Emissions and External Environmental Costs from the Perspective of Differing Travel Purposes

Hagedorn T, Sieg G

Abstract
Comparisons of emissions and external environmental costs between transport modes usually focus on a distance-based approach. Emissions, and consequently the external costs of transport modes, are measured either per kilometer or passenger kilometer. For travel purposes such as holiday or leisure, however, this approach is not appropriate, as destinations are determined endogenously and thus distances vary across transport modes. In this study, we present a novel methodology to correctly and accurately measure leisure emissions and external costs. The new metric is called “full-price emissions”. Full-price emissions calculate the ratio of a transport mode’s emissions or external costs and its full price. The results show that the relative climate damage imposed by aircraft, calculated according to full-price emissions, is approximately four times larger than distance-based approaches reveal. We further observe that, in contrast to distance-based emission comparisons, environmental costs of petrol cars are lower than that of diesel cars. Additionally, full-price emissions display unintended substitution effects of environmental policies that can contribute to climate damage.

Keywords
Emissions; Environmental effects; External costs; Full price; Travel purpose; Environmental policies; Pricing; Taxation