Calculate distance in km to nearest points (given in lat/long) using ArcGIS DEsktop and/or R?

Although this isn't an ArcGIS solution, your problem can be solved in R by exporting your points from Arc and using the spDists function from the sp package. The function finds the distances between a reference point(s) and a matrix of points, in kilometers if you set longlat=T.

Here's a quick and dirty example:

library(sp)
## Sim up two sets of 100 points, we'll call them set a and set b:
a <- SpatialPoints(coords = data.frame(x = rnorm(100, -87.5), y = rnorm(100, 30)), proj4string=CRS("+proj=longlat +datum=WGS84"))
b <- SpatialPoints(coords = data.frame(x = rnorm(100, -88.5), y = rnorm(100, 30.5)), proj4string=CRS("+proj=longlat +datum=WGS84"))

## Find the distance from each point in a to each point in b, store
##    the results in a matrix.
results <- spDists(a, b, longlat=T)

It's not an ArcGIS solution, but using a Round Earth data model in a spatial database would do the trick. Calculating earth distance in database supporting this would be pretty easy. I can suggest you two readings:

http://postgis.net/workshops/postgis-intro/geography.html

http://blog.safe.com/2012/08/round-earth-data-in-oracle-postgis-and-sql-server/


You need a distance calculation that works with Lat/Long. Vincenty is the one I would use (0.5mm accuracy). I have played with it before, and it is not too hard to use.

The code is a bit long, but it works. Given two points in WGS, it will return a distance in meters.

You can use this as a Python script in ArcGIS, or wrap it around another script that simply iterates over the two Point Shapefiles and builds a distance matrix for you. Or, it is probably easier to feed the results of GENERATE_NEAR_TABLE with finding the 2-3 nearest features (to avoid complications of earth's curvature).

import math

ellipsoids = {
    #name        major(m)   minor(m)            flattening factor
    'WGS-84':   (6378137,   6356752.3142451793, 298.25722356300003),
    'GRS-80':   (6378137,   6356752.3141403561, 298.25722210100002),
    'GRS-67':   (6378160,   6356774.5160907144, 298.24716742700002),

}

def distanceVincenty(lat1, long1, lat2, long2, ellipsoid='WGS-84'):
    """Computes the Vicenty distance (in meters) between two points
    on the earth. Coordinates need to be in decimal degrees.
    """
    # Check if we got numbers
    # Removed to save space
    # Check if we know about the ellipsoid
    # Removed to save space
    major, minor, ffactor = ellipsoids[ellipsoid]
    # Convert degrees to radians
    x1 = math.radians(lat1)
    y1 = math.radians(long1)
    x2 = math.radians(lat2)
    y2 = math.radians(long2)
    # Define our flattening f
    f = 1 / ffactor
    # Find delta X
    deltaX = y2 - y1
    # Calculate U1 and U2
    U1 = math.atan((1 - f) * math.tan(x1))
    U2 = math.atan((1 - f) * math.tan(x2))
    # Calculate the sin and cos of U1 and U2
    sinU1 = math.sin(U1)
    cosU1 = math.cos(U1)
    sinU2 = math.sin(U2)
    cosU2 = math.cos(U2)
    # Set initial value of L
    L = deltaX
    # Set Lambda equal to L
    lmbda = L
    # Iteration limit - when to stop if no convergence
    iterLimit = 100
    while abs(lmbda) > 10e-12 and iterLimit >= 0:
        # Calculate sine and cosine of lmbda
        sin_lmbda = math.sin(lmbda)
        cos_lmbda = math.cos(lmbda)
        # Calculate the sine of sigma
        sin_sigma = math.sqrt(
                (cosU2 * sin_lmbda) ** 2 + 
                (cosU1 * sinU2 - 
                 sinU1 * cosU2 * cos_lmbda) ** 2
        )
        if sin_sigma == 0.0:
            # Concident points - distance is 0
            return 0.0
        # Calculate the cosine of sigma
        cos_sigma = (
                    sinU1 * sinU2 + 
                    cosU1 * cosU2 * cos_lmbda
        )
        # Calculate sigma
        sigma = math.atan2(sin_sigma, cos_sigma)
        # Calculate the sine of alpha
        sin_alpha = (cosU1 * cosU2 * math.sin(lmbda)) / (sin_sigma)
        # Calculate the square cosine of alpha
        cos_alpha_sq = 1 - sin_alpha ** 2
        # Calculate the cosine of 2 sigma
        cos_2sigma = cos_sigma - ((2 * sinU1 * sinU2) / cos_alpha_sq)
        # Identify C
        C = (f / 16.0) * cos_alpha_sq * (4.0 + f * (4.0 - 3 * cos_alpha_sq))
        # Recalculate lmbda now
        lmbda = L + ((1.0 - C) * f * sin_alpha * (sigma + C * sin_sigma * (cos_2sigma + C * cos_sigma * (-1.0 + 2 * cos_2sigma ** 2)))) 
        # If lambda is greater than pi, there is no solution
        if (abs(lmbda) > math.pi):
            raise ValueError("No solution can be found.")
        iterLimit -= 1
    if iterLimit == 0 and lmbda > 10e-12:
        raise ValueError("Solution could not converge.")
    # Since we converged, now we can calculate distance
    # Calculate u squared
    u_sq = cos_alpha_sq * ((major ** 2 - minor ** 2) / (minor ** 2))
    # Calculate A
    A = 1 + (u_sq / 16384.0) * (4096.0 + u_sq * (-768.0 + u_sq * (320.0 - 175.0 * u_sq)))
    # Calculate B
    B = (u_sq / 1024.0) * (256.0 + u_sq * (-128.0 + u_sq * (74.0 - 47.0 * u_sq)))
    # Calculate delta sigma
    deltaSigma = B * sin_sigma * (cos_2sigma + 0.25 * B * (cos_sigma * (-1.0 + 2.0 * cos_2sigma ** 2) - 1.0/6.0 * B * cos_2sigma * (-3.0 + 4.0 * sin_sigma ** 2) * (-3.0 + 4.0 * cos_2sigma ** 2)))
    # Calculate s, the distance
    s = minor * A * (sigma - deltaSigma)
    # Return the distance
    return s