Economic aspects of transport | Umweltbundesamt

Economic considerations

Although the transport of people and goods ensures mobility and a wide variety of products, it also incurs a number of costs. Whereas the benefit of the goods added by transport is compensated by the prices of transport and transport services, other associated costs are only in part taken into account in decisions concerning how to execute transport. So-called external costs are ignored, especially costs incurred through pollution and accidents. As a result, there is a large of volume of transport performance whose total cost is higher than its benefit.

In order to contain the economy’s transport volume to a level that makes both macroeconomic sense and is environmentally sound, external costs must be assessed fairly to their source; in other words, they must be internalised. Efficient and ecological transport policy may not be limited to raising the price of transport. It must also take into account measures that avoid transport activity, which promote a switch to more environmentally friendly modes of transport, which use existing capacities (transport routes and vehicles) optimally, and also reduce the specific environmental impact caused by vehicles.

A certain share of external environmental costs is caused by emissions of air pollutants and the greenhouse gas carbon dioxide (CO2). The average external costs, e.g. for travel in a passenger car, are considerably higher than those for use of public modes of passenger transport. Air travel incurs – in particular as concerns damage to the climate – very high costs.

The calculated costs indicated in the table are based on German Federal Environment Agency (UBA) methodological convention, which takes into account proposed procedures and standardised definitions that are intended to serve the purpose of transparency and easier understanding of the external cost estimates. Furthermore, there are new calculations of the external costs caused by air pollution and climate damage, and real situations for accommodation of external costs are identified.