External costs and the airports debate

I’m sure you know at least a bit about the airport debate. It’s often reported that Britain needs more airport capacity in the South East of England. I’m not going to enter into that fascinating debate here. Instead, I seek to draw attention to the language I have seen used this week by two key players in the argument: Heathrow and Gatwick airport.

Most people – non-economists included – might reasonably assume that a choice about locating an expanded airport would be conducted in terms of the costs and benefits of alternative locations.

And that’s the point that’s caught my eye, since I’ve been doing work with students about the concept of private costs/benefits and external costs/benefits.

Notice from these newspaper cuttings how Heathrow seek to justify the enormous financial costs of expansion mainly in terms of the giant financial benefits it should bring - admittedly, mainly to the wider economy. You might argue that it's trying to emphasise the private benefits and external benefits of that proposal.

That’s interesting in terms of the (arguably slightly more eye catching) campaign being run by Gatwick. They are choosing to focus their argument around the external costs, or negative externalities associated with air transport.

There can be little doubt that when a final decision is ever made on this topic, it will hinge on both private and external costs and benefits. That, at least, is a sign of sophisticated, if long-winded, policy making.