<p>Transportation networks serve as critical infrastructure in ensuring the efficient movement of people and goods, but their sustainability is challenged by the growing population’s needs and growing amount of emissions. Transportation networks are inherently susceptible to random events like weather or accident, which causes the links to deteriorates at varying capacity levels, and can thus be regarded as a multi-state network with multiple degradable capacities. Unlike the existing research that employs a single discrete distribution to describe capacity degradation, this study utilizes the Dirichlet distribution to characterize the stochastic capacity degradation and introduces Monte Carlo simulation to simultaneously assess both reliability and environmental impact of a degradable transportation network. Numerical results demonstrate that as capacity degradation increases, network reliability declines and environmental impact escalates. Also, enhancing the maximum capacity of key links, instead of all links, significantly improves network performance. The proposed approach and findings can help optimize traffic management to improve reliability and reduce environmental effect, so as to establish an efficient and sustainable transportation network.</p>