Estimating Values of Negative Externalities

Transport Economics 

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  • Created by: TessAni
  • Created on: 19-01-13 15:13
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  • Estimating Values of Negative Externalities
    • Problems
      • Purely estimations
      • Highly subjective - how do you monetise a life?
      • Opportunity Cost argument for a commodity which has no place in the market
      • Controversy over which method to use
    • Methods
      • Casualty costs - based on severity,  age and current earnings
      • Shadow Prices - a relative price that is proportional to the opportunity cost for the economy
      • External cost - damage to property, insurance administration and police costs
      • Replacement costs - the cost to fit triple glazing
      • value of time lost, cost to economy of congestion, fuel and maintenance costs, additional vehicles required by commercial users


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