Market-based Instruments Applied to Transportation Issues ... · Market-based Instruments applied...
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Market-based Instruments Applied to Transportation Issues:
Swiss Heavy Vehicle Fee
Doctoral Seminar EPFL
April 11, 2013
Franziska Borer Blindenbacher
Transport Consulting
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Overview
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• Full Costs of Transportation
• Externalities, External Costs
• Market-based Instruments
• Swiss Heavy Vehicle Fee (HVF)
• Conclusion and Discussion
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Inefficiencies in Transportation
“… one of the important reasons why imbalances between modes of transport and inefficiencies have arisen is because transport users have not been adequately confronted with the full costs of their activities. As prices do not reflect the full social cost of transport, demand has been artificially high. If appropriate pricing and infrastructure policies were to be pursued, these inefficiencies would largely disappear over time.”
Source: EU Mid-term Review of White Paper (2006)
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Inefficiencies in Transportation
“… one of the important reasons why imbalances between modes of transport and inefficiencies have arisen is because transport users have not been adequately confronted with the full costs of their activities. As prices do not reflect the full social cost of transport, demand has been artificially high. If appropriate pricing and infrastructure policies were to be pursued, these inefficiencies would largely disappear over time.”
Source: EU Mid-term Review of White Paper (2006)
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• Fatalities, injuries
• Noise, air, water pollution
• Congestion
• Greenhouse gas emissions
• Diminishing energy resources
Negative Impacts of Transportation
• Biological, ecosystem damage
• Large land use
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Full Social Cost of Transportation
All costs occurring due to provision and use of transport infrastructure: wear and tear of infrastructure, capital,
congestion, accident, environmental costs
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Private or internal costs
Directly borne by transport user: wear and tear and energy cost of vehicle use, own time costs, transport fares, taxes and charges
External costs
Difference between social costs and private costs, borne by society at large
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Classification of Costs of Transport
Cost of categories Social costs
Internal/Private costs: borne by transport user
External costs: borne by society or other transport users
Transport operating expenditure
Fuel and vehicle costs Tickets/fares
Costs paid by other users or by society
Infrastructure use costs Costs covered by infrastructure charge Costs covered by tickets/fares
Costs partly uncovered
Accidents costs Costs covered by insurance, own accident costs
Uncovered accident costs (e.g. pain and suffering imposed on others), administrative and police costs
Noise costs Own disbenefits Costs borne by people exposed to noise (noise disturbance, health effects)
Air pollution costs Own disbenefits (depending on individual situation)
Costs borne by people exposed to air pollution (health effects)
Climate change costs Own disbenefits (including future generation, i.e. children)
Costs borne by society and by future generations
Congestion costs Own time costs Delays/time costs imposed on others
Source: EU Green Paper "Towards fair and efficient pricing in transport” (1995) 7 11.4.2013 Franziska Borer Blindenbacher Transport Consulting
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External Costs CH: 9 billion CHF
Road (94%) Rail (6%)
Accidents 2’076 24
Noise 1’262 85
Health 1’970 141
Building Damage 298 19
Climate 1’210 3
Nature-Landscape 747 121
Other Costs 896 102
Total (million CHF, 2009) 8’459 495
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• Little relationship between amount ‘consumed’ (distance or resources) and total price
• Mismatch between transport prices paid by users and underlying costs
• Solution: Applying ‘user-pays’ and ‘polluter-pays’ principles by using market-based instruments
Prices in Transport Sector
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Price-based Market Instruments
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• User charges
• Emission charges or fees
• Changing taxes
• Giving subsidies
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Market-based Instruments applied for Internalization
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• Lead to more efficient use of infrastructure
• Reduce negative side effects of transport activity
• Improve fairness between transport users and transport modes
• Change behavior
• Flexible, often used in policy mix with other instruments (regulations with command/ control measures)
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Heavy Vehicle Fee in CH since 2001
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• Shift from Road to Rail
• Protection of Environment
• Internalizing External Costs
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Design of Swiss Heavy Vehicle Fee
Performance-related:
Distance Weight Emissions (2009):
Euro 0/1/2: 3.07 Cts/tkm Euro 3: 2.66 Cts/tkm Euro 4/5/6: 2.26 Cts/tkm
Admissible Weight > 3.5t
Use of all Roads in CH
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Use of Revenue HVF
Current Revenue CHF 1000 million/annum:
2/3 Government (Public Transport Fund, FinöV) New Rail Links across Alps (2 base tunnels)
Rail 2000 Noise Mitigation
High Speed Rail Links
1/3 Cantons
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HVF - Impact on Environment
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100% 100.00% 100% 100%
84.1%
89.7%
96.3% 95.7%
75%
80%
85%
90%
95%
100%
105%
NOx PM10 CO2 Energy
Old Regime New Regime
Source: ARE, 2012
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HVF - Effect on Vehicle Kilometers
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1950
2000
2050
2100
2150
2200
2250
2300
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Mio
. Fzk
m
Source: ARE, 2012
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HVF - Effect on Alpine Trips
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Source: ARE, 2012
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Road Charging Globally
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• Truck Tolling: Austria (2004), Germany (2005), Czech Republic (2007), Slovakia (2010), Poland (2011)
• EUROVIGNETTE (as of 2013): External costs of air pollution, noise and congestion may be charged
• Urban Road Pricing: Singapore (1975), Bergen (1986), London (2003), Stockholm (2007), Oslo (2008), Milan (2008), HOT-lanes in US
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Conclusions
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• Consider full costs of transportation
• Internalize external costs by applying performance-related market-based instruments
• Transport users should get what they pay for and pay for what they get
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Sources
http://www.are.admin.ch/themen/verkehr/00250/00461/index.html?lang=en
http://europa.eu/rapid/press-release_PRES-11-300_en.htm
http://ec.europa.eu/transport/modes/road/road_charging/charging_hgv_en.htm
http://www.eea.europa.eu/publications/road-user-charges-for-vehicles
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Contact
Franziska Borer Blindenbacher
International Transport Consultant
Scientific Adviser, Federal Office for Spatial Development ARE
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