World Resources Report - World Resources Institute

THE GOING RATE:What it Really Costs to Drive

James J. MacKenzieRoger C. DowerDonald D.T. Chen

n

W O R L D R E S O U R C E S I N S T I T U T E

June 1992

Kathleen CourrierPublications Director

Brooks ClappMarketing Manager

Hyacinth BillingsProduction Manager

James J. MacKenzie; American Public Transit AssociationCover Photos

Each World Resources Institute Report represents a timely, scientific treatment of a subject of public concern. WRI takes responsibilityfor choosing the study topics and guaranteeing its authors and researchers freedom of inquiry. It also solicits and responds tothe guidance of advisory panels and expert reviewers. Unless otherwise stated, however, all the interpretation and findings setforth in WRI publications are those of the authors.

Copyright © 1992 World Resources Institute. All rights reserved.ISBN 0-915825-77-5Library of Congress Catalog Card No. 92-61217Printed on recycled paper

CONTENTS

ACKNOWLEDGMENTS v

FOREWORD vii

I. INTRODUCTION 1

II. THE EFFECTS OF DISTORTED PRICES 5

III. MARKET COSTS AND EXTERNALITIES 7

IV. MARKET COSTS: PAYING THE BILL FOR ROADWAY CONSTRUCTION, MAINTENANCE,

HIGHWAY SERVICES, AND PARKING 9

Roadway Capital Outlays 9Roadway Maintenance 9

Highway Services 9Parking 10

V. EXTERNAL COSTS: PAYING THE BILL FOR CLEANING THE AIR, AVOIDING CLIMATE CHANGE,

ENHANCING SECURITY, REDUCING CONGESTION, AND MITIGATING ACCIDENTS 13

The Costs of Air Pollution 13

The Rising Risks of Climate Change 14Security Costs of Importing Oil 15Congestion 17Motor Vehicle Accidents 19

The Costs of Noise 20Damages from Vibration 21Land Loss 21

VI. THE ROAD FROM HERE: SUMMARY AND RECOMMENDATIONS 23

Increased Fuel Taxes 23Increased Taxes on Trucks 25Parking and Tax Reform 25

Tolls and Time-of-day Pricing of Roadways 25

Reform of Zoning and Land Use Planning 26

NOTES 29

ACKNOWLEDGMENTS

This report has benefited greatly from the gener-ous and thoughtful comments of many friends andcolleagues. From within WRI we thank Gus Speth,Alan Brewster, Walt Reid, Jessica Mathews, andRobert Repetto. Outside reviewers include KeithBartholomew, David Burwell, Mark DeLuchi, AndyHamilton, Stan Hart, John Holtzclaw, Tom Horan,Charles Komanoff, Brian Ketcham, Douglass Lee,Todd Litman, John Moore, and Donald Shoup. To allof these reviewers we owe a debt of thanks. Ultimate-ly, of course, the accuracy and recommendations ofthe report are solely the responsibility of the authors.

Our special thanks go to Kathleen Courrier forher skillful editing of the report, to Sue Terry forhelping us locate all the needed books and reports,to Hyacinth Billings for preparing the text for publi-cation, to Allyn Massey for preparation of the figures,and to Cindy Barger and Eva Vasiliades for their day-to-day support while the report was in preparation.

JJ-M.R.C.D.

D.D.T.C.

FOREWORD

Have you ever wondered why public transit ser-vice in the United States is so poor? Or why the airis unhealthy despite all the pollution control efforts?Or why traffic gets worse even though we keepbuilding more lanes and more roads? Or why we areimporting nearly half our oil, about one third of itfrom the Middle East? Or why European cars get somuch better gas mileage than American ones? Theanswer, as is often the case, lies in the economics:operating private motor vehicles in the United Statestoday is deeply subsidized, and we do it to excess.

The costs of getting around on four wheels arebecoming clear to everyone who takes an honestlook, but little work has been done to understandthe economics of it all. If drivers had to pay by themile until the whole bill were covered, sliding be-hind the wheel would lead to even more stickershock than a visit to the neighborhood car dealership.

In The Going Rate: What it Really Costs toDrive, James J. MacKenzie, senior associate in WorldResources Institute's Program in Climate, Energy,and Pollution; Roger C. Dower, director of the pro-gram; and Donald D. T. Chen, an independent en-vironmental analyst, explore the full costs of a trans-portation system dominated by private motorvehicles. The report estimates what the "polluterpays" principle and its logical extensions wouldmean for the country that pioneered the automotiverevolution and leads the world in oil imports andemissions.

MacKenzie, Dower, and Chen argue that theAmerican dream of a car—or two or three ofthem—in every garage poses real risks to our health,our energy security, and the global environment,now that Americans log 2 trillion miles behind thewheel each year. The authors calculate that the fullcosts of driving, if totted up at the gas pump, couldraise the price of gasoline by several dollars a gallon.

All told, the costs of driving that motorists andtruckers don't shoulder come to some $300 billion ayear, say the authors. An illustrative handful of de-tails suggests how much society at large is paying:

• Gas taxes and other user fees covered onlyabout 60 percent of the $33.3 billion

governments spent on building, improving,and repairing roads in 1989; the rest of themoney came from taxpayers and othersources.

• An estimated $68 billion not covered by userfees is spent each year on such services ashighway patrols, traffic management, parkingenforcement, traffic accident response teams,policework on auto accidents and thefts, androutine street maintenance.

• The costs of vehicular air pollution are hard topin down because they include such elusivedamages as illness, premature death, andreduced crop yields; but even at the low esti-mate of $ 10 billion a year, they are substan-tial—and all of them are borne by society atlarge.

• Since motorists use about half of imported oil,up to half the cost of maintaining a U.S. mili-tary presence in the Middle East—or $50 bil-lion a year—could be considered part of whatdriving costs.

• By accounting for about 25 percent of U.S.carbon dioxide emissions, driving also in-creases the risk of climate change. The rangeof possible consequences of a warmer worldis so wide and uncertain that estimating costsis impossible, but everyone will pay in somemeasure.

There are other incalculable losses too, of course,such as the 47,000 people killed in motor vehicleaccidents—about one in five while walking or ridinga bicycle—in the most recent year for which statis-tics are available.

What policy changes are needed to lower thistoll and ensure the development of a balanced trans-portation system? The authors discuss a number ofmeasures that would help, including enacting fueltaxes that would raise the cost of gasoline, levyingroad tolls based on time of day, reforming employer-paid parking, and raising charges on truckers. Theyalso make the case that long-term changes in zoninglaws will be needed to encourage greater residentialpopulation density if public transit is to become a

viable option in more places. The authors assert thatenacting such a package of changes would be farmore sensible than building more and more roads,only to see many of them fill up within days, asclogged with traffic as the old roads they weredesigned to replace. Besides saving the time now lostto stop-and-go traffic, imposing user fees on motor-ists and truckers would encourage demand for newenergy-efficient and even emissionless vehicles andfor alternative modes of transportation. The end re-sult would be more transportation options allaround—and less pollution, less wasted time, andless aggravation.

The Going Rate is the latest in the WorldResources Institute's series of reports on climate,energy, and pollution policies. The policy recom-mendations spelled out in this report extend those ofsuch previous studies as Driving Forces: Motor

Vehicle Trends and Their Implications for GlobalWarming, Energy Strategies, and TransportationPlanning; Breathing Easier-. Taking Action onClimate Change, Air Pollution, and EnergyInsecurity; and /// Winds-. Air Pollution's Toll onTrees and Crops.

Financial support for WRI's work on transporta-tion and other climate and energy issues has beenprovided by The Nathan Cummings Foundation, TheJoyce Foundation, The William Penn Foundation,Public Welfare Foundation, Inc., Rockefeller BrothersFund, W. Alton Jones Foundation, and The GeorgeGund Foundation. To all these institutions, we ex-press our deep appreciation.

James Gustave SpethPresidentWorld Resources Institute

I. INTRODUCTION

No other country in the world depends as heavi-ly on motor vehicles as the United States does. Inper capita use, no other developed country evencomes close. The average American drives or ridesabout 12,000 miles per year in cars and light trucks,almost double the distance traveled in most other in-dustrial countries.1 (See Figure 1.) Even in urbanareas, where people are the most likely to have othertransportation options, Americans use motor vehiclesfor 82 percent of their trips, compared with 48 per-cent for Germans, 47 percent for the French, 45 per-cent for the English, and 42 percent for Danes.2 In1990, there were a record 190 million motor vehi-cles registered in the United States—23 million morevehicles than licensed drivers—and no end to thegrowth in the number of vehicle miles traveled(VMT) is in sight. (See Figure 2.)

Thanks largely to motor vehicles, hyper-mobility has become almost an Americanbirthright.

Thanks largely to motor vehicles, hyper-mobilityhas become almost an American birthright. Per capitamotor vehicle use (cars, trucks, buses, etc.) has al-most tripled, from three thousand VMT per personin 1950 to over 8700 in 1990, a compound growthrate of 2.6 percent per year. (See Figure 3.) Afford-able motor vehicles and inexpensive fuel havebrought American car owners freedoms and opportu-nities that few other countries can even hope tomatch and that were scarcely imaginable just a fewdecades ago. At the same time, the expanding truckfleet has enabled industry to move goods quicklyand conveniently to markets.

Yet, a forty-year focus in U.S. transportationpolicy on motor vehicles as the answer has madeAmericans lose sight of the question. The longstand-ing commitment to personal vehicles has led to inter-state and urban highways that at least until recently

Figure 1. Per Capita Car and Light Truck Travel(1987)

United -States

France ~

Sweden -

United -Kingdom

Norway -

West -Germany

Italy -

Japan

B CarsD Rail

and Buses

I102 4 6 8 10 12

Thousands of PassengerMiles per Person

I14

have been the world's envy, to suburban develop-ments, to shopping malls, and—coming full circle—to the world's highest per capita motor-vehicle use.The quest for personal mobility may now be inter-fering with the good life instead of contributing to it.

The quest for personal mobility may nowbe interfering with the good life instead ofcontributing to it.

Billions of dollars have been spent to build,maintain, and repair our highways and roads, andbillions more are needed to keep them in good con-dition. Besides the financial burden this represents,compelling evidence reveals that our commitment to

Figure 2. Trends in Total U.S. Motor Vehicle MilesTraveled

2500 _

2000 _

§, 1500 _H

1000 _

500 _

1960 1970 1980 1990

Year

automobiles and trucks threatens our health, securi-ty, and the natural environment. Ironically, as con-gestion increases, ownership of a motor vehicle nolonger guarantees mobility and quick access to ser-vices and places beyond the neighborhood or thereach of public transportation.

In many parts of the country, rush-hour andeven weekend congestion is slowly strangling entiremetropolitan areas. Along with increased stress andtension, congestion leads to lost time, lower workerproductivity, increased air pollution, more accidents,and wasted fuel. A transportation system dominatedby vehicles also contributes to other national prob-lems—and tragedies—including 47,000 deaths andfive million injuries (the toll in 1988).3

The social, economic, and environmental costsresulting from these trends have sparked widespreadconcern over whether—and at what price—growingmotor vehicle use can be sustained. The FederalHighway Administration expects congestion to growfourfold on the nation's freeways and twofold onother roads over the next twenty years.4 Accordingto the Transportation Research Board, part of the

National Academy's National Research Council, annu-al delays in travel time will increase by 5.6 billionhours over the next two decades, wasting an addi-tional 7.3 billion gallons of fuel per year, annuallyadding 73 million tons of carbon dioxide to U.S.emissions, and increasing travelers' costs by $41 bil-lion.5 The end results of such congestion border onthe absurd: a one-way 30-mile commute on U.S.Route 1 from New Brunswick, New Jersey to Tren-ton could easily turn into a five-hour ordeal by 2005,as traffic inches along at an average speed of sixmiles per hour, slower than a trotting horse.6

The prospect of immobility is only part of theproblem. Increased driving frustrates the achieve-ment of national goals such as clean air, energy secu-rity, and protection of the environment. If motor ve-hicle use continues to grow, as expected, the

Traffic congestion is not a new problem and try-ing to build more highways to alleviate it is not anew solution. In "The Power Broker," a biographyof Robert Moses, New York's planning czar duringthe 1930s, Robert Caro describes the frustration oftrying to cut traffic by focusing on the constructionof more roads and bridges. "Watching Moses openthe Triborough Bridge to ease congestion on theQueensborough Bridge, open the Bronx-WhitestoneBridge to ease congestion on the Triborough Bridgeand then watching traffic counts on all three bridgesmount until all three were as congested as one hadbeen before, planners could hardly avoid the conclu-sion that 'traffic generation' was no longer a theorybut a proven fact: the more highways were built toalleviate congestion, the more automobiles wouldpour onto them and. . . force the building of morehighways—which would generate more traffic andbecome congested in their turn in an inexorablywidening spiral that contained the most awesome im-plications for the future of New York and of all ur-ban areas. . . Pour public investment into the im-provement of highways while doing nothing toimprove mass transit lines, and there could be onlyone outcome. . .Moses' immense new highway con-struction proposal. . . could only make congestion, al-ready intolerable, progressively worse. His pro-gram. . .was doomed to failure before it began."7

Figure 3. Average U.S. Per Capita Motor VehicleTravel

o

I

1950 1990

prospects for further reducing urban air pollutionand U.S. petroleum imports are dim. Yet, by the year2010, total fuel consumption by U.S. motor vehiclescould increase by as much as 50 percent over to-day's levels.8 Even today, with less than 5 percent ofthe world's population, the United States consumes aquarter of the world's oil, and one half of this—about 8.9 million barrels per day—is burned in mo-tor vehicles.9 With domestic oil production declin-ing, following our current transportation policies willdeepen U.S. dependence on foreign oil sources, in-creasingly from Persian Gulf producers, furtherjeopardizing national security and adding togreenhouse-gas emissions.

Growing frustration with what four decades offurious highway building has wrought emerged inthe vigorous debate surrounding the passage of the1991 surface-transportation act, a law that greatly in-creased the funds available for public transportation.Although the era of massive highway building is end-ing, the United States still spends nearly $200 millionevery day building and rebuilding the nation's streetsand roads, despite predictions that congestion anddelays will worsen.

I I . THE EFFECTS OF DISTORTED PRICES

Today's heavy use of cars and trucks in theUnited States did not just happen. Nor did it springsolely from some peculiarly American love affairwith the automobile. Rather, economic and politicalforces that partially mask the full costs of driving areat work. Motorists today do not directly pay any-thing close to the full costs of their driving deci-sions. However steep the bills for cars, insurance,automobile maintenance, and gasoline may seem todrivers, federal and state policies spare them manyother costs. The net effect of these policies is tomake driving seem cheaper than it really is and toencourage the excessive use of automobiles andtrucks.

What are the annual social costs of driving thatmotorists don't pay directly out of pocket? And whatpolicy changes are needed to better account forthem through user fees and charges? Answeringthese questions—the purpose of this report—is by nomeans a straightforward task. But following the "pol-luter pays" principle of cost allocation, as recom-mended here, would begin to shift the various costsassociated with motor vehicle use to the drivers whoimpose them.

Some analysts may object to shifting all of thecosts of motor vehicle use to drivers, arguing thatroadways provide some public benefits that wouldjustify partial public payment for, say, highway

construction and repair. But any such benefits arequite difficult to measure and, in any case, are likelyto be small compared with overall private benefits.In this report we allocate all costs directly to themotor vehicles—both public and private—that im-pose them.

From a purely economic point of view, impos-ing user charges that reflect the costs of driving willnot necessarily lead to economically optimal levels ofdriving or to the wisest investment in roads, bridges,and other driving-related facilities. (Such optimal lev-els would be determined by finding the point atwhich the marginal social costs of driving equal themarginal benefits, either in the short or long term.)Still, imposing fees on users—that is, the drivingpopulation—is consistent with theories of cost alloca-tion that call for drivers to bear the costs they im-pose. Imposing user charges that better reflect thefull costs of driving is likely to reduce levels of in-essential driving and, perhaps, increase demand fortransportation forms other than motor vehicles.

Finally, even when drivers as a group pay thecosts of driving it may be possible to charge heavierfees on those drivers who impose greater costs. Thecosts of accidents, for instance, could be pro-ratedso that highest-risk drivers would pay the most.Some policy initiatives that would accomplish such ashift are proposed at the end of the report.

III. MARKET COSTS AND EXTERNALITIES

The costs of driving can be categorized as either"market" or "external." Market costs are those thatare actually reflected in economic transactions, suchas purchasing a car, buying fuel to operate it, con-structing and repairing roads, paying for parkingspaces, or purchasing automobile insurance. Marketcosts represent the direct, ordinary, expected costsof owning and operating a motor vehicle. In con-trast, external costs (or "externalities") are notreflected directly in market transactions. These hid-den costs include those for illnesses resulting frommotor-vehicle air pollution and the economic risksfrom increased global warming and dependence onimported oil. External costs obviously must be esti-mated using techniques other than analyzing normalmarket prices. Social costs are the sum of market andexternal costs—in short, total costs.

Making motor vehicle users bear their fair shareof the total costs of driving would help curb theproblems stemming from our current transportationsystem—congestion, excessive air pollution, growinggreenhouse gas emissions, and endangered nationalsecurity, to name a few. But, for several reasons,motor vehicle users rarely face the full costs of theirdriving decisions.

Government taxing policies frequently shift someof the direct costs of driving away from drivers. Inthis way, drivers fail to bear directly a significant

fraction of road construction and repair costs, thecosts of providing highway services, and the costs ofproviding commuter parking. In the case of external-ities such as air pollution, climate-change risks, andnoise, everyone shares the costs, but those who im-pose the costs pay only a fraction. Finally, somecategories of costs paid by drivers don't bear any di-rect relation to their driving decisions or the costs ofthese decisions. For example, drivers pay some acci-dent costs in the form of medical expenses, lostwork time, or premiums for accident insurance, butaccident insurance costs are not always peggeddirectly to the amount of driving or the actual risksimposed by specific drivers.

To the extent that the price of driving—as re-flected, for example, in the prices of cars, gasoline,and road fees—does not include all of these costs,people drive more than they otherwise might andshy away from competing transportation systems—such as public transportation or bicycles—that canprovide comparable services at lower social costs.

The enormity of the problems spawned by theuse of cars and trucks in the United States demands afull accounting of these unborne social costs. With-out such information in hand, the comparative ad-vantages and drawbacks of using, say, tolls, servicecharges, or fuel taxes to incorporate these costs intodriving decisions will be hard to assess.

IV. MARKET COSTS: PAYING THE BILL FOR ROADWAY CONSTRUCTION,MAINTENANCE, HIGHWAY SERVICES, AND PARKING

The annual costs of building and maintaininghighways and roads are paid by governments at alllevels. In 1989, federal, state, and local governmentsspent roughly $33 billion constructing, improving,and rehabilitating highways, streets, and roads.10 Anadditional $20 billion was spent on maintenance,$6.4 billion on police and safety services, $5.4 bil-lion on administration, and $6.3 billion on interestand debt retirement.11

Roughly speaking, this $71 billion represents theannual costs of capital and operating investments inU.S road construction and maintenance. About 60percent ($44.3 billion) of the funds raised for high-ways (some $73.6 billion) came from federal andstate highway-user related taxes and tolls.12 The $29billion not covered by federal and local user feescame from local property taxes, general funds, andother indirect sources. Over 90 percent of these non-driver funds are raised at the state and local level.(See Table 1.)

The costs of road construction, improvement,and repair in 1989 were $33.3 billion. They werecovered by a combination of gas taxes, other userfees, and non-driver sources. Gas taxes and otheruser fees, raised directly from drivers, constitutearound 60 percent of the total sum raised, about $20billion. Other sources, mostly at the state and locallevels, paid the remaining $13 billion.

In 1989, about 265,000 miles of pavement wererated in poor condition and about 134,000 bridgeswere rated as structurally deficient.13 Damaged road-ways and bridges impose costs on drivers—vibration,noise, discomfort, and wear and tear on vehicles.These costs translate into higher motor vehicle repaircosts, time lost, and inconvenience. According toKetcham, 95 percent of all highway damages are at-tributable to heavy trucks.14 Researchers at theBrookings Institution recently reached the same con-clusion: "For all practical purposes, structural dam-age to roads is caused by trucks and buses, not bycars."15 (For perspective, there are ten times as many

tractor trailers on the roads as commercial buses.)Using adjusted data from the FHWA 1982 Cost Allo-cation Study, Ketcham estimates that a 36-ton 5-axletractor trailer causes $0.37 worth of damage forevery mile that it travels on an urban interstate. A50-ton, 4-axle truck—with an average of almost 75percent more weight per axle—causes an estimated$6 per mile worth of damage to a rural arterial high-way.16 (Road damages increase dramatically as axleloads rise: a typical single axle 13-ton truck doesover 1000 times as much structural damage as acar.17) Clearly, trucks aren't paying their fair share.Truck owners pay only 32 percent of national high-way disbursements. The extremes are in New York,where they contribute as little as 16 percent,18 andArizona, where they account for about 42 percent ofthe state's total user-fee receipts.19

Maintenance costs cover routine patching, bridgepainting, snow and ice removal, pavement marking,litter removal, and the like. Currently, user fees (suchas gasoline taxes) account for about $12 billion (60percent) of the $20 billion spent annually on roadmaintenance. The remaining $8 billion is financed atthe state and local levels by taxpayers, propertyowners, and others, not directly by drivers.

Among the many economic benefits enjoyed bymotorists are highway patrols; traffic management;parking enforcement; emergency responses to trafficaccidents by fire-fighters, paramedics, and police; in-vestigations of vehicle accidents and auto-theft; androutine street maintenance. Stanley Hart, a Californiacivil engineer, has estimated what it costs Pasadena,California to provide vehicle-related services, includ-ing motorcycle patrols, details for auto theft, parkingenforcement, accident aid, fighting garage fires, andvarious public works expenses, such as traffic androad engineering.20 Hart also estimated how much ofthese costs motor-vehicle user fees cover. For fiscal

Table 1. Summary of National HighwayReceipts and Disbursements(Billions of 1989 dollars)

Sources of Receipts

User Fees, FederalUser Fees, State/Local

User Fees, Subtotal

Other Sources, FederalOther Sources, State/Local

Other Sources, Subtotal

Total Receipts

DisbursementsConstruction and RepairMaintenanceOther

$14.1$30.2

$44.3

$ 2.4$26.9

$29.3

$73.6

$33.3$19.7$18.2

(19%)(41%)

(60%)

(3%)(37%)

(40%)

(100%)

Total $71.2

Source: "Highway Statistics, 1989" Federal HighwayAdministration, U.S. Department of Transportation,FHWA-PL-9O-OO3, Table HF-10.

year 1982-1983, auto-related expenditures forPasadena totaled $15.7 million, and drivers directlypaid only 25 percent of the total. Hart calculated thatan increase in the fuel tax of 21 cents per gallonwould be needed to cover these costs and that acomparable tax would be needed to cover similarcounty expenditures. Extrapolating these results tothe entire United States provides a crude estimate ofnational costs: the annual costs of highway servicesnot currently covered by user fees, Hart estimates,total $68 billion (1989 dollars). (See Table 2.)

Parking costs should be considered part of thenormal costs of owning and operating a motor vehi-cle. Yet, parking is supplied free to many motorists,effectively subsidizing the use of cars and trucks.The obvious example is the suburban shopping mall:customers park free. People who drive to the mallpay the parking fees only indirectly through theprices of the services and goods sold. Shoppers whowalk or take public transportation to malls are thuspaying for parking spaces they do not use, much as

Table 2. Summary of Annual Market CostsNot Borne by Drivers(Billions of .1989 dollars)

Costs Not DirectlyBorne by Drivers

Highway Construction and Repair $ 133Highway Maintenance $ 7.9Highway Services (Police, fire, etc.) $ 68Value of Free Parking $ 85

Total

Source: See text.

$174.2

consumers who pay with cash subsidize those whouse credit cards.

Most employers in the United States also providefree parking. Approximately 86 percent of the Ameri-can workforce commutes to work by car,21 and over90 percent of all commuters park for free at work.22

In all, close to 85 million Americans enjoy free park-ing space at work.

What is the dollar value of these unborne coststo commuters? Assuming a $1000 per year averagenational value for a parking space,23 the nation's 85million recipients of free parking enjoy an annualparking subsidy of about $85 billion in addition tothe other parking subsidies described earlier. (SeeTable 2.) Of course, someone pays this $85 billionannual tab for parking, but it is not part of the costof driving.

Someone pays the $85 billion annual tabfor parking, but it is not the driver.

Employers offer free parking to workers partlybecause this fringe benefit is not taxed federally. Inthe Washington, D.C. area, for instance, an employercan provide a parking space as a fringe benefit for anemployee at a cost of about $8 per day, about $2000per year, without the recipient paying any federal taxon the benefit. To provide the same employee withan extra $2000 of take-home salary, an employer

would have to spend about $4,400 per year (includ-ing federal, state, and local taxes, pension contribu-tions and other benefits). More generally, DonaldShoup and Richard Willson have estimated that thevalue of a $ 1 tax-free parking subsidy—taking intoaccount federal, state, and social security taxes—varies from $1.35 to $1.53, depending on thedriver's taxable income. It thus costs employers farless to offer "free" parking—an untaxed benefit—than the equivalent salary increase.

An extensive literature on parking practices indi-cates that free or subsidized parking for commutersmakes solo commuting almost irresistible.24 (See Fig-

ure 4.) This commuting pattern, in turn, gives rise toexcessive congestion, air pollution, security risks, ac-cidents, and the various other societal costs outlinedhere. Shoup and Willson estimate that simply endingemployer-paid parking would reduce the number ofsolo commuters between 18 and 81 percent, depend-ing on local circumstances and transportation alterna-tives, and it would cut the number of cars driven towork by 15 to 28 percent.25

Where commuter parking is provided free, partof the cost is paid by taxpayers in general through

1. As a Paid Parking Place• Employee Benefit @ $177 per month: $2000TOTAL COST TO EMPLOYER $2000

2. As a Salary Increase• Employee Take Home Pay:

—Federal Tax @ 28%—State, Local Tax @ 7%

—Social Security @ 7.5%—Pension @ 5%

Gross Salary• Other Employer Contributions

—Social Security @ 7.5%—Workman's Compensation &

Unemployment Ins. @ 3%

—Pension & Life Ins. @ 5%

$2000

1067267286

190

$3810

286

114

190

TOTAL COST TO EMPLOYER $4400

Source: "Commuter Parking Cost Study," Metropolitan

Washington Council of Governments, 1991, p. 19

Figure 4. Commuting Trends

100 _

80 _

S i Private VehicleB Public TransitD Walk/BicycleD Work at Home

I960 1965 1970 1975 1980 1985

Year

forgone tax revenues, and part is paid by employerson behalf of their employees. Of course, employeesindirectly pay some of this cost: if they weren't get-ting free parking, they would probably be gettingsome other form of compensation. Although employ-ers and even the general public may benefit fromfree or subsidized parking—employee morale orpunctuality might be better, for instance—the currentallocation system masks the true cost of commuting.

Many employees welcome free parking benefits, butothers who live near work or prefer other modes oftransport might not need or want free parking.

When parking is offered as a "take-it-or-leave-it"benefit, drivers have no incentive to change in-grained behavior. Without doubt, free parking en-courages solo driving, and far more Americans driveto work alone than would if they had to pay parkingcosts directly.

V. EXTERNAL COSTS: PAYING THE BILL FOR CLEANING THE AIR,ENHANCING SECURITY, AVOIDING CLIMATE CHANGE, REDUCING

CONGESTION, AND MITIGATING ACCIDENTS

After almost twenty-five years of efforts to re-duce pollution from motor vehicles, the U.S. car andtruck fleet is still a major source of carbon monoxideand smog. (See Figure 5.) In 1986-1988, about 112million Americans were living in areas where at leastone air quality standard was not met, in large mea-sure the consequence of car and truck emissions. Indeveloping and industrialized countries alike, air pol-lution problems are mounting, with motor vehiclesthe source of major carbon monoxide emissions andsmog problems.26 Although cars are getting cleanerwith each model year, they are also getting morenumerous and logging more miles—two trends thatoffset much of this improvement.

Although cars are getting cleaner witheach model year, they are also gettingmore numerous and logging moremiles—two trends that offset much of theimprovement.

According to a 1991 report by the NationalAcademy of Sciences (NAS), EPA has greatly under-estimated the impacts of motor vehicles on smoglevels. Emissions of smog-contributing organic com-pounds are probably two to four times greater thanEPA estimates.27 According to the NAS, the vehiclesthat EPA uses to calculate pollution emissions arecleaner than most of those on the road, correctionsfor speeding and evaporative emissions are inac-curate, the Federal Test Procedure does not accurate-ly simulate actual driving, and current inspection andmaintenance (I&M) programs are not leading to thereductions anticipated. As a result, tailpipe emissionsfrom individual new cars and trucks have been

reduced (and vehicle prices now include the cost ofpollution control devices), but the motor-vehiclefleet emits much more pollution than previouslythought—certainly too much to disregard.

Motor vehicle pollution damages human health,materials, crops, trees and other vegetation, and visi-bility. Perhaps less obviously, the production, refin-ing, transportation, and storage of oil also pollute theair and water, whether through oil spills or ground-water contamination.

Using EPA data, Mark French of the Federal Re-serve System estimates the costs of motor-vehiclegenerated ozone reflected in health effects, lost laborhours, and reduced agricultural revenues at 3.5 to 11cents per gallon with a point estimate of 6 cents (all1987 dollars).28 (These estimates exclude the costs ofacid rain, chronic health problems, carbon monoxidehealth impacts, and forest damages from low-altitudeozone—all attributable at least in part to motor vehi-cle emissions.) Updating these values to 1989 yieldsestimated damages of $9 billion per year (with arange of $5 billion to $16 billion). The CongressionalOffice of Technology Assessment estimates the eco-nomic health benefits of meeting the ozone standardat $0.5 to $4 billion per year.29 Much of this ozoneforms in an atmospheric soup of motor vehicleemissions.

Researchers at the University of California,Davis, have also estimated the damages from motor-vehicle air pollution, including illnesses and prema-ture death, reduced agricultural productivity, damageto materials, reduced visibility, and others.30 Theycalculated damages amounting to $ 10-1200 billionper year, the large range reflecting the uncertaintysurrounding the number of deaths and illnesses at-tributable to pollution and the monetary value as-signed to human health and life itself.

Great uncertainties notwithstanding, the eco-nomic costs of motor vehicle air pollution no doubtrun into billions of dollars per year. In this analysis,$10 billion, as a conservative estimate, is used. (See

Table 3-)

Figure 5. Motor Vehicle Contribution to U.S. AirPollution Emissions (1989)

70-,

6 0 -

50 _

4 0 .

3 0 -

2 0 -

1 0 -

0-*.

Motor VehiclesOther

I Nitrogen I TSPOxides

Carbon VolatileMonoxide Organic

Compounds

Source: U.S. Environmental Protection Agency

SulfurDioxide

U.S. motor vehicles are also a driving force inglobal climate change. Reducing the risks will requirechanging energy-use patterns: about half of globalgreenhouse gas emissions stem from fossil fuel com-bustion (carbon dioxide), and the United States relieson fossil fuels for nearly 90 percent of its energysupply.

Greenhouse warming occurs when a blanket ofatmospheric gases allows sunlight to penetrate to theearth, but partially traps the earth's radiated infraredheat. Over the past century, human activities haveled to the buildup in the atmosphere of carbondioxide and other gases (including methane, nitrousoxide, and ozone) that threaten to intensify this

Table 3. Annual External Costs Not Borneby Drivers ($ Billions)

Health Costs from Air Pollution $ 10

Reduction (20%) of National CO2 > >$ 27Emissions (Motor Vehicles Only)

Security CostsStrategic Petroleum Reserve $ 0.3Military Expenditures $ 25

Accidents $ 55

Noise Costs $ 9

Total

Source.- See text.

$126.3

natural warming.31 To stabilize atmospheric carbondioxide concentration, the nations of the world willhave to cut carbon dioxide emissions—the bulk ofwhich arise from fossil fuel burning—by fully 60 to80 percent.32

Given large scientific uncertainties, it is not pos-sible to accurately estimate the actual costs of thecurrent buildup of greenhouse gases. Looking for atleast an imperfect substitute for reliable estimates ofeconomic damages, some policy analysts have esti-mated the costs of reducing the threat by, for exam-ple, imposing a carbon tax or by planting trees tooffset carbon dioxide emissions.* Dale Jorgenson ofHarvard and Peter Wilcoxen of the University ofTexas have estimated that a phased-in tax on fossilfuels, reaching $60 (1990 dollars) per ton of carbonin the year 2020, would cut U.S. emissions to 80percent of the 1990 level by 2005 and would holdthem there indefinitely.33 A lower carbon-reductiontarget would obviously lead to a lower cost per ton.Stabilizing carbon dioxide emissions at 1990 levels,

* The costs of implementing such control programsmay bear little relation to the actual damages being in-curred from global climate change. For example, somehave argued that increased energy efficiency, at least inthe United States, could largely offset the buildup ofcarbon dioxide in the atmosphere at very little cost.Yet, the costs of damages so avoided could amount tohundreds of billions of dollars.

• Air Pollution—mostly carbon monoxide and smog—have reached unhealthy levels in many major U.S.cities with motor vehicles the principal source. Mo-tor vehicles are also important contributors to acidrain through their emissions of nitrogen oxides.

• Oil Imports—U.S. petroleum imports have in-creased to almost 45 percent of supply, primarily tosupport growing transportation demand. Between1973 and 1990 oil consumption declined 44 percentin buildings, 9 percent in industry, and 64 percent inpower generation. Only in transportation has oil con-sumption increased: by 21 percent over this period.Transportation (motor vehicles, planes, ships, etc.)now accounts for almost two thirds of U.S. oil con-sumption and oil imports threaten our national andeconomic security.

• Global Change—Emissions of transportation-relatedgases contribute directly or indirectly to globalwarming and ozone depletion. These gases includecarbon dioxide, CFCs, hydrocarbons, nitrogen ox-ides, and carbon monoxide.

for example, might cost as little as $17 per ton, ac-cording to the same study. * *

In the United States, motor vehicles, planes,trains, ships, and pipelines account for about 30 per-cent of all carbon dioxide emissions. In 1990, motorvehicles in the United States consumed about 133billion gallons of gasoline and diesel fuel, releasingabout 350 million tons of carbon in the process.34

(See Figure 6.) A $60-tax on a ton of carbon trans-lates into a price increase of $8.20 per barrel of oil,or about $0.20 a gallon. Such a tax would significant-ly cut the use of coal—the fossil fuel with by far thehighest carbon content—but would affect U.S. oil

* *A worldwide 20 percent cut in carbon dioxide emis-sions would be only a first step to neutralizing thethreat of global warming; it would not stabilize the con-centration of carbon dioxide in the atmosphere. As al-ready indicated, stabilizing carbon dioxide concentra-tions at today's levels would require an immediatereduction in global carbon dioxide emissions by 60 to80 percent.

and gas consumption comparatively little.35 Assuming

that motor-vehicle fuel consumption would continue

at roughly 1990 levels, a phased-in tax of $0.20 per

gallon would eventually cost motorists about $27 bil-

lion per year. (See Table 3-)

• Congestion—Traffic in major urban areas has stead-ily increased with the growth in urban sprawl lead-ing to traffic delays, stress, lost productivity, highervehicle operating costs, excess fuel use, greenhousegas emissions, and air pollution.

• Accidents—Traffic accidents lead to pain and suf-fering, higher insurance costs, damages to vehiclesand other property, extra legal, medical and emer-gency-services costs, and losses of productivity.

• Noise—In addition to causing ill health effects,

noise from highways leads to reductions in property

values.

• Land Loss—Over 2 percent of U.S. land is pavedover for roads and parking lots. The building ofroads and other transportation-related facilities hascaused the loss of wetlands, watershed regions,aquifer recharge areas, parklands, scenic areas, andhistoric and cultural areas.

Motor vehicles now account for over half ofU.S. oil consumption and more than total domesticproduction. The U.S. transportation system is almosttotally dependent on oil, ever more of it imported.This growing dependence puts the country's nationalsecurity and economic well-being at risk. While theUnited States has been a net importer of oil since1948, concern over the security implications of im-porting petroleum rose dramatically as the OPEC car-tel's power grew in the early 1970s. At the time ofthe Arab oil boycott during the 1973 Middle Eastwar, imports to the United States from the PersianGulf accounted for about 5 percent of oil supply.36

(See Figure 7.) After the 1979 Iranian revolution,Persian Gulf imports dropped, reaching a low of 3

Figure 6. Annual Carbon Dioxide Emissions FromU.S. Motor Vehicles

400 _,

o300.

200 _

100 _

1960 1970 1980 1990

Year

Source: WRI and U.S. DOT

percent of supply in 1985. With the crash in worldoil prices in the mid-1980s, U.S. oil demand roseeven as U.S. exploration and production efforts fell.The net result was yet another rise in imports fromthe Middle East to 13 percent of domestic supply in1990. This trend is likely to continue. According tothe Department of Energy, oil imports accounted for42 percent of supply in 1990 and could reach 70percent by the year 2010 and 80 percent by 2030.37

With the expected decline in non-OPEC produc-tion,38 oil-consuming nations everywhere will be-come increasingly dependent on oil from the PersianGulf.

Dependence on imported oil, particularly from apolitically unstable region, can impose several kindsof costs on U.S. society. The first is related to thepotential impacts that increasing imports could haveon the international price of oil. As the level of oilimported by the United States rises, global demandfor oil increases, and worldwide oil prices are drivenupward. This upward pressure can lead to higher oilbills for all oil-consuming nations and may increaseinflation worldwide and decrease U.S. purchasingpower globally. Over the last 15 years, various

Figure 7. Trends in U.S. Oil Supply

20 _

Quo

10 _

5_

•. T11

. I " 1

' 3 * , ; • !>

f.'.l m

1973 1977 1981Year

¥

! • ' • • ' ;

••S-J

*•**. \

• Domestic OilH Non-Arab OPECED Non-OPEC• Arab OPEC

\ 1 1 r1985

'»'. t

1 r1989

Source: WRI and U.S. DOE

analysts have estimated the economic costs of thiselement of oil import dependency at $0 to $100 perbarrel of oil. More recent theoretical and empiricalanalyses suggest that this first class of social costsmay not be as significant an economic threat as oncethought.39 In this report, the impact of U.S. demandfor oil on world prices is considered negligible ($0 asa cost element.)

The second class of social costs arises fromoverall U.S. dependence on oil and our economicvulnerability to sudden interruptions of supply. Suchcosts could include inflation, inconvenience, loss ofincome, unemployment, and productivity declines,to name a few. Because of the international nature ofoil markets, domestic economic disruptions in theUnited States can occur even if oil imports accountfor only a small fraction of total supply. The UnitedStates and other nations that rely heavily on petro-leum for transportation and lack alternative fuels forcars and trucks are especially vulnerable to disrup-tions in oil supplies. But though such costs are real,experts don't agree on their actual dollar value.

Without reliable estimates of these costs (a prob-lem with climate change too), analysts use the costsof mitigation programs as an approximation of theoverall risks. Several types of government programshave been designed wholly or partly to reduce therisks of an oil-supply disruption or the economic im-pacts should one occur. Besides the research and de-velopment of alternative motor-vehicle fuels, the fed-eral government has developed a strategic petroleumreserve (SPR) and maintains a military presence inthe Persian Gulf to ensure access to Middle Eastoil—both actions to protect the U.S. economy fromthe costs of oil supply disruptions. In all, some $28billion (1990 dollars) has been invested in the SPRsince 1976, and appropriations for facilities and oilhave been averaging about $500 million per year.Those who consume oil should bear these costs, nottaxpayers (who pick up the tab for the Departmentof Energy). Even more significant are the costs ofmaintaining a sizable military presence to protect theMiddle East region, estimated recently by EarlRavenal for the Cato Institute at $50 billion peryear.40 This sum reflects the costs of supporting theso-called Central Command (CENTCOM); it coversthe expenses of maintaining four land divisions, ninetactical air wings, and three navy aircraft-carrier bat-tle groups; it does not include the costs, estimated at

$5 billion per year, of a conventional war. Currently,the public pays these military expenditures throughgeneral tax revenues.

For several reasons, U.S. oil consumers shouldnot have to foot the entire bill for these annual mili-tary expenditures. First, protecting access to oil maynot be the only reason for keeping a military pres-ence in the Middle East. Second, even if the UnitedStates significantly reduced its own oil imports, itmight still feel a need to protect world oil supplies.All oil-importing nations, including the Europeansand the Japanese, benefit when the United Statessafeguards access to Middle Eastern oil supplies, afact not lost on the countries that pitched in to payfor the war with Iraq in 1991.

Unfortunately, determining how much of thesecosts U.S. oil consumers should rightly pay is fraughtwith difficulties. Since motor vehicles account forhalf of U.S. oil consumption, in this report we allo-cate half the entire amount—$50.5 billion (SPR andmilitary expenditures). (See Table 3-) We recognizethat this estimate may be high and further analysismay produce a more appropriate value.

Congestion is one of the most troublesome long-term problems facing transportation planners andone of the most frequently cited issues in the trans-portation planning debate. Although nearly everyoneintuitively recognizes highway congestion by the ob-vious symptoms—slow or stop-and-go traffic,crowded lanes, gridlock—a technical definition ofthe condition is surprisingly hard to pin down. TheInstitute of Transportation Engineers describes "con-gestion" as what happens when the number of vehi-cles attempting to use a roadway at a given time ex-ceeds the roadway's ability to carry the load atgenerally acceptable service levels. As conditionsmove from the various levels of service (summarizedin Table 4), a highway becomes progressively morecongested.41

In Los Angeles, congestion has already reducedaverage freeway speeds to less than 31 MPH; by theyear 2010, they are projected to fall to 11 MPH.42

According to the Federal Highway Administration(FHWA), congestion is serious and rapidly worseningelsewhere too. On interstate and other major roads,congestion caused an estimated 8 billion hours of

Table 4. Measures of Highway Traffic Flow (Design Speed of 70 mph)

Level of Service

A

Density1

12

Speed2

60

MSF3

700

V/C4

0.35

ADT5 DVMT6

B

C

D

E

F

20

30

42

67Highly

575446

30

Variable and Unstable

1100

1550

1850

2000

Conditions

0.54

0.77

0.93

1.00

13,000

15,000

17,000

18,500

11,500

13,000

15,000

17,000

Source: GAO, "Traffic Congestion: Trends, Measures, and Effects" GAO/PEMD-90-1, November 1989, p. 39

1. Measured in cars per mile per lane2. Average speed in miles per hour3. Maximum Service Flow rate, measured in cars per hour per lane4. The ratio of traffic Volume to Capacity5. Average Daily Traffic volume per lane6. Daily Vehicle Miles of Travel per mile per lane

delay in 1989, lowering productivity and raising thecosts of shipping freight by truck.43 Almost 70 per-cent of daily peak-hour travel on the urban interstatesystem occurs under near stop-and-go conditions, a30-percent increase since 198344 (See Figure 8.)

"Congestion now affects more areas, more often, forlonger periods, and with more impacts on highwayusers and the economy than at any time in the na-tion's history," according to the FHWA.45

Congestion intensifies environmental problems,increases commuting times, raises vehicle operatingcosts (wasted fuel, excess wear on brakes, tires, andthe engine, etc.), lowers worker productivity (fromstress and fatigue), boosts insurance costs by increas-ing the risk of accidents, engenders productivity loss-es, and slows the delivery of business products.Though difficult to estimate, the toll of congestionon the health and mental well-being of drivers is alsovery real. Congestion is believed to increase bloodpressure, frustration, and aggressive driving habits,even as it saps drivers' patience.46

Environmental and air pollution impacts onlyadd to this catalog of risks and ills. Greater smog,higher acid rain levels, and growing greenhouse gasemissions are among the most menacing. Considerjust the extra carbon dioxide emissions. According toDepartment of Transportation estimates, congestion

caused the waste of 3 billion gallons of gasoline in1984—3 percent of total national gasoline consump-tion. This waste resulted in the needless release of anextra 30 million tons of carbon dioxide in 1984.(The climate costs from these releases are included inthe earlier cost estimates of global climate change.)By 2005, over 7 billion gallons are projected to bewasted as a result of growing highway congestion—70 million tons of carbon dioxide needlessly releasedinto the atmosphere.

Estimates of the economic costs of congestionvary, and none has been comprehensive. Most havefocused on such easily quantified values as lost time,wasted fuel, and increased insurance premiums dueto accidents, and most exclude such costs as vehiclewear due to constant braking, driver stress, andother comparatively elusive damages. One widelycited report by the Texas Transportation Institute(TTI) found that congestion costs (from delay, extrafuel consumption, and higher insurance premiums)on major freeways and arterial roads in just 39 of thenation's largest metropolitan areas totaled over $41billion in 1987.47 Of this amount, $28.6 billion wasfor lost time, $4.3 billion for wasted fuel, and $8.1billion for higher insurance premiums. The GeneralAccounting Office cites estimates of national pro-ductivity losses from congestion of $100 billion

Figure 8. Travel Congestion on Urban Interstates

80 _

"2 6 0 .

iges

ICon

1£ 40 _n

Per

cent

to o

0

54

41

61-

68

1975

Source: Federal Highway Administration

1978 1981Year

1983 1985 1987 1988

annually,48 and cites estimates of truck-delay costsfrom congestion of $24 to $40 billion per year.49

The total market costs of congestion on thenation's roadways total at least $100 bil-lion per year.

Counting only productivity losses, excess fueluse, and higher insurance premiums, the total marketcosts of congestion on the nation's roadways total atleast $100 billion per year. Drivers on congestedroads bear this burden. (Externalities related to con-gestion—air pollution, global warming, noise, and soforth—are covered elsewhere in this report.)

In 1988, 14.8 million accidents involving motorvehicles led to 47,000 deaths and almost 5 million in-juries.50 Most of the costs of these accidents were

borne directly by drivers. Approximately 17 percentof these motor-vehicle deaths, however, were amongpedestrians and bicyclists.51 Although cyclists andwalkers both use streets and roads, neither groupcontributes much to the overall costs of roadway con-struction or maintenance. In this analysis, they are notconsidered roadway users, and a fraction of the totalcosts of accidents is allocated to them as non-drivers,at least in such categories as pain and suffering.

According to a recent study completed by theUrban Institute for the Federal Highway Administra-tion, the total social costs resulting from motor-vehicle accidents amounted to $358 billion in1988.52 (See Table 5.) By far the largest cost categorywas pain, suffering, and lost quality of life—a total of$228 billion, estimated on the basis of the willing-ness of accident victims to pay to reduce the risks ofsuch effects. The remaining $130 billion in losseswas spread over productivity losses, property dam-age, medical expenses, legal and court costs, admin-istrative costs, workplace costs, travel delay, andemergency services.

Who pays these costs? Some are borne by gov-ernments, some by insurance companies, some by

m

Table 5. Costs of Motor Vehicle Accidents(Billions of 1988 dollars)

Wages & Household Prod.Property DamageMedicalLegalAdministrativeWorkplace CostsTravel DelayEmergency ServicesPain, Suffering, and Lost

Quality of Life

Total

58.138.312.67.97.82.42.00.9

228.5

Portion NotDirectly Borne

by Drivers

13.10.02.70.00.00.40.0NA

39

Total $358.5 $55.2

Source: "The Costs of Highway Crashes," preparedfor the Federal Highway Administration by the UrbanInstitute. Pub. No. FHWA-RD-91-055, June 1991

NA: These costs are covered elsewhere.

businesses, and some by accident victims and theirfamilies.

• Productivity losses amounted to $58.1 billionand included lost earnings from injury or death andlower productivity at home (when, for instance, thecar is being repaired). Drivers paid most of thisamount: roughly $23.8 billion was covered by insur-ance policies, mostly through auto insurance paid forby drivers; about $25.4 billion was borne primarilyby those involved in the accidents. Federal and stategovernments picked up the remaining $8.8 billion.By our estimates, the total productivity losses notborne by drivers amounted to the $8.8 billion paidby federal and state governments and $4.3 billion (17percent of the costs of all accidents) borne by pedes-trians and bicyclists, for a total of $13.1 billion.

• Property damages in 1988 amounted to $38.3billion. Of this sum, $24.9 billion was covered byauto insurance (and therefore by drivers) and $13.4billion by those in the accidents, also drivers. If it isassumed that pedestrians' and cyclists' property loss-es are negligible, then all property damage costs arebeing borne by drivers.

• Medical expenses totaled $12.6 billion in1988. Auto insurance paid by motor vehicle driverscovered roughly $2.2 billion of these costs. Another$6.5 billion came from health insurance and workerscompensation. (Here again, we assume that 17 per-cent of these costs were paid by the policies ofpedestrians and bikers.) State and federal govern-ments and other sources (including charity care byhospitals) accounted for $1.1 billion; costs bornedirectly by those involved with the accidents, about$2 billion; and other sources paid the remaining $0.8billion. Thus, the medical bill not directly borne bydrivers totaled about $2.7 billion.

• Legal, court, and administrative costs ($15.7billion) were essentially all covered by auto insur-ance, so drivers paid them.

• Workplace costs included lost time fromworkers talking about accidents or caring for victims,as well as recruitment and training costs to replaceinjured workers. Such costs amounted to $2.4 bil-lion, of which 17 percent ($0.41 billion) are assumednot to have been borne by drivers.

• Travel delays from accidents are estimated at$2 billion per year. Motor-vehicle drivers pay thesecosts.

• Emergency services for accidents ($0.9 billion)are covered entirely by governments. (To avoid dou-ble counting with earlier cost estimates made underthe highway services category, these costs are ex-cluded here.)

• The costs of pain, suffering, and lost quality oflife ($228 billion) fall almost entirely to accident vic-tims and their families. Again, the assumption here isthat 17 percent, or $39 billion, was borne by pedes-trians and cyclists. The total cost of accidents notborne by drivers comes to approximately $55 bil-lion. (See Table 3.)

THE COSTS OF NOISE

Noise is often overlooked as a side effect of mo-tor vehicle use, even though it bothers people livingor working near roads and highways and causesstress and fatigue. Often, noise barriers—the costs ofwhich are accounted for in highway-constructionbudgets—are erected between roads and homes orbusinesses. But roads can't be totally soundproofed—witness property value losses near roads throughoutthe country. By one estimate, even after mitigation,

traffic noise was reducing home property values by$6 to $182 per decibel.53 By another, that of DouglassLee of the DOT, the average cost of noise pollutionto housing units is $21 (1981 dollars) per housing unitper year for each excess decibel of noise.54

University of Iowa researcher Barry Hokansondeveloped noise cost factors for both cars and truckson urban highways.55 Using updated values for thesefactors and 1989 figures for total vehicle-miles-traveled (VMT) in urban areas, in this report we haveestimated noise damages to property in urban areasfrom cars and trucks at about $9 billion (1989 dollars)per year. Trucks cause about 85 percent of this dam-age. Researcher Brian Ketcham obtains essentially thesame result, ascribing almost two thirds of the roaddamages to heavy trucks.56 (See Table 3-) Motor-vehicle users are not directly footing these costs.

Like noise, vibration in homes and businessesalong highway rights-of-way and the damages itcauses are rarely acknowledged as a side effect ofmotor vehicle driving. Yet, when heavy vehicles hitpotholes, they can shake and damage nearby build-ings (as well as underground pipes), the repair costsof which fall upon the building owner or, in the caseof large mains, municipalities or utilities. For thepeople who live in such buildings, vibrations canalso cause stress and fatigue.

Not much statistical information on vibrationcosts due to motor vehicles has been published. ButKetcham has made a very rough estimate. Assumingthe cost of vibration damage to be one half of thestructural maintenance costs for buildings in urbanareas, he calculates the national loss in property val-ue (mostly along local streets) due to vibration to beabout $6.6 billion for 1989. By his reckoning, heavyvehicles are responsible for most of this damage.57

(Since no data are available by which to judge thisestimate, we do not include it in our tabulation ofcosts.)

tAND LOSS

Not all land used for roads has a highly valuablealternative use, but construction of highways, inter-changes, and other transportation facilities hascaused the loss of wetlands, watershed regions,aquifer recharge areas, parklands, scenic areas, andhistoric and cultural areas. By some estimates, nearlyhalf the land in a typical American city is used to ac-commodate motor vehicles.58 More than 60,000square miles of U.S. land is paved over—2 percent oftotal surface area and the equivalent of 10 percent ofall arable land.59 The costs of land loss are partiallyreflected in the costs of land bought for roads,though the true social costs would also include thefull environmental or historical values, which havenot been estimated.

VI. THE ROAD FROM HERE: SUMMARY AND RECOMMENDATIONS

Although exact calculations are subject to anynumber of qualifications and uncertainties, U.S. mo-tor vehicles almost certainly impose very large annu-al costs on the country, many of which drivers donot shoulder. Costs hidden until now include bothmarket costs (those reflected in prices paid forspecific services) and externalities (those that fall out-side of normal market transactions). Summarized inTable 2, estimates of market costs not paid bydrivers (including road construction and repair, high-way services, and parking) amount to about $170 bil-lion per year. Summarized in Table 3, the externalcosts—those stemming from pollution, climate risks,a military presence in the Middle East, oil storagecosts, accidents, and noise—come to about $126 bil-lion per year. Together, the market and externalcosts of motor vehicle use that are not reflecteddirectly in user charges to drivers amount to almost$300 billion per year, more than 5 percent of thecountry's Gross Domestic Product. Clearly, howthese costs are paid will influence how much we usemotor vehicles and, in turn, what social, environ-mental, and security problems stem from vehicleuse.

Together, the market and external costs ofmotor vehicle use that are not reflecteddirectly in user charges to drivers amountto almost $300 billion per year, more than5 percent of the country's Gross DomesticProduct.

It's only fair that those who enjoy the benefitsof motor vehicle use should pay for the costs of thatuse directly. But there is no single best mechanismfor charging all the now-hidden costs of driving tousers of motor vehicles. Ideally, the price would bepaid as close to the place and time where the cost isincurred as possible. In practice, this pay-as-you-go

approach is not always technically or economicallyfeasible. As an alternative, some of these costs (thoserelated to fuel consumption or miles driven by a car)might most easily be included in existing federal andstate gasoline taxes. Others might be more reason-ably and usefully incorporated into user fees or in-surance premiums.

Some pricing options, however theoretical-ly attractive, may simply be too expensiveor difficult to implement.

Such user charges could be further refined, con-sidering that not all users of roads cause the sameamount of damage to the transportation infrastruc-ture, health, buildings, or the environment. If the"polluter pays" principle applied to environmentalproblems is invoked, the heaviest users or worstoffenders should bear the greatest burden. In thecase of road repair, for instance, trucks should pay ahigher charge than other motor vehicles, one basedon axle weight and distance traveled. Of course, asnoted earlier, the costs of assessing charges or feesto cover the costs of driving cannot be ignored:some pricing options, however theoretically attrac-tive, may simply be too expensive or difficult toimplement.

No attempt is made here to evaluate in detail allthe possible policy options for establishing usercharges that reflect the cost burdens of driving. Butthe measures highlighted below illustrate the rangeof potential policy responses.

Many of the general costs identified in thisreport—those stemming from air and water pollu-tion, global warming, security risks, and accidents—are associated with gasoline and diesel fuel consump-tion. Some could be shifted to drivers by increasing

fuel taxes because total fuel-tax revenues increasedirectly with fuel consumption and thus at least par-tially reflect the risks associated with fossil fuel com-bustion in motor vehicles. A large fraction of othercosts—including those of providing vehicle-relatedemergency police, fire, and medical services, and thecosts of highway construction not now covered byuser fees—could also be covered by fuel taxes, eventhough the rationale is weaker for paying these costsat the pump.

Even with a $2 per-gallon rise in the priceof fuel—increased gradually over a dec-ade to soften the blow—U.S. gasolineprices would still be below those of manyother industrial nations.

Figure 9. Comparison of Gasoline Prices (1990)

The costs of automobile insurance could also bepartially paid at the pump through an insurancepremium levied on gasoline. The money collectedwould be placed in an insurance fund that would beused to help cover the costs of accidents. Proposalsalong these lines have been made in California. Theyhave two clear advantages: they provide more com-plete accident coverage (reducing the problemsposed by uninsured motorists), and they more close-ly reflect the actual risks that specific drivers facesince motorists who drive more would pay higherpremiums. If all of these fuel-related costs were ad-ded to the price of gasoline, fuel taxes would haveto be increased over present levels by well over $2per gallon. However, even with such a steep rise inthe price of fuel—increased gradually over a decadeto soften the blow—U.S. gasoline prices would stillbe below those of many other industrial nations. (SeeFigure 9.)

A common objection to higher fuel taxes is thatthey hurt low-income families, who spend propor-tionately more of their income on energy. But newanalyses suggest that, for gasoline at least, the biggesttax burden won't fall on the poor.60 MIT economistJames Poterba argues that while the poor do spend alarge fraction of their income on gasoline, overallhousehold expenditures are a better index than

United -States

UK -

Germany -

Japan "

Netherlands -

France ~

Norway ~

Sweden ~

Italy ~

2 3 4Dollars per Gallon

Source: International Energy Agency

income for measuring the regressiveness of highergasoline taxes. According to Poterba, such benefits asfood stamps, medicaid, and other programs give low-income families more purchasing muscle than theirtotal income would suggest. If this hidden power istaken into account, he found, the poorest 10 percentof households spend less than 4 percent of their totaloutlays on gasoline—less than any other incomebracket except for the very wealthy. "For the poorin inner cities who use public transportation," Poter-ba says, "a tax increase will yield higher incomewith little offsetting change in the cost of living."61

The greatest burden falls on middle-income house-holds. For this group, according to Poterba, between4 and 6 percent of all household spending goes forgasoline.

Even so, it wouldn't be hard (administrativelyanyway) to take the sting out of higher gasoline taxes.For low- and middle-income families, income taxescould be cut to offset the burden. For those so poorthat they pay no taxes, a refund could offset anylosses. For retirees, social security benefits could be

increased to make up the difference. On balance, theoverall change in taxes could be made progressiveand still nudge consumers to reduce their fuelconsumption.

For low- and middle-income families, in-come taxes could be cut to offset the bur-den of higher gasoline taxes. For those sopoor that they pay no taxes, a refundcould offset any losses. For retirees, socialsecurity benefits could be increased tomake up the difference.

Since heavy trucks cause most of the damages toour roadways, they are responsible for the damagesthat cars and other vehicles suffer on deterioratingroads. The best way to cover these costs would beto impose an annual charge on trucks that wouldvary according to a vehicle's weight-per-axle and an-nual mileage—better indicators than fuel consump-tion of a vehicle's potential to destroy a road'ssurface.

The land-use and environmental problemscaused by subsidies for commuter parking can be ad-dressed through a variety of policies.62 One wouldbe to require employers who offer free parking togive all employees the option of taking a tax-freetravel allowance of equal market value. A variant ofthis option would be to put a ceiling on the tax-freeportion of the subsidy. Any such move should gohand in hand with the development of other policiesaffecting commuting, such as vanpooling incentives,free parking for bicycles, preferential parking for car-pools, providing rides to public-transit nodes, guar-anteed rides home to workers when emergenciesarise, and so forth. At shopping malls, a more equit-able way to supply parking would be to chargeshoppers who drive for parking instead of hiding thecost in the prices of goods sold.

Governments at various levels have long at-tempted to accommodate growth in motor vehicleuse by building more roads instead of addressing theeconomic forces behind traffic growth and conges-tion. Gradually, highway construction replaced mo-bility as the paramount goal. The drive to build moreroads may once have been appropriate, but todaysuch a strategy is destined to fail: ample evidenceshows that every time a roadway is built or widened,more drivers appear and the new or expanded roadssoon become as congested as the old ones.63

Congestion on major urban roads takes a sub-stantial economic and environmental toll on allAmericans. Even if drivers bear most of these costsalready, introducing congestion pricing would makedrivers squarely face the costs they impose on othersby driving when traffic is heavy. It would encouragethem to reschedule or reroute trips, try alternativemodes of travel, or carpool.

Introducing congestion pricing would en-courage drivers to reschedule or reroutetrips, try alternative modes of travel, orcarpool.

The technology for rapidly scanning vehicles forbilling purposes already exists. Electronic numberplates have been successfully tested in Hong Kong.64

Sensors in the road read each vehicle's code as itpasses over the toll site and a monthly bill listing thecharges is sent to each driver. Electronic licenseplate systems are already in use on the North DallasTollway and on the Coronado Bridge in San Diego.An alternative proposal would use prepaid "smartcards," available at gas stations, from which tollswould be deducted as the car crosses a meteringpoint. Similar electronic billing technology is beingtested on Interstate 190 near Buffalo, New York: adevice reads special windshield tags and automatical-ly deducts the toll from the driver's prepaid account.

According to a new World Resources Institutestudy recently summarized in Congressional testimony,

if congestion tolls were set just to reflect the costs oftraffic delay, they would range (according to localconditions) from $0.25 to 11.25 for a typical ten-mileurban trip.65 Time-of-day tolls represent an importantstep toward easing congestion and reducing suchassociated economic and environmental costs aswasted fuel, excessive air pollution, and carbon diox-ide emissions.

Congestion can, of course, also be mitigated di-rectly through various technological and traffic-man-agement programs financed through user fees. TheInstitute of Transportation Engineers has evaluatedmany options for reducing congestion—HOV lanes,improved traffic signals, motorist information sys-tems, reversible traffic lanes, ramp metering, parkingmanagement programs, and many others—on thebasis of overall effectiveness, cost, and barriers toimplementation.66 No single solution, the authorsfound, is most effective against congestion problemsin every region. Rather, each area of the country hasto be evaluated separately and an integrated programdeveloped to fit local conditions and satisfy localneeds.

Unfortunately, no combination of technologicalfixes can prevent congestion permanently. As noted,adding or widening roads merely invites more motorvehicle use—a strategy that contains the seeds of itsown failure. Another technological chimera is ex-panding infrastructure to increase average travelspeeds to conserve fuel. Australian researchers PeterNewman and Jeffrey Kenworthy have shown that al-though energy use and emissions are both lowest attravel speeds of 45 mph, free-flowing uncongestedtraffic actually encourages more driving within a re-gion or city, resulting in more aggregate emissionsand energy consumption.67 So-called smart highwaysmay reduce congestion for a while, but over thelong term they too will probably just attract moretraffic by improving driving conditions.

Over the longer term, technological fixes anduser charges alone are unlikely to break up growingurban congestion. For that, a more efficient transpor-tation system based on changes in land use and de-velopment patterns is needed. According to JohnHoltzclaw, a California planner and engineer, a

doubling of residential population density is associatedwith a 25- to 30-percent reduction in the number ofmiles people need to travel by car.68 European citiesare living proof that a high standard of living is com-patible with a reduced need for cars and that the keyto both is fairly high residential densities combinedwith mixed zoning and integrated public transporta-tion planning. Public transportation will never beviable in the United States if the ideal remains threeor four dwellings per acre. Densities above 7 hous-ing units per acre are needed for cost-effective busservice while densities of over 9 housing units peracre are needed for cost-effective light-rail service.69

Similarly, by changing zoning to allow mixedresidential and commercial development, the numberof daily auto trips per household could be cut up to25 percent.70 The need for auto trips can also bereduced by rearranging our cities so they supportnot only public transit but bicycling and walking aswell.

European cities are living proof that ahigh standard of living is compatible witha reduced need for cars and that the keyto both is fairly high residential densitiescombined with mixed zoning and in-tegrated public transportation planning.

The development of a balanced transportationsystem is likely to require a number of policy re-forms, including gradually increased fuel taxes;changes in federal funding formulas to favor—or atleast not to disadvantage—public transportation; thewider introduction of road tolls and other forms ofhighway pricing; technological fixes to reduce con-gestion; changes in tax policies that now encouragesolo commuting; and the adoption of land-use andzoning reforms to encourage the denser urban de-velopment that is more compatible with walking, bi-cycling, and public transportation.

A few of these reforms were adopted in thenewly enacted Intermodal Surface Transportation Ef-ficiency Act of 1991. This landmark law authorized$151 billion for highway and public transit over the

following six years. Of this, $32 billion was specifi-cally earmarked for mass transit—twice the previousannual spending and twice the amount recommendedby President Bush. And—except for the completionof a small portion of the interstate system—for thefirst time, the same ratio of federal to local fundingwill apply to both highway and transit projects,removing the previous bias toward building roads.The Act broke new ground, giving states and localgovernments more leeway in how they spend federalfunds. For example, states may transfer up to half oftheir National Highway System funds ($21 billion) tomass transit or other transportation projects. (Statesthat aren't meeting federal clean air standards—in

1989, some 39 states—may shift all of their NHSfunds to other projects.)

Yet, the new transportation bill fails to addressthe basic issues of making drivers pay the full costsof motor vehicle use—a key to developing a moreefficient transportation future. The Administrationand Congress have ignored the need to adopt higherfuel taxes and offset parking subsidies, for instance,and have neglected the potentially powerful rolesthat toll roads and road pricing could play in alleviat-ing congestion. Without such reforms, the motiva-tion needed to change driving and travel habits sothat people will switch to more efficient transporta-tion modes just isn't there.

James J. MacKenzie is a Senior Associate in WRI's Climate, Energy, and Pollution Program. Roger C. Doweris Director of WRI's Climate, Energy, and Pollution Program. Donald D. T. Chen holds a master's degree inEnvironmental Studies from the Yale School of Forestry and Environmental Studies.

NOTES

1. The data for this chart come from "Energy Usein Passenger Transport in OECD Countries:Changes Between 1970 and 1987," Lee Schipperet al., Lawrence Berkeley Laboratory, LBL-29830.

2. John Pucher, "Urban Travel Behavior as the Out-come of Public Policy: The Example of Modal-Split in Western Europe and North America,"APA Journal, Autumn 1988, p. 510.

3. "The Costs of Highway Crashes," prepared bythe Urban Institute for the U.S. Federal HighwayAdministration, Pub. No. FHWA-RD-91-055,Technical Summary, June 1991.

4. "Managing Mobility: A New Generation of Na-tional Policies for the 21st Century," Report ofthe American Public Transit Association Transit2000 Task Force, p. 7.

5. Managing Mobility, Transit 2000, p. 7.6. Testimony by Harvey Gantt, American Institute

of Architects, before the U.S. House of Represen-tatives Subcommittee on Energy and Environ-ment of the Committee on Interior and InsularAffairs, June 27, 1991.

7. Quoted from "The Costs of Unplanned UrbanSprawl," by Jessica T. Mathews, The Washington

Pox?, January 14, 1991.

8. James J. MacKenzie and Michael P. Walsh, "Driv-

ing Forces: Motor Vehicle Trends and their Im-

plications for Global Warming, Energy Strate-

gies, and Transportation Planning, " WorldResources Institute, December 1990.

9. United States oil consumption as a fraction of worldconsumption from "International Energy Annual,1990," Energy Information Administration, Depart-ment of Energy, DOE/EIA-0219 (90), January, 1992.Fraction of U.S. oil consumed in motor vehiclesfrom "Annual Energy Review, 1990," Energy In-formation Administration, Department of Energy,DOE/EIA-0384 (90) May 1991, Tables 23 and 51.

10. "Highway Statistics, 1989" Federal Highway Ad-ministration, U.S. Department of Transportation,FHWA-PL-90-003, p. 39.

11. "Highway Statistics, 1989" Federal Highway Ad-ministration, U.S. Department of Transportation,FHWA-PL-90-003, Table HF-10, p. 39.

12. "Highway Statistics, 1989" Federal Highway Ad-ministration, U.S. Department of Transportation,FHWA-PL-90-003, Table HF-10, p. 39.

13- "The Status of the Nation's Highways andBridges: Conditions and Performance," Commit-tee Print, Committee on Public Works and Trans-portation, U.S. Government Printing Office, Sep-tember 1991.

14. "Making Transportation Choices Based on RealCosts," October 6, 1991 (Revised), paper byBrian Ketcham at the Transportation 2000 Con-ference "Making Transportation a National Priori-ty," Snowmass Colorado, p. 9.

15. Small, Kenneth, et al., Road Work, a New High-

way Pricing and Investment Policy, 1989, TheBrookings Institution, Washington, D.C., p. 11.

16. "Hidden Costs," 1991, draft report by Konheimand Ketcham, Inc., Brooklyn, New York, pp. 9-10.

17. Small, Kenneth, et al., Road Work, a New High-

way Pricing and Investment Policy, 1989, TheBrookings Institution, p. 11.

18. In 1989, state and federal user fees on trucksamounted to $22.7 billion, 47 percent of totalmotor vehicle user fees, but only 32 percent oftotal highway disbursements ($71 billion).Source: "Facts and Figures, "91" Motor VehicleManufacturers Association of the United States,pp. 80 and 82.

19- "Understanding the Highway Finance Evolution/Revolution," American Association of State High-way and Transportation Officials (AASHTO), Jan.1987, p. 9.

20. Stanley Hart, "Huge City Subsidies for Autos,Trucks," California Transit, September 1986.

21. A.E. Pisarski (1987), Commuting in America, EnoFoundation for Transportation, Inc., p. 48.

22. Shoup and Willson (1990), "Employer-Paid Park-ing: The Influence of Parking Prices on TravelDemand," Proceedings of the Commuter ParkingSymposium, Seattle, Washington, p. 10.

23. Association for Commuter Transportation and theMunicipality of Metropolitan Seattle, "Proceed-ings of the Commuter Parking Symposium,"Seattle, Washington, December 6-7, 1990, p. v.

24. See, for example, "Proceedings of the CommuterParking Symposium," sponsored by the Associa-tion for Commuter Transportation and the Mu-nicipality of Metropolitan Seattle, December 1990.

25. Donald C. Shoup and Richard W. Willson, "Em-ployer-Paid Parking: The Problem and ProposedSolutions," DRAFT, July 1991.

26. "World Resources, 1990-91," World ResourcesInstitute, Washington, D.C., 1990, Chapter 12.

27. "Rethinking the Ozone Problem in Urban andRegional Air Pollution," National Research Coun-cil, National Academy Press, Washington, D.C.1991, page 7.

28. "Efficiency and Equity of a Gasoline Tax In-crease," Mark French, Paper #33, Finance andEconomics Discussion Series, Federal ReserveBoard, Washington, D.C. July 1988.

29. "Catching Our Breath, Next Steps for ReducingUrban Ozone," Office of Technology Assess-ment, OTA-O-4l3,July 1989.

30. "Transportation Energy Futures," Daniel Sperlingand Mark A. DeLuchi, Annu. Rev. Energy, 1989.14:375-424.

31. Intergovernmental Panel on Climate Change,1990, "Climate Change, The IPCC ScientificAssessment," Cambridge University Press, NewYork.

32. Intergovernmental Panel on Climate Change,1990, "Climate Change, The IPCC ScientificAssessment," Cambridge University Press, NewYork. p. 5.

33. "Reducing U.S. Carbon Dioxide Emissions: theCost of Different Goals," Dale W. Jorgenson andPeter J. Wilcoxen, CSIA Discussion Paper 91-9,Kennedy School of Government, Harvard Univer-sity, October, 1991.

34. Fuel use in U.S. motor vehicles in 1990 wasabout 133 billion gallons. A gallon of oil has acarbon content of about 5.3 pounds.

35. Personal communication with Peter J. Wilcoxenby James MacKenzie, December 6, 1991.

36. "Monthly Energy Review," US DOE, July 1991,p. 13.

37. "National Energy Strategy, Technical Annex 2,"U.S. DOE, 1991/1992 Edition, page 11.

38. "Slide Seen for Non-OPEC Oil Production," Oil

& Gas Journal, April 29, 1991, pp. 75-76.39. An overview of these issues and additional refer-

ences can be found in: Toman, M.A., The

Economics of Energy Security: Theory, Evidence,

Policy, Resources for the Future: Washington,D.C. 1991.

40. "Designing Defense For a New World Order,"Earl C. Ravenal, The Cato Institute, Washington,D.C, 1991, p. 46.

41. For an excellent summary of various ways ofmeasuring congestion see pages 35 through 49 ofthe GAO report "Traffic Congestion: Trends,Measures, and Effects," GAO/PEMD-90-1, Novem-ber 1989.

42. "Transportation and Land Use, Bridging theGap," Developments, the Newsletter of the Na-tional Growth Management Leadership Project,Spring-Summer 1990, p. 2.

43. U.S. Federal Highway Administration, "The 1991Status of the Nation's Highways and Bridges: Con-ditions, Performance, and Capital Investment Re-quirements," July 2, 1991, page 5. The 8 billionhours is the difference between congestion at Dand F levels of service, and is based on FHWAmodels of travel speed decline for given vehicledensities and travel conditions (phone interviewwith Harry Caldwell of the FHWA, Aug. 12, 1991).

44. Committee Print, Committee on Public Worksand Transportation, "The Status of the Nation'sHighways and Bridges: Conditions and Perform-ance," September, 1991, page 21.

45. U.S. Federal Highway Administration, "The 1991Status of the Nation's Highways and Bridges:Conditions, Performance, and Capital InvestmentRequirements," July 2, 1991, page 24.

46. California psychologist Raymond Novaco, asquoted in Time, September 12, 1988, p. 55.

47. "Roadway Congestion in Major Urbanized Areas1982-1987," Texas Transportation Institute incooperation with the U.S. Federal Highway Ad-ministration, 1989.

48. Robert L. French, as quoted by the GAO, "SmartHighways: An Assessment of Their Potential toImprove Travel," May 1991, GAO/PEMD-91-18,p. 10.

49. "Traffic Congestion, Trends, Measures, andEffects," General Accounting Office, GAO/PEMD-90-1, pp. 63-64.

50. "The Costs of Highway Crashes," prepared bythe Urban Institute for the U.S. Federal HighwayAdministration, Pub. No. FHWA-RD-91-055,Technical Summary, June 1991-

51. "Accident Facts, 1990 Edition," National SafetyCouncil, Chicago, Illinois.

52. "The Costs of Highway Crashes," prepared bythe Urban Institute for the U.S. Federal HighwayAdministration, Pub. No. FHWA-RD-91-055,Technical Summary, June 1991.

53- Gary Allen, "Highway Noise, Noise Mitigationand Residential Property Values," Journal of

TRR #812, pp. 21-26, 1981.

54. Douglass Lee, "Efficient Highway User Charges,"Appendix E, p. E50.

55. Hokanson, Barry, et al., "Measures of NoiseDamage Costs Attributable to Motor VehicleTravel," Technical Report 135, Iowa City. Insti-tute of Urban and Regional Research, Universityof Iowa, December 1981, as cited in DouglassLee, "Efficient Highway User Charges," Appen-dix E, p. E49, Table 11.

56. "Making Transportation Choices Based on RealCosts," October 6, 1991 (Revised), paper byBrian Ketcham at the Transportation 2000 Con-ference "Making Transportation a National Priori-ty," Snowmass, Colorado, p. 8.

57. "Making Transportation Choices Based on RealCosts," October 6, 1991 (Revised), paper byBrian Ketcham at the Transportation 2000 Con-ference "Making Transportation a National Priori-ty," Snowmass, Colorado, p. 9.

58. Kirkpatrick Sale, Human Scale (New York: Cow-ard, MacCann, & Geoghegan, 1980), as cited inMichael Renner, Rethinking the Role of the Auto-mobile," WorldWatch Paper 84, June 1988, p.46.

59. "Policy Implications of Greenhouse Warming,"Report of the Mitigation Panel, Policy Implica-tions of Greenhouse Warming, National AcademyPress, 1991, Prepublication Manuscript.

60. "Is the Gasoline Tax Regressive?" James M.

Poterba, Tax Policy and the Economy, 5, 1991.See also "A Gas Tax Hike Might Not Clobber thePoor. . . " Business Week, April 8, 1991, p. 16.

61. "A Gas Tax Hike Might Not Clobber thePoor. . . " Business Week, April 8, 1991, p. 16.

62. See, for example, "Proceedings of the CommuterParking Symposium," sponsored by the Associa-tion for Commuter Transportation and theMunicipality of Metropolitan Seattle, Dec. 6-7,1990.

63. Institute of Transportation Engineers, 1989, "AToolbox for Alleviating Traffic Congestion,"Washington, D.C., p. 11.

64. For a more complete discussion of toll meteringsee "An Analysis of Tolls to Reduce Congestionon Urban Highways in the United States," WorldResources Institute, DRAFT, 1992, J. Geogheganand R. Repetto.

65. Roger C. Dower and Robert Repetto, Testimonybefore the Committee on Ways and Means, U.S.House of Representatives, February 6, 1992.

66. Institute of Transportation Engineers, 1989, "AToolbox for Alleviating Traffic Congestion,"Washington, D.C.

67. P.W.G. Newman, J.R. Kenworthy and T.J. Lyons,"Does Free-flowing Traffic Save Energy and Low-er Emissions in Cities?" 1988, pp. 267-271, Jour-

nal ANZASS.

68. John Holtzclaw, "Automobiles and Their Alterna-tives: An Agenda for the 1990s," 1991, Proceed-ings of a Conference sponsored by the Conserva-tion Law Foundation of New England and theEnergy Foundation, p. 50.

69. Pushkarev and Zupan, 1977, "Public Transporta-tion and Land Use Policy" Indiana University,pages 141 and 190.

70. Cervero, Land-Use Mixing and Suburban Mobili-

ty, 42 Transportation Quarterly 429, 431.

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WRI's Board of Directors:Matthew NimetzChairmanRoger W. SantVice ChairmanJohn H. AdamsKazuo AichiRobert O. AndersonRobert O. BlakeJohn E. BrysonJohn E. CantlonPamela G. Carl tonWard B. ChamberlinEdwin C. CohenLouisa C. DuemlingAlice F. EmersonJohn FirorShinji FukukawaCynthia R. HelmsCurtis A. HesslerMartin HoldgateThomas E. LovejoyC. Payne LucasAlan R. McFarland, Jr.Robert S. McNamaraScott McVayPaulo Nogueira-NetoSaburo OkitaRonald L. OlsonMaria Tereza Jorge PaduaRuth PatrickAlfred M. Rankin, Jr.James Gustave SpethM.S. SwaminathanMostafa K. TolbaRussell E. TrainAlvaro UmanaVictor L. UrquidiGeorge M. Woodwell

James Gustave SpethPresidentJ. Alan BrewsterSenior Vice PresidentJessica T. MathewsVice PresidentWalter V. ReidVice President for ProgramRobert RepettoVice President and Senior EconomistDonna W. WiseVice President for Policy AffairsWallace D. BowmanSecretary- Treasurer

The World Resources Institute (WRI) is a policyresearch center created in late 1982 to helpgovernments, international organizations, and privatebusiness address a fundamental question: How cansocieties meet basic human needs and nurture economicgrowth without undermining the natural resources andenvironmental integrity on which life, economic vitality,and international security depend?

Two dominant concerns influence WRI's choice ofprojects and other activities:

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