Overcoming Barriers to Transportation Cost Internalization

Much progress has been made in accounting for the externality costs related to transportation decisions in recent years. However, major institutional and political barriers currently impede both public awareness of this information and the introduction of market-based pricing mechanisms that might begin to better internalize both marginal costs and social and environmental cost factors to inform decision making by both consumers and policy-makers. Focusing mostly on the U.S. experience, this paper explores these barriers and discusses strategies that might contribute to progress in both cost internalization and regulatory reform. Incremental progress can come through the development of information, analysis, and decision support systems for transportation and long range planning, through appropriate applications of Intelligent Transportation Systems technologies such as electronic road and parking pricing, through the development of performance and incentive based regulatory systems, and perhaps by influencing advertising that shapes public attitudes towards motor vehicles.