The context of this study is the public sector provision of services involving travelling in local authority areas in England. Such travelling services are costly and the relative levels of these costs across different local areas have raised a number of policy issues, particularly how performance assessments of local authorities and capitation-based funding by central government take into account (or fail to take into account) the differential travel costs faced in geographical areas that differ in population dispersion (sparsity) characteristics. The research presented here is concerned with identifying and evaluating practical indicators of mileage-related costs faced in local areas and a range of indicators have been explored for three services: domiciliary care, refuse collection and home-to-school transport. The findings suggest that currently used population dispersion indicators could be improved and that the current sparsity allowances in England underestimate the relative cost effects by a considerable amount. © 2010 Operational Research Society Ltd. All rights reserved.