Econ Section IV: Costs and Benefit of Transportation

What are some benefits of transportation systems?

Improved access to employment, education, healthcare, and new markets

What quantifiable measures do economists use to evaluate the value of transportation projects?

Construction costs, fuel expenditures, time savings, and increased economic activity

What costs are associated with capital?

One-time design and construction costs

What are some examples of capital costs?

Planning, preliminary engineering, project design, environmental impact analysis, right-of-way acquisition, construction, equipment purchases, etc.

What costs are associated with operating?

Recurring operations, maintenance, and rehabilitation costs

What are some typical highway operating costs?

Traffic management, crash or weather related repair and cleanup, equipment, utilities, resurfacing, etc.

What costs are associated with vehicles?

Vehicle ownership and maintenance costs like fuel, tire replacement, and insurance

What reduces vehicle maintenance costs?

Pavement resurfacing

What costs are associated with travel time?

Lost time and productivity

What enables faster travel times?

Signal timing coordination

What costs are associated with travel time reliability?

Variance of schedule uncertainty

What reduces variability in travel time?

Dynamically priced HOT lanes

What are costs associated with safety?

Number, severity, and cost of crashes

What can reduce the number of crashed related to driver fatigue?

Addition of rumble strips

What are costs associated with emissions?

Health and other costs of vehicle-produced pollution

What can reduce emissions?

Using compressed natural gas vehicles

What costs are associated with noise?

Discomfort and property value loss due to traffic noise

What can reduce traffic noise?

A sound wall

What are costs associated with ecological impacts?

Travel's impacts on wildlife habitat, water flow, and water quality

What is an example of a negative ecological impact?

A road runs through an endangered species habitat, impeding animal movements

What two categories can transportation costs be grouped into?

Internal and external

What are internal costs?

Expenses paid directly by the people who operate or use the system

What are external costs?

Costs that fall on people who aren't directly part of the transaction

What are some examples of external costs?

Health impacts of air pollution, stress and sleep loss from traffic noise, and traffic congestion

What are some capital costs of automobile travel?

Vehicle, roadway, and traffic signals

What are some capital costs of railroad travel?

Railcars, tracks, stations, railyards, and signal systems

What are some capital costs of airline travel?

Airplanes, airports, and traffic control systems

What are some capitals costs associated with traveling by ship?

Ports and ships

What operating costs do many transportation modes share?

Fuel, labor, maintenance, supplies

What are capital costs?

Large, fixed, and largely sunk one-time investments

What are some examples of capital costs in transportation?

Building a new train station, paving a highway, or buying buses and airplanes

What are operating costs?

The ongoing expenses needed to keep facilities, vehicles, and services running smoothly

What is a defining feature of transportation?

Capital costs dominate and vary greatly

Which two costs have to be equal in order for there to be no externalities?

Social cost and private cost

Why are there no externalities when social and private cost are equal?

All social costs are fully covered by users

What kind of cost includes taxes?

Private costs

What happens when social cost is greater than private cost?

Part of the burden falls on non-users

What two factors account for about half of private commuting costs?

Travel time and reliability

What factor makes up a third of private commuting costs?

Vehicle-related expenses

What percent of roadway costs are funded through taxes?

25%

What percent of parking infrastructure costs are passed on to users?

Less than 3%

Who covers the rest of the private commuting costs?

Other taxpayers and employers

What percent of crash-related costs are paid by drivers?

59%

What percent of the costs of local air pollution do drivers personally experience?

4.5%

What costs are not included in private cost accounting?

Global environental costs

What percent of the total social cost of an average commute is external?

29%

What is the increase in crash costs for other drivers from 1 extra mile of travel equivalent to?

18% of the costs associated with the driver's own crash risk

What costs are borne mainly by highway users?

Operating and maintenance, vehicle capital, travel time, schedule delay and unreliability

What costs are borne substantially by non-users?

Crashes, government services, and environmental costs

What are some fixed costs?

Roadway and parking

What does understanding external costs help us understand?

Environmental, delay-related, and safety impacts of transportation activities