The fact that it is difficult, though by no means impossible, to place money values on environmental damage such as noise pollution and global warming is absolutely no reason for entering a zero cost next to such items.
The argument that congestion costs are not external costs because they are borne only by other road users is ridiculous. Any driver on the road imposes an external cost on other drivers by slowing them down and increasing journey times. The fact that these costs are borne only by other road users is irrelevant. The net social advantages from the existing road network can only be maximised by charging all road users a fee equal to the congestion costs which they impose on other road users. Road pricing will inevitably be required. France, Switzerland, Italy, Japan and America all have road pricing in one form or another.
Our research published in Blueprint 3 (Earthscan, London) indicates that the social costs of road use in terms of pollution, noise, accidents and congestion was at least pounds 22.9bn- pounds 25.7bn in 1991. This was twice the revenue obtained from taxing road users, excluding VAT, which is charged to all goods. New work which we will publish shortly suggests that these cost estimates are, if anything, an underestimate.
At the moment, road users pay only a fraction of the costs associated with road transport. What taxes there are on motoring fail to properly allocate the costs between different road users. A continuation of current transport policies is likely to bring mounting congestion, more misguided investment decisions, too much pollution and increasing costs to industry.
PROFESSOR DAVID PEARCE
The Centre for Social and Economic Research on the Global Environment
University College, London
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