New Public Management in the Transport Sector, Oslo Sept 2006. ________________________________________ Transport Infrastructure Pricing

1
New Public Management in the Transport Sector,
Oslo Sept 2006._________________________________
_______Transport Infrastructure Pricing A
European view

• Chris Nash
• Institute for Transport Studies,
• University of Leeds
• c.a.nash_at_its.leeds.ac.uk

2
Outline

• Introduction
• Development of the Commissions policy
• Pricing Principles
• Research Issues
• Practical experience
• Conclusions

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Development of EC Policy

• Green paper Towards fair and efficient pricing
  in transport (CEC, 1995)
• White paper Fair payment for infrastructure use
  (CEC, 1998)
• White paper on Transport Policy (CEC, 2001)
• Directive on Rail Infrastructure charges
  (2001/14)
• Proposal to amend Directive 1999/62/EC on the
  charging of heavy goods vehicles (CEC, 2003)

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Social rules for infrastructure pricing and
investment

• P SRMSC gives optimal use of existing capacity
• If P gt LRMSC expand capacity
• P lt LRMSC reduce capacity
• But note
• indivisibilities
• long time lags
• location specific externalities
• ? Need for SCBA

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Incentives for a privately owned infrastructure
manager

• Natural monopoly so needs regulation
• P SRMSC gives perverse incentives regarding
  investment
• P LRMSC gives better incentives
• So private IM should not receive payment for
  externalities, but for investment

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Incentives for commercial operators/franchisers

• Desirable that a long term contract signals
  avoidable costs, not just SRMSC
• Best achieved via a 2-part tariff (but
  competitive issues?)

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Cost recovery

• gt 100 for congested roads
• lt 100 for uncongested roads
• lt 100 for rail
• So we need either
• Government subsidies
• 2-part tariffs or Ramsey pricing (or both)

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Research Issues

• What proportion of infrastructure costs varies
  with use, and how can this be allocated between
  vehicle types?
• Is it possible to value external costs?
• Would MSC pricing damage the economy?
• Should all revenues be earmarked for the mode in
  question?

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Marginal social cost of infrastructure use

• Wear and tear
• Delays to other vehicles
• External accident cost
• Air pollution
• Noise
• Global warming

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Econometric studies of road wear and tear
Source Link et al. (2002). Updated using Link
(2006). Elasticity for Austria taken from Herry
and Sedlacek (2002)
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Rail Wear and Tear Costs
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External Congestion Costs (p per vehicle km)
Great Britain 1998 range by location
Source Sansom et al.
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Congestion and Scarcity on rail

• Relationship between reliability and capacity
  utilisation
• delay minutes f (capacity utilisation)
• Auctioning
• Calculation of opportunity cost
• Long run incremental cost

14
External Accident costs

• costs not borne by users (e.g. health services,
  police)
• Plus value of additional risk to other users
  (evidence that this is often negative)

15
The Impact Pathway Approach for the
quantification of external costs caused by air
pollution
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Valuation issues (UNITE values)

• Health effects
• Value of a statistical life
• 150,000 euros per life year lost
• Noise
• Use of house price studies to measure the Noise
  Sensitivity Depreciation Index (-.9)
• Global Warming
• Abatement cost to meet Kyoto targets
• - 20 euros per tonne

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Range of Environmental costs of Euro 2 diesel hgv
on inter-urban roads (eurocents per vkm)
Source UNITE case studies
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Environmental Costs of Rail Transport(euros per
100 train km)
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Impacts of pricing reform(IASON)

• Reassignment from urban to inter urban and rural
• Higher proportion of large trucks
• 6 of road tonne km diverted to rail and water
• More local sourcing of inputs and consumer goods
  (50 of traffic reduction)

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Regional impacts(IASON /TIPMAC)

• Biggest traffic reduction in core countries
• These also receive biggest revenues
• Ignoring recycling of revenue, GDP reduction
  slightly bigger in peripheral regions/countries
• If revenue recycled via income tax cuts, all
  countries benefit though scale variable

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Acceptability research

• Need to consider relevant stakeholders
• Acceptability amongst users if-
• Tackling recognised problems
• Seen as fair (change all vehicles regardless of
  nationality, vehicle type)
• Use of revenue agreed

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Implementation - roads
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Implementation - roads

• No impact on mode split (BUT Swiss charges
  accompanies move from 28 tonnes to 40 tonnes
  gvw).
• Significant impact on vehicle size, load factors,
  environmental category.

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Implementation rail cost recovery
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Implementation rail typical charge (euros per
train km)
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Conclusions

• EU policy will improve efficiency of resource
  allocation
• Problems with it may be overcome
• Need for more research but already know direction
  in which to move
• See www.imprint-net.org