Modeling the Internalization of External Costs of Transport

Increases in traffic congestion and pollution levels in urban areas in Europe have resulted in the need to develop reliable and transferable methods of assessing the environmental and social effects of transport pricing and other regulatory policies. To achieve this, it is necessary to quantify the marginal social costs of transport as a function of travel demand and then to obtain the optimum marginal social cost by maximization of utility subject to budget constraints. The work conducted by Trinity College, Dublin, on a project (TRENEN) funded by the European Union JOULE II Non-Nuclear Energy Program is described. The project involved the development and calibration of an optimization model, the TRENEN model, based on welfare economics to address fundamental issues relating to the external costs of transport. The determination of the optimum function type used to represent the transport demand–delay relationship (which was obtained using an existing four-stage network model) for input to the TRENEN model is described. The TRENEN model is quite different from network modeling in that it is fundamentally macrolevel in its approach and works in an economic framework rather than at a traffic network level. Also discussed is a calibration of the TRENEN model for Dublin, the capital city of Ireland. Dublin currently experiences high levels of traffic congestion, particularly in the morning peak period, resulting from a heavy demand for car travel and the poor level of service associated with public transport. The possibility of using the TRENEN model, which addresses the issue of “social equilibrium” at a macrolevel, in conjunction with the more traditional “network equilibrium” approach used by traditional four-stage microsimulation modeling techniques, is discussed.