Magnitude of external costs of highways in Japan

Abstract

This study estimates the external costs of highways in Japan. External costs consist of five components: traffic accidents, air pollution, noise, global warming, and traffic congestion. The major findings are as follows. First, external costs increase at an accelerated rate as traffic volume increases. Second, the largest component of external costs is traffic congestion, accounting for about 53%. The next largest components are traffic accidents and air pollution. Third, among vehicle types, the external costs of buses are largest, at 117 yen per vehicle-km, about 18 times higher than the external costs of regular cars. Fourth, total external costs for the entire highway network are about 823,128 million yen (about 0.2% of Japan’s GDP). Relative to highway toll revenues, operating costs, and total provision costs of highways, external costs equal 69.9, 116.7, and 48.3%, respectively. Therefore, the current toll revenues do not cover the total social cost of highways. Fifth, as for regional differences, the external costs of regions, such as South Kanto (Tokyo), Kinki (Osaka), and Tokai (Nagoya), account for 68.8% of all Japan. Finally, among these five components, regional disparity appears to be large especially with regard to noise and air pollution.