The cost of transport – and what isn’t on the bill
Transport incurs costs that are largely invisible today. A study by the University of Basel shows how these external costs could be charged for and the revenue redistributed in a socially acceptable way.
10 August 2026 | Catherine Weyer
Angelina Weber works in Pratteln. Five days a week, she drives from her home in Oberwil to work and back again. If she were charged for the costs she incurred for the general public, it would amount to around CHF 4.50 per working day. This would cover the costs arising from things like CO₂ emissions, air pollution, noise, the risk of accidents and congestion.
The example of Angelina Weber is fictitious. As yet, there is no comprehensive system for pricing the external costs of transport.
The ‘polluter pays’ principle for transport
It’s a well-known fact that transport generates costs which the public has to bear. Now, a new study by economist Professor Beat Hintermann and his research group shows how the behavior of road users can be influenced. Their findings were published in the journal The Review of Economic Studies. The conclusion: a relatively simple levy would encourage more climate-friendly behavior and reduce the associated costs to public health and society as a whole. And at the same time, it would also provide funds to expand the infrastructure.
Study involving 3,600 motorists
The economics professor and his team spent eight weeks studying the behavior of around 3,600 people from urban areas in German- and French-speaking Switzerland. They were between 18 and 65 years old and drove regularly. They used a smartphone app to record their travel habits.
After four weeks, the participants were divided into three groups. One control group continued to receive a simple overview of their travel behavior. A second group was also informed of the external costs incurred by their journeys. The third group received the same information, plus a personal budget. The calculated external costs of their journeys were deducted from this budget for four weeks. The participants were allowed to keep whatever was left at the end.
Information alone is not enough
It became clear that knowing the cost of their own journeys did little to change the behavior of most participants. It was only when the costs were subtracted from a personally allocated budget that they drove less and switched to other modes of transport more often.
Taxing the Swiss population using this very precise system would involve a great deal of effort. There would also be data protection issues associated with full GPS tracking. However, model calculations show that in Switzerland, a large proportion of the social benefits could also be achieved with a much simpler solution.
A bonus awaits at the end of the year
Instead of recording each individual trip, charges could be based on easily measurable parameters – such as fuel consumption or, in the case of electric cars, the number of kilometers driven. The revenue could be channeled into a fund and be redistributed in full or in part to the public. “We estimate that around CHF 1,600 could be paid back per person and year,” says Hintermann.
What our daily mobility costs
Distance travelled
around 48 km
Time spent travelling
93 minutes
Private costs
CHF 23
Total external costs
CHF 4.50
of which air pollution and noise
CHF 2.00
of which congestion and overcrowded public transport
CHF 1.10
of which climate damage
CHF 0.90
of which health care costs (e.g. due to accidents)
CHF 0.60
In the Canton of Basel-Stadt, a similar system is already in place for electricity, in the form of a steering tax per kilowatt hour. Those who consume more electricity pay more into the fund. At the end of the year, everyone in Basel receives the same amount back. This means that those who have used less electricity over the course of the year benefit.
Such a measure is unlikely to fundamentally change transport in Switzerland, says Hintermann. Many journeys – for example, to work, to school or to fulfill care responsibilities – cannot simply be avoided. “Transport is relatively inflexible, as demand is not very elastic.”
Redistribution helps those on low incomes in particular
This is especially evident when it comes to car use: even when driving becomes more expensive, only a relatively small number of people switch to other modes of transport. The effects are measurable, but limited: in the short term, an increase in the cost of driving leads to a reduction in the number of car kilometers driven of 0.1–0.2%.
In the long term, the response is roughly twice as high. The levy, however, would create a financial incentive to reduce external costs. And those who don’t change their behavior contribute to a shift in transport habits through the levy. “In this way, everyone makes a contribution: either through their behavior or through their wallets.”
The measure would also have a socio-political component. “The redistribution would primarily benefit people on lower incomes who are less able to afford travel,” says Hintermann.
Incidentally, most of the participants in Hintermann’s study did not want any potential proceeds from such a levy to be paid back to them directly. “The majority wanted the money to be used to expand public transport. That’s actually an astonishing statement from people who drive regularly,” says the economist. This can be explained, for example, by the expected reduction in road congestion brought about by public transport, which also benefits motorists.
For media enquiries
Prof. Dr. Beat Hintermann, University of Basel, Faculty of Business and Economics, phone +41 61 207 33 39, email: b.hintermann@unibas.ch
Original publication
Beat Hintermann et al.
Pigovian Transport Pricing in Practice
Review of Economic Studies (2026), doi: 10.1093/restud/rdag051
