In this paper we discuss to what extent transport policy fails to integrate five types of external effects, and what kind of research needs follow from the objective to make transport sustainable. The discussion is a synthesis of the findings collected and synthesized in the framework of Focus Group 4 of the STELLA project. The assignment of Focus Group 4 was to draw up a set of recommendations for future transport policy-oriented research dealing with external effects, on the basis of a series of specialist workshops.
Five different kinds of so-called external effects of transport were identified beforehand, being environment, safety and security, public health, land use and congestion. Safety and security as well as congestion are external effects in the sense that they are not ‘internalised’ in the price of the transport service, but they do affect predominantly others within the transport system. This means that with some delay the transport market still reacts to changes in the intensity of these effects, albeit biased or insufficient. The public goods character of both externalities however implies that public intervention is needed to attain better performance of these external effects, partly via internalisation of the external effects and partly via planning (i.e. by evaluating the trade-offs ex ante).
The other external effects, however, are not only insufficiently internalised in the transport price, but they are also predominantly affecting parties outside the transport system. Consequently, changes in the intensity of these effects do not feed back directly into the transport market. In that case public intervention has even a more complicated task, since it takes more time and is more complicated to learn what are actually the right balances for the trade-offs between adequate access and, in turn, sustainability, spatial quality, and public health.

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Impacts of economic theories on environmental economics.

The adequate integration of sustainability into transport policy: some major dilemmas

In this chapter we assess the role of economics in governance for sustainable development. Firstly, we investigate how well the mainstream environmental and resource economics paradigm has helped us understand the nature of sustainable development. We explain the context in which environmental and resource economics developed and the main propositions made during its formative years. These help us to understand the paradigm’s approach to sustainable development (or sustainability – we do not distinguish between these two terms, although some do). Taken to the limits of formalism, it culminates in the social planner’s desire to optimise human welfare over time and the drive to place monetary values on, and aggregate, all forms of wealth, including natural assets. This chapter then outlines the strengths and weaknesses of this approach by comparing it with an alternative set of approaches that have come to be known as ecological economics. Our second question is how can economics inform governance systems for sustainable development? Thus the final section of this chapter reflects on the contributions that economics can make to the policy process, using two high-profile examples: the Copenhagen Consensus devised by Bjørn Lomborg (Lomborg, 2001) and the Stern Review of the Economics of Climate Change (Stern, 2007). Although economic analysis has much to offer (for example in the design of policy instruments for delivering sustainable development), we caution firmly against a reliance on formal modelling to prescribe a single, optimal path of policy. Instead we must draw upon a broader range of evidence, in which such formal approaches are nevertheless useful. We emphasise the need for economic research on sustainable development to take serious and explicit account of its ethical implications, of uncertainty about the consequences of depleting the natural

Impacts of economic theories on environmental economics.

Citations

The adequate integration of sustainability into transport policy: some major dilemmas

Governing Sustainability: Economics and the governance of sustainable development

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