CTS research associate David Anderson presented "The Incidence of Transportation Costs in the Twin Cities Region" on March 15. Anderson, along with Gerard McCullough, CTS director and professor of applied economics, are calculating cost incidence by geographic regions and by income/vehicle ownership groups. Their goal for this stage of the study is to determine how costs vary for these groups in order to aid in policy analysis.

The broad tasks addressed in their study are calculating the full social costs of regional travel for the years 1998 and 2020, and determining who bears and who imposes these costs. Specific objectives include identifying costs that are growing rapidly or are distributed unfairly and identifying activities with large gaps between social and private costs.

Costs are divided into three categories in the study: governmental costs (those borne by governments for roads, highways, and highway patrol, for instance); internal costs such as fuel or depreciation, borne by the person who causes them; and external costs, which are those not borne by the person who causes them, such as noise and pollution. The work on cost incidence focuses on the latter two categories.

Governmental transportation costs are paid for in part with general revenue and in part with user fees. User fees also vary greatly across households. For example:

• The amount collected through fuel taxes is determined by vehicle type and by how much and how fast people drive.
• Vehicle registration fees are based on the age of the vehicle owned, and hence tend to rise with income.
• Special assessments for transportation are an important source of revenue for local governments.
• Fees paid by commercial vehicles are assumed to be costs passed on to consumers.

Heavy vehicles damage roads and bridges, imposing some maintenance costs for government. Passenger cars also impose governmental costs for services such as police and fire.

External costs depend on how, when, and where travel takes place. The same person may both impose and bear the same type of external cost, and these costs will not generally be equal. Location primarily determines who bears the external costs of air pollution and noise. Generally, the people who impose congestion bear its cost. Some external crash costs are borne by drivers and some by pedestrians and bicyclists, although it’s difficult to get good data on pedestrian and bicycle crashes in small areas, Anderson said.

People outside the region also bear certain external costs. Examples include externalities from energy use, global warming, and crop damage.

Many external costs imposed by groups of people are closely related to some combination of vehicle miles traveled (VMT) and vehicle hours traveled (VHT). VHT and VMT increase somewhat with distance from the central business districts. People who are further from these districts generally travel in areas with lower densities, however, which may reduce the costs of some types of external impacts.

Going forward, Anderson and McCullough will finish calculating and assembling cost incidence data, then will investigate transportation financing alternatives and determine the costs of two alternative transportation systems.