Internalizing the externalities of urban private transport: a case of Gurgaon, India

Abstract

India is a developing nation with one of the fastest-growing economies in the world. The theories of microeconomics establish a direct and positive relationship between the increase in GDP and per capita income with per capita consumption. The rise in disposable income indicates more opportunities for an individual to pursue his personal needs like owning a luxurious vehicle which affects their travel behavior and indirectly discourages the use of public transit. Although the increase in vehicle ownership indicates growth in the economy, its negative impacts cannot be ignored. The negative externalities (e.g. congestion, air pollution, GHG emission, noise pollution) generated by the use of private transit create a significant economic loss to the country. A World Bank study released in 2016 revealed that India lost more than 8.5% of its rise in GDP in 2013 due to air pollution. According to a study by Uber, Indian commuters take 1.5 times longer to travel a given distance in peak hours compared to travel time during non-peak hours. The present study intends to incorporate the external cost (congestion, vehicle emission, noise pollution) of transport for private vehicle users developing a mechanism to estimate it and suggesting a framework to collect external cost. The study will help in assessing the change in the travel behavior of urban private vehicle users if external costs are implied. Furthermore, the study will also help in estimating the reduced amount of greenhouse gases which used to emit from private vehicles on the road, reduced volume of vehicles, increased number of users for public transport, and the increased revenue generated from it resulting from the shift of private transport users towards the public transit. The present study shall also evaluate the revenue generated as a form of tax levied on private vehicle users if they continue to use the prevailing mode by paying the external cost.