Financing Transport Projects: Why integrating externalities matters for decision making

This briefing paper argues that conventional financial analysis for transport infrastructure is inadequate because it fails to integrate externalities—the costs or benefits impacting third parties. The author contends that neglecting these factors leads to continued investment in carbon-intensive road transport over sustainable alternatives.

• The transport sector is a primary driver of climate change and human health impacts, contributing more than 20% of global carbon dioxide emissions.
• Conventional financial analysis fails to capture modern environmental, social, and financial dynamics, leading to a bias where investment favors carbon-intensive road transport instead of sustainable alternatives because externalities are neglected.
• Integrating non-financial considerations, such as positive externalities (e.g., improved air quality and resident health benefits) and negative externalities (e.g., pollution from vehicle emissions), allows decision-makers to better understand a project's overall value.

APA

Carlucci,, E. (2024). Financing Transport Projects: Why integrating externalities matters for decision making. International Institute for Sustainable Development. https://www.iisd.org/publications/report/financing-transport-projects

Chicago

Carlucci,, Edoardo. Financing Transport Projects: Why integrating externalities matters for decision making. International Institute for Sustainable Development, 2024. https://www.iisd.org/publications/report/financing-transport-projects.

Wikipedia

{{cite report |last1=Carlucci, |first1=Edoardo |title=Financing Transport Projects: Why integrating externalities matters for decision making |publisher=International Institute for Sustainable Development |date=6 March 2024 |url=https://www.iisd.org/publications/report/financing-transport-projects |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{carlucci2024financing, author = {Carlucci,, Edoardo}, title = {{Financing Transport Projects: Why integrating externalities matters for decision making}}, institution = {International Institute for Sustainable Development}, year = {2024}, month = mar, url = {https://www.iisd.org/publications/report/financing-transport-projects}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }