This chapter considers negative and positive externalities as intrinsic elements of modern economics, and especially transport economics. Experience shows that practical policies have limited ability to internalise externalities by pricing and regulation in the transport sector. Various levels of interaction can be distinguished, between the transport sector and environmental and human resources. The chapter examines the harmful effects of transport on quality of life, analyses how to consider safety and the environment as economic goods, and presents some quantitative results of calculation of the external costs of transport. It reviews some policy measures that may reduce the external costs of transport. It comments that may reduce the external costs of transport. It comments on the proposition that transport, especially road transport, generates external benefits that can be deducted from its external costs. Finally, it presents some general conclusions.
Abstract