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    External Costs of Inland Transport

    Subjects: Others | Economics
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    Submitted by: Florian Hofbauer

    Definition

    Sustainable transport, such as using inland waterway transport (IWT), represents a major pillar of the European Green Deal to reduce global warming. To evaluate the different inland transport modes (road, rail, IWT), it is crucial to know the external costs of these modes.

    1. Introduction

    Sustainability is a major goal of the European Climate Policy, with the aim of limiting the effects of global warming and climate change. In December 2019, the “Green Deal” was announced by the European Commission, aiming at a 90% reduction of emissions by 2050 in the transport sector[1]. Developing the vision of sustainable transport systems from abstract ideas to actual implementation constitutes a major challenge for many logistics, supply chain management and transport stakeholders. A modal shift towards sustainable transport modes, such as railway or inland waterway (IWT), is a major part of the Green Deal[1] and has the potential to reduce the negative side effects caused by road transport, including external costs from emissions, noise and congestion[2]. Railway and IWT are the inland transport modes with the lowest emissions and external costs compared to road and air transport[3][4].

    2. External Costs

    "External costs, also known as externalities, arise when the social or economic activities of one (group of) person(s) have an impact on another (group of) person(s) and when that impact is not fully accounted, or compensated for, by the first (group of) person(s). In other words, external costs of transport are generally not borne by the transport user and hence not taken into account when they make a transport decision."[3]

    External costs can be divided into seven categories: accident, noise, congestion, habitat damage, air pollution, climate change and well-to-tank emissions. Table 1 explains the seven external cost categories.

    Table 1. Explanation of external cost categories.

    Accident costs

    Material damage or immaterial damage resulting from accidents that are not covered by insurance payments (e.g., human costs, medical costs, administrative costs, loss of production)

    Noise costs

    Costs from unwanted noise of varying duration, intensity or other quality that causes physical or psychological harm to humans

    Congestion costs

    Congestion costs are the delay costs and welfare loss associated with the congestion.

    Costs of habitat damage

    Costs resulting from negative impacts of transport on nature and landscape: loss of habitats (ecosystems), fragmentation of habitat, habitat degradation through emissions

    Air pollution costs

    External costs from the following four types of impacts caused by the emission of transport-related air pollutants: health effects, crop failures, material and construction damage, loss of biodiversity

    Climate change costs

    The costs of climate change are defined as the costs associated with all the effects of global warming: sea level rise, crop failures, health costs, damage to buildings and materials (weather damage), loss of biodiversity and problems with water supply.

    Cost of well-to-tank emissions

    The cost of well-to-tank emissions (= cost of energy production) includes the production of all types of energy sources, which leads to emissions and other externalities. This includes the extraction of energy sources, processing (e.g., refining or electricity generation), transport and transmission, construction of energy plants and other infrastructure

    Adapted from Schroten et al. [3]

    3. External Costs of Transport

    In this section, the calculation methods of the external cost categories from Schroten et al.[3] & PLANCO[5] are compared. The focus is on the general description of the calculation factors followed by an overview of average external costs of freight transport.

    3.1. Accident costs

    In the PLANCO study[5], the external accident costs result from the calculation of human costs and material damage in accidents in which a freight vehicle was involved. For the calculation of human costs, the number of casualties per mode of transport is divided into different levels of injury and multiplied by the corresponding cost factor. The cost factors for human costs and material damage were taken from calculations by the German Federal Highway Research Institute[6]. For rail transport and IWT, separate cost factors for material damage were calculated based on the damage estimates of evaluated accident reports. The resulting total external accident costs were related to the transport performance in tonne-kilometers by the respective mode of transport.

    Schroten et al.[3] deal with significantly more subcategories of external accident costs and distinguish between human costs, loss of production, medical costs, administrative costs and property damage in the case of external accident costs. Due to insurance payments, only a certain percentage of these cost categories are considered external costs. For example, it is assumed that 100% of material damage is covered by insurance and therefore does not have to be taken into account in the calculation of external accident costs. In addition, the study uses correction factors for the number of accidents to compensate for the problem of unreported accidents[7][8][9]. This concerns mainly road transport, as it is very unlikely that accidents in rail transport and IWT go unnoticed. In the case of accidents involving different modes of transport, the accident costs are allocated to the mode of transport that caused the accident. Within a mode of transport, the accident costs are assigned according to the damage potential of the vehicles involved[10][11].

    3.2. Noise costs

    Noise costs are calculated using the same methodology in both studies. The number of people and the extent of noise pollution is determined by interviewing the affected population. The cost factors for noise result from the willingness of the affected people to pay for the reduction of environmental noise levels. In addition, treatment costs for cardiovascular diseases resulting from increased noise pollution are taken into account[12][13].

    3.3. Congestion costs

    Congestion costs are not addressed in the PLANCO study[5], since they can be neglected for IWT. The calculations of congestion costs by Schroten et al.[3] focus on road freight transport, as they are highly relevant for this sector. Congestion costs result from the calculation of delay costs and welfare loss. The calculation of these costs depends on numerous factors, such as speed-flow functions, demand curves [14][15], value of time[9][16][17] as well as the social costs in terms of welfare loss. The costs are calculated using simulation tools for the European area[18].

    For rail transport, congestion costs are generally not relevant due to the fixed train schedules. However, in the case of highly used networks, train delays can cause congestion even for scheduled services. Schroten et al.[3] also consider the future calculation of scarcity costs in the event that the means of transport of regular services strongly compete with each other in terms of time slots. However, such a calculation requires a great deal of information and is highly context-specific[3]. For IWT, congestion costs are considered similar to those of rail transport and therefore not relevant. An idea for further critical evaluation is the analysis of congestion situations in ports or at bottlenecks such as locks, which might be relevant for inland navigation and may cause considerable congestion costs[19][20].

    3.4. Costs of habitat damage

    PLANCO[5] refers to the cost rates of a study by INFRAS[21] which are intended to show the costs of the renaturation of sealed surfaces along transport routes. However, due to the uncertainties in the delimitation of impaired areas, the study refrains from using these cost rates and from monetizing habitat damage. Schroten et al.[3] calculate the costs of habitat damage based on the length (or area) of the infrastructure network of the transport modes and the derived annual cost factors for habitat loss and habitat fragmentation per kilometer based on a study by INFRAS/Ecoplan[22].

    3.5. Costs of air pollution, climate change and well-to-tank emissions

    For the calculation of air pollution, climate change and well-to-tank emissions, the input values are vehicle performance data[23], emission factors per vehicle type and cost factors of air pollutants. Multiplying these values results in the external costs of air pollution, climate change and well-to-tank emissions. The cost factors for air pollutants refer to the health effects, crop losses, material and building damage and biodiversity loss caused by air pollutants. The cost factor for CO2 equivalents corresponds to the avoidance costs of one tonne of CO2e. Schroten et al.[3] use the cost factors of air pollutants from the Environmental Prices Handbook 2017[24] and a CO2e price of 100€/t based on the average of the values found in the literature. PLANCO[5] refers to the cost rates from the method convention of the German Federal Environment Agency from 2007[25] and uses a value of 70€/t as CO2e price.

    3.6. Average external costs of freight transport

    Table 2 lists the external cost factors of PLANCO[5] for the transport modes road, rail and inland waterways. The study provides the average external cost factors per tonne-kilometer for the cost categories accidents, noise, air pollution and climate change for Germany for the year 2005. The external cost factors per mode of transport are differentiated between bulk and container transport.

     Table 2. Average external costs of freight transport (Germany, 2005) per transport mode.

    External cost categories

    Road

    Rail

    Inland Waterway

    €-cent/tkm

    €-cent/tkm

    €-cent/tkm

    Bulk

    Container

    Bulk

    Container

    Bulk

    Container

    Accident costs

    0.43

    0.43

    0.06

    0.06

    0.03

    0.03

    Noise costs

    0.79

    0.79

    0.84

    0.84

    0.00

    0.00

    Air pollution costs

    0.32

    0.17

    0.05

    0.04

    0.12

    0.12

    Climate change costs

    0.47

    0.26

    0.18

    0.16

    0.12

    0.11

    Total

    2.01

    1.65

    1.13

    1.1

    0.27

    0.26

    Adapted from PLANCO [5].

    Table 3 shows the external cost categories of the “Handbook on External Costs of Transport” [3] for the transport modes road, rail and IWT. The study provides the external cost categories accidents, noise, congestion, habitat damage, air pollution, climate change and well-to-tank emissions for the EU-28 area for the year 2016. Moreover, costs for light commercial vehicles, heavy goods vehicles and electric and diesel trains are included.

    Table 3. Total and average external costs of freight transport (EU-28, 2016) per transport mode.

    External Cost Categories

    Road

    Rail

    Inland Waterway

    Total Costs

    (Billion €)

    €-cent/tkm

    Total Costs

    (Billion €)

    €-cent/tkm

    Total Costs

    (Billion €)

    €-cent/tkm

    Accident costs

    42.8

    6.0 (LCV)

    1.3 (HGV)

    0.3

    0.1

    0.1

    0.1

    Noise costs

    14.5

    1.6 (LCV)

    0.5 (HGV)

    2.5

    0.6 (electric)

    0.4 (diesel)

    n.a.

    n.a.

    Congestion costs

    70.1

    16.8 (LCV)

    0.8 (HGV)

    n.a.

    n.a.

    n.a.

    n.a.

    Costs of habitat damage

    8.0

    1.35 (LCV)

    0.2 (HGV)

    1

    0.2 (electric)

    0.2 (diesel)

    0.3

    0.2

    Air pollution costs

    29.4

    4.7 (LCV)

    0.8 (HGV)

    0.71

    0.0 (electric)

    0.7 (diesel)

    1.9

    1.3

    Climate change costs

    22.8

    4.0 (LCV)

    0.5 (HGV)

    0.2

    0.0 (electric)

    0.2 (diesel)

    0.4

    0.3

    Costs of well-to-tank emissions

    7.5

    1.15 (LCV)

    0.2 (HGV)

    0.6

    0.2 (electric)

    0.1 (diesel)

    0.2

    0.1

    Total

    195.1

    35.6 (LCV)

    4.2 (HGV)

    5.4

    1.1 (electric)

    1.8 (diesel)

    2.9

    1.9

    Adapted from Schroten et al.[3].

    A comparison of the tables shows that the studies differ in the degree of breakdown into subcategories of external costs. PLANCO[5] offers a differentiation of the average external costs according to the type of cargo (bulk and container). Schroten et al.[3] also offer this differentiation, but only when listing marginal external costs. This differentiation is of great relevance, since the values can differ significantly depending on the type of cargo. Other categories such as car transport should be considered for future external cost calculations, as emission calculation studies such as the Global Emissions Council Framework[26] show that the difference in emissions due to the different weight and aerodynamics can be significant.

    An essential distinction that is missing in both studies is the distinction between fuel types. Schroten et al.[3] offer a distinction between electricity and diesel for rail, and the significant differences in external costs underline the importance of this distinction. However, this distinction is missing for the other modes of transport. Alternative fuels are also essential in view of the European Green Deal[1] and therefore need to be considered for future calculations. Future studies on the specific emission values of alternative fuels, such as those of the Smart Freight Centre and Global Logistics Emissions Council Framework[27], should provide the basis for differentiated calculations with regard to external costs.

    4. Further Research

    Due to the omnipresent topic of climate change, the internalization of external costs will play a major role in the future when calculating and comparing transport scenarios. Research gaps need to be identified and adressed to ensure an accurate comparison of inland modes of transport with regard to external costs.

    As an example, the following Table 4 shows the high potential for future research of external cost calculation methods of IWT. It shows the evaluation of IWT compared to road and rail for the external cost categories. Moreover, the future research column summarizes the major gaps in the existing literature concerning the calculation of each external cost category.

    Table 4. External cost categories and future research for IWT.

    External Cost Category

    Evaluation of IWT

    Future Research

    Accident costs

    very low accident costs

    Evaluation of accidents and related costs in all relevant EU countries

    Noise costs

    very low noise costs

    Evaluation of the noise of ships at anchor

    Congestion costs

    very low congestion costs

    Evaluation of congestion situations in ports or at bottlenecks such as locks

    Costs of habitat damage

    very low cost of habitat damage

    Evaluation of the multifunctionality (i.e., multi-use as recreational area, touristic area) of waterways

    Costs of air pollution, climate change and well-to-tank

    lower than road, similar to rail

    Identification of ships older than 2003

    Evaluation of used theoretical vs. practical values for energy consumption and its parameters (e.g., engine load factors)

     Briefly summarized, the major recommendations for further research are:

    • Measurement of energy consumption and related emissions of IWT needs to be qualitatively and quantitatively improved and brought up to the level of road transport, to ensure an accurate comparison of the related external costs with other modes of transport.

    • Other external cost categories such as noise costs, congestion costs and costs of habitat damage should also be further researched, as these categories have the potential to demonstrate some advantages of sustainable transport modes such as rail and IWT, which could play a role in the future internalization of external costs.

    Detailed information about the external cost calculation of IWT and recommended further research can be found in the study by Hofbauer and Putz.

    The entry is from 10.3390/su12145874

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