Transportation social cost analysis is my specialty. I have reviewed
Mumford's paper and have the following comments.

The estimates of external costs used in this report are much lower than
those developed in other studies. In particular, the study estimates that
congestion costs are 6 times greater than crash costs and air pollution
costs, although most studies I've seen place each of these costs in the
same general magnitude (see David Maddison, et al, "The True Costs of Road
Transport," Earthscan, London, 1996; James Murphy and Mark Delucchi, "A
Review of the Literature on the Social Cost of Motor Vehicle Use in the
United States," Journal of Transportation And Statistics, Vol. 1, No. 1,
Bureau of Transportation Statistics, hppt://www.bts.gov, January 1998, pp.
15-42).

The author explains this by saying that he uses "ex-post" cost estiamtes as
opposed to "ex-ante" estimates used by other researchers. Although I've
reviewed dozens of transportation cost studies, I have never heard these
terms used in this context and I think it is inappropriate. Efficient
prices reflect marginal costs, which by definition mean the costs that WILL
BE IMPOSED by a particular consumption activity. I cannot see any
justification for using past rather than future costs when calculating
optimal prices.

The report includes ALL taxes when calculating motorists payments, although
standard highway cost allocation practices specify that only special taxes
be considered "roadway user fees." (see FHWA, 1997 Federal Highway Cost
Allocation Study, USDOT, http://www.ota.fhwa.dot.gov/hcas/final, 1997.)
Only fuel taxes above the tax rate on other equivalent goods should be
considered motorist user fees. Including general taxes, such as VAT,
implies that fuel should be tax exempt (i.e., that all taxes should be
considered a user fee rather than a tax).

Mumford does not include roadway expenses when disaggragating costs. In
general, rural road travel tends to have high roadway costs per vehicle
mile because of relatively light traffic (so costs are divided among a
smaller number of users). Accounting for this factor would tend to partly
offset the overcharging that he estimates for rural driving.

There are a number of other external costs of automobile use that this
study excludes. These include the opportunity cost of roadway land (a cost
normally ignored by transport economists but recognized by urban
economists), parking subsidies (which turn out to be one of the largest
external costs of automobile use), the barrier effect (the delay traffic
imposes on pedestrians and cyclists, which is simply an extention of
congestion costs to nonmotorized travel), climate change emissions, vehicle
water pollution, and environmental impacts of road and parking facilities
(such as lost wildlife habitat). Transportation economists have
traditionally ignored most of these costs, but some of us believe that they
should be considered (see Todd Litman, Transportation Cost Analysis;
Techniques, Estimates and Implications, VTPI (http://www.vtpi.org), 2000).
Because he ignores these other cost categories, Mumford's estimates should
be considered to represent the lower-bound range of external costs.

I certainly agree with the report's conclusion that fuel taxes are a poor
instrument for internalizing most of vehicle costs. Variable road pricing,
parking pricing and distance-based fees are far more efficient instruments
(see Todd Litman, Socially Optimal Transport Prices and Markets, VTPI,
http://www.vtpi.org, 1999.). However, until such fees are in place, there
are valid justifications for using fuel taxes as a second-best instrument
for internalizing costs.

I take exception to the statement that "The presentation is 'intellectually
vigorous' rather than 'academically rigorous'". This implies that academic
analysis is not intellectual, and that intellectual analysis can ignore the
peer review and public critique demanded in an academic context. Such
statements are simply an excuse for biased analysis to claim validity
without without being subject to scrutiny. If the analysis is good, it can
withstand academic rigor. If it is bad, it should not claim intellectual
vigor.


Sincerely,

Todd Litman, Director
Victoria Transport Policy Institute
"Efficiency - Equity - Clarity"
1250 Rudlin Street
Victoria, BC, V8V 3R7, Canada
Phone & Fax: 250-360-1560
E-mail:  [log in to unmask]
Website: http://www.vtpi.org



At 09:49 PM 10/09/2000 +0300, you wrote:
>I have now answered my own question - here it is in case anyone is
>interested.
>
>Source: "The Road from Inequity: Fairer Ways of Paying the True Costs
>of Road Transport", by Peter Mumford, pub. Adam Smith Institute, 2000.
>ISBN 1-902737-17-12. Downloadable from www.adamsmith.org.uk (Hope I
>have remembered that correctly).
>
>Finds that rural motorists pay up to seven times their "social costs"
>in excess motoring taxes - that's excess over what's consumed by road
>building. While for urban motorists, social costs are from two to
>eight times the level of excess taxation. For road users as a whole,
>though, social costs roughly balance excess taxation. (He admits to
>his social costs being conservative - ex-post rather than ex-ante.)
>
>The presentation is "intellectually vigorous" rather than
>"academically rigorous" - but it looks like a good first approximation
>to me. It is making the case for lower blanket taxes together with
>urban road pricing, with excess taxes devoted to public transport etc.
>
>Mind you, I personally/professionally can see some problems in making
>travelling in rural areas cheaper than in towns - PPG13 reversed!
>
>If anyone has comments on the validity of Mr Mumford's findings, I
>would be interested to hear them.
>
>On Wed, 13 Sep 2000 21:38:32 +0300, Alan P Howes
><[log in to unmask]> wrote:
>
>>I recently read "somewhere" reports of a research project which showed
>>that tax payed by urban UK motorists = x * [Cost to Community of that
>>use] while for rural motorists the figure was y.
>>
>>x<1 while y>1.
>>
>>Can anyone tell me the vales of x and y, and give me a reference for
>>the research?
>
>-- 
>Alan Howes, Special Advisor (Operations)
>Saudi Public Transport Company, Riyadh, Saudi Arabia 
>[log in to unmask]
>PLEASE DO NOT SEND LARGE MESSAGES (>100kB) WITHOUT PRIOR NOTICE
>Also [log in to unmask]
>
>
>

Sincerely,

Todd Litman, Director
Victoria Transport Policy Institute
"Efficiency - Equity - Clarity"
1250 Rudlin Street
Victoria, BC, V8V 3R7, Canada
Phone & Fax: 250-360-1560
E-mail:  [log in to unmask]
Website: http://www.vtpi.org



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