{"id":247781,"date":"2026-09-10T13:03:47","date_gmt":"2026-09-10T10:03:47","guid":{"rendered":"https:\/\/azbuki.bg\/?p=247781"},"modified":"2026-09-10T13:03:47","modified_gmt":"2026-09-10T10:03:47","slug":"integrating-the-valorization-of-external-transport-costs-into-the-efficiency-assessment-of-road-infrastructure-investment-prioritization","status":"publish","type":"post","link":"https:\/\/press.azbuki.bg\/en\/xxvii-international-scientific-conference-transport-2025\/integrating-the-valorization-of-external-transport-costs-into-the-efficiency-assessment-of-road-infrastructure-investment-prioritization\/","title":{"rendered":"Integrating the Valorization of External Transport Costs into the Efficiency Assessment of Road Infrastructure Investment Prioritization"},"content":{"rendered":"

Christina Nikolova
\n<\/strong>University of National and World Economy, Sofia, Bulgaria<\/em><\/p>\n

https:\/\/doi.org\/10.53656\/isct-2025.07<\/a><\/p>\n

\"\"
\nPDF<\/a><\/p>\n

Pages 78-94<\/em><\/p>\n

Abstract.\u00a0<\/strong>This paper examines the critically important relationship between the valuation of external transport costs and the assessment of the effectiveness of investment prioritization in road infrastructure. Its primary objective is to demonstrate how the appropriate recognition and valuation of externalities can enhance the decision-making process regarding where and how to invest in the road network.<\/p>\n

The report emphasizes that investments in road infrastructure should not be evaluated solely in terms of direct financial costs and benefits. Instead, they must be assessed within the broader context of their overall impact on society and the environment, including external costs such as air pollution, noise, congestion, road accidents, limited access to transportation, and other negative externalities.<\/p>\n

The central thesis advanced in the report is that, when prioritizing road infrastructure investments, it is essential to consider how these projects can effectively reduce or prevent such external costs. For instance, investments in bypass roads can help mitigate congestion and pollution in urban centers; the construction of safer roads equipped with proper signage and lighting can contribute to a reduction in traffic accidents; and measures aimed at improving public transport\u2014often supported by quality road infrastructure\u2014can decrease dependency on private vehicles and thus reduce associated external costs.<\/p>\n

The paper proposes a methodology for the valorization (monetary valuation) of these externalities, enabling their integration into economic evaluations of investment projects. The conducted analyses and resulting conclusions confirm that road infrastructure investments leading to a reduction in external costs generate greater overall societal benefits. By prioritizing such projects, it is possible to achieve not only economic efficiency but also significant improvements in quality of life, public health, and the sustainability of the transport system.<\/p>\n

Ultimately, the study advocates for a more intelligent and responsible management of public funds in the transport sector through the integration of external cost valorization into investment decision-making frameworks.<\/p>\n

Keywords:<\/em> transport externalities; external costs of transport; valorization, infrastructure investment prioritization; investment efficiency; transport policy<\/p>\n

 <\/p>\n

    \n
  1. Introduction<\/strong><\/li>\n<\/ol>\n

    In recent decades, the prioritization of public investments in road infrastructure has become a central concern for transport policymakers and public authorities, especially in the context of increasingly limited budgetary resources and growing environmental awareness. The traditional evaluation of such investments has primarily focused on direct financial indicators such as construction costs, maintenance expenditures, and time savings for users. However, this approach neglects an essential dimension of transport activity \u2013 its external costs, which affect third parties and the environment without being reflected in market transactions.<\/p>\n

    Integrating external costs of transport into investment efficiency evaluations is crucial for enhancing the sustainability and economic viability of transportation systems. By internalizing these costs, policymakers can make more informed decisions that reflect the actual societal impacts of transport activities. This integration can be achieved through various methodologies and frameworks that assess the externalities associated with transport.<\/p>\n

    This paper argues that an integrated evaluation of road infrastructure investments must include the valorization of external transport costs, encompassing the costs of air and noise pollution, congestion, accidents, climate change, and restricted accessibility. These externalities represent a significant societal burden and should be systematically internalized in project appraisal and investment prioritization frameworks.<\/p>\n

    Building upon the internalization paradigm developed at the European level \u2013 particularly through the \u201cuser pays\u201d and \u201cpolluter pays\u201d principles \u2013 this study seeks to demonstrate how properly valuated external costs can serve as a robust criterion for comparing and ranking infrastructure projects. When road investments are prioritized based not only on financial returns but also on their potential to mitigate negative externalities, public funds can be allocated more efficiently and equitably, contributing to both economic performance and societal well-being.<\/p>\n

    The paper is motivated by the imperative to align national infrastructure strategies with the objectives of the European Green Deal and the Just Transition mechanisms, which emphasize decarbonization, resource efficiency, and fairness. It aims to propose a methodology for the monetary valuation of external costs and to provide empirical insights into how such valuation can support better-informed decisions in road infrastructure planning and funding.<\/p>\n

     <\/p>\n

      \n
    1. Methodology<\/strong><\/li>\n<\/ol>\n

      The methodological framework applied in this study builds upon the established European practices in internalizing external transport costs, as presented in the Handbook on the External Costs of Transport <\/em>[1] and further developed through projects such as UNITE, HEATCO, and CASES. The approach involves two interlinked stages: valuing marginal external costs and integrating them into a decision-support system for investment prioritization [2].<\/p>\n

      External costs refer to the unaccounted impacts of transport activities on society, including accidents, pollution, and congestion [3]. These costs can be categorized into costs for preventing environmental degradation, health impacts from pollution, and economic losses due to accidents.<\/p>\n

      2.1 Valuation of External Costs<\/em><\/p>\n

      The external cost components considered in the analysis include:<\/p>\n

      \u2013 Air pollution<\/strong>, based on emissions of NO\u2093, SO\u2082, PM\u2082.\u2085, and VOCs;<\/p>\n

      \u2013 Noise pollution<\/strong> is evaluated through health impacts and property value depreciation.<\/p>\n

      \u2013 Congestion<\/strong> is quantified via time loss and increased vehicle operating costs.<\/p>\n

      \u2013 Accidents<\/strong>, including medical costs, loss of productivity, and the value of statistical life.<\/p>\n

      \u2013 Climate change<\/strong>, via carbon pricing of GHG emissions.<\/p>\n

      \u2013 Barrier effects and accessibility deficits<\/strong> are particularly relevant for vulnerable regions and social groups.<\/p>\n

      For each cost category, unit values (\u20ac\/vkm or \u20ac\/tkm) are applied based on updated country-specific correction coefficients, which account for purchasing power parity (PPP), inflation (via HICP), and transport network characteristics. The adjusted marginal cost values are then multiplied by estimated traffic volumes for specific road segments to obtain total external costs by project.<\/p>\n

      2.2 Cost-Benefit Analysis of Road Rehabilitation Measures<\/em><\/p>\n

      An integral part of the proposed methodological framework involves a cost\u2013benefit analysis (CBA) of road rehabilitation and maintenance interventions. This analysis compares the required investment expenditures for repairing specific road sections with the expected benefits arising from the intervention. The benefits are expressed in both direct and indirect (societal) terms [4], including:<\/p>\n

      \u2013 Direct benefits for road users include improved travel speeds, enhanced ride quality, and reduced vehicle operating costs.<\/p>\n

      \u2013 Reduction in the number and severity of traffic accidents, leading to a corresponding decline in associated social costs, including medical expenses, property damage, and loss of productivity.<\/p>\n

      \u2013 Mitigation of traffic congestion, resulting in time savings for both passenger and freight transport.<\/p>\n

      \u2013 Decreased fuel consumption, contributing to cost savings for transport operators and private users.<\/p>\n

      \u2013 Lower emissions and environmental impact, with associated reductions in the costs of air quality management, climate change mitigation, and ecosystem restoration.<\/p>\n

      This CBA approach facilitates the identification and prioritization of road segments where maintenance and rehabilitation works are likely to yield the highest net social benefit [5]. By monetizing both internal and external impacts, the analysis supports the efficient allocation of limited infrastructure funding toward projects that offer the most significant savings in direct expenditures and the avoidance of societal costs [6].<\/p>\n

      2.3 Integration into Investment Prioritization<\/em><\/p>\n

      The next step is to incorporate the calculated external cost reductions into the assessment of infrastructure projects. For this purpose, a multicriteria evaluation (MCE) approach is employed, where conventional indicators (e.g., internal rate of return, net present value) are supplemented by an External Cost Savings Index (ECSI). The ECSI is defined as:<\/p>\n

      \"\"<\/p>\n

      where:<\/p>\n

      \u2013 \u0394EC is the reduction in total external costs (\u20ac\/year) due to the investment;<\/p>\n

      \u2013 CAPEX is the capital expenditure of the project (in \u20ac).<\/p>\n

      This index enables a transparent comparison across alternative projects, supporting the prioritization of those that generate the highest societal benefit per euro invested, not only through direct user benefits but also through reduced externalities [7].<\/p>\n

      The methodology is applied to hypothetical case scenarios involving prioritising investments and major repair works of road infrastructure sections. The valuation results provide actionable insights into how investments with comparable financial performance may differ substantially in terms of their external cost mitigation potential.<\/p>\n

       <\/p>\n

        \n
      1. Empirical Application<\/strong><\/li>\n<\/ol>\n

        To demonstrate the practical applicability of the proposed methodology, this study presents an empirical illustration based on selected types of road infrastructure investments, including construction, road safety enhancement, and interurban corridor improvement.<\/p>\n

        The analysis focuses on a key section of the national road network \u2013 National Road II-53, Yambol-Sredets \u2013 which connects the North and South of Bulgaria through the Balkan Mountains and is frequently used as an alternative to the heavily trafficked Hemus and Trakia motorways. The route is characterized by challenging terrain, steep gradients, and high levels of heavy goods vehicle (HGV) traffic. The technical condition of the road section under study has deteriorated significantly, with road surface degradation, insufficient signage and lighting, and suboptimal safety infrastructure. As a result, this route is associated with elevated accident rates, longer travel times, and increased fuel consumption \u2013 factors that contribute to substantial external costs.<\/p>\n

        A comparative assessment of the current state and a hypothetical post-rehabilitation scenario was conducted, quantifying the reduction in:<\/p>\n

        \u2013 Time losses for freight and passenger transport;<\/p>\n

        \u2013 Traffic accidents and related social costs;<\/p>\n

        \u2013 Vehicle operating costs, including fuel consumption;<\/p>\n

        \u2013 Noise and air pollution;<\/p>\n

        \u2013 Carbon emissions.<\/p>\n

        The analysis applied adjusted marginal external cost values (\u20ac\/vkm) based on the EU Handbook on External Costs and national correction coefficients. The expected reduction in external costs was monetized over a 30-year horizon and discounted using a 5 % social discount rate.<\/p>\n

        The respective investment costs are described in Table 1 below.<\/p>\n

         <\/p>\n

        Table 1. <\/strong>Investment costs<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
        Investment costs<\/strong><\/td>\n\u00a0<\/strong><\/td>\n\u00a0<\/strong><\/td>\n\u00a0<\/strong><\/td>\n\u00a0<\/strong><\/td>\n<\/tr>\n
        With Project (JV)<\/strong><\/td>\nTotal<\/strong><\/td>\n2024<\/strong><\/td>\n2025<\/strong><\/td>\n2026<\/strong><\/td>\n<\/tr>\n
        Length, km<\/td>\n1,100<\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
        Designing<\/td>\n67 859,00<\/td>\n67 859,00<\/td>\n <\/td>\n <\/td>\n<\/tr>\n
        Construction and installation works<\/td>\n7 464 484,00<\/td>\n2 985 793,60<\/td>\n2 612 569,40<\/td>\n1 866 121,00<\/td>\n<\/tr>\n
        Assessment of compliance with the basic requirements for constructions according to Art. 142, para. 6, item 2 of the SDA<\/td>\n10 179,00<\/td>\n10 179,00<\/td>\n <\/td>\n <\/td>\n<\/tr>\n
        Construction supervision<\/td>\n213 756,00<\/td>\n85 502,40<\/td>\n74 814,60<\/td>\n53 439,00<\/td>\n<\/tr>\n
        Engineering supervision<\/td>\n6 786,00<\/td>\n2 714,40<\/td>\n2 375,10<\/td>\n1 696,50<\/td>\n<\/tr>\n
        Road safety audit<\/td>\n10 000,00<\/td>\n4 000,00<\/td>\n3 500,00<\/td>\n2 500,00<\/td>\n<\/tr>\n
        Expropriation of properties<\/td>\n50 000,00<\/td>\n50 000,00<\/td>\n <\/td>\n <\/td>\n<\/tr>\n
        Archeology<\/td>\n50 000,00<\/td>\n50 000,00<\/td>\n <\/td>\n <\/td>\n<\/tr>\n
        Environment impact assessment procedures<\/td>\n50 000,00<\/td>\n50 000,00<\/td>\n <\/td>\n <\/td>\n<\/tr>\n
        Staff costs, publicity and visualization, etc. taxi<\/td>\n79 230,00<\/td>\n31 692,00<\/td>\n27 730,50<\/td>\n19 807,50<\/td>\n<\/tr>\n
        TOTAL:<\/strong><\/td>\n8 002 294,00<\/strong><\/td>\n3 337 740,40<\/td>\n2 720 989,60<\/td>\n1 943 564,00<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

        Source: <\/em>National Road Infrastructure Agency, 2024<\/p>\n

        The initial maintenance and operation costs have been calculated based on the scenarios, with or without investments (see Table 2).<\/p>\n

         <\/p>\n

        Table 2. <\/strong>Costs for maintenance and operation (EUR)<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
        Minimal impact option<\/strong><\/td>\nYears<\/strong><\/td>\nTotal<\/strong><\/td>\n2024<\/strong><\/td>\n2025<\/strong><\/td>\n2026<\/strong><\/td>\n2027<\/strong><\/td>\n2028<\/strong><\/td>\n2029<\/strong><\/td>\n2030<\/strong><\/td>\n2031<\/strong><\/td>\n2032<\/strong><\/td>\n2033<\/strong><\/td>\n<\/tr>\n
        Without project<\/strong><\/td>\nUnit of Cost<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
        Road II-53 (2 lanes) (length)<\/td>\n1,10 km<\/td>\n <\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
        Current activities<\/strong><\/td>\n<\/tr>\n
        Ongoing maintenance<\/td>\n1 268<\/td>\n84 972<\/td>\n1395<\/td>\n1465<\/td>\n1538<\/td>\n1615<\/td>\n1696<\/td>\n1780<\/td>\n1869<\/td>\n1963<\/td>\n2061<\/td>\n2164<\/td>\n<\/tr>\n
        Winter maintenance<\/td>\n\u00a0822<\/td>\n60 078<\/td>\n904<\/td>\n949<\/td>\n997<\/td>\n1047<\/td>\n1099<\/td>\n1154<\/td>\n1212<\/td>\n1272<\/td>\n1336<\/td>\n1403<\/td>\n<\/tr>\n
        Total current expenditure<\/td>\n2 090<\/td>\n143 382<\/td>\n2299<\/td>\n2414<\/td>\n2535<\/td>\n2662<\/td>\n2795<\/td>\n2934<\/td>\n3081<\/td>\n3235<\/td>\n3397<\/td>\n <\/td>\n<\/tr>\n
        Recurring activities<\/strong><\/td>\n<\/tr>\n
        Preventive repairs<\/td>\n133 637<\/td>\n599 511<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n228047<\/td>\n<\/tr>\n
        Total recurring costs<\/td>\n <\/td>\n599 511<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n228047<\/td>\n<\/tr>\n
        Total maintenance costs – option „without project“<\/em><\/td>\n <\/td>\n730 187<\/td>\n2299<\/td>\n2414<\/td>\n2535<\/td>\n2662<\/td>\n2795<\/td>\n2 934<\/td>\n3081<\/td>\n3235<\/td>\n3397<\/td>\n228047<\/td>\n<\/tr>\n
        Other costs<\/strong><\/td>\n<\/tr>\n
        Labour<\/td>\n18%<\/td>\n133 721<\/td>\n414<\/td>\n435<\/td>\n456<\/td>\n479<\/td>\n503<\/td>\n528<\/td>\n555<\/td>\n582<\/td>\n611<\/td>\n41048<\/td>\n<\/tr>\n
        Materials<\/td>\n64%<\/td>\n447 916<\/td>\n1472<\/td>\n1545<\/td>\n1622<\/td>\n1703<\/td>\n1789<\/td>\n1878<\/td>\n1972<\/td>\n2071<\/td>\n2174<\/td>\n145950<\/td>\n<\/tr>\n
        Equipment<\/td>\n8%<\/td>\n55 990<\/td>\n184<\/td>\n193<\/td>\n203<\/td>\n213<\/td>\n224<\/td>\n235<\/td>\n246<\/td>\n259<\/td>\n272<\/td>\n18244<\/td>\n<\/tr>\n
        Other costs<\/td>\n10%<\/td>\n69 987<\/td>\n230<\/td>\n241<\/td>\n253<\/td>\n266<\/td>\n279<\/td>\n293<\/td>\n308<\/td>\n324<\/td>\n340<\/td>\n22805<\/td>\n<\/tr>\n
        With project<\/strong><\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
        Current activities<\/strong><\/td>\n<\/tr>\n
        Ongoing maintenance<\/td>\n1 268<\/td>\n62 180<\/td>\n<\/td>\n<\/td>\n<\/td>\n1615<\/td>\n1696<\/td>\n1780<\/td>\n1869<\/td>\n1963<\/td>\n2061<\/td>\n2164<\/td>\n<\/tr>\n
        Winter maintenance<\/td>\n\u00a0822<\/td>\n40 307<\/td>\n<\/td>\n<\/td>\n<\/td>\n1047<\/td>\n1099<\/td>\n1154<\/td>\n1212<\/td>\n1272<\/td>\n1336<\/td>\n1403<\/td>\n<\/tr>\n
        Total current expenditure<\/td>\n<\/td>\n90 873<\/td>\n<\/td>\n<\/td>\n<\/td>\n2662<\/td>\n2795<\/td>\n2934<\/td>\n3081<\/td>\n3235<\/td>\n3397<\/td>\n3567<\/td>\n<\/tr>\n
        Recurring activities<\/strong><\/td>\n<\/tr>\n
        Preventive repairs<\/td>\n133 637<\/td>\n675 062<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
        Total recurring costs<\/td>\n <\/td>\n675 062<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
        Total maintenance costs – option „with project“<\/em><\/td>\n <\/td>\n760 479<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n2934<\/td>\n3081<\/td>\n3235<\/td>\n3397<\/td>\n3567<\/td>\n<\/tr>\n
        Total costs for the existing road<\/em><\/td>\n <\/td>\n238 122<\/td>\n2299<\/td>\n2414<\/td>\n2535<\/td>\n887<\/td>\n932<\/td>\n978<\/td>\n1027<\/td>\n1078<\/td>\n1132<\/td>\n76016<\/td>\n<\/tr>\n
        Total costs \u2013 option \u201cwith project\u201d<\/em><\/td>\n <\/td>\n998 601<\/td>\n2299<\/td>\n2414<\/td>\n2535<\/td>\n887<\/td>\n932<\/td>\n3913<\/td>\n4108<\/td>\n4314<\/td>\n4529<\/td>\n79582<\/td>\n<\/tr>\n
        Other costs<\/strong><\/td>\n<\/tr>\n
        Labour<\/td>\n18%<\/td>\n179 748<\/td>\n414<\/td>\n435<\/td>\n456<\/td>\n160<\/td>\n168<\/td>\n704<\/td>\n739<\/td>\n776<\/td>\n815<\/td>\n14325<\/td>\n<\/tr>\n
        Materials<\/td>\n64%<\/td>\n639 105<\/td>\n1472<\/td>\n1545<\/td>\n1622<\/td>\n568<\/td>\n596<\/td>\n2504<\/td>\n2629<\/td>\n2761<\/td>\n2899<\/td>\n50933<\/td>\n<\/tr>\n
        Equipment<\/td>\n8%<\/td>\n79 888<\/td>\n184<\/td>\n193<\/td>\n203<\/td>\n71<\/td>\n75<\/td>\n313<\/td>\n329<\/td>\n345<\/td>\n362<\/td>\n6367<\/td>\n<\/tr>\n
        Other costs<\/td>\n10%<\/td>\n99 860<\/td>\n230<\/td>\n241<\/td>\n253<\/td>\n89<\/td>\n93<\/td>\n391<\/td>\n411<\/td>\n431<\/td>\n453<\/td>\n7958<\/td>\n<\/tr>\n
        Cost Savings<\/em><\/strong><\/p>\n

        \u00a0( option \u201cwithout project\u201d- option „with project“)<\/em><\/strong><\/td>\n

        		 <\/td>\n-298 731<\/td>\n0<\/td>\n0<\/td>\n0<\/td>\n1774<\/td>\n1863<\/td>\n-978<\/td>\n-1027<\/td>\n-1078<\/td>\n-1132<\/td>\n148464<\/td>\n<\/tr>\n
        <\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

        Source: <\/em>Authors\u2019 calculations<\/p>\n

        \u00a0<\/em><\/p>\n

        These investment types (with or without new investments) were chosen due to their varying impacts on external cost categories and their relevance to current policy debates regarding sustainable transport and decarbonization strategies.<\/p>\n

        The scenario in the example provided was assessed in terms of:<\/p>\n

        \u2013 Baseline option (without investments) and projected traffic volumes (veh\/day);<\/p>\n

        \u2013 Road user characteristics (vehicle type, fuel type, emission standards);<\/p>\n

        \u2013 Local environmental and socio-economic conditions (e.g., population density, accident rates, background pollution levels);<\/p>\n

        \u2013 Expected changes in externalities due to project implementation (e.g., reduced congestion, emissions, accident frequency).<\/p>\n

        The marginal external cost values were drawn from the most recent update of the Handbook on the External Costs of Transport [1] and adjusted for national conditions using PPP and HICP-based coefficients. The assessment took into account the specific external cost structure of road transport in Bulgaria, where traffic patterns, fleet composition, and infrastructure conditions differ from those in other European countries.<\/p>\n

        For each scenario, the reduction in external costs was estimated for a 30-year analysis period using discounted cash flows. These values were then used to calculate the External Cost Savings (ECS), as introduced in the methodology section, and External Cost Savings Index (ECSI) allowing for comparison across cases (see Appendix 1, Table 1, which presents the evaluation of costs and benefits for the first 10 years of investment).<\/p>\n