How Much Does Transportation Really Cost?


Everyone who drives feels the increasing price of gas in their pocketbook. But what are the additional social costs of transportation? How would one even start thinking about this question clearly?

Transport Canada recently released a report quantifying the full costs of transportation, that made national headline news in Canada. The full costs of transportation were estimated to be between $198 billion and $233 billion (all figures $CDN) - that's about $7000 per capita.

So where did all this money go? Over 80% went to financial costs (vs social costs). 80% of the financial costs are due to road transport. Air, rail, and marine, in that order, make up the rest.

Slicing the financial costs another way, the cost of vehicles (capital and operating) was more than 80%. Infrastructure made up the rest—including roads, bridges, patrolling, and even snow removal.


Interestingly, user charges (such as transportation-specific fuel taxes) paid by vehicle operators for infrastructure were broken out separately in the report. The ratio of user charges to infrastructure costs was over 1/2 in the case of air, around 1/3 in the case of road, and a small fraction for rail and marine—food for thought when thinking about who pays for transportation, and who benefits.

Perhaps surprisingly, the social costs amounted to less than 20% of the total costs of transportation. This does not mean that these social costs are negligible, but rather that we spend even more on moving people and things around than the short-term effects of all the pollution and accidents might indicate. Accidents were estimated to be over half the social costs, with delays, pollution, and greenhouse gases also being significant.

How much can these figures be trusted? While the methodology is robust, many costs were explicitly not included due to insufficient data or resources, like oil and chemical spills, parking, and environmental costs of fuel and vehicle production. There are also assumptions about discount rates and many social cost factors (like the "cost" of a ton of greenhouse gas emissions), which are made explicit but might be questioned.

The authors acknowledge up front that "the benefits of transportation are real and important to society," but were unable to estimate these benefits in this first report. That's a critical missing factor in most cost analyses of pollution, social costs, or ecosystem services, yet one that is truly a "Grand Challenge" to solve. How much is your car worth to you? What is the quantified "social benefit" of a municipal public transit system? What are the long-term development, business, and international relations benefits of air travel—and how much will the concomitant carbon emissions cost us in the long run?


It's good to know that work like this is being done. (This report follows on one from last year on the Social Cost of Motor Vehicle Collisions in Ontario, which if anything was even more detailed.) Estimating full costs and benefits—be it for transportation, ecosystem services, or health—gives us a handle on those things we intuitively know are important but can't readily attach a price tag to. It also promotes clear thinking and good data about the components of costs and benefits, which in turn helps focus on where costs can be reduced and benefits increased. Perhaps the next step is to link the full panoply of such work being done worldwide into a loose federation, so we could add up costs and benefits across jurisdictions, sectors, and time—and model where ingenuity and behavior change could be best applied.