The following report is organised in two parts. The first part evaluates the social costs of transport, including summaries of the definitions of environmental costs and the methods of measuring them. This is followed by a literature review of results found in different countries by different authors. The second part examines how evaluations of social costs are used in formulating and implementing environmental policies, starting with a review of the various instruments for internalising social costs. Then, on the basis of an assessment of the policies followed, a judgement is made as to their success or failure, with a view toward making recommendations for future research and action.