Sustainability effects of Subsidies in Transport Gunnar Lindberg VTI, Sweden 1. Swedish Transport Accounts 2. Measuring Marginal Cost 3. Advanced pricing today 4. Infrastructure provision a decreasing cost activity 5. Financing 6. Conclusion
Swedish transport account, 1998 Infrastructure VAT Other tax Fuel tax Subsidy ROAD RAIL PT AVIATION MARITIME 7 000 6 000 5 000 Internal accident cost Environmental cost External accident cost Infrastructure cost Infr Charges User tariff 4 000 Supplier operating cost M 3 000 Delay Internal accident cost Environmental cost External accident cost 2 000 1 000 Infrastructure cost 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 M 0 ROAD RAIL PT AVIATION MARITIME
Comment 1» External costs are important» Accounting information is not enough» Marginal cost information is necessary Measuring the Marginal cost» (Infrastructure cost)» Air pollution» Accidents»Noise» Congestion/Scarcity» Greenhouse gases
Air pollution Impact Pathway Approach Emissions Transport and Chemical conversion Concentration and Deposition Response of Receptors Physical Impact Change in Utility Welfare Losses Costs Cost per vehicle kilometre Country and Petrol cars EURO II Diesel cars, EURO II town/area Belgium, rural 0.22 0.45 Belgium, Brussels 0.84 3.31 Finland, Helsinki 0.31 1.00 German, Stuttgart 0.44 1.33 German, 0.14 0.25 Güstrow-Neustrelitz Greece, Athens centre 1.53 6.52 Greece, rural2 0.26 0.47 Netherlands, 0.17 0.41 Groningen Netherlands, 0.54 2.46 Amsterdam United Kingdom, 1.10 4.46 London United Kingdom, rural 0.14 0.29 Source: Friedrich and Bickel (2001) p 209-210.
External accident cost Weight Internal Cost External Cost Proportion External Marginal tonne ( /vkm) ( /vkm) internal (θ) Cost ( /vkm) 3.5 11.9 0.007 0.020 0.27 n.a 12 14.9 0.005 0.032 0.13 n.a 15 18.9 0.004 0.065 0.06 0.006-0.010 19 22.9 0.003 0.031 0.08 0.007 0.009 23 26.9 0.006 0.048 0.11 0.008 0.012 27 30.9 0.003 0.050 0.06 0.015 0.017 31-0.003 0.099 0.03 0.030 0.033 Above 12t 0.004 0.047 0.08 0.008 0.011 Comment 2» Huge variability in marginal costs» Advanced pricing instrument necessary
Advanced pricing - Europe Stockholm» Kilometer charges on HGV in Switzerland, Austria and Germany» Road pricing in London and Stockholm» Advanced experiments - accidents
Passages over the zone Intelligent economic speed adaptation» Charge related to speed behaviour» GSM, GPS technology» 150 cars in real traffic
Pricing scheme Speed profile Low High 0-10% above speed limit 0.10 SEK/minute 0.20 SEK/minute 11-20% above speed limit 0.25 SEK/minute 0.50 SEK/minute 21% above speed limit 1.00 SEK/minute 2.00 SEK/minute 0.2 0.18 0.16 0.14 Speed profile roads with speed limit 50 km/h Car 58 Speed limit 50 km/h Sept 01 Sept 02 Frequence 0.12 0.1 0.08 Type I Type II Type III 0.06 0.04 0.02 0 2.5 7.5 12.5 17.5 22.5 27.5 32.5 37.5 42.5 47.5 52.5 57.5 62.5 67.5 72.5 77.5 Km/h
Reduced speed violations Comments 3 Figure 1 0.18 0.16 0.14 0.12 0.10 PVM, all violations, for original participants (Yes) and non-participants (No).» Advanced technology works» People adjust to pricing signals 0.08 0.06 0.04 Yes No 0.02 YesNov 0.00 Sept 2001 Oct 2001 Nov 2001 Sept 2002 Oct 2002 Nov 2002
Infrastructure a decreasing cost activity» Marginal infrastructure cost on railways Road maintenance cost - Sweden Table: 1 Marginal cost in /100 gross ton km for Swedish and Finnish railroads Country Sweden Finland Year 1995 2000 1995 2000 ALL tracks 0.012 0.013 0.016 0.024 Main/electrified tracks 0.009 0.009 0.012 0.018 Secondary/non-electrified tracks 0.097 0.099 0.026 0.040 Based on Johansson and Nilsson (2001). Exchange rate: 9.40 /SEK.» Cost recovery 12-17%
Airport cost Comment 4» Infrastructure cost is a decreasing cost activity» Marginal cost based pricing will not cover the infrastructure cost» or, average cost pricing will be too high
» Two sources;» The users» General taxpayers Financing Tax money not for free» Cost of Public Funds = 1.3 in Sweden» Welfare loss of user charges can be accepted up to 30%» This depends on case by case elasticities» Norway tunnels and bridges
Conclusions» External costs are important and if unpaid, they are a hidden subsidy.» We observe huge variability in marginal costs which means that we need to have variability in price signals.» Advanced technology is here, it works and people adjust to price signals. Introduce it to minimize external costs.» Infrastructure cost is a decreasing cost activity which means that we will have problems with cost recovery if we only look at pure infrastructure costs. Be careful with cost recovery.» We only have two sources for financing users or taxpayers. However, tax money is not for free (CPF = 30%) and we can accept a welfare loss of 30% for other sources.» Need to evaluate the welfare loss of user charges case by case. It is also a huge variability in elastcicties.