Pricing and Internalizing Noise Externalities in Road Freight Transportation

People living close to main roads may suffer from the nuisance of traffic and noise pollution. This paper assesses the effect of full routing cost in vehicle routing decisions by internalizing the external cost of noise. On a first step, noise externalities are economically assessed through a contingent valuation procedure. Secondly, a novel methodology is proposed to allocate the external costs to the road network links. Results show significant differences in routing planning depending on the approach: minimization of traditional internal cost versus minimization of full cost. These results encourage further research in pricing and methodologies to internalize externalities.