Pricing Freight Transport to Account for External Costs
Presentation
Presentation by David Austin, an analyst in CBO’s Microeconomics Studies Division, at the 91st Annual Conference of the Western Economic Association International.
Although freight transport contributes significantly to the productivity of the U.S. economy, it also involves sizable costs to society. Those “external” costs include wear and tear on roads and bridges; delays caused by traffic congestion; injuries, fatalities, and property damage from accidents; and harmful effects from exhaust emissions. No one pays those costs directly—neither freight haulers, nor shippers, nor consumers. The unpriced external costs of transporting freight by truck (per ton-mile) are around eight times higher than the costs for rail; those costs net of existing taxes represent about 20 percent of the cost of truck transport and about 11 percent of the cost of rail transport. This presentation examines policy options to address those unpriced external costs.
