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Internalization of External Costs of Transport in Flanders

Issue 10-03-2017Update 2016 - The MIRA-research report “Internalization of external costs of transport in Flanders” (2010) estimated the private costs, the external costs, and the degree of internalization of transport for the period 2000-2008. Six years later it is time to update this report.

As in the previous study, we calculated the private and marginal external costs for different transport modes. The private costs are the costs for the user. For road transport these include the vehicle purchase costs, insurances, maintenance, fuel costs, etc. For regulated transport (bus, train, plane) this is the ticket price. Marginal external costs are external because the user does not take them into account when deciding to make a trip. They are called marginal as we focus on the additional effect of that one trip. We distinguish the following marginal external costs:

  • Congestion
  • Environment (air pollution and greenhouse gasses)
  • Noise
  • Safety
  • Infrastructure
  • Health

Internalization of external costs determines the extent to which the user does take into account part of these external costs via taxes and levies. In the case of full internalization, the user pays for all the costs he causes via taxes and levies. Today, in most cases, the user does not pay the full costs he causes.

In this study we calculated the private costs, marginal external costs, and degree of internalization for all modes for the period 2000-2014, with an outlook towards 2016. Based on these calculations we assessed the evolution of the degree of internalization over time. Is Flanders heading towards the “polluter pays principle”? Which steps are needed to evolve to a better pricing?

To what extent does the transport user internalize their external costs?

At the moment most users do not pay for the nuisances they cause. The figure below shows the degree of internalization for the different modes examined in this study. The numbers are relative: the sum of all external costs equals 100 %. The small grey bars show to what extent the taxes cover the marginal external costs. A negative tax represents a subsidy. For cyclists, the marginal benefits are larger than the marginal costs, hence the sum of external “costs” does not equal 100 %.

Figure: Internalization of external costs for all transport modes (in %) (total marginal external costs = 100 %), Flanders, 2014. Source: TML

 Figure Internalization of external costs for all transport modes (in %) (total marginal external costs = 100 %), Flanders, 2014. Source: TML

The degree of internalization for the modes bus and passenger train fall beyond the scale of this graph. The degree of internalization for bus is -744 %, for passenger train national diesel -540 % and for passenger train electric -1 115 %.

mehb = marginal external health benefit, meic = marginal external infrastructure cost, menc = marginal external noise cost, meac = marginal external accident cost, meec = marginal external environmental cost, mecc = marginal external congestion cost

For more information on the calculations, the evolutions over time and possible lessons learned, we refer to the report.

Read the English summary of the Dutch report ‘Internalization of external costs of transport in Flanders: update 2016'

Study commissioned by MIRA, the Environment Reporting Unit
Research report MIRA/2016/06

researchers: Eef Delhaye, Griet De Ceuster, Filip Vanhove, Sven Maerivoet, Transport & Mobility Leuven

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