Who pays for all these roads?

Over-dependence on roads is a good way for cities to

lose money.

Justin VannPashak

Nov 6, 2018

Hundreds of millions of dollars for a few hours of use.

It’s time to illustrate the concept of externalities with some transportation examples.
Identifying externalities requires a person to peel away some layers, dig into a
deeper analysis. An externality is any time there is a benefit or cost to a person not
directly associated with the action in question. It’s what happens when other
people’s behavior costs or benefits you indirectly. Externalities are usually
unintentional consequences of individual decisions. Negative Externalities are like
collateral damage but in an economic sense. With a transportation example, we’ll
discuss the costs and benefits for people who do not own or drive the cars causing
these externalities. We all know what costs and benefits come with owning a car
ourselves. Negative Externalities are the costs and benefit that others pay for us to
own a car. Positive Externalities are the benefits to other people resulting from our
driving.

Here are some examples:

Negative Externalities of Urban Car-Dependence:

 Driving promotes a sedentary lifestyle. Negative health can cost all citizens.

 Pollution caused by automobiles costs everyone.

 Road rage has costs beyond those people who are directly involved.

 Encouraging low-density development results in inefficient use of other

infrastructure like sanitary, water, and drainage infrastructure. This
infrastructure is paid for by the collective tax pool. Higher density development
subsidizes lower density developments. Even minimum sized infrastructure is
often overbuilt for low density, but is required to be overbuilt for engineering
reasons.

 Land value is often hurt by proximity to big roads.

 Dementia has been linked to proximity to major roads.

 Congestion costs everyone, other people using roads in significant volumes

can affect your experience using the road, costing you time and money.

 Available land is scarce in major cities, roads and parking can take up
significant portions of land that could be used for more valuable purposes.

 Risks to kids and other vulnerable road users like cyclists.

 Sprawl costs more than it generates.

 Traffic lights… somewhat tied to congestion, but they deserve their own
section. If you were the only person you using the road, there would be no need
for traffic lights. The more people use the road, the longer we wait. Cars on
cities are the only reason traffic lights exist. They’re the only we reason we are
all forced to stop for 3 minutes every 5 minutes.

The costs associated with traffic and congestion are not covered directly by those
causing the problems.

Positive Externalities of Urban Car-Dependence:

 Time can be saved by using automobiles, but it is important to rule out cases
where cars caused the problem they solve. In many cases sprawl is a direct
result of car dependence. Slower moving drivers can slow others down, which
would be a negative externality. So time is fairly neutral.Cars definitely bring a
lot of positive externalities to travel between cities rather than within cities.

Experts have a difficult time listing positive externalities for automobiles. Part of
this is because cars often cause the problem they solve as mentioned. Another
reason positive externalities are hard to find is that many of the positive impacts of
automobiles are internalized. Most positive benefits are directly felt by the car
owner, with very little positive impacts for spread to others.
Internalizing
Internalizing externalities is a process of getting people to pay directly for the
negative costs they are causing. Mobility pricing is one of the ways being suggested
for internalizing negative externalities associated with car ownership. It is also
referred to as Congestion pricing. It’s essentially a toll to use roads. The price goes
up depending on how busy the roads are. It generates revenue for the tax pool,
benefit other citizens to offset the negative effects mentioned above. Pigouvian taxes
are another attempt to internalize externalities.

Until users pay for all these externalities, thereby “internalizing” them, their
decisions are being subsidized. Other people are covering the extra costs.

In Conclusion
Some of our decisions cost other people. If I crank up the music in my apartment at
night, my neighbors may have to pay with some sleep. A drunk driver may cost
someone else their life. In other cases the costs are less obvious. To accomodate
people passing through urban neighborhoods, residents of the neighborhood often
sacrifice land value and clean air. Over-dependence on cars can increase health care
costs, in many ways we all pay for these whether it’s through insurance or taxes.
Car-free urban dwellers pay taxes that pay for snow clearing in the suburbs.

There are also positive externalities associated with car-first cities. Faster delivery of
goods. Access to exotic foods. Unfortunately, most benefits of car ownership are felt
directly by the owner while in today’s world, others subsidize this ownership. It’s a
complex balancing equation. It’s likely that the negative externalities outweigh the
positive ones. It’s likely the negative externalities outweigh the internalized benefits
of car dependence as well.

There are simpler solutions to mobility problems that skew more heavily to the
positive. These alternatives balance modes, giving citizens freedom of choice. Mode
choice, particularly making walking a competitive option, is at the heart of creating
a transportation network without negative externalities.