The main aim of this paper is to raise awareness of the necessity to estimate the external costs of transport, and in particular in urban area of Canton Sarajevo. It does not provide full extent of the costs as it focuses only on two components, air pollution and accidents. It focuses on the concise methodology for estimation of external expenses of air pollution from road and air transport and road traffic accidents, using official statistical data for modeling emissions (COPERT 4, Copert Street Level, IPPC Tier 3A methodology) and for accounting road traffic accidents. Statistical significance of correlation between traffic flow and measured concentration of pollutant at Otoka location is determined by Pearson’s correlation coefficient. Air pollution and traffic accidents are monetized according to the Synapse Energy Economics cost estimation of metric ton of CO2, and Nicholas School of the Environment, Duke University, for other pollutants, while estimation methodology for both air pollution and traffic accidents is done in line with Handbook on External Costs of Transport, European Commission.