Eric Helland, at Marginal Revolution, links to and discusses a paper by Aaron Edlin and Pinar Karaca-Mandic on road congestion externalities: "Toll Roads and Externalities"
Among other things, Edlin and Karaca-Mandic find that "In California, a very high-traffic state, we estimate that a typical additional driver increases the total insurance premiums that others pay by roughly $2231 �$549 each year."
In July, the British Ministry for Transport released a report on the feasibility of road pricing to address driving externalities. The report web page is here: "Road Pricing Feasibility Study".
"12. There is significant experience, both internationally and in the UK, of road charging schemes. They fall into three main types: charges for crossing a cordon; for driving in an area (e.g. the London Congestion Charge) and charging for the use of a linear section of infrastructure such as a bridge or motorway. They use technologies such as toll booths, self-declaration, microwave tags and automatic number plate recognition. These are well proven, but limited in scale. As demand management tools they are effective at dealing with city centres (the London charge has cut congestion in the charged area by an average of 30 per cent), but cannot deal with large complex urban areas without a large number of boundaries with infrastructure at each one. And they can be blunt. They do not distinguish between short and long journeys, or several journeys in a zone.
13. The key to a fully national road pricing scheme is a technology which can charge by time, distance and place to target the costs, including environmental costs. Most costs are caused by congestion. Targeting congestion might require a complex 'box' on board the vehicle which could work out exactly where, when and over what distance the vehicle was being used, possibly using a positioning system, although the technology requirement will depend on the precise requirements of the scheme, and on technological developments over time. On the advice of experts, the study estimates that the equipment necessary to deliver a full position-based charging scheme will not be available in a mass market, low-cost form, until at least 2014."
Global positioning systems could provide the opportunity to monitor activity and provide the necessary pricing flexibility:
"4.15 Technologies that can charge by time, place and distance are at the forefront of technological development. While the individual components are available, getting them to work together to the required standard is the challenge. This would entail the development of a complex 'box' on board the vehicle that uses several different technologies (including position-fixing and communications facilities for transferring data to and from the charging authority). No such unit is currently manufactured for the mass market or has the necessary capability to be applicable for all vehicles. There are emerging possibilities of using the technology of the mobile phone cellular radio network that can give the location of a mobile phone, similarly to give the location of a vehicle. But the most likely candidate for a reliable and accurate positioning technology is that offered by positioning satellites."