The external costs of traffic injury: Definition, estimation, and possibilities for internalization

The external costs of traffic injury in Norway are estimated. External costs are all costs that are imposed on others and not borne by the person whose activity generates the costs. Three types of external cost are identified: system externalities, physical injury externalities, and traffic volume externalities. System externalities are costs that road users impose on the rest of society. Physical injury externalities are costs that one group of road users imposes upon another in crashes in which both groups are involved. Traffic volume externalities are the costs imposed on other road users when an additional road user joins traffic. System externalities are estimated to be about 30% of the total cost of traffic injury. Physical injury externalities are estimated to be about 10% of the total cost of traffic injury. No precise estimate can be given for traffic volume externalities. Possibilities for internalizing the external costs are discussed. In Norway, current taxes on ownership and use of motor vehicles cover the external costs of traffic injury, although the taxes were not designed with this purpose in mind.