ENVIRONMENTAL EXTERNALITIES OF MOTOR VEHICLE USE. IN: HANDBOOK OF TRANSPORT AND THE ENVIRONMENT

Motor vehicles cause many types of pollution and contribute to other forms of environmental degradation. The cost to society of these impacts may amount to hundreds of billions of dollars per year. Although these costs to society are large and pervasive, they are not actually reflected in the transportation prices paid by the persons whose traveling decisions give rise to the social costs. This divergence between the costs that society bears and the costs that travelers pay can be considered an externality. In economic terms, externalities are undesirable because when they are present some people may make economic choices whose costs to society exceed the benefits. One way to address this inefficiency is to estimate the dollar value of the environmental damages and then incorporate the estimates into prices of transportation goods and services or cost-benefit-analyses of transportation investments. Toward this end, this chapter reviews the external environmental costs of motor vehicle use in the U.S.