Climate policy costing methodologies

This study examines why studies to assess the cost effectiveness of policies addressing the climate impact of transport have yielded such widely different results to date. To this end, experts in the Netherlands were consulted and the national and international literature reviewed. Our analysis of the costing methodologies in use shows there are three types of choice having a major influence on results. The first concerns the perspective adopted. Are costs being considered from the perspective of the end user, society or government? Secondly, there are a series of choices to be made in calculating direct expenditures, with respect to depreciation rates and prior estimates of investments, among other things. Finally, there is a basic choice as to whether only direct expenditures are to be included, or a comprehensive welfare-economic analysis carried out. Are the welfare effects of behavioural change or additional externalities to be included, for instance?