Pricing for Traffic Safety

This paper evaluates the traffic safety impacts of various transport pricing reforms, including fuel-tax increases, efficient road and parking pricing, distance-based insurance and registration fees, and public-transit fare reductions. This analysis indicates that such reforms can significantly reduce traffic risk, in addition to providing other important economic, social, and environmental benefits. Crash reductions depend on the type of price change, the portion of vehicle travel affected, and the quality of alternative transport options available. If implemented to the degree justified on the grounds of economic efficiency (for example, to reduce congestion, recover road and parking facility costs, and make insurance more actuarially accurate), these reforms are predicted to reduce North American traffic casualties by 40% to 60%. The low per capita traffic fatality rates in European and wealthy Asian countries result in significant part from their higher transport prices, which result in more efficient multimodal transport systems by which residents drive less and rely more on alternative modes. However, these benefits are often overlooked: pricing reform advocates seldom highlight traffic safety benefits, and traffic safety experts seldom advocate pricing reforms. Taking these steps is particularly important for developing countries now establishing pricing practices that will affect their future travel patterns and therefore crash risks.