Internalisation of external costs and the effects on prosperity

In this study, the KiM Netherlands Institute for Transport Policy Analysis assesses the effects of passing on to traffic and transport the costs of external effects, such as accidents, the environment and noise. In nine out of the ten cases studied, this ‘internalisation' led to increases in prosperity in the Netherlands. Internalisation leads to a decline in external costs of approximately 100 million to 1.7 billion euro per year. Internalisation however is also accompanied by collection costs, international transfers and logistic adjustments. The total impact of these effects range from a decrease in prosperity of 20 million euro to an increase in prosperity of 1.2 billion euro per year. The KiM conducted this research at the request of the Directorate-General for Civil Aviation and Maritime Affairs of the Ministry of Transport, Public Works and Water Management.