PG Funding and Management
Strategies
Task M4: The Impacts of Road
Pricing on the Socio-Economy
Kristín H. Sigurbjörnsdóttir and
Anton Goebel
Reykjavik 4.12.2008
Authors
•
•
•
•
•
Anton Goebel and Juha Tervonen, Finland
Oscar Alvarez Robles, Spain
Morten Welde and Inger Andrea Thrane, Norway
Laurent Donato, Belgium Wallonia
Samira Irsane-Semaan, France
04.12.2008
CEDR
2
Starting point for the task
• CEDR's strategic plan 2005-2009
- Task M4 "Show the effects of road pricing (RP) on
socio-economics"
- to show that RP is only one tool in tool kit of public
authorities
- the objectives of road pricing must be defined
- to analyse the nature of the toll systems applied
- identify and examine existing studies on the impact of RP
04.12.2008
CEDR
3
Starting point for the task
• Group's judgment
- There are already endless amount of general reviews of
existing systems and pricing theory, but not so many papers
on general impacts of RP -> The group decided to be loyal
to the original task title and concentrate on impacts of RP.
- Objectives, equity and acceptability should also be treated as
they are closely related to impacts of RP.
- Also a short review of current EU policy development would
be useful, but no reviews or case studies of existing
systems -> they are only used as examples of impacts!
04.12.2008
CEDR
4
Starting point for the task
The following content was agreed:
1) Introduction
2) Objectives of RP
2) RP in Europe
3) Socio-Economic Impact Chains of RP
4) Equity of RP
5) Acceptability of RP
7) Conclusions
04.12.2008
CEDR
5
Objectives of road pricing
• Two primary objectives
- Regulation: users pays all the costs (including all external cost) they
induce for the whole society -> demand management.
- Funding: generating revenues for construction and maintenance of
roads or in some cases e.g. revenues for promotion of public transport.
• Other objectives
- to limit CO2 emissions
- increase the quality of living environment
- decrease the fluctuation of travel time
One remark: the aim of RP is not to promote social fairness, but to
avoid distortions that lead to an inefficient allocation of resources and, in
turn, to a situation where the whole society is worse off!!!
04.12.2008
CEDR
6
Road pricing in Europe
• EU policy
- Taxes and fees must be related to level of pollution,
congestion and wear and tear of infrastructure -> polluter
pays principle!
- Since the publication of the White paper in 1998, the
Commission has taken several legislative initiatives.
04.12.2008
CEDR
7
Road pricing in Europe
- Eurovignette directive (1999) gives the legal basis for the
implementation of RP:
- HGV's over 12 tonnes for designated parts of network,
- HGV’S over 3,5 tonnes since 2012 (amended in 2006)
- minumum levels for taxes on HGV's and maximum levels
for user charges
- tolls should be proportionate to the cost of building,
operating, maintaining and developing the infrastructure
and may also include a return on capital or a profit margin
04.12.2008
CEDR
8
Road pricing in Europe
- 2008 proposal for revision of Eurovignette directive
- option for internalisation of external costs
- the revenue from internalisation of externalities will be
earmarked for reduction of externalities
- the scope is the entire network (national and local roads).
- The member countries have submitted their opinions on the
proposal and the final decision making process is in
progress.
04.12.2008
CEDR
9
Socio-economic impact chains
of road pricing
- the impacts of different road pricing instruments
(including taxation)
- no quantitative measurement of impacts, but some
examples of existing systems
- application of "The Impact Map of Road
Management" and causal impact chain approach
developed by FINNRA
04.12.2008
CEDR
10
Socio-economic impact chains
of road pricing
THE IMPACT CHAIN APPROACH
Concept analysis: the strategy level
impacts (e.g.. environment,
accessibility, regional development...)
are divided into partial impacts.
Causation: the change in state that
follows directly from RP (output) and
the impacts that follows from it in
logical progression.
Strategy level
impacts
Road pricing
instruments
Result: the higher level abstract
impacts are presented in more
concrete way for illustration of
impacts of RP.
04.12.2008
CEDR
11
04.12.2008
Direct
impacts
Volume of travel
& consumption
Travel costs
(households)
GNP
Employment
RP
Price of goods &
services
Freight costs
(companies)
Production
German HGV road tax: supplementary
prices 0.15 - 0.90 €/100kg for
shipment from Finland to Germany.
Use of revenue
General economic perspective
Socio-economic impact chains
of road pricing
Funding of the
transport system
CEDR
Tax compensations
12
ACCESSIBILITY
Travel and transportation costs
Socio-economic impact chains
of road pricing
04.12.2008
Cost of using
passenger car
RP
Change in travel &
freight costs
Tax
compensations
Fixed cost,
fuel cost,
km cost
Funding of the
transport
system
Cost of
operating bus
services
Cost of
operating
freight
services
German HGV road tax: supplementary
prices 0.15 - 0.90 €/100kg for
shipment from Finland to Germany.
Empty runs of HGV reduced by 15%
since 2005.
Revenue
CEDR
13
ACCESSIBILITY
Functionality
Socio-economic impact chains
of road pricing
04.12.2008
London: travel time
savings 37 000
hours per day.
Stockholm: number
of entered vehicles 22%.
Charges
Average
speed
Volume,
timing,
route,
mode of
travel /
delivery
Funding of the
transport system
Smooth flow
of traffic
Travel time
Fluctuation of
travel times
Disruptions
Predictability
of travel and
delivery times
Need to plan
travel and
consider
certainty
margins
Revenue
CEDR
14
ACCESSIBILITY
Travel convenience
Socio-economic impact chains
of road pricing
Experience of
travel
environment
Charges
Volume,
timing,
route,
mode of
travel
No valid examples
available, only
some indicative
statements.
Convenience of
travel
Experience of
travel
situation
Funding of the
transport system
Revenue
04.12.2008
CEDR
15
Socio-economic impact chains
of road pricing
Vehicle
taxes
ACCESSIBILITY
Traffic safety
Traffic regulation penalties
Insurance system
Traffic
behaviour
Fatalities
Charges
Volume,
timing,
route,
mode of
travel/
delivery
Changes in
traffic flow
Accident risk
& risk
perception
Number and
severity of
accidents
Stockholm: personal
injury accidents
reduced 5-10% inside
the area.
Funding of the
transport system
Injuries
Damage to
property
Norway: if traffic moves from high
quality toll road to "free" lower class
roads, safety impact is not
necessarily positive.
Revenue
04.12.2008
Vehicle characteristics
CEDR
16
Socio-economic impact chains
of road pricing
ENVIRONMENT
Vehicle/fuel
taxes
Charges
Volume,
timing,
route,
mode of
travel /
freight
Vehicle characteristics/fuel
consumption
Emission
volumes and
noise levels
Funding of the
transport system
Environmental
risks and the
quality of the local
and global
environment
Stockholm:CO2
emissions reduced
by 14%.
Health and
comfort, global
economy
Revenue
04.12.2008
CEDR
17
COMMUNITY STRUCTURE
Socio-economic impact chains
of road pricing
04.12.2008
Vehicle/fuel
taxes
Charges
Cost of travel
& freight
Funding of the
transport system
Community planning
Location of
services,
workplaces and
housing
London: sales
reduced by 5.58.2% in tolled area
during the year after
the charge.
Number and/or
length of trips
and deliveries
Size and density
of community
Accessibility
Revenue
CEDR
18
QUALITY OF THE LIVING
ENVIRONMENT
Socio-economic impact chains
of road pricing
04.12.2008
Vehicle/fuel
taxes
Charges
Changes in
travel and
freight
Funding of the
transport system
No valid estimates,
but e.g. in Stockholm
general "feeling" is
positive.
Green areas
Townscape
Quality of
living
environment
Environmental
nuisances
Security
Revenue
CEDR
19
REGIONAL DEVELOPMENT
Socio-economic impact chains
of road pricing
04.12.2008
Availability of
labour
Vehicle/fuel
taxes
Charges
Cost of trips
&
deliveries
Firms
Location
advantage/
disadvantage
Households
Funding of the
transport system
Access to
markets
Costs of
logistics
Choices in
labour markets
Öresund bridge:
major integration
of the Öresund
region in the
employment
market, housing,
business,
shopping and
leisure activities.
(Not direct
impact of RP, but
RP made the
project possible.)
Access to
services
Quality of
living
environment
Revenue
CEDR
20
Socio-economic impact chains
of road pricing
Finland: 11% of the
State revenue from
road user taxation.
ROAD FINANCE
Vehicle/fuel
taxes
State budget
Transport
system funding
(maintenance /
investment)
Charges
Norway:25 % of the
State /
total road
local budget construction budget
Revenue
comes from toll
road revenues.
04.12.2008
CEDR
21
Equity of road pricing
• Equity could be defined as the fair distribution of impacts across the
whole population.
• RP does not have to be regressive (take larger percentage of income
from the poor that the rich), but there are always some loser and
winners.
Winners
Losers
Motorists who value time
Public transport passengers who
experience shorter travel times and service
improvements
Receivers of net revenues
Motorists who do not value time and have
no alternative modes of travel
Motorists who change destination
Residents in areas that experience
increased traffic
Source: Gomez-Ibanez (1992)
04.12.2008
CEDR
22
Equity of road pricing
• Equity implications are sensitive to the scheme's specification and the
location of workplaces and residential areas, car ownership and travel
patterns in different cities.
• The use of revenue is crucial from equity viewpoint
- Small (1992) and Goodwin (1989) tripartition of the revenue:
- general tax cuts or cuts in car taxes
- public transport improvements
- road investments.
04.12.2008
CEDR
23
Acceptability of road pricing
• In general RP is not acceptable!
100% 96
92
84
81
91
86
84
75%
59
50%
41
25%
19
4
16
8
0%
Improve
public
transport
16
P&R
Ac c es
Reducing Inc reasing
parking
restric tion parking
c ost
spac e
Acceptable
14
9
Cordon Congestion Distanc e
based
pric ing
pric ing
pric ing
Not acceptable
Source: Schade 2001.
04.12.2008
CEDR
24
Acceptability of road pricing
• Acceptability of RP increases when road users start to benefit from
impacts of RP (improved traffic conditions, roads, quality of living
environment, public transport etc).
80%
72%
70%
70%
64%
41
60%
54%
19
50%
40%
37%
Ac c es
restric tion
16
48%
Cordon Congestion
pric ing
pric ing
30%
20%
10%
0%
Bergen (open 1986)
Oslo (open 1990)
Negative attitudes in percent before opening
Trondheim (open 1992)
Negative attitudes in percent a year after opening
Source: Odeck and Brathen 2002.
04.12.2008
CEDR
25
Acceptability of road pricing
• Three main forms of acceptability are public, business and political
acceptability.
• The acceptability of RP increases with the clarity of the perceivable
positive impacts.
Cost of
travel
and
freight
Functio
nality
of road
links
Public
acceptability
---
+
Business
acceptability
--
+
Political
acceptability
--
+
Traffic
Safety
Environment
Commun
ity
structure
Quality of
living
environm
ent
Regional
development
Funding
++
+
+
-
+++/- - -
---
++/- - -
--
++
--
+
+
+
+++ very important positive factor, ++ important positive factor, + small positive factor, - - - very important negative
factor, - - important negative factor, - small negative factor, blank = very little or meaningless factor
04.12.2008
CEDR
26
Conclusions
• When designing the pricing system, there must be an understanding of
the impacts of pricing and what impacts are important for the
acceptability of the system.
• The socio-economic impacts of RP are diverse and far reaching -> it is
much easier to estimate the amount of direct impacts (e.g. user costs,
accident level, etc.), but estimating the broader impacts (e.g. regional
development, impact on GNP, etc. ) is challenging and often only at an
indicative level.
• The magnitude of the impacts depends on the level of fees that are set.
• RP can have both regressive and progressive impacts and it does not
necessarily have to hurt the poor and have negative impacts on mobility
and thus lead to social exclusion.
04.12.2008
CEDR
27
Conclusions
• The acceptability of RP has a clear connection to its impacts:
acceptability increases when the actual impacts are similar to what was
predicted.
• Although road management in Europe is usually funded from the
general State budget, road user charges are becoming increasingly
important in the regulation of traffic and the funding of road
management.
• Vehicle and fuel taxes are effective instruments only for obtaining
funding, but are very ineffective in producing other impacts.
04.12.2008
CEDR
28
Thank you!
[email protected]
[email protected]
04.12.2008
CEDR
29