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DIRECTORATE-GENERAL FOR INTERNAL POLICIES

POLICY DEPARTMENT B: STRUCTURAL AND COHESION POLICIES

TRANSPORT AND TOURISM

The Calculation of External Costs in the Transport Sector

A comparative analysis of recent studies in the light of the Commission's 'Greening Transport

Package'

STUDY

This document was requested by the European Parliament's Committee on Transport and Tourism.

AUTHORS

TRT Trasporti e Territorio Srl*

RESPONSIBLE ADMINISTRATOR

Mr Nils DANKLEFSENPolicy Department Structural and Cohesion PoliciesEuropean ParliamentB-1047 BrusselsE-mail: [email protected]

LINGUISTIC VERSIONS

Original: EN;Translation: DE, ES, FR, IT, PL.

ABOUT THE EDITOR

To contact the Policy Department or to subscribe to its monthly newsletter please write to:[email protected]

Manuscript completed in February 2009.

Brussels, © European Parliament, 2009.

This document is available on the Internet at:http://www.europarl.europa.eu/activities/expert/eStudies.do?language=N

DISCLAIMER

The opinions expressed in this document are the sole responsibility of the author and do not necessarily represent the official position of the European Parliament.

Reproduction and translation for non-commercial purposes are authorised, provided the source is acknowledged and the publisher is given prior notice and sent a copy.

* Mr Angelo MARTINO, Ms Silvia MAFFII, Mr Alessio SITRAN, Ms Maurizia GIGLIO.

DIRECTORATE-GENERAL FOR INTERNAL POLICIES

POLICY DEPARTMENT B: STRUCTURAL AND COHESION POLICIES

TRANSPORT AND TOURISM


A comparative analysis of recent studies in the light of the Commission's 'Greening Transport

Package'

STUDY

AbstractThe internalisation of external costs in the transport sector is one of the most challenging issues that European transport policy will have to deal with in the coming years. The study provides a concise overview of the most important and most recent studies on external costs, highlighting the strengths and weaknesses of the various approaches, and analysing the current work of the Commission's Directorate for Transport, the IMPACT Handbook on estimation of external costs in the transport sector and the Greening Transport Package.

IP/B/TRAN/FWC/2006_156/Lot7-C1-SC4 February 2009

PE 408.958 EN


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CONTENTS

Glossary 3

List of abbreviations and acronyms 7

List of figures 9

List of tables 9

Executive summary 11

1. Introduction 19

2. The definition of external costs of transport 21

2.1 Types of externalities 212.2 Methodologies for assessment 23

2.2.1 The economic quantification of impacts 232.2.2 Average and marginal costs 252.2.3 'Bottom–up' and 'top–down' approaches 26

2.3 Internalisation of external costs 26

3 The calculation of external costs according to the scientific literature 29

3.1 Introduction 293.2 Accidents 32

3.2.1 Types of cost 323.2.2 Methodology and key factors for calculation 333.2.3 Estimates 34

3.3 Climate change 363.3.1 Types of costs 363.3.2 Methodology and key factors for calculation 373.3.3 Estimates 37

3.4 Air pollution 403.4.1 Types of costs 403.4.2 Methodology and key factors for calculation 403.4.3 Estimates 41

3.5 Noise 433.5.1 Types of costs 433.5.2 Methodology and key factors for calculation 443.5.3 Estimates 44

3.6 Congestion and scarcity 463.6.1 Types of costs 463.6.2 Methodology and key factors for calculation 473.6.3 Estimates 48

3.7 Other external costs 503.8 Summary 52

4 The IMPACT study 55

4.1 Policy context 554.2 Overview 554.3 Estimates of external costs 55

4.3.1 Accidents 56

Policy Department B: Structural and Cohesion Policies

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4.3.2 Climate change 594.3.3 Air pollution 594.3.4 Noise 614.3.5 Congestion and scarcity 624.3.6 Other external costs 64

4.4 Summary of the IMPACT Study 64

5 Analysis of the Greening Transport Package 69

5.1 Overview of the Greening Transport Package 695.2 Proposed measures for more sustainable transport 705.3 Impact assessment of the internalisation of external costs 71

5.3.1 The degree of internalisation by modes of transport and externality type 71

5.3.2 The methodology 735.3.3 Use of revenues 755.3.4 Analysis of impacts 755.3.5 Conclusions 76

5.4 Proposal for a Directive on HGV charging 775.5 Rail noise abatement measures 825.6 Future measures 835.7 Stakeholders' positions on the Greening Transport Package 835.8 Conclusions 86

6 Conclusions 89

6.1 The scientific basis of the IMPACT Handbook 896.2 The Greening Transport Package and the IMPACT Handbook 89

6.2.1 Transport modes coverage 896.2.2 Types of external costs 906.2.3 Cap values 91

6.3 Final remarks 926.3.1 Current levels of internalisation 926.3.2 Use of resources 936.3.3 Coordinated measures for all modes of transport 936.3.4 Time horizon for implementing the HGV charging system 936.3.5 Interoperability of IT tools 93

7 Bibliography 95

ANNEXES 101

Annex A Overview of selected output values for cost category 101

Annex B What the European Union has already done 111

Annex C Examples of practical application of the proposed

Eurovignette Directive and calculation of cap values 113


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GLOSSARY

Accident elasticity Percentage change in the number of accidents in response to a 1% increase or decrease in traffic volume.

Accident insurance Voluntary or mandatory insurance against the risk of accidents (property and health). The premium serves to (partly) internalise external costs.

Accident rate Accident rate describes the probability of an accident per 1000 vehicle kilometres.

Average cost Total costs in a period, divided by the quantity (output) produced/consumed in that period.

Cheapest cost avoider principle

(CCAP)

The stakeholder who can prevent external costs at the lowest cost to the overall economy should pay.

Climate change (global warming)

Climate change refers to the variation in the Earth’s global climate or in regional climates over time. In recent usage, especially in the context of environmental policy, it often refers only to changes in modern climate, including the rise in average surface temperature known as global warming, often as a consequence of human activities.

Contingent valuation method

(CVM)

Valuation method which elicits estimates of value directly from individuals by asking how much they are willing to pay/to accept for improving/deteriorating environmental quality.

Decibel Measure for calculating the intensity of sound energy. Several filters have been defined to achieve a better adaptation of dB measurements and the loudness impression of human beings. The most commonly used type of filter is the (A) filter.

Defensive expenditures

Method to estimate the availability to pay for a reduction in annoyance values at acceptable levels. This method is useful in determining the minimum threshold of the values that individuals associate with environmental goods and services, by levering on a set of inputs provided by the market.

Dose-response functions

Functions showing the link between a specific concentration and its specific effects.

Elasticity Proportional change in demand as a response to a price increase or decrease.


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External cost Cost not borne by the person causing this cost, but imposed on other users. It is an economic cost not normally taken into account in markets and in the decisions made by market players.

Hedonic pricing method

Regression technique used to estimate the prices of qualities or models that are not available on the market in particular periods, but the prices of which in those periods are needed in order to be able to construct price relatives. It assesses the value of various aspects of the environment through the WTP expressed in related markets.

Human value (loss) Value attributed to human life in excess of the average economic output produced by an individual.

Internalisation Incorporation of an externality into the market decision-making process through pricing or regulatory interventions.

Marginal accident cost (MC)

When a user enters the traffic stream he/she will expose himself/herself to an accident risk. In addition he/she increases or decreases the risk for other users. When economic values are assigned to these changes in risk they express the marginal accident cost.

Marginal cost Costs linked to a small increment in demand.

Marginal external accident cost

The user already perceives a part of the marginal accident cost as a private marginal cost (PMC). The difference between the marginal accident cost and the PMC is the unpaid marginal external accident cost.

Marginal external costs

The difference between marginal private and social costs as defined above.

Marginal private costs

The costs associated with a unit of extra consumption which would be borne by the person consuming that unit.

Marginal social costs

The costs associated with a unit of extra consumption which would be borne by society at large, including those costs borne by the person consuming that unit.

Opportunity costs Costs which arise when a particular activity restricts alternative uses of a scarce resource.

Polluter pays principle

Principle whereby the polluting party pays for the damage done to the natural environment.

Revealed preferences

Method based on the observation of actual behaviour of individuals. It includes: averting or defensive behaviour method, hedonic pricing


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method, travel cost method, and cost of illness method.

Risk elasticity Percentage change in the accident risk in response to a 1% increase or decrease in traffic volume.

Risk value Monetary value for pain, suffering and grief of an average transport accident victim. It is mainly used for estimating marginal external accident costs.

Shadow price In the context of a maximisation problem with a constraint, the shadow price on the constraint is the amount that the objective function of the maximisation would increase if the constraint were relaxed by one unit.

Stated preferences Method which gathers data on the individual preferences by means of direct interviews of a sample of the population. Sample interviews are carried out where respondents are asked to choose between alternative pairs or to rank a wider number of alternatives. The main technique developed is contingent valuation.

Traffic volume Measure for traffic expressed in vkm, pkm or tkm.

Travel costs method Travel costs method arises from the recognition that travel and time costs form an implicit price for accessing recreation resources. This method seeks to estimate a money value on the basis of the amount that people actually pay (in money and time) to gain access, or to avoid various forms of damage and degradation. Here WTP is assessed through expenditure on recreational activities.

Travel mode Class of means of transport (road, air, rail, maritime, inland waterways, etc).

Value of a life year lost (VLYL)

The approach values lost live years and not premature deaths. The value of a live year can be derived from the VSL and taking age, life expectancy and discount rates into account. This approach is especially applied for the valuation of air-pollution-related health effects.

Value of statistical life (VSL)

Method to calculate a monetary equivalent to a person who is killed or injured. VSL may be intended as the opportunity costs of a saved human life.

Value of time (VOT)The monetary value attached to transport time savings.


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Willingness to accept (WTA)

The willingness (or ability) of people to accept in compensation for the abolition, reduction or reception of a particular matter.

Willingness to pay (WTP)

WTP generally is the maximum monetary amount that an individual would pay to obtain a unit of a good.


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LIST OF ABBREVIATIONS AND ACRONYMS

CO2 Carbon dioxide is a chemical compound composed of two oxygen atoms covalently bonded to a single carbon atom. It is a greenhouse gas and a major contributor to climate change

CO2e Equivalent CO2 (CO2e). It refers to the concentration of CO2that would cause the same level of radiative forcing as a given type and concentration of greenhouse gas

dB Decibel

DG ECFIN Directorate-General for Economic and Financial Affairs of the EU

DG EMPL Directorate-General for Employment, Social Affairs and Equal Opportunities of the EU

DG ENTR Directorate-General for Enterprise and Industry of the EU

DG ENV Directorate-General for the Environment of the EU

DG JRC Directorate-General Joint Research Centre of the EU

DG SG Directorate-General - Secretariat-General of the EU

DG TAXUD Directorate-General for Taxation and Customs Union of the EU

DG TREN Directorate-General for Energy and Transport of the EU

ETS Emissions Trading Scheme

EU European Union

GHG Greenhouse gas

HDVs Heavy-duty vehicles over 3.5 tonnes gross weight

HGVs Heavy goods vehicles over 3.5 tonnes gross weight

IPA Impact pathway approach

IPCC Intergovernmental Panel on Climate Change

LDVs Light-duty vehicles under 3.5 tonnes gross weight

LTO Landing and taking off events

NOX Generic term for mono-nitrogen oxides (NO and NO2). These oxides are produced during combustion, especially combustion at high temperatures.

PCU Passenger car unit. It is used to standardise vehicles in relation to passenger cars.


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Pkm Unit of measurement which represents the transport of one passenger over one kilometre.

PM Particulate matter, particulates (fine dust and soot) suspended in the air.

Ppm Parts per million. It is used to quantify small concentrations, usually mass.

Ro-Ro Roll-on/roll-off. Ro-Ro vessels are ferries designed to carry wheeled cargo such as cars, trucks, semi-trailer trucks, trailers or railway coaches/wagons.

SO2 Sulphur dioxide, it acts as an acid. Inhalation results in laboured breathing, coughing, and/or a sore throat and may cause permanent pulmonary damage.

Tkm Unit of measurement which represents the transport of one tonne over one kilometre.

Vkm Unit of measurement representing the movement of a road motor vehicle over one kilometre.


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LIST OF FIGURES

Fig. 2. 1 Overview of the main methods for the evaluation of environmental goods 25

Fig. 2. 2 Internalisation of prices and externalities in an economic sector 27

Fig. 4. 1 Example of external costs in urban areas (daytime, in €/cent) 66

Fig. 4. 2 Example of external costs in interurban areas (daytime, in €/cent) 66

Fig. 4. 3 Example of external costs in urban areas (night-time, in €/cent) 67

Fig. 4. 4 Example of external costs in interurban areas (night-time, in €/cent) 67

LIST OF TABLES

Tab. 2. 1 Main types of transport externalities 22

Tab. 2. 2 Main types of other external costs of transport 22

Tab. 3. 1 The relevant studies relating to transport externalities 30

Tab. 3. 2 Matrix of the 11 most relevant studies on external transport costs 32

Tab. 3. 3 External accident costs: overview of the surveyed studies 35

Tab. 3. 4 External climate change costs: overview of the surveyed studies 39

Tab. 3. 5 External air pollution costs: overview of the surveyed studies 42

Tab. 3. 6 External noise costs: overview of the surveyed studies 45

Tab. 3. 7 External congestion costs: overview of the surveyed studies 49

Tab. 3. 8 Main types of 'other external costs' according to selected studies 52

Tab. 3. 9 Degree of relevance of each externality per transport mode 53

Tab. 3. 10 Comparative summary for the surveyed main externalities 54

Tab. 4. 1 Recommended unit values for accidents for different networks in€ct/km for passenger cars, motorcycles and HDVs 58

Tab. 4. 2 Overview of the recommended values for external costs of climate change (in €/tonne per CO2) 59

Tab. 4. 3 Recommended values for air pollution costs for road, rail and waterways (€2000/tonne of pollutant) 60

Tab. 4. 4 Recommended values for marginal noise costs for road and rail transport (€ct/vkm) 62

Tab. 4. 5 Proposed ranges of marginal social costs prices of congestion by road class and type of area (€/vkm 2000) 63

Tab. 4. 6 Main strengths and weaknesses of the IMPACT Handbook 65

Tab. 5. 1 Overall strategy for the internalisation of external costs for all modes of transport 71

Tab. 5. 2 Policy options analysed for the internalisation of external costs 74


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Tab. 5. 3 Main items in the proposal for the revision of the Directive on HGV charging (Eurovignette) 78

Tab. 5. 4 EU strategy for the internalisation of external costs by mode oftransport 87

Tab. 6. 1 The IMPACT study and the Greening Transport Package 92

Tab. A. 1 Accident costs in road transport 101

Tab. A. 2 Accident costs: selected values for rail transport 102

Tab. A. 3 Air pollution costs: selected output values for passenger cars 103

Tab. A. 4 Air pollution costs: selected output values for HGVs 104

Tab. A. 5 Noise costs: selected output values by traffic scenario 105

Tab. A. 6 Estimates of congestion costs for urban roads in €/vkm 107

Tab. A. 7 Habitat fragmentation and habitat loss in Switzerland: average costs per km of infrastructure (road and rail transport) 108

Tab. A. 8 Habitat fragmentation and habitat loss in the EU 15 (plus Switzerland and Norway): average costs per km of infrastructure (road and rail transport) 108

Tab. A. 9 Separation effects: input values and cost factors for road and rail infrastructure in urban areas in Switzerland 108

Tab. A. 10 Scarcity problems: specific cost factors for the construction ofbicycle lanes in urban areas in Switzerland 109

Tab. A. 11 Additional costs in urban areas: unit costs for road and rail transport in the EU 15 (plus Norway and Switzerland) 109

Tab. A. 12 Up– and downstream costs in the EU 15 (plus Norway andSwitzerland) 109

Tab. A. 13 Up– and downstream costs in Switzerland 110

Tab. A. 14 Local air pollution for road and rail transport in the Alpine area 110

Tab. A. 15 Local noise pollution for road and rail transport in the Alpine area 110

Tab. B. 1 Main EU initiatives for greening transport 111

Tab. C. 1 Average speed in free flow in km/h 113

Tab. C. 2 Trip scheduling of Strasbourg-Vienna corridor 114

Tab. C. 3 Strasbourg-Vienna corridor: unit cost with and without caps 114

Tab. C. 4 Trip scheduling of Brindisi-Chiasso corridor 115

Tab. C. 5 Brindisi-Chiasso corridor: unit cost with and without caps 115

Tab. C. 6 Trip scheduling of Kilkenny-Monaco corridor 116

Tab. C. 7 Kilkenny-Monaco corridor: unit cost with and without caps 116


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EXECUTIVE SUMMARY

Transport activities are of paramount importance owing to their crucial role in promoting economic and social development, as well as in enhancing a company’s competitiveness and providing for the fundamental right of mobility in modern times. Nevertheless, transport also produces external costs which may impact negatively upon society as a whole and which are not internalised by the providers and consumers of transport services. Indeed, the use of transport services causes not only considerable environmental damage (air pollution, climate change, noise, ecosystems, etc.), but also loss of life and injuries from traffic accidents. Typically, externalities produced by transportation may be identified as air and noise pollution, accidents, congestion and, more importantly, climate change (see the table on the next page).

The rapid growth in transport volumes and environmental awareness have made these factors very much a part of today’s political agenda. The issue of introducing a corrective measure by accounting for external costs through their 'internalisation' in a comprehensive final total price for transport services has become crucial for policy making and research in the transport sector. To this end, several approaches and methods have been developed over recent years.

The purpose of this study is to develop a comparative analysis of the most recent and relevant findings in order to provide a solid background for the European Parliament's Committee on Transport and Tourism. Furthermore, the study provides an analysis of the IMPACT Handbook on estimation of external costs in the transport sector, and of the Greening Transport Package issued by the European Commission, as well as of the similarities between the two documents.

Methodologies for the assessment of external costs

The magnitude of impacts such as congestion, accidents and pollution result from all types of transport (both passengers and goods), depending on (i) a vehicle’s characteristics (e.g. size, technology) and (ii) when and where transport takes place (e.g. level of demand, speed, driving cycle, time of day, location, etc.). These two elements have to be taken into account to estimate unitary impact factors: accident rates, emissions per vehicle km driven (vkm), congestion level, etc. In some cases e.g. pollution, the analysis should also consider impact factors such as the production of vehicles themselves and fuels. In order to quantify an external cost, the final impact is estimated in physical terms and has to be translated into economic terms. In most cases, the analysis concerns public goods or merit goods that do not have comparable market values (for example, the goods 'clean air', 'human health', and 'the ecosystem'). In other cases, market evaluation for certain goods exists, but the evaluation is so rigid that the analysis is highly complex and controversial. Particular techniques have to be implemented consistently in order to calculate the values for such 'goods'.

In the mainstream approach, the evaluation in economic terms is based on an individual approach for environmental goods. On this basis, the willingness to pay (WTP), for obtaining an additional benefit, or the willingness to accept (WTA), for a monetary compensation after having been deprived of such benefit, is estimated directly or indirectly (in the case of public goods, where a market is not available). The estimation techniques normally used are based on demand curves (revealed preference and stated preferencemethods, which may be considered complementary rather than alternative) or different approaches, such as defensive expenditures, dose–response functions and the damage


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costs approach. The latter is particularly relevant, since it is applied when estimating the external costs attributable to climate change.

Main types of transport externalities

Externality Cost components Key drivers

Accidents Material damage

Administrative costs

Medical costs

Production losses

Risk value

Road transport: Type/characteristics/maintenance of vehicles; vehicle speed; traffic volume and speed; time of day; weather conditions; infrastructure layout, technology and maintenance. Air transport: Level of maintenance of aircraft, weather conditions and the education and training level of pilots.Rail transport: Type/characteristics/maintenance of rolling stock, level of infrastructure maintenance. As for air transport, for rail transport the education and training level of train drivers is also crucial.

Air pollution Human health costs

Material damage costs

Crop losses

Population and settlement density.

Receptor density close to emission source.

Sensitivity of area.

Level of emissions, (according to different transport modes).

Climate change Prevention costs to reduce risk of climate change

Damage costs of increasing temperature

Type of vehicle and its equipment.

Speed.

Driving style.

Fuel consumption and carbon content of fuel.

Congestion and scarcity

Congestion: time and operating costs

Scarcity: delay costs and opportunity costs

Congestion: type of infrastructure, traffic and capacity levels mainly depending on time of day, location,accidents and type of infrastructure construction.Scarcity: type of infrastructure, traffic and capacity levels mainly depending on time of day, location.

Noise Annoyance

Medical costs

Time of day.

Receptor density close to emission source.

Existing noise levels.

There are two main approaches to determine how the external costs of transport may be quantified and transposed into monetary values:

a bottom–up approach, which is site-specific and starts with assessing a particular case under specific spatial and temporal conditions, and then estimating the externalities of a broader set of transport activities is done by aggregating the single case and rising to upper levels of aggregation. This approach allows marginal costs to be estimated;

a top–down approach, which starts with total estimates expressed in monetary terms for the entire sector or set of activities, which is then disaggregated among all particular sub-activities of the externality. This approach normally leads to average costs being estimated, which usually smooths out the great diversity in the marginal external costs which are specific to each situation.


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A combination of these two approaches is also possible and sometimes recommended, although the bottom-up approach is normally suggested for efficient pricing since it is more specific.

Main studies on the external costs of transport

There is a lot of literature available concerning transport–related external costs: this is the result of 15 years of significant projects, both funded and implemented by the European Commission. Other studies have also been carried out by specific transport companies or national authorities.

Table 3.1 below presents a comprehensive summary for each externality, by identifying the predominant methodology; the degree of concordance; the main factor influencing the estimates and the critical issues. Overall, the degree of convergence has been evaluated according to a set of indicators, such as: (i) the selection of the cost components, (ii) the value assigned to the value of statistical life (VSL) and value of time VOT, (iii) the geographical coverage and, finally, (iv) the general methodology adopted by the surveyed studies.

Comparative summary for the surveyed main externalities

Types of externality

Prevalent methodology

Degree of convergence of the estimates

Main factors influencing the estimates Critical issues

Accident Bottom–up Accident statistics; vehicle technology; cost components that are considered as external.

VSL; driver behaviour; coverage secured by insurance premiums.

Climate change

Damage costs Approach; discount rate; time period.

Geographical coverage (global phenomenon); estimation method; general lack of knowledge of the physical impacts of global warming.

Air pollution Bottom–up VSL; population density; vehicle technology; proximity to emission source.

EURO norm selected; power traction (petrol, diesel, electricity).

Noise Bottom–up VSL; population density; vehicle technology; proximity to emission source; time of day; traffic volumes.

Transport mode; estimation method (hedonic price, CVM).


Bottom–up VOT, speed/flow function. Transport mode; VOT (working and non–working time).

Legend:

Low degree of convergence/relevance

Medium degree of convergence/relevance

High degree of convergence/relevance


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The IMPACT Handbook

On the basis of a request from the European Parliament, which stressed the consideration of all possible impacts generated by external costs as well the barriers to their internalisation, the European Commission launched the IMPACT study with the following overall goals: (i) to provide a comprehensive overview of the main methodological approaches and estimations for which the current literature has produced transport–related external costs; (ii) to identify which methods and values may be recommended as 'default'when calculating external costs.

The IMPACT Handbook on estimation of external costs in the transport sector served as the reference document for the impact assessment study of the Greening Transport Package, which was released in July last year by the European Commission. The relevant conclusions of the study are the following:

The cost of scarce infrastructure (congestion for roads, scarcity for other modes), accident costs, and environmental costs are considered as external costs;

The level of existing fuel and vehicle taxation needs to be considered so as to compute optimum charge levels and internalisation of external costs;

The level of externality differs according to the different cost categories and modes;

Marginal cost estimation is more suitable for value estimates relating to specific traffic situations: in cases where aggregation is difficult, the average or total costs based on national values are preferred.

The IMPACT Handbook not only reviewed a broad set of pan-European and country–specific studies, but also paid attention to the most relevant methodological approaches used for the surveyed studies in estimating external costs. This ensured a comprehensive analysis of the current state of research on transport–generated external costs, and enabled the IMPACT Handbook to identify best practices for calculating external cost values; moreover, the scientific basis of the IMPACT Handbook is found to be both solid and accurate.

The Greening Transport Package

The Greening Transport Package, launched on 8 July 2008 by the European Commission, consists of five parts contributing to the framing of a strategy which sets out how external costs can be internalised for all modes of transport. The overall strategy set out by the European Commission includes immediate actions, and future actions.

With immediate effect, the European Commission intends to revise Directive 1999/62/EC (as modified by Directive 2006/38/EC) on HGV charging, in order to establish a common framework for calculating road tolls on the basis of both infrastructure costs and external costs. The proposed revision of the Directive aims to modify this scenario by extending the scope of the current legislation, namely by allowing Member States to charge road freight vehicles over 3.5 tonnes, both for recovering the infrastructure costs and also including those costs which are associated with congestion, noise and air pollution. The proposed revision also intends to introduce common charging principles, using a method which calculates chargeable costs and caps and setting up monitoring tools which should avoid any discriminatory implementation of the charging scheme.

The proposed Directive only covers air pollution, noise and congestion. For these three externalities, the proposal builds on the values recommended by the IMPACT study and sets out the formulae to be applied for the calculation of chargeable costs and their 'capped' values.


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The proposed Directive does not include two classes of externalities: climate change and accidents. Climate change is not directly addressed because it does not depend on the time and place where the vehicle is used, but on fuel consumption. Accidents are not addressed for two main reasons. First, the external costs depend, to a large extent, on the applicable insurance system and the costs covered. Secondly, unlike local pollution and congestion costs, accident costs cannot be efficiently internalised by kilometre-based charges as they are very much determined by individual drivers' characteristics and accident history.

Proposed EC strategy for the internalisation of external costs by mode of transport

External costs Road Rail Aviation Maritime Inland

waterways

Accidents

No measures for the moment.

The situation will be reassessed in 2013.

No measures.

Low number of accidents and strict regulation already in place. A price signal to modify behaviour is not necessary/effective.

No measures


No measures


No measures


Climate change

Proposal for revision of energy taxation.

Is already subject to ETS on electricity, proposal for revision of energy taxation for diesel.

Inclusion of aviation in the ETS system from 2012.

Measures are being discussed in IMO, EU action in 2009 if no progress.

Possible proposal for internalisation of CO2 with a 2013 horizon.

Air pollution

Review of Directive 1999/62/EC.

Urban Mobility Action Plan.

Intelligent Transport System Action Plan.

Possible review of the first railway package.

Existing directive 2001/14/EC.

Proposal to charge aircraft operators on the basis of their emissions.

Proposal to reduce NOx emissions.

Council Common position adopted by the EP on 23 October 23. A 2nd reading by the Council is now pending.

IMO agreed to the revision of MARPOL Annex VI to reduce the SOx, NOx, VOC and PM emissions. Proposal for amendments to the Directive on marine fuels to implement changes to MARPOL in 2009.

Harmonisation of the infrastructure charging scheme by 2013 (NAIADES Action Plan).

Noise


Urban Mobility Action Plan.

Communication on noise abatement measures proposal for noise-differentiated track access charges in the recast Directive 2001/14/EC in late 2008.

Proposal for noise directive in December 2008.

Not a significant externality.


Congestion


Urban Mobility Action Plan

Intelligent Transport System Action Plan.

Scarcity charges already possible.

Slot allocation rules already in place.

Congestion only in ports and already priced in port charges.



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Conclusions

The overall assessment of the IMPACT Handbook shows that it conducted a comparative analysis which is both thorough and of good quality. From a scientific point of view, the IMPACT Handbook is both solid and accurate, it pays attention to all the most significant methodological approaches adopted so far, it takes into account the different studies available for estimating external costs and identifies best practices for calculating external cost values.

It may be said that the Greening Transport Package is very much in line with the recommendations presented by the IMPACT study. There are however some differences, namely transport modes covered, external costs considered and cap values.

With regard to transport modes, the Greening Transport Packages proposes immediate measures solely for road freight transport through the revision of Directive 1999/62/EC; for the other modes of transport it indicates a set of priorities that will be developed with a longer-term perspective.

As for the external costs covered, the Greening Transport Package proposes charging for only three externalities: air pollution, noise and congestion for road freight transport, and primary pollutants, namely PM, NOX and VOC emissions. The rationale for the choice of these three external costs, and the exclusion of accidents and climate change, is motivated by the fact that these externalities (i) are either closely linked to the location where transport takes place and (ii) their costs vary according to various parameters such as distance travelled, the environmental performance of vehicles, plus others. Tolls are considered the best pricing instruments for assigning these costs to users fairly and efficiently, by better reflecting the real use of vehicles, and therefore the user responsible for external costs.

Cap values have been introduced to standardise the results for the specific application of the formulae, calculating different external costs according to the specific time of day, road section (suburban or inter-urban) and Member State. The application of these values, which were not suggested by the IMPACT study, both simplifies and harmonises the pricing scheme, while avoiding overpricing. The values are therefore considered – with a few exceptions – to be appropriate.

The analysis is complemented by the following remarks:

Both the IMPACT study and the Commission document acknowledge: (i) the heterogeneity of internalisation across Member States and modes of transport; and (ii) that the signal given to the market by existing charges and taxes is not clear, while recognising its relevance in order to avoid charging double for the same external costs. The issue is then of extreme relevance and probably deserves more incisive action.

The use of revenues from internalisation policies has direct implications in terms of acceptability to users. It is then crucial to give precise indications (and public information) on how these revenues are to be used, bearing in mind that the choice of earmarking them according to the principle of 'sustainable transport' is not alwayssufficiently clear.

The time gap between the implementation of short–term and long–term measures may cause a lack of coordination among the interventions for the different modes of transport. A more precise road map for long-term measures might be advisable.

The HGV pricing scheme does not have a fixed time schedule for the implementation of the internalisation measures, so the proposal should define a precise time-span ensuring


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the smooth introduction of such measures and thus the possibility of properly assessing the impact on users.

The proposal should also consider the need to secure interoperability of IT tools for electronic pricing throughout the EU Member States.

The IMPACT study and the Greening Transport Package

Type of externality IMPACT study Greening Transport Package

Accidents

Values for road transport for network type and for passenger cars, motor cycles and HGVs per country.

Average cost for air transport.

The issue of accident costs is addressed, but no specific and short-term measures are planned.

Measures are postponed until the review of the European Road Safety Action Programme in 2010.

Climate change

Costs for passenger cars and trucks according to EURO class and network type.

Costs for passenger and freight trains according to network type for electric and diesel type.

Costs for freight transport on inland waterways for vessel type.

Costs for aviation according to flight distance per passenger and per flight.

The issue of climate change is addressed, but no specific and short-term measures are planned.

Measures are postponed until the inclusion of commercial aviation in the ETS, and until the review of the general energy taxation Directive.

Air pollution

PM, VOC , SO2, NOx and NMVOC emissions are covered.

Costs of each pollutant for road, rail and waterways per country.

Marginal cost for air transport.

Part of the strategy, but only measures for road freight transport are proposed.

Only PM, VOC and NOx emissions are covered.

Calculated by multiplying emission factor of pollutant on road type per monetary cost of pollutant (from IMPACT study).

Cap values are imposed.

Noise

Unit values for marginal costs for different network type for road and rail according to time of day.

Marginal noise cost in air transport.


Calculated by multiplying noise cost per person exposed on road type (from IMPACT study) per population exposed to daily noise level, divided by average daily traffic; (night-time correction factor used for night-time noise cost).


Proposal of rail noise abatement measures by retrofitting freight wagons with low-noise brakes.

Congestion

Ranges of marginal social costs prices by road class and type of areas in off-peak and peak periods.

Estimates for other modes of transport.


Values are calculated by deducting infrastructure development cost already charged from marginal external cost of congestion, where marginal external cost of congestion is calculated on the basis of value of time, average traffic and small change in traffic.


Source: Proposal for a Directive of the European Parliament and of the Council amending Directive 199/62/EC on the charging of heavy goods vehicles for the use of certain infrastructures, COM (2008) 436/3 and

IMPACT study.


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1 INTRODUCTIONTransport plays a crucial role in European citizens’ daily lives. It is a key driving force since it both secures the fundamental right of mobility in today’s society and enhances competitiveness as a whole within the European economy.

In addition to its benefits, transport and its continuous growth inflict external costs on society as an economic consequence of adverse impacts caused by transport services.

An 'externality', either positive or negative, may be defined as a change in welfare which is caused by an economic activity but not reflected in market transactions or prices. Such externalities are either positive or negative – negative externalities result in reduced utility from those affected, while positive externalities imply increased utility without cost.

In particular, when referring to the external costs generated by transport activities, the first aspect is the notion of 'social cost'. The social cost of transport relates to the cost borne by the whole community and includes not only the private cost borne by the producer (and paid directly by users) but also the external costs caused by the activity. The social cost therefore incorporates the sum of all the associated costs of an economic activity: both the costs borne by the producer and all the costs borne by society at large.

Hence, evaluating the externalities generated by transport is of paramount importance in order to support the decision-making and appraisal process for both transport policies and transport investment projects, respectively.

More precisely, the issue of introducing a corrective measure by accounting for external costs through their 'internalisation' in a comprehensive final total price for transport services has become crucial for policy making and research in the transport sector. Several approaches and methods have been developed in this respect.

The purpose of this study is to draw up a comparative analysis of the most recent and relevant findings on the subject in order to provide a solid basis for the European Parliament's Committee on Transport and Tourism. The study is organised as follows:

Chapter 2 introduces the concept of externality in the transport sector and provides it with some background by addressing the definition of external costs and the main methodologies for estimating them;

Chapter 3 compares the existing literature on external costs by reviewing the mostrelevant studies on this issue and assessing their main considerations according to the different types of externalities;

Chapter 4 illustrates and analyses the Handbook on estimation of external costs in the transport sector prepared by the IMPACT project on behalf of the EC Directorate for Transport;

Chapter 5 presents the European Commission’s Communication on external costs, by analysing the approach followed by the Commission, and in particular to what extent the Commission has included the IMPACT recommendations in its legislative proposals;

Chapter 6 draws up the conclusions of the study and assesses the scientific soundness of the values adopted in the proposed Directive, as well as their feasibility in policy implementation.


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2 THE DEFINITION OF EXTERNAL COSTS OF TRANSPORT

2.1 Types of externalities

The term 'externality' refers to a situation where a change in welfare is generated by an economic activity, yet not reflected in market transactions or prices. Externalities can be either positive or negative: negative externalities result in lowered utility from those affected, while positive externalities imply increased utility without cost.

In particular, when referring to the external costs generated by transport activities, we must first consider the 'social cost'. The social cost of transport relates to the cost of transport borne by the whole community and includes not only the private costs of the producer (and paid directly by users) but also the external costs caused by the activity. The social cost therefore incorporates the sum of all the associated costs of an economic activity: both the costs borne by the producer and all the costs borne by society at large.

As far as transport is concerned, it is clear that its role is paramount in securing the fundamental right of mobility and in promoting economic growth and competitiveness. Nevertheless, transport also produces external costs that society and the environment as a whole are forced to bear and that are not internalised by the producers and consumers of transport services. Indeed, the use of transport services not only causes considerable environmental concerns (air pollution, climate change, noise, damage to ecosystems), but has also an impact in terms of loss of life and injuries from traffic accidents. It is therefore crucial to assess the costs associated with these problems.

Table 2.1 summarises the main cost components and key drivers associated with transport externalities. Apart from these main categories of external costs, there are other costs that in some studies are considered and evaluated. However, the literature on these issues is not extensive and sometimes these costs are even ignored. There are many critical issues in this group of costs, since (i) it is often uncertain how to approach these valuations adequately, (ii) scientific knowledge is less comprehensive than for the main externalities, and (iii) the relation between the activities and the impacts is not easy to quantify. Moreover, in the case of additional costs in urban and sensitive areas, since these are largely attributable to noise and air pollution, they might be considered as specific effects of a more general estimation of these two main external costs. According to some of the studies, these costs may be grouped together in nature and landscape, additional costs in urban areas, and up- and downstream processes (as in Table 2.2).


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Tab. 2. 1 Main types of transport externalities

Externality Cost components Key drivers

Accidents Material damageAdministrative costsMedical costsProduction lossesRisk value

Road transport:Type/characteristics/maintenance of vehicles; vehicle speed; traffic volume and speed; time of day; weather conditions; infrastructure layout, technology and maintenance.

Air transport:Level of maintenance of aircraft, weather conditions and the education and training level of pilots.

Rail transport:Type/characteristics/maintenance of rolling stock, level of infrastructure maintenance. As for air transport, for rail transport the education and training level of train drivers is crucial.

Air pollution Human health costsMaterial damage costsCrop losses

Population and settlement density.Receptor density close to emission source.Sensitivity of area.Level of emissions, (according to different transport modes).

Climate change Prevention costs to reduce risk of climate change.Damage costs of increasing temperature.

Type of vehicle and its equipment.Speed.Driving style.Fuel consumption and carbon content of fuel.


Congestion: time and operating costs. Scarcity: delay costs and opportunity costs.

Congestion: type of infrastructure, traffic and capacity levels mainly depending on time of day, location, accidents and construction type of infrastructure.

Scarcity: type of infrastructure, traffic and capacity levels mainly depending on time of day, location.

Noise AnnoyanceMedical costs

Time of day.Receptor density close to emission source.Existing noise levels.

Tab. 2. 2 Main types of other external costs of transport

Externality Main effects

Nature and landscape Habitat loss and habitat fragmentation.Additional costs in urban areas Separation effects and scarcity problems (costs for bicycle

lanes).Up- and downstream processes Upstream effects as a percentage of air pollution costs, based

on the amount of indirect effects of related emissions.Upstream effects as a percentage of climate change costs, based on the amount of indirect processes of CO2 emissions.Nuclear power risk for electricity production.


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2.2 Methodologies for assessment

In the scientific literature, different methodological approaches are available when calculating transport externalities, which in turn are different in nature. Impacts such ascongestion, accidents, and pollution are generated by all types of transport (both passenger and goods). The generation of the above-mentioned impacts, as well as their magnitude, depend upon two main factors: vehicle characteristics (e.g. size, technology);

when and where transport occurs (e.g. level of demand, speed, driving cycle, time of day, location).

In order to estimate unitary impact factors – accident rates, emissions per vehicle km (vkm) driven, level of congestion, etc. – these two elements have to be taken into account. In some cases, such as pollution, the analysis should also consider the impact factors for the production of vehicles and fuels.

Although, in principle, impacts depend on specific conditions, the need to provide estimations that can be applied to a wider range of conditions leads to the consideration of average or representative situations.

The results of studies providing representative estimations of marginal or average externalities (e.g. per vkm) can be then used to quantify the externalities produced by transport as a whole in a given region over a given period of time (e.g. one year). For this purpose, it is necessary to quantify transport demand in the time-span chosen and the relevant categories for which different marginal impacts are available: for example, the total kilometres travelled every year by private cars with a certain engine size and EURO rating, on a given category of roads, or the share of HGV transport in urban and non-urban areas.

2.2.1 The economic quantification of impacts

In order to quantify an external cost, the final impacts estimated in physical terms (damage unit or risk or loss of time per vkm, pkm, tkm travelled according to a specific mode) have to be translated into economic terms. In most cases, the analysis concerns public goods or merit goods that do not have comparable market evaluations (e.g. the goods 'clean air', 'human health', 'ecosystem'). In other cases, a market for the goods in question exists, but the market has so many rigidities that the analysis results tend to be highly complex and controversial. Particular techniques then have to be used to measure the value attached to such 'goods' in a consistent way.

In the mainstream approach, the evaluation in economic terms (e.g. the damage generated by a worsening of air quality in a given area) is based on the demand formulated by individuals for the environmental goods (air quality in this example). On this basis, the willingness to pay (WTP) to obtain an additional unit of the benefit (e.g. to reduce the concentration of a given pollutant or to avoid an increment of the same concentration), or the willingness to accept (WTA) monetary compensation after having been deprived of a unit of such a benefit (e.g. an increment of the concentration of the pollutant) is estimated. In the case of public goods, where a market is not available, the WTP or WTA can be estimated only indirectly. The estimation techniques that may be used have been described and classified to a large degree. The scientific literature identifies two methodologies that are based on demand curves:


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revealed preferences methods are based on observation of the actual behaviour of individuals. These methods include: the method of averting or defensive behaviour, the hedonic pricing method, the travel cost method, and the cost-of-illness method. For all these techniques, the basic idea is to identify an observable market behaviour depending on the preference for the non-market good under evaluation and measure the WTP or WTA by comparing different behaviours in different conditions. The averting behaviour method infers values from observing how individuals change their behaviour in response to changes in the quality of the environment, health, or safety; with the hedonic pricing method, the price paid for houses and apartments in different environmental urban conditions is used to estimate the value attached to environmental quality; with the travel cost method, the value of non-market environmental goods (for instance of a recreational activity) can be measured through the market for the costs of travelling to the area by individuals or households because there is a trade-off between the benefit gained from visiting the recreational area and the value of money and time spent to travel there; the cost-of-illness method estimates the explicit market costs resulting from a change in the incidence of a given illness. It generally relies on direct costs such as medical treatment, rehabilitation and accommodation. It does not account for indirect costs such as the loss of income or the loss of leisure time, let alone the cost of pain and suffering. The reduction in medical costs incurred because of a medical intervention should therefore be considered a lower bound estimate of the WTP. Actual choices between transport alternatives with different travel costs and times are used to estimate the value of travel time;

stated preferences methods gather data on individual preferences by means of direct interviews of a sample of the population. Stated preferences surveys are widely used in the transport sector to estimate the value of time as well as of qualitative features such as reliability. Sample interviews are carried out where respondents are asked to choose between alternative pairs or to rank a wider number of alternatives. Outside the transport sector, the main technique developed within stated preference methods is contingent valuation, which consists of eliciting the WTP or WTA for a very detailed description of hypothetical scenarios including the context, the effect to be obtained or avoided, the distribution of costs across population groups, etc.

Revealed and stated preferences methods may be complementary rather than alternative. In stated preferences techniques the advantage is to control the key variables better and avoid problems of statistical significance which often affect actual observations. However, responses to hypothetical scenarios are not necessarily a reliable representation of actual behaviours.

Besides these, other methods are not based on demand curves, such as defensive expenditures, dose–response functions and the damage costs approach. The latter is of particular relevance, since it is applied in estimating the external costs attributable to climate change.


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Fig. 2. 1 Overview of the main methods for evaluating environmental goods

2.2.2 Average and marginal costs

It has been underlined that both the variability of the transport activity (e.g. emission factors varying according to vehicles and driving conditions) and the site specifics considerably influence the environmental impact, and should be reflected in the output values of the evaluation process.

One should therefore be aware of the difference between average and marginal external costs. The former are equal to the total costs in a period divided by the quantity (output) produced/consumed in that period, while the latter are costs relating to a small increment in quantity (e.g. an extra vehicle kilometre driven).

It should be noted that average external costs usually neutralise the great diversity in the marginal external costs that are specific to each situation, although they are of utmost importance since they provide a reference value for the entity of the external costs relating to the main transport modes and single vehicle categories. The marginal cost approach is considered the most appropriate for pricing purposes.


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2.2.3 'Bottom–up' and 'top–down' approaches

As previously noticed, the core question is to determine how the external costs of transport may be quantified and transposed into monetary values. This is done through two main approaches:

a top–down approach, which starts with total estimates expressed in monetary terms for the entire set of activities or sector, which are then disaggregated among all the particular sub-activities of the externality. This approach normally leads to average costs being estimated.

a bottom–up approach, which is site-specific and starts with assessing a particular case under specific spatial and temporal conditions, and then the estimate of the externalities of a broader set of transport activities is done by aggregating the single case and rising to upper levels of aggregation. This approach allows marginal costs to be estimated.

Even though a combination of these two approaches may be recommended, the existing literature for efficient pricing mainly makes reference to the bottom-up approach, and particularly by following the impact pathway approach (IPA), as developed by the ExternE project (1999). The approach looks at the physical pathway that a specific pollutant takes from its emission up to its harmful effects on the external environment (final impacts). This allows for the evaluation of the various types of pollution and their related risks.

2.3 Internalisation of external costs

'Internalisation' of the external costs may be generally defined as the incorporation of an externality into the market decision-making process through pricing. In order to internalise the external costs caused by transport in market mechanisms, they should be quantified and included in the prices in which economic goods and services are exchanged and purchased, equalling the magnitude of the (marginal) damage attributable to them.

The internalisation would be then implemented by charging polluters with the damage cost of the pollution caused by them, along the lines of the polluter pays principle (PPP), which states that the user should pay the full social cost (including environmental costs) of his/her activity.

A key aspect when estimating the possibility of internalising external costs generated by transport activities is, first of all, to consider what is already internalised, so as to avoid double charging. From this perspective, the picture is still quite fragmented, with significant discrepancies between transport modes. A more detailed analysis is provided in section 5.3.2.


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Box 2.1 Polluter pays and cheapest cost avoider principles

The internalisation of environmental externalities is based on the polluter pays principle, i.e. the stakeholder who generates external costs for society should pay for it. This principle thus has substantial political relevance, owing also to the fact that it is also mentioned in Article 174 of the Treaty establishing the European Community. This principle is also close to the Pigovian principle, which states that the one who pollutes should also bear the cost of the effects imposed on others.

However, there is no full and common agreement on its application. Indeed, it should behighlighted that there is a minor group of academics (e.g. Baum, 2008) which does not consider the polluter pays principle appropriate for reducing external costs. Conversely, they assume that the so-called cheapest cost avoider principle (CCAP) should be preferred, which implies that a cost-benefit analysis is conducted and the stakeholder who can prevent external costs at the lowest cost for the overall economy should pay. In other words, this approach considers possible action not only from the polluter's side, but also from the side of those exposed in internalising external costs.

Overall, as is also pointed out in the Commission’s impact assessment of the internalisation of external costs, the application of the cheapest cost avoider principle may pose some specific difficulties, namely in terms of: (i) reaching agreement between all possible transport users and the affected population, and (ii) the large size of the exposed population, especially in the case of air pollution, accidents, noise and climate change. In this respect, an advantage would be obtained by the use of technical solutions, which are generally cheaper if applied to the polluter's side.

Figure 2.2 summarises the internalisation of external costs. D is the demand curve (or willingness to pay); S is the perceived (or private) marginal costs curve. The equilibrium occurs when the D and S curves cross each other, which implies a unitary price (P) for the services concerned and determining an optimum transport volume (X). Nevertheless, foreach single transport unit there is a specific external marginal cost which is not necessarily perceived by the transport operator but, conversely, has an impact on the entire community. If such costs were to be added to the private marginal transport costs for every level of activity, the result would be the S’ curve, which also includes the external costs.

Fig. 2. 2 Internalisation of prices and externalities in an economic sector

Source: FEDERTRASPORTO (2002)


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For all levels of mobility (levels of vkm), the distance between S’ and S represents the marginal external cost generated by the externalities. The social optimum transport volume corresponds to point X’, where the sale price of the item corresponds to the private marginal cost (the vertical section BX’) plus the external marginal costs (section BA). At this point, the following condition is obtained:

Price = Social Marginal Costs = Private Marginal Cost + External Marginal Cost

This condition may be satisfied through imposing a Pigovian tax2 equivalent to AB, which will be added to the private transport costs (BX’), thus equalling the price that is actually paid at the social marginal cost. It has to be pointed out that a reduction of some types of externality, which is obtained through a reduction in outputs and illustrated in an analysis, can also be achieved more or less efficiently through technological improvements, e.g. a reduction in average emissions (although this does not apply for congestion and scarcity).

2 A Pigovian tax, named after economist Arthur Pigou, is a tax levied to correct the negative externalities of a

market activity.


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3 THE CALCULATION OF EXTERNAL COSTS ACCORDING TO THE SCIENTIFIC LITERATURE

3.1 Introduction

There is a vast scientific literature examining the external costs generated by transport activities. Several studies have been conducted in this respect over the last 15 years: (i) partly funded by the European Commission under specific service projects or research (4th, 5th and 6th framework programmes – this is the case, for example, with ExternE, GRACE and UNITE; (ii) partly contracted by specific transport stakeholders such as the Union International des Chemins de Fer (UIC) – this is the case for INFRAS/IWW; or (iii) funded by national authorities, such as the Swiss Federal Office for Spatial Development.

The relevant studies are listed in chronological order in Table 3.1 (the table provides the full title, the authors and the acronym that is used to refer to the study in the rest of this document). The most significant studies are marked in grey, and for each of them Table 3.2 points out the types of externalities considered.


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Tab. 3. 1 The relevant studies relating to transport externalities

Title Authors Year Geographical coverage Externalities Transport

modes

A critical review of the calculation of external costs of transport(BAUM)

H. BAUM 2008 EU 27 All All

Determination and application of environmental costs at different sized airports: aircraft noise and engine emissions

C. LY and P. MORREL

2006 UK and the Netherlands

Noise Air

STERN Review N. Stern et al. 2006 World Climate change AllAnalysis of the contribution of transport policies to the competitiveness of the EU economy and comparison with the United States (COMPETE)

W. SCHADE, C. DOLL, M. MAIBACH,M. PETER,F. CRESPO,D. CARVALHO,G. CAIADO,M. CONTI,A. LILICO, N.AFRAZ

2006 EU 25 , USA, Switzerland

Congestion Road, rail, water, air

Generalisation of Research on Accounts and Cost Estimation (GRACE)

University of Leeds 2006 EU 25 Accident, noise, climate change, environment, congestion

Road, rail, air, water

CAFE (Clean Air For Europe) CBA

M. HOLLAND, S. PYE, P. WATKISS, B. DROSTE-FRANKE, P. BICKEL

2005 EU Air pollution Not applicable

New Energy Externalities Development for Sustainability (NEEDS)

W. OTT, M. BAUR,Y. KAUFMANN

2005 EU Air pollution, climate change, soil and water pollution, biodiversity losses and land use.

External costs of energy

The Impacts and Costs of Climate Change

P. WATKISS, et al. 2005 EU Climate change Not applicable

Developing Harmonized European Approaches to Transport Costing and Project Assessment (HEATCO)

P. BICKEL (et al.)

2005 EU 25 Congestion, accident, noise, air pollution.

Road, rail

CE Delft/ECORYS, Marginal costs of Infrastructure use – towards a simplified approach

ECORYS,CE DELFT

2004 EU 15 Congestion, accidents, air pollution, noise.

Road, rail, aviation

CE Delft, The price of transport – overview of thesocial costs of transport

VERMEULEN, et al. 2004 The Netherlands Accidents, airpollution, noise climate change, congestion, land take.


Kristensen, Marginal costs of traffic noise, Generalised values for pricing policies

N.B KRISTENSEN, A. OHM, J. HØY

2004 Denmark Noise Road

Scenarios, Traffic Forecasts, and Analyses of Corridors on the Trans-European Transport Network (TEN-STAC)

NEA, IWW, COWI, et al.

2003 EU 25 Congestion Road

Newbery, Estimating urban road congestion costs

D.M. NEWBERY,G. SANTOS

2002 UK Congestion Road

Unification of Accounts and University of Leeds 2002 EU 15, Hungary, Accidents, air Road, rail,


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Title Authors Year Geographical coverage Externalities Transport

modes

Marginal Costs for Transport Efficiency (UNITE)

Estonia, Switzerland

pollution, noise, climate change, congestion, nature and landscape, soil and water pollution, nuclear risks.

urban public transport, air, water

Real Cost Reduction of Door-to-door Intermodal Transport (RECORDIT)

S. WEINREICH, et al.

2001 3 selected European corridors

Air pollution, noise, accidents, climate change, congestion.

Intermodal freight transport: road, rail, vessel

Swiss Federal Office for Spatial Development (OSD)External costs of road and rail transport

Swiss Federal Office for Spatial Development

2000 Switzerland Accidents, noise, air pollution, climate change, nature and landscape, soil and water pollution, vibrations, sensitive areas, urban effects, up- and downstream processes.

Road, rail

Pricing European Transport Systems (PETS)

C. NASH, et al.) 2000 EU Congestion, air pollution, noise, climate change, accidents.

Road, rail, air

External costs of Transport: Accidents, Environmental and Congestion Costs of Transport in Western Europe

INFRAS/IWW 2000, 2004

EU 15, Norway, Switzerland

Accident, noise, air pollution, climate change, congestion, nature and landscape, urban effects, up- and downstream processes.


Externalities of Energy (ExternE)

M. HOLLAND, et al.

1999 EU 15(without Luxembourg, Norway)

Accidents, air pollution, climate change, noise, soil and water pollution.

External costs of energy

Concerted actions on Transport Pricing Research Integration (CAPRI)

C. NASH,T. SANSOM,B. MATTHEWS

1999 EU Congestion, accidents, air pollution, noise, climate change, water pollution.

Road, rail, air

High Level Group on transport infrastructure charging, Final report on Estimating Transport Costs

The expert advisors to the HLG on Transport InfrastructureCharging

1999 EU Congestion, air pollution, noise, accidents.

Road, rail

Efficient transport for Europe – policies for the internalisation of external costs

European Conference of Ministers of Transport

1998 EU 15, Norway, Switzerland

Congestion, accidents, noise, air pollution, climate change.

Road, rail

ITS, Surface transport costs and charges

T. SANSOM,C. NASH,P. MACIE,J. SHIRES,P. WATKISS

1998 UK Congestion, air pollution, noise, climate change.

Road, rail

Note: The 11 most significant studies are marked in blue


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In the remaining sections of this chapter, the distinct externalities will be examined and a full overview of their output values, based on the surveyed studies, is provided in Annex A.

Tab. 3. 2 Matrix of the 11 most relevant studies on external transport costs

Transport externalities consideredStudy

Accidents Climate change Air pollution Noise Congestion

COMPETE (2006)

GRACE (2006)

CAFE CBA (2005)

HEATCO (2005)

CE Delft (2004)

UNITE (2002)

RECORDIT (2001)

OSD (2000)

INFRAS/IWW (2000, 2004)

ExternE (1999)

High Level Group (1999)

3.2 Accidents

3.2.1 Types of cost

An accident may be defined as a specific but unexpected and unintended external event which occurs at a particular time and place, without apparent or deliberate cause but with a marked effect. In this respect, the external costs generated by transport accidents are of major concern, as part of these costs is borne by the users but, more importantly, there is also almost always a cost to others. This cost can be direct or indirect, as well as being linked to either the health of the people involved in the accident or to the material damage caused by the accident itself.

In this regard, the key question is then about which parts of the accident costs are considered as internal (thus covered by insurance premiums) and which parts are considered as external (thus not covered). Usually, damage and risks to the individuals who travel by a particular mode are covered by insurance premiums. External costs of accidents may therefore be defined as the difference between total accident costs and insurance premiums.

This implies that insurance has the role of being a mechanism for internalising the external costs of accidents, and if the total cost of the accident is higher than the total insurance premium, the difference is the external part. This also leads to the conclusion that the external part of accident costs varies between different countries, owing to the differences in their respective insurance systems. Within the UNITE case studies, the range of the internal part varies between 59% and 76% for road transport.

The analysis of transport accident externalities compared eight studies, namely GRACE, HEATCO, High Level Group on Transport Infrastructure Charging, INFRAS/IWW, Swiss Federal Office for Spatial Development (OSD), PETS, RECORDIT and UNITE.


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Generally speaking, bottom-up is the preferred approach when estimating accident-related external costs; this appears quite clear since results of the different studies depend upon either national or site-specific characteristics. Transferability of final output values across different countries thus remains limited.

GRACE and UNITE may be considered the most relevant studies in this field, as both (i) cover all transport modes, (ii) are based on a differentiated bottom-up approach by making use of the recommended input values, and finally (iii) provide a good framework for estimating and calculating accident-related costs. The INFRAS/IWW study may also be worthy of note, because it secures good quality of data owing to the use of update data derived from the European road and rail accident database.

3.2.2 Methodology and key factors for calculation

The majority of the surveyed studies opted for a bottom–up approach, which leads to an estimate of marginal costs; only INFRAS/IWW opted for a combination of both bottom–upand top–down approaches, thus producing estimates for total, average and marginal costs. It should also be highlighted that, since marginal costs may differ widely as a result of various specific factors (human factors; weather; state of art of the infrastructure; driving speed; traffic intensity and vehicle technologies and equipment, etc), results for the estimates are different for the surveyed studies.

Indeed, estimating the external costs of accidents may lead to different outputs as a result of one or more of the following assumptions:

which impact pathways (number of casualties, injuries, time lost for medical assistance secured by victims’ relatives, etc) are considered;

which methods are used to record casualties statistically (within one week, one month, etc.);

which economic components of the damage (WTP to avoid accidents, material damage, production losses, etc) are considered;

which part of these costs is already internalised (e.g. through insurance premiums).

The valuation of an accident can be divided into direct economic costs, indirect economic costs and a value of safety per se. The direct cost is observable as expenditure today or in the future. This includes medical and rehabilitation costs, legal costs, emergency services and property damage costs. The indirect cost is the production capacity lost to the economy that results from premature death or reduced working capability as a result of the accident. However, these two components do not reflect the well-being of people. People are willing to pay large amounts to reduce the probability of premature death, irrespective of their production capacity. The WTP estimates the amount of money people are willing to forgo to obtain a reduction in the risk of death. In this respect, the concept of value of statistical life (VSL) is of particular relevance, since this is probably the most important variable to be considered in the evaluation process, owing to the fact that it considerably influences the estimates of social costs linked to accidents3.

The study by Professor Baum positions itself in disagreement with this approach and proposes a damage-cost approach in calculating accident costs instead of the WTP

3 In this respect, HEATCO (2005) points out that when adding VSL to the estimate of accident cost, double

counting may occur in relation to gross production losses: it is often assumed that VSL includes the value of lost consumption by the deceased person, but this is also included in the gross lost production.


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approach (Baum, 2008). In fact, this study considers that accident costs would be already and mostly internalised, namely:

production losses would be covered by insurance schemes, and should thus be regarded as internalised;

compensatory payments for non-pecuniary damage should be preferred to VSL, because they may be approximately determined in an objective way, while the latter is based on the WTP, and is thus determined subjectively. Moreover, since compensatory payments for non-pecuniary damage are covered by insurance, the consequence is that this accident cost component would also be internalised.

However, this last point, in particular, seems questionable, since it may be disputed that an approximately objective way other then the WTP may be more valid for estimating the non-pecuniary costs of accidents.

3.2.3 Estimates

Comparison is made difficult owing to the various cost components that are considered as external by the surveyed studies. For example, INFRAS//IWW calculates marginal costs by considering only one specific factor (traffic intensity) and by distinguishing between road types: urban, motorways, and inter-urban. As a general result, costs associated with urban roads are 4-5 times higher than costs associated with motorways, depending on the country considered.

UNITE considers the value of statistical life to be the most important element in the cost of an accident, and applies an average European value of 1.5 million (as suggested by INFRAS/IWW); output values differ according to the different countries and between transport modes.

Few studies have calculated marginal and average costs for rail transport and the differences between them mainly depend upon data sources in the surveyed countries. Moreover, rail accidents are not frequent and consequently values represent average costs rather than marginal costs.

In this respect, the most complete and updated data is found in UNITE and INFRAS/IWW, although they make use of different timing for the calculation of rail-transport-related accident costs, i.e. five years and seven years, respectively. For instance, for marginal costs UNITE assumes a value of € 0.30/train km for both passenger and freight transport, while INFRAS/IWW estimates a value of € 0.08/train km for rail passengers only. Such differences may be mostly explained by pointing out that UNITE only focuses on Switzerland as a case study, while INFRAS/IWW calculates a European average value. This necessarily smoothes the final value since different income levels and accident rates are taken into consideration for the individual EU countries.

For air transport, the calculation is performed by transferring values from €/pkm to €/LTO and by making use of average pkm values obtained from the TRENDS database and the ICAO data. In this respect, INFRAS/IWW provides values that range between € 12 and € 309/LTO, where the differences in values between the different countries are dependent not only upon type and technology of aircrafts, but specifically upon the distinct values for the purchasing power parity that are applied for them.

Table 3.3 provides an overview of the main features for the surveyed studies on accident costs.


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Tab. 3. 3 External accident costs: overview of the surveyed studies

Study

Base year and

geographical coverage

Methodology Transport modes

Value of statistical life (VSL)

Output values Main strengths Remarks

BAUM 2008EU 27

Damage-cost All Considered as internal

Any (since already internalised)

Critical review of the IMPACT Handbook

No calculation of own estimatesCritical analysis not extended to other studies

GRACE 2005EU 25

Bottom–up All VSLBandwidth of € 800 000-1 800 000

Marginal costs

Recent data.All modes covered.Provides a good summary for external cost calculations on marginal costs.Based on a differentiated bottom-up approach by making use of the recommended input values.

Only update, no calculation of new values

HEATCO 2004EU 25

Bottom–up Transport and electricity generation

VSLBandwidth of € 800 000-1 800 000

Values for casualties avoided for EU 25

Systematic review of all relevant factors relating to the calculation of transport-related external costs

No own calculations

High Level Group on Transport Infrastructure Charging

Only methodology Selected EU countries

Bottom–up Road, Rail Not given Marginal costs

- Only methodological considerations

INFRAS/IWW

1995 EU 15 + Switzerland and Norway

Bottom–up/Top–down

All VSL€ 1 678 000

Total and average costs; marginal costs

Good quality of data owing to the use of update data derived from the European road and rail accident database.

Old base year.Limited to EU 15, Switzerland and Norway only

PETS 1995/1998 Switzerland

Bottom–up All N.A. Marginal costs

- Old study

RECORDIT 19983 corridors:- Genoa to Manchester - Patras to Gothenberg - Barcelona to Warsaw

Bottom–up Road, rail (freight)

Not given Total and average costs

Very detailed calculations for specific case studies of freight transport

Limited to freight (road and rail) transport only


1998 Switzerland

Top–down Road, rail VSLCHF 2 900 000

Total and average costs

Use of a well-developed and differentiated methodology for estimating all cost components.Generation of empirical and statistical results.Best-practice study for total or average accident costs.Good basis for value transfer.

Limited to Switzerland only


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UNITE 1998 EU 15 + Hungary, Estonia and Switzerland

Bottom–up All VSL€ 1 500 000

Total and average costs for all countries; marginal costs for specific countries

Use of well-based national data.Use of the 'risk value' concept.Provision of good framework for estimating and calculating all types of accident-related costs.Based on a differentiated bottom-up approach by making use of the recommended input values.

Critical methodological elements: risk elasticity, VSL, proportion of internal costs.

3.3 Climate change

3.3.1 Types of costs

The term climate change (or global warming) normally refers to changes in the concentration of greenhouse gases which have been causing a progressive warming of earth’s near surface, mainly because of human influence. Indeed, there is a scientific consensus that the increase in atmospheric greenhouse gases attributable to human activity has caused most of the warming observed since the start of the industrial era.

For several reasons, the evaluation of the impacts and external costs associated with climate change plays a crucial role within the literature that was surveyed by this study. Among all classes of external costs, the effects of climate change are the most difficult to identify and evaluate in economic terms since its costs are characterised by the global nature of the phenomenon and the long-term time horizon of their effects. Moreover, the choice of selecting the values for the evaluation of climate-change-related costs has direct political implications for the efforts that need to be undertaken in order to reduce emissions in both developed and developing countries.

Climate change produces various types of damage. The most relevant impacts refer to those of rising sea levels and extreme weather events, as well as harmful effects on human health, agriculture, biodiversity and ecosystems. The most critical issues for climate change refer to:

assessing the long-term risks and impact of climate change;

assessing the magnitude of impacts on climate change attributable to air transport.

The analysis of climate change compared 12 studies, namely ExternE/NewExt, GRACE, HEATCO, INFRAS/IWW, PETS, RECORDIT, STERN Review, UNITE, Watkiss, TRL and CE Delft.

In this respect, it has to be pointed out that there is still a low level of convergence in the estimates between the various studies. This is largely linked to the fact that climate change is a global phenomenon and hence not all studies make use of the same estimation methods yet. Within such a context, some studies are of more relevance than others, such as, for example, STERN and Watkiss; the former provides an assessment of costs for both climate change and mitigation and has a strong political impact, while the latter focuses especially on the economic costs attributable to climate change and introduces the notion of the social cost of carbon.


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Finally, the study conducted by CE Delft may also be considered as relevant, since it produces a comprehensive assessment of air-transport-related impacts on climate change, by making use of both damage and mitigation cost approaches.


The surveyed studies provided evidence after using two main approaches in estimating the costs linked to the damage caused by climate change: (i) damage costs and (ii) avoidance costs (also referred to as mitigation costs).

The damage costs approach seeks to estimate both the type and economic scale of the damage associated with the impact pathways of climate change, observed on a long-term basis. The cost avoidance approach assumes, instead, a certain quantitative objective for the reduction of emissions and quantifies the cost of mitigation measures that a community is willing to pay in order to achieve such an objective over a long period of time.

The output values of these two evaluation methods, or even a combination of both, may differ substantially, and therefore a comparison may not be possible.

The cost components of climate change externality have been identified in factors linked to both the prevention costs to reduce risk of climate change and the damage costs of increasing temperature. In this respect, all greenhouse gases are considered relevant for calculating the contribution of each transport mode to climate change. For rail transport, the production of electricity is also considered.

In particular, the cost categories focus on the following factors:

loss of agricultural products;

change in the availability of water resources;

health impacts;

costs of a rise in sea level;

emission factors of a vehicle or transport sector;

social costs of carbon (economic costs to society of climate change).

A different perspective in the analysis of the external costs attributable to climate change is again introduced by Baum (Baum, 2008), who argues that the cost avoidance approach should be preferred to the damage costs approach, since the former would have the advantage that estimates are associated with fewer uncertainties. Secondly, he questions the need for internalisation of CO2 costs, since in his opinion they would be already charged through high petrol and diesel taxes.

Nevertheless, the question of whether fuel taxes might or might not represent internalisation of the external costs generated by climate change is still debated. Moreover, the European Commission has considered it more appropriate to address the issue in the context of the revision of the Energy Taxation Directive, and taking into due consideration current fuel taxation levels in the various EU Member States.

3.3.3 Estimates

The ExternE damage costs approach quantifies the effects of climate change with regard to (i) human health, (ii) damage associated with the rising sea levels, (iii) loss of added value in the agricultural sector, and (iv) the differences in the availability of water. Damage to ecosystems and biodiversity has not been included in its analysis.


38

When illustrating its results, ExternE does not provide a single and precise value of external costs per tonne of CO2, but only produces a range of values (defined as 'illustrative restricted range') that result from the application of different discount rates.

Among other studies, INFRAS/IWW opts for a cost avoidance approach and values are estimated based on the objective of reducing CO2 emissions in developed countries by 2030 by 50% compared to the 1990 level. INFRAS/IWW then estimates a European average shadow value – which represents the marginal opportunity cost of the use of a certain resource – for CO2 of € 135 per tonne (with a range between € 70 and € 200 per tonne), since it does not distinguish between different situations within the individual European countries considered.

The social cost of carbon study (Watkiss, 2005b), which includes a comprehensive review of existing estimates of damage costs relating to global warming, is also of particular relevance. The study observes the economic costs to society from climate change expressed in the social cost of carbon (SCC). According to this study, the SCC is estimated as the net present value of climate change impacts over the next 100 years (or longer) of one additional tonne of carbon emitted into the atmosphere today. It is the marginal global damage cost of carbon emissions. It concluded that estimates of the social cost of carbon range between three orders of magnitude, since it reflects the uncertainties in climate change and its impacts, and the choices of decision variables. The study, however, provides a benchmark of £35/tonne CO2 (€ 52.5/tonne CO2) as a reasonable figure for a global decision context committed to reducing the threat of dangerous climate change, and includes a modest level of aversion to extreme risk, relatively low discount rates and equity weighting.

Finally, the Stern Review provides a quantification of the costs for both climate change impact and its mitigation. It affirms that damage costs relating to climate change are considerably higher than the estimates produced by earlier studies, because either they have not included the most uncertain but potentially most dramatic impacts, or they have assumed a temperature increase of 2–3º C, while the Stern Review considers that increases of 5–6º C are very likely. However, risks of the worst impacts of climate change may be considerably reduced in the case of a stabilisation of GHG levels in the atmosphere of between 450 and 550 ppm CO2 equivalent (CO2e) . According to the study, the current level of ppm CO2e is rising at more than 2 ppm each year and stabilisation in this range would require emissions to be at least 25% below current levels by 2050, and perhaps much more. Moreover, and looking at the overall costs of climate impacts, these may reach 5% to 20% of per capita consumption in the business-as-usual scenario for now and forever, while the mitigation costs associated with limiting CO2 emissions are estimated to be around 1% of GDP by around 2050. Here the STERN study assumes a business-as-usual scenario, where the value of the social costs of carbon (equivalent to damage costs) is estimated at around € 71/tonne. In the case of a stabilisation of between 550 and 450 ppm, the social costs of carbon would be € 21/tonne, i.e. roughly one third of the level reached in the business as usual scenario.

Estimating the external cost of climate change caused by air transport is of the utmost importance, owing to its current and, above all, expected contribution to greenhouse gas emissions in the future. In this respect, two studies may be cited here:

TRL estimates total external costs by aircraft in a range of € 33–133/tonne (central estimate € 86/tonne) for CO2 and € 3900/tonne for NOx. Here TRL observes the total emissions by an aeroplane for a return trip and multiplies them by external cost factors derived from the Department of the Environment, Transport and the Regions (2000).


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The CE Delft study uses a combination of both the damage costs and cost avoidance approaches to calculate climatic impacts from aviation, which leads to a middle estimate of € 30/tonne CO2 equivalent, with sensitivities of between € 10 and 50/tonne.

Table 3.4 provides an overview of the main features for the surveyed studies on climate change costs.

Tab. 3.4 External climate change costs: overview of the surveyed studies

Study

Base year and


Methodology Transport modes Main strengths Remarks

BAUM 2008EU 27

Cost avoidance approach

All Critical review of the IMPACT Handbook


CE Delft Europe Damage costs Air Comprehensive assessment of air-transport-related impacts on climate change.Use of both damage and mitigation costs approaches.Specific attention paid to contrail formation.Differentiation between climatic impacts of average flight that do or not cause contrails.

Climatic impacts of sulphur and soor aerosol emissions have not been financially valued

ExternE/NewExt

International perspective

Bottom–up All Introduces the IPA approach.Proposal for using a central value.Long-term perspective (2050).

Only methodological update

GRACE Europe Damage costs All - -

HEATCO Europe Damage costs and abatement costs used as second-best option

All Use of a range of CO2 cost factors for external cost assessment owing to various levels of uncertainties in estimating climate change costs.

No own calculations

INFRAS/IWW

2000International perspective (developed countries)

Avoidance costs All Estimation of a European average shadow value.Long-term perspective (2050).

-

RECORDIT Europe Avoidance costs Road, rail (freight)

Very detailed calculations for specific case-studies of freight transport


STERN Review

International perspective

Damage costs/avoidance costs

All Assessment of costs for both climate change and mitigation.Strong political impact.Estimates higher than earlier studies.Long-term perspective (2050).

No concrete data on the results.No specific results are specified for cost curves, damage and abatement costs.

TRL Europe Damage costs Air Specific study for aviation How the damage costs of NOx

consider the various radiative forcing mechanisms involved is not mentioned


40

UNITE 1998EU 15 + Hungary, Estonia and Switzerland

Bottom–up All Assessment of the amount of CO2

emitted by different transport modes and multiplied by a constant fact independent of the locations of emissions.

Method used for assessing GHG emissions by aircrafts is not specified.

Watkiss Europe Damage costs - Comprehensive assessment of existing estimates for damage costs linked to global warming.Special focus on the economic costs attributable to climate change.Introduction of the social cost of carbon concept.Long-term perspective (2050).

-

3.4 Air pollution


Air pollution is dependent upon many factors, from fuel composition to engine characteristics and maintenance, types and main characteristics of vehicle, infrastructure layout, speed, congestion, etc.. Moreover, air pollution is measured by the emission and concentration of particular primary pollutants, which include nitrogen oxides (NOx), carbon dioxide (CO2), sulphur dioxide (SO2), lead (Pb) and, finally, particulate matter (PM10 and PM2.5) such as dust and soot. These primary pollutants can cause damage to materials and buildings, agricultural crops and forests, as well as being harmful to human health when inhaled.

Since air pollution may be considered as one of the main externalities generated by transport, almost all studies have treated this issue in their analyses. The analysis of air pollution compared nine studies, namely ExternE/NewExt, GRACE, HEATCO, High Level Group on Transport Infrastructure Charging, INFRAS/IWW, Swiss Federal Office for Spatial Development, RECORDIT, UNITE and CAFE CBA.

Among them, ExternE, CAFE CBA, HEATCO and the study by the Swiss Federal Office for Spatial Development outline the strengths. Indeed, ExternE introduces the concept of IPA (see section 2.1.3) which has served as a methodological basis for all later studies that have opted for a bottom-up approach; CAFÉ CBA and HEATCO are two very complete studies with a wide European geographical coverage that may ensure a high degree of transferability, aggregation and application of results. Lastly, the study by the Swiss Federal Office for Spatial Development may be regarded (together with INFRAS/IWW) as a point of reference for the top-down approach: it levers on an advanced approach based on a methodology developed in a WHO study for Switzerland, Austria, and France in order to calculate total ambient concentration and population exposure through emission-exposure models.


Preference has been shown by all studies – with the exceptions of only INFRAS/IWW and OSD – for the bottom–up approach, since this generally makes it easier to trace a pollutant from source to the final receptor, and thus provides more accurate information.

The key factors for estimating the external costs attributable to air pollution generated by transport activities may be grouped as follows:

health costs, which are the negative impacts on human health (mortality and morbidity) attributable to breathing in air pollutants (in years of life lost);


41

material damage, which is the negative impact on buildings attributable to degradation of their construction materials;

crop losses, which are the negative impacts on ecosystems (crops, soil, forests, water flows, groundwater, waterways, etc.) attributable to contamination, acidification and eutrophication with heavy metals.

In order to evaluate the impact patterns of air pollution, it is paramount to consider the following dimensions:

population and settlement density, implying the concept of receptor density close to an emission source, which is an indication of the population close to a source of air pollution, i.e. the closer to an air pollution source the population is, the more negative effects it will suffer and the higher the marginal costs will be;

sensitivity of area;

level of emissions (depending on the different transport modes).

3.4.3 Estimates

For road transport, the estimation of external costs attributable to air pollution differs according to (i) EURO standards, (ii) type of road network, (iii) type of fuel used, and (iv) population density of the area close to the emission source.

Among all pollutants, PM2.5 and P10 are considered by far the most relevant owing to their serious harmful effects on human mortality and morbidity. This is the case, for example, with CAFE CBA, which considers various types of primary pollutants and produces an average of damage between urban and rural areas by highlighting how PM2.5 is the pollutant for which the location of release is of particular relevance.

Among other studies, UNITE concludes that, according to the case studies from Berlin and Stuttgart, damage cost rates vary considerably and are unrelated to the size of the cities.

Rail transport marginal costs vary more considerably than for road transport. Here, values are differentiated according to the type of traction (electric or diesel traction), and direct or indirect emissions, where the former only apply to diesel traction, while the latter are caused by electricity production for electric traction, and fuel production for diesel traction. Generally, marginal costs for diesel traction are higher than those for electric traction.

Concerning air transport, values are estimated based on two parameters: type of aircraft and location; usually, values are monetised in terms of €/LTO and range between € 22/LTO (GRACE) and € 60/LTO (ExternE) for short-haul flights, while they vary between € 153/LTO (GRACE) and € 431/LTO (ExternE) for long–haul flights.

Finally, for maritime and inland water transport only very few marginal cost case studies exist, but they are difficult to compare owing to different locations and vessel sizes. Moreover, and looking at the specific external costs for the various vessel categories, it is important to note (TRT, 2007) that significant differences exist between bulk transport (about € 0.003/tonne km), container transport (€ 0.005/tonne km, that is 66% more thanbulk) and truck and trailer Ro-Ro transport (€ 0.032/tonne km, ten times higher than the specific external cost for bulk transport).

Table 3.5 provides an overview of the main features for the surveyed studies on air pollution costs.


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Tab. 3.5 External air pollution costs: overview of the surveyed studies

Study

Base year for results

and geographical coverage

Methodology Transport modes

Value of Statistical Life (VSL) / Value of a Life Year

Lost (VLYL)


CAFE CBA European Union

Bottom–upImpact pathway approach (ExternE)

Road, Rail VSL€ 980 000 (median)€ 2 000 000 (mean)VLYL€ 52 000 (median)€ 120 000 (mean)

Marginal costs

Very complete study;Estimation of general figures for all EU countries.Update of value ranges for damage costs.Easy application and aggregation of results.

Does not include building damage

ExternE/NewExt

1995EU 15 (excluding Luxembourg) + Norway and some NMS

Bottom–up External costs of energy

VSL€ 3,200,000

Marginal costs

Introduction of the IPA approach.

Only methodological update

GRACE 2005EU 25

Bottom–up or top–down according to the specific case study

All VSLBandwidth of € 800 000-1 800 000

Average and marginal costs

Wide European geographical coverage.All modes covered.

-

HEATCO 2002EU 25


Transport and electricity generation

VSLBandwidth of € 800 000-1 800 000

Marginal costs

Very complete study.Wide European geographical coverage.Update of value ranges for damage costs.Use of the ExternE methodology.Assessment of also local effect of PM2.5

on human health and densely populated areas.High level of transferability of results on EU scale.Easy application and aggregation of results.

No own calculations


Only methodology Selected EU countries

Bottom–up All Not given Marginal costs


INFRAS/IWW

2000EU 15 + Switzerland and Norway

Top–down All VSL€ 1 400 000

Total, average and marginal costs

Most relevant study for the top-down approach.

-


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RECORDIT

19983 corridors:- Genoa to Manchester - Patras to Gothenberg - Barcelona to Warsaw

Bottom–up Road, rail (intermodal freight transport)

Not given Total and average costs

Very detailed calculations for specific case studies of freight transport



2002Switzerland

Top–down Road, rail VLYLCHF 89 870


Use of an advanced approach based on a methodology developed in a WHO study for Switzerland, Austria, and France.Calculation of total ambient concentration and population exposure through emission-exposure models.

Limited to Switzerland only

UNITE 1998EU 15 + Hungary and Czech Republic


All VSL€ 1 000 000VLYL€ 74 500 (chronic effects)VLYL€ 128 500 (acute effects)

Total and average costs for all countries considered, marginal costs for specific countries.

Use of dose-response functions to quantify pollutant-related impacts.

Old base year.Limited to EU 15 and some new Member States only

3.5 Noise


Noise is one of the main environmental impacts that arise from a transport scheme. Noise can cause serious impacts on individuals’ well-being by leading to damage to both psychological and physical health.

Hearing damage can be caused by noise levels higher than 85 dB(A)4, whilst lower levels (above 60 dB(A)) can be sources of nervous stress reactions, including increased heart rate, increased blood pressure and hormonal changes, as well. Finally, damage occurs particularly when exposure to noise is continued over a long period of time.

The analysis of noise compared 11 studies, namely GRACE, HEATCO, High Level Group on Transport Infrastructure Charging, INFRAS/IWW, Kristensen, Swiss Federal Office for Spatial Development, PETS, RECORDIT, UNITE, TRL and Ly. In all these studies, with the exception of RECORDIT and HEATCO, which focus only on road and rail (freight in the case of RECORDIT), all transport modes are treated.

4 Noise is generally measured by a logarithmic scale of sound levels called decibels (dB). The scale runs from 0 dB (the minimum detectable sound) to 120 dB (the threshold of pain). Since the human ear is also sensitive to the frequencies of oscillation of the sound waves, an 'A' weighting factor is applied to the decibel scale, which gives a measurement unit of dB(A). Since decibels are an instantaneous measurement, several indexes have also been introduced to measure noise over a period of time, such as, for example, Laeq, which is a more appropriate measure for railway noise, since the latter tends to be much more intermittent than highway traffic noise.


44

INFRAS/IWW is the most complete study for the top-down approach. It includes a high level of differentiation according to different times of day, traffic conditions and local conditions and, consequently, provides a high level of transferability and potential for aggregation. GRACE and UNITE are, instead, the most promising as far as the studies using a bottom–up approach are concerned. GRACE, in particular, produces estimates based on recent data for all modes and has wide European geographical coverage. On the other hand, UNITE takes into account the time of day


Studies of noise usually make use of a bottom–up approach in estimating external noise pollution costs. Generally speaking, the cost of transport noise is dependent upon the source of noise, which implies that annoyance to people varies particularly between the different transport modes.

For the calculation of noise impacts, two cost components were considered by all studies:

annoyance, which measures the costs relating to the disturbance individuals experience when exposed to traffic noise;

health-related costs, which refer to more long-term health effects caused by exposure to noise, such as medical costs, hospital costs and reduced productivity.

The study by the Swiss Federal Office for Spatial Development also linked impacts of noise on human health and material damage with the effects in terms of rent levels.

Inside these externalities, some key drivers are also identified:

time of day, which implies higher marginal costs in the case of noise at night;

receptor density close to emission source, which is an indication of the population close to a source of noise;

existing noise levels, which implies that the lower the existing background noise levels, the higher the marginal costs will be.

3.5.3 Estimates

Specific local factors largely influence the estimation, and thus the evaluation and comparison of the external costs associated with noise. This is particularly true for road transport, where significant ranges have been recorded. In this respect, the most important local factors related to time of day and traffic level, with higher values for night-time and low traffic density. Here, INFRAS/IWW provides us with a comprehensive analysis of marginal noise costs, since it considers the impacts of the various factors at local level. This study differentiates the estimates for marginal costs (passenger cars) by (i) traffic scenario (urban, inter-urban and rural), (ii) traffic density (dense or light), and (iii) time of day (day or night). The results are a broad range of values, which go from €0.0014/vkm with low traffic density in rural areas in the day time to € 0.3368/vkm with low traffic density in urban areas at night.

For rail transport, the level of noise largely depends upon the characteristics of the rolling stock (speed, tracks, brakes, surface conditions). Here, INFRAS/IWW estimates higher values than for road transport, with a range of between € 0.288 and € 8.212/vkm for passenger trains in rural areas in the day time and passenger trains in urban areas at night, respectively.


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Concerning air transport, the fact of being largely dependent upon local factors, aircraft type and technology, time of day and timing of flight paths during the day, made it almost impossible to compare values on a broader scale and to present some comparable ranges of value. Additionally, another important factor is represented by the number of people affected by noise, which is linked to the population density around the airport (Ly, 2001).

Table 3.6 provides an overview of the main features for the surveyed studies on noise costs. It must be stressed that some studies only evaluated years of life lost by using the value of a life year lost (VLYL).

Tab. 3. 6 External noise costs: overview of the surveyed studies

Study

Base year and

geographical

coverage

Methodology

Transport modes

Value of Statistical

Life (VSL)/Value of a Life Year Lost (VLYL)


GRACE 2005,EU 25

Bottom–up All VLYL € 40 300 Total costs Estimates for all modes.Wide European geographical coverage.Recent data.

-

HEATCO 2002,EU 25

Bottom-up Road, Rail VLYL € 40 300 Total costs Use of CVM to estimate WTP for five annoyance levels.Systematic review of the most relevant aspect relating to noise external costs

No own calculations


Only methodology

Selected EU countries

Bottom–up All VSL € 3 100 000VLYL € 84 000

Marginal costs

- Only methodological considerations.

INFRAS/IWW

2000EU 15 + Switzerland and Norway

Top–down Road, rail, aviation

VSL€ 1 500 000

Marginal costs

Most complete study for the top-down approach.High level of differentiation according to different times of day, traffic conditions and local conditions. High degree of transferability and potential for aggregation.Marginal noise costs are estimated for specific scenarios of traffic contexts and settlement structures.

Not all health costs are considered.Deficiencies in the procedure for estimating the number of people exposed to different noise levels in Eastern Europe.

Kristensen 2002Denmark

Bottom–up Road Not applicable Marginal costs

- Limited to road transport and Denmark only

Ly 2001United Kingdom, The Netherlands

Top–down Air Not applicable Total and average costs

Relevant for assessing noise-related impact attributable to air transport.

-

RECORDIT 19983 corridors:- Genoa to Manchester - Patras to Gothenberg - Barcelona to Warsaw

Bottom–up Road, rail (freight)

VSL € 1 000 000VLYL € 74 500

Marginal costs

Very detailed calculations for specific case studies of freight transport.Use of dose-response functions.



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2002Switzerland

Combination of bottom–up and top–down

Road, rail VLYLCHF 85 000


- Limited to Switzerland only

TRL 1995–2000 EU 15, United Kingdom, Sweden

Bottom–up Road, rail, air

Not applicable Marginal costs

- Old base year.Limited to EU 15 only.

UNITE 1998EU 15 + Hungary and Czech Republic

Bottom–up Road, rail, aviation

VSL€ 1 000 000VLYL€ 74 500 (chronic effects)VLYL€ 128 500 (acute effects)

Marginal and average costs

Time of day is taken into account for estimation.Relevant for assessing noise-related impact attributable to air transport.

Old base year.Limited to EU 15 and some new Member States only.

3.6 Congestion and scarcity


Infrastructure capacity is limited and a problem of allocation occurs when traffic increases. When there is increased travel time for all users the result is congestion costs. With air transport and railways, the main result is that other operators will not be able to get the slot that they want: in this situation, scarcity costs arise when a particular slot or track assigned to an incumbent could have a higher value if used by another operator.

Congestion may have various reasons, but in many cases delays appear as the result of multiple causes:

Bottlenecks and capacity shortages at links or nodes; The physical condition and quality of infrastructure and vehicles; Infrastructure construction activities; Accidents;

Weather conditions; Operating and management failures; Technical problems with infrastructure or vehicles; Sundry other reasons.

Congestion can affect the performance and quality of the transport system in a number of ways: increased travel times; overcrowding and delay on public transport; deterioration in the 'driving experience' with stop-start conditions, and reliability problems. In brief, congestion is represented by the cost of time delays and any increased operating costs caused by an extra transport unit joining the traffic flow. Road traffic congestion is an example of a cost that is external to individual motorists but largely internal to motorists as a group: each vehicle user both imposes and bears this cost.

Traffic congestion emerges from the mutual disturbance of vehicles, trains or aircraft when transport infrastructure capacity approaches saturation. There is a difference between road transport and scheduled services in terms of the consequences. In road transport congestion is perceived by increasing mutual disturbance, reducing manoeuvrability and consequently decreasing vehicle speeds. In scheduled transport, slots or tracks are pre-


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planned and congestion occurs because of the variations compared with the planned timetable (for example, a train that is late causes a delay in all other trains).

Studies considered in the analysis of congestion cost are mainly: COMPETE, UNITE, GRACE, INFRAS/IWW, HEATCO, High Level Group, CE Delft/ECORYS, TEN-STAC.

COMPETE incorporates recent data and assesses all transport modes with wide European geographical coverage. The quality of the analysis is strengthened by a classification of country networks for all modes and is based on severity and likelihood of congestion, which allows for a high degree of data transferability.

Alongside this, INFRAS/IWW may be presented as the first study to have estimated total external congestion costs, total delays and potential congestion pricing with reference to 17 European countries. GRACE and UNITE further contributed to an update in this respect by clarifying some issues relating to scarcity values and introducing data update, respectively.


Studies of congestion are typically focused on road transport and use a harmonised bottom-up approach, which starts from typical specific costs for transport modes and countries. Estimates of marginal congestion costs in scheduled transport are rare and refer to very specific case studies. One method of calculating congestion costs proceeds from vehicle hours lost and posits a certain value for time. The delay to other road users caused by one additional vehicle entering the traffic flow is assigned a monetary value based on the value of travel time. The basic elements required for the estimates are:

Infrastructure capacity; Speed/flow function; Value of travel time (VOT); Demand elasticity;

Infrastructure capacity and speed/flow curves are used together to describe the development of average travel speeds on a network segment when traffic volume changes. Both elements depend on infrastructure characteristics. In freight transport the definition of the value of travel time is even more complex, since other items are important, such as the value of goods, the risk of damage or loss and the reliability of consignment times.

The value of travel time refers to the cost of time spent on transport: in operating terms, it is generally treated as the value of travel time savings (VTTS), i.e. the benefits from reduced travel time. The value of time varies considerably from person to person (relating e.g. to income) and depends upon the purpose of the journey. In particular, the value of working time (i.e. time spent travelling in the course of work) is generally calculated differently from the value of non-working time (i.e. time spent travelling outside work). The value of working time is the opportunity cost of that time to the employer, which is generally equivalent to the wages of the worker. The value of non-working time is time spent outside work and it is estimated from revealed preference or stated preference analysis techniques, where the real or hypothetical choices of travellers between faster but more expensive modes and slower but cheaper modes can be examined. Since value of time depends on specific conditions, studies’ values generally differ from each other; for example, in UNITE the value of time for road transport is equal to € 21 per person hour (business) and € 4 per person hour (leisure and private), while HEATCO estimates values of delays attributable to congestion for commuting at between € 8.48 and € 10.89/vkm and for private trips at between € 7.19 and € 9.13/vkm.


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Finally, demand elasticity is needed to assess the reactions of infrastructure users when congestion arises. Elasticity depends very much on local conditions (e.g. the availability of alternatives). Given the difficulties with defining demand elasticity in advance, wherever possible external road congestion costs should be estimated from a model which simulates the interaction of demand and supply on the road network: this model would ideally incorporate a detailed network description, with both speed/flow relationships and junction delays, and allow for user reactions in terms of at least re-routing and changing mode. The ability to model change of travel time departure, destination or frequency of travel would enrich the representativeness of the responses, although very few models incorporate such elements. As mentioned above, the key elements needed to estimate congestion costs depend on local conditions. In order to define useful reference values that can be applied to contexts other than those where they have been estimated, segmentation is needed. Costs should therefore be distinguished in terms of e.g. location (inner/outer city, urban, inter-urban, rural), type of infrastructure and time of travel (peak and off-peak), passenger and freight transport, individual and commercial transport.

Here, the study by Professor Baum provides a different reading on this topic: congestion costs would already be internalised and, consequently, should not be counted as external costs (Baum, 2008). The reason is linked to the fact that each motorist contributes the same level of congestion he/she suffers because of other motorists. This implies that every motorist represents a burden on the collective of all motorists and at the same time is burdened by this collective, and hence including congestion costs in an external cost analysis would be equivalent to double counting.

However, it may argued that every user who enters the traffic flow considers only those costs that he/she personally bears and, in most cases, he/she will be unconscious of, or unwilling to take into account, the costs he/she imposes on other users. This means that the user only considers the average costs experienced by other road users and thus does not include the congestion-related impact of his/her trip on other vehicles. The difference between the marginal cost and average cost curves is that: (i) the former represents the social marginal costs (for the new user and for existing ones) of an additional journey; (ii) the latter represents the perceived additional cost of the new user only (i.e. his/her private cost). It is true that the social costs here are those belonging to society and road users. However, the price introduction generates a rationing effect of scarce capacity, depending on the different WTPs.

3.6.3 Estimates

Table 3.7 summarises the available European studies reporting estimates of congestion costs. Studies considered in the analysis stress that road congestion is strongly dependent on traffic volume and type of network. For inter-urban transport, for example, the average value for marginal costs is influenced by traffic conditions and is included in a range between almost zero and € 0.03/vkm for selected motorway corridors in Europe.

The analysis of marginal congestion cost for urban roads is more complex, as case studies are different and hardly comparable. Some country-specific studies also exist, examining different cities or areas, using different methodologies as shown in Annex A. Again, results differ according to area, type of road and peak or off-peak.


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Tab. 3.7 External congestion costs: overview of the surveyed studies

Study

Base year and


Transportmodes

Cost components

Value of time (VOT)


BAUM 2008EU 27

All - - Already internalised

Critical review of the IMPACT Handbook


CE Delft/ECORYS

Unit costs function and rates for 2002EU 15

Road, rail Time costs Not available Marginal social costs

Estimates according to road type, time of day and vehicle class

-

COMPETE 2005EU 25, CH, USA

Road, rail, air, shipping, public transport

Time and operating costs

Values from UNITE, TEN-STAC, INFRAS/IWW

Qualitative congestion trends, relative operating costs

Recent data.Wide European geographical coverage.All modes covered (particularly public transport).Provision of an overview of existing values.Classification of country networks for all modes and based on severity and likelihood of congestion.High degree of data transferability.

No own estimates

GRACE 2005 Urban road, inter-urban rail

Road: time costs.Rail: operating costs.

Value of time based on TREMOVE.

Marginal social costs

Recent data.Use of WTP for specific tracks to estimate scarcity costs.Estimation of relative (rail) slot allocation costs.Further clarification on the issue relating to scarcity values.

Urban simulations based on less (compared to INFRAS) realistic speed/flow curves

HEATCO 2004General methodology and case studies of UK, Denmark and Greece

All modes Time and operating costs.

The values of travel time saving by country, mode, travel purpose and trip length include most recent evidence on willingness-to-pay surveys.

Unit value, national case study results

Updated review of values of time

No own calculations


General methodology

Road, rail Time and operating costs.

No estimates, only methodology: for business and workingtravel time estimates relating to wage rates and overhead labour costs. For leisure and commuting journeys, estimates using WTP

Country-wise function



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INFRAS/IWW

1995, 2010EU 15, CH,NO

Road Time and operating costs.

For business travel the average for EU 17 is equal to € 14.83/hour (passenger) and € 29.48/hour (freight)

Total costs by country, marginal social costs by traffic situation

First study to have estimated total external congestion costs, total delays and potential congestion pricing with reference to 17 European countries.

Focus on single links, thus results are only of theoretical relevance.Reaction patterns of users to the introduction of congestion charging neglected.

TEN-STAC 2000-2020EU 25

Road Time costs. Average for EU 27 is " 28.88 per person hour for business, € 7.57 for commuting/private, € 4.43 for leisure/holiday. Values also for rail and air transport

Total costs - -

UNITE 1996, 1998,2005EU 15, CH, EE, HU

Road, rail, aviation

Time and fuel costs

€ 21 per person hour (business)€ 4 per person hour (privateand leisure).

Total delay costs per country, marginal social costs by case study

Estimation of social marginal costs for: four cities, four rail networks and, in general terms air transport.Contribution to data update in this respect.Good geographical coverage

Urban simulations based on less realistic speed/flow curves (compared to INFRAS)

3.7 Other external costs

As pointed out in section 2.1, a variety of other external costs exists in addition to the main categories of externalities – congestion, environmental costs and accidents – that have been observed so far. Nevertheless, these costs present a series of critical factors, such as an uncertain valuation approach or a lack of sufficient scientific knowledge, which do not permit a precise and accurate economic and monetary estimation.

Only a few studies (INFRAS/IWW, ExternE, OSD, Friedrich and Bickel and UNITE) extend the analysis beyond the usual categories and consider other costs in their analysis. Building on these studies, the following types of costs may be identified:

Nature and landscape, where the main effects are caused by the provision and utilisation of the infrastructure;

Additional costs in sensitive areas, where the main effects are associated with time losses due to separation effects for pedestrians, scarcity problems (loss of space availability for bicycles) and urban visual intrusion due to transport volume and infrastructure;

Up- and downstream processes, where the main effects are defined as a percentage of air pollution costs, climate change costs, and nuclear power risks for electricity production;

As far as the methodological approach is concerned, four different approaches have been used by four different studies: repair costs approach (as used by INFRAS/IWW), standard price approach (as used by ExternE);


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two-stage approach, including compensation for habitat loss and compensation costs for habitat fragmentation (as used by OSD);

two-stage approach, including repair costs for reduced species diversity due to land use change, and repair costs for negative effects of airborne emissions on biodiversity and ecosystems (as used by NEEDS5).

In particular, the INFRAS/IWW study may be considered to be the most complete study in this domain as it considers three main types of other external costs, i.e. (i) nature and landscape, (ii) additional costs in urban areas, and (iii) up- and downstream processes. For all these costs, the methodology used is based on the repair and compensation costs approach, and total, average and marginal costs are estimated:

For nature and landscape6 (comparison of average costs):

within passenger transport, cars amount to € 0.0247/pkm, which is 3.6 times higher than rail, owing to the fact that road infrastructure has increased significantly between 1950 and today, whereas rail infrastructure has remained rather stable;

within freight transport, the relation is even more in favour of rail, since rail costs are even lower than those of waterborne transport, because of the increase over recent decades in infrastructure for waterborne transport;

For additional costs in urban areas7 (comparison of average costs where separation effects are of major importance with a share of nearly 80%):

within passenger transport, separation effects have the same level for passenger cars and rail. This is attributable to the fact that detours due to railway lines are bigger, although the absolute amount is much lower. However, the space availability for bicycle lanes is only relevant for road transport;

within freight transport, the average costs of HGVs are 55% higher than the costs for rail freight. No costs occur for the other transport means;

the differences between countries are mainly based on the amount and share of urban transport. Thus, countries such as the Netherlands have rather high average costs;

For up- and downstream processes8:

most important are upstream processes for climate change costs, mainly based on the use of fossil energy for the construction of vehicles and infrastructure (59% of total costs, whereas air pollution costs amount to 38%);

nuclear power risks have a minor share, but are of special interest for rail transport and amount to € 0.33 billion;

within passenger transport, upstream effects are higher for passenger cars than for passenger rail, whereas the costs for air transport are significantly lower;

nuclear power risks are important for rail and amount to 15–20% of average costs; within freight transport, rail has about 60% of the costs of HGVs. The share of nuclear

power risks is similar to that for passenger transport.

The GRACE study is also of particular interest, since it focuses its estimations on a specific sensitive area, such as the Alpine area. Here, GRACE concludes that for road transport the highest factor of more than 10 is observed for visual intrusion, while for noise and

5 This study is not listed in Table 3.8 since it only considers external costs of energy and not of transport.6 The main effects for nature and landscape are caused by the provision and utilisation of the infrastructure.7 The main effects for urban areas are associated with time losses due to separation effects for pedestrians,

scarcity problems (loss of space availability for bicycles) and urban visual intrusion due to transport volume and infrastructure.

8 The main effects are defined as a percentage of air pollution costs, of climate change costs, and nuclear power risks for electricity production.


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infrastructure costs a factor of five is estimated. Effects of local air pollution are also in that magnitude, although owing to regional air pollutants the factor is roughly halved to 2.1. The factor for accidents of 1.2 is again about half of this.

Tab. 3.8 Main types of other external costs according to selected studies

Study Base year

Geographical coverage Type of cost Methodology Output

valuesMain

strengths Remarks

ExternE 19952004

EU 15 plus Norway

Nature and landscape.Soil and water pollution.Up- and downstream processes.

Standard price approach


- Only methodology

GRACE 2006 Alpine area Visual intrusion.Accidents.Infrastructure costs.

Impact pathway approach

Marginal costs

Very detailed cost analysis and use several, specific effects

Focus on a specific sensitive area (the Alpinearea) only

INFRAS/IWW

1995 EU 15, plus Switzerland and Norway

Nature and landscape.Additional costs in urban areas (separation effects and space availability for cyclists).Up- and down streaming processes.

Repair and compensation costs approach

Total and average costsMarginal costs

Most complete study in this field.

-


2000 Switzerland Nature and landscape.Additional costs in urban areas.Up- and downstream processes.

Two-stage approach: compensation for habitat loss and compensation costs for habitat fragmentation.


Good quality of data and relatively highly worked-out cost factors.

Limited to Switzerland only.Low degree of results transferability (very specific for Switzerland).

UNITE 1998 EU 15, plus Switzerland and Norway

Nature and landscape.Soil and water pollution.

Repair and compensation methodology


- Limited to the EU 15, Switzerland and Hungary only.

3.8 Summary

Table 3.9 shows the relevance of each externality according to the different transport modes. This shows the impact of each externality on the modes of transport and it has been calculated based on (i) the existing literature, (ii) the recommended values produced by the surveyed studies and (iii) the comparison between them.

Based on the analysis previously carried out, Table 3.10 presents a comprehensive summary for each externality, by identifying the following parameters: predominant methodology; degree of concordance; main factor influencing the estimates; and critical issues. For each externality, the most frequently used methodological approach has been


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identified, together with the most critical variables that have been covered in producing the outcome values. Finally, the most relevant studies have been associated with each externality.

Overall, the degree of convergence – i.e. the extent to which the input and output values for the different externalities are similar in the different studies – has been evaluated according to a set of indicators, such as (i) the selection of the cost components, (ii) the value assigned to the VSL and VOT, (iii) the geographical coverage and, finally, (iv) the general methodology followed by the surveyed studies. Based on these assumptions, a high degree of convergence in the estimates has been found for accident, air pollution and congestion external costs, whilst medium convergence has been recorded for noise pollution. A low degree of convergence applies, instead, to climate change, mainly owing to the particular nature of this externality and the lack of convergence in current scientific debate.

Tab. 3.9 Degree of relevance of each externality per transport mode

Mode of transport Accidents Climate change Air pollution Noise Congestion

and scarcity

Road

Rail

Aviation

Maritime

Inland waterway

Legend:





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Tab. 3.10 Comparative summary for the surveyed main externalities

Types of externality

Prevalent methodology

Degree of convergence

of the estimates

Main factor influencing the

estimatesCritical issues Most relevant

studies

Accident Bottom–up Accident statistics; vehicle technology; cost components that are considered as external.

VSL; driver behaviour; coverage secured by insurance premiums.

GRACEINFRAS/IWWSwiss Federal Office for Spatial DevelopmentUNITE

Climate change

Damage costs Approach; discount rate; time period.

Geographical coverage (global phenomenon); estimation method; general lack of knowledge of the physical impacts of global warming.

CE DelftHEATCOSTERN ReviewWatkiss

Air pollution Bottom–up VSL; population density; vehicle technology; proximity to emission source.

EURO norm selected; power traction (petrol, diesel, electricity).

ExternECAFÉ CBAHEATCOOSD (for top-down approach)

Noise Bottom–up VSL; population density; vehicle technology; proximity to emission source; time of day; traffic volumes.

Transport mode; estimation method (hedonic price, CVM).

GRACEINFRAS/IWWUNITE


Bottom–up VOT, speed/flow function.

Transport mode; VOT (working and non–working time).

COMPETEGRACEINFRAS/IWWUNITE

Other external costs

N.A. N.A. Uncertain valuation approach; lack of sufficient scientific knowledge; inaccurate economic and monetary estimation.

GRACEINFRAS/IWWSwiss Federal Office for Spatial Development

Legend:





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4 THE IMPACT STUDY

4.1 Policy context

The IMPACT (Internalisation Measures and Policies for All External Costs of Transport) study was commissioned by the European Commission in 2007 from a consortium led by CE-Delft and also including INFRAS, Fraunhofer Gesellschaft (ISI) and the University of Gdansk as partners. The origin of this study is strictly linked with the revision of Directive 2006/38/EC on charging heavy duty vehicles for the use of certain infrastructure.

On the basis of a request from the European Parliament, which stressed the need to consider and address all impacts generated by external costs as well as the barriers to their internalisation, the European Commission was asked to provide a model to serve as the basis for estimating external costs and their effects. This model, with the support of an impact assessment on internalisation for all modes of transport, was then expected to be able to identify the necessary and appropriate modifications in a legislative proposal to further review the Eurovignette Directive.

4.2 Overview

The purpose of the IMPACT study was to provide a comprehensive overview of the main methodological approaches and estimates adopted by the current literature on the internalisation of external costs generated by transport activities. Secondly, the IMPACT study was also asked to identify which methods and values may be recommended as 'default' when calculating external costs as a basis for the implementation of the necessary transport pricing policies.

The IMPACT Handbook on estimation of external costs in the transport sector (released in February 2008) compiles and evaluates the existing scientific research on estimating external costs by providing (at both European Union and national level) the state of the art and best practice for policy and formulates a set of recommendations. In particular, the Handbook:

provides information on how to generate quantitative information for different external cost categories, as a basis for the definition of internalisation policies;

covers all environmental, accident and congestion costs;

considers all transport modes;

focuses on marginal external costs of transport activity as a basis for the definition of internalisation policies;

does not include information on existing taxes and charges and on infrastructure costs;

recommends methods for calculating external costs and best available input values for such calculations.

4.3 Estimates of external costs

The IMPACT Handbook deals with the issue of external costs generated by transport activities on the basis of the following six parameters:

scientific accuracy, which refers to the choice between the different methodological approaches and estimation methods;


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quality of data basis, which refers to the statistical data sources accessible at different levels (European, national, local);

completeness, which refers to how many transport modes and cost categories are covered by the studies;

transferability, which refers to the possibility of transferring the output values generated in a specific context;

practical application, which refers to the possibility of applying the study results for different transport modes, areas, times of day, etc.;

potential for aggregation, which refers to the possibility of combining specific values in order to derive more general values applicable to more countries and transport modes.

The only exception is represented by climate change, for which such an approach was not possible owing to the particular nature of this externality and the lack of convergence in current scientific debate. The conclusions reached by the IMPACT Handbook are then illustrated in the following sections for each type of external cost.

For all transport modes, the values presented by the IMPACT Handbook are expressed in mode (vehicle, train, vessel and flight) kilometres. This has allowed a comparison of the values between the studies.

4.3.1 Accidents

For accidents, the IMPACT Handbook considers as external those costs which are not covered by risk anticipation and insurance. On the basis of the surveyed studies, and making a distinction between total and average accident costs on the one hand, and marginal accident costs on the other, the IMPACT Handbook formulates the following considerations:

for total and average accident costs: a large part of the cost of material damage is covered by insurance fees, and is therefore considered as internal; medical costs are partly internal, since they are covered by the insurance system; however, the difference between total costs and the coverage secured by the insurance system is considered as external; although some administrative costs (such as the cost of the police, the insurance system and the legal system) are covered by insurance premiums, a significant part of it remains external; risk value, which is the monetary value for pain, grief and suffering is considered as external, as are production losses, since the lost output is generally covered within the risk value;

for marginal accident costs: the user is assumed to internalise the risk he/she exposes himself/herself to, values as WTP, which is then internal; the expected accident cost to the rest of society when the user exposes himself/herself to risk by entering into the traffic flow; the WTP of the household, relatives and friends and the rest of society for the increase or decrease in the accident risk for all other users of the same mode; the WTP of the household, relatives and friends and the rest of society relating to the changed accident risk in other modes of transport.

On this basis, for the external costs relating to accidents, and in relation to the various transport modes, the Handbook’s recommendations are as follows:

road: it is recommended that the evaluation and output values included in UNITE (in particular with reference to the Swiss case study) be considered because this study is the most important carried out at European level and is based on a differentiated bottom-up approach.


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rail: few studies on marginal and average accident costs exist and the results are linked more to average than to marginal costs. In INFRAS/IWW the average external accident costs for rail transport are estimated according to the UIC accident statistics, whilst the Swiss case study covered by UNITE also gives values for average external accident costs. The European average external accident costs for rail transport amounts to € 0.08-€ 0.30/train km.

air: the Handbook recommends the average costs developed in INFRAS/IWW, where values are transferred from €/pkm to €/LTO using average pkm values from the TRENDS Database and ICAO data for the number of LTOs. Values for different countries range from € 12 to around € 309/LTO.

Scientific accuracy: according to the IMPACT Handbook, almost all the surveyed studies provide a good level of scientific accuracy. UNITE, in particular, contains instructions for calculating total and average accident costs and a methodological framework for estimating marginal external accident costs, as well.

Quality of data basis the Handbook notes that a high degree of differentiation is needed for calculating external costs of accidents. In this respect, UNITE uses solid national data and up-to-date data from the IRTAD/UIC database, which covers European road and rail accident statistics. OSD and CE-Delft use specific data sources for their countries of analysis, i.e. Switzerland and The Netherlands respectively.

Completeness: two groups of factors are observed: (i) completeness in transport modes treated and (ii) completeness in cost categories covered. With regard to other transport modes such as aviation, maritime or inland waterway transport, the Handbook observed a significant level of fragmentation of the results and only UNITE and INFRAS/IWW give a rather exhaustive overview of total costs for various transport modes.

Transferability: the IMPACT Handbook finds that the transferability of results for the external costs relating to accidents is limited, since total or marginal cost approaches are dependent upon specific case study characteristics. Data for valuation as provided by the cost–benefit analysis carried out by HEATCO9 is considered as valid for transference to other case studies, although it can only be used for calculating total costs.

Practical application: as already stressed for the transferability issue, the IMPACT study concludes that values provided by the cost–benefit analysis carried out by HEATCO can also serve for evaluating accident costs.

Potential for aggregation: marginal costs are directly linked to the surveyed specific case study. Thus, the need for aggregation of differentiated results is not insignificant.

9 HEATCO Project, Deliverable 5 Proposal for Harmonised Guidelines.


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Tab. 4.1 Recommended unit values for accidents for different networks in €ct/km for passenger cars, motorcycles and HDVs

Source: IMPACT Handbook from UNITE, 2002d


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.4.3.2 Climate change

The Handbook notes the need for a differentiated approach, which should include both damage and mitigation strategies, and draws out the following remarks on the reviewed scientific literature:

higher values are estimated with newer studies of damage by making use of more detailed modelling and more knowledge of risk sensitivity;

a large spread still results from studies of damage costs, which explains the high level of uncertainty that still exists for this approach;

the cost avoidance approach is more suitable when long–term reduction policy targets are set at a political level; for this approach, the spread of results is lower than for the damage costs approach.

To summarise, the IMPACT Handbook recommends the use of the cost avoidance approach for estimating short-term external cost factors, while opting for the damage costs approach as a basis for calculating external costs in the longer term. Recommended values from IMPACT are summarised in Table 4.2.

On climate change, the IMPACT Handbook makes a final conclusion concerning the level of levies on fuels, namely, that when considering the internalisation of external costs as a policy tool, the latter have to be internalised as an additional levy on fuels, vehicles or kilometres driven. This implies that simply regarding existing excise duties as a way of internalising external climate costs will not contribute to the achievement of the objective of decreasing CO2 emissions in the transport sector.

Tab. 4.2 Overview of the recommended values for external costs of climate change (in €/tonne CO2)

Year of application Lower value Central value Higher value

2010 7 25 452020 17 40 702030 22 55 1002040 22 70 1352050 20 85 180

4.3.3 Air pollution

Concerning air pollution, the findings are that those studies that favour an EU perspective and are based on costs per tonne of pollutant may be recommended for deriving unit values. In this respect, and also as a result of their solid methodological approach and potential transferability to other national contexts, CAFE CBA and HEATCO may be considered the two studies to refer to primarily. Other (also country-) specific studies may be recommended for assessing specific situations, even though their potential for transferability is limited.

In conclusion, for external air pollution costs the IMPACT Handbook recommends the use of a combined approach, based on the HEATCO output values for the valuation of PM2,5/PM10

emissions and the CAFE CBA one for evaluating emissions of other pollutants.


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Tab. 4. 3 Recommended values for air pollution costs for road, rail and waterways (€/tonne of pollutant; year 2000)

Pollutant NOX NMVCC SO2 PM2,5 (exhaust) PM10 (non-exhaust)

Context Urban metropolitan Urban

Outside built-up areas

Urban metropolitan Urban

Outside built-up areas

Austria 8 700 1 700 8 300 415 000 134 300 69 600 166 200 53 700 27 800Belgium 5 200 2 500 11 000 422 200 136 200 91 100 169 900 54 500 36 500Bulgaria 1 800 200 1 000 43 000 13 800 11 000 17 200 5 500 4 400Cyprus 500 300 2 000 243 700 78 700 20 600 97 500 31 500 8 200Czech Republic

7 300 1 000 8 000 252 600 81 400 62 700 101 000 32 600 25 100

Denmark 4 400 700 5 200 386 800 124 700 45 500 154 700 49 900 18 200Estonia 800 100 1 800 133 400 43 400 22 500 53 400 17 300 9 000Finland 800 200 1 800 337 100 108 600 28 100 134 800 43 400 11 200France 7 700 1 400 8 000 392 200 126 300 78 400 156 900 50 500 31 400Germany 9 600 1 700 11 000 384 500 124 000 75 000 153 800 49 600 30 000Greece 800 300 1 400 248 700 80 100 35 000 99 500 32 100 14 000Hungary 5 400 900 4 800 203 800 65 600 52 300 8 500 26 200 20 900Ireland 3 800 700 4 800 391 000 126 200 40 900 156 400 50 500 16 400Italy 5 700 1 100 6 100 371 600 120 100 67 600 148 600 48 000 27 100Latvia 1 400 200 2 000 115 700 37 200 21 500 46 300 14 900 8 600Lithuania 1 800 200 2 400 143 100 46 500 28 600 57 200 18 600 11 400Luxembourg 8 700 2 700 9 800 671 500 216 200 95 700 268 600 86 500 38 300Malta 700 400 2 200 245 400 78 700 20 400 98 200 31 500 8 200Netherlands 6 600 1 900 13 000 422 500 136 400 82 600 169 000 54 500 33 000Norway 2 000 300 2 500 309 600 99 600 30 100 123 800 39 900 12 000Poland 3 900 600 5 600 174 500 56 000 52 400 69 800 22 400 20 900Portugal 1 300 500 3 500 259 500 83 600 38 500 103 800 33 500 15 400Romania 2 200 400 2 000 29 200 9 400 7 500 11 700 3 800 3 000Slovakia 5 200 700 4 900 194 200 62 100 52 400 77 700 24 900 21 000Slovenia 6 700 1 400 6 200 262 900 84 500 54 500 105 200 33 800 21 800Spain 2 600 400 4 300 299 600 96 400 41 200 119 900 38 600 16 500Sweden 2 200 300 2 800 352 600 113 400 34 300 141 000 45 400 13 700Switzerland 9 200 1 800 8 800 444 800 143 100 73 500 177 900 57 200 29 400United Kingdom

3 900 1 100 6 600 389 100 125 300 60 700 155 700 50 100 24 300

Source: IMPACT Handbook, HEATCONote: Recommended values are similarly applied for all transport modes.

The differential impact on air pollution is, indeed, determined by the quantity of emissions generated by each transport mode.

Scientific accuracy: the IMPACT Handbook considers the surveyed studies to be scientifically accurate. This is particularly true for the studies with a bottom–up approach, such as the ExternE study, where the methodology has been continuously reviewed and updated. The same applies to CAFE CBA. The OSD study is considered as worthy of note because of its very advanced approach, where the population’s exposure to PM10 is modelled with a combined top-down and bottom-up approach.

Quality of data basis: despite the difficulty of evaluating the quality of data basis, since this is not always fully illustrated, the Handbook expresses positive remarks overall on this issue, especially when analysing bottom–up based studies where requirements for emissions data, meteorological data and receptor density data are stricter.

Completeness: according to the Handbook, the studies based on ExternE (for instance, UNITE, CAFE CBA, RECORDIT, etc.) cover the following cost categories: human health damage, damage to buildings and to crops/crop losses. The NewExt study also covers costs associated with impacts on ecosystems and biodiversity.


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Transferability: this parameter is satisfied well in studies with European coverage, rather than in specific country studies. The Handbook stresses how a key aspect for transferability is represented by the data availability in the various countries.

Practical application: this is easier in the case of studies that make use of kg per pollutant as the unit cost rate.

Potential for aggregation: the Handbook concludes that multi-country studies where results are estimated in terms of mass unit of pollutant have to be preferred.

4.3.4 Noise

For external noise costs the IMPACT Handbook recommends the use for both road and rail transport of the output values produced by INFRAS/IWW, as illustrated in Table 4.4. Marginal noise costs associated with maritime and inland waterway transport have been assumed to be negligible, since their emission factors are very low and their activities mainly take place outside populated areas.

Scientific accuracy: according to the Handbook, not all the surveyed studies secure the same level of accuracy in estimation methods. For example, INFRAS/IWW assumes 50% of the WTP to reduce noise annoyance as a proxy value for estimating noise–related health costs. Conversely other studies, such as UNITE and RECORDIT, make use of dose–response functions, which lead to more precise estimations.

Quality of data basis: the IMPACT study points out that quality of data is a key concern for top–down studies since the data on the number of people exposed to noise pollution is often roughly estimated and thus not reliable.

Completeness: for almost all surveyed studies, the costs of disutility attributable to transport noise are taken into account. Nevertheless, since WTP values that serve as a basis for calculating these costs do not include long–term health impacts, the IMPACT Handbook recommends considering such impacts separately (as in HEATCO). Some studies (PETS, ECMT, Ly, ITS) do not follow the same approach and only estimate the costs of disutility attributable to transport noise while other studies, such as CE Delft and INFRAS/IWW only take health costs partly into account.

Transferability: again, the comparative analysis underlines how transferability of value is of major concern in the case of marginal costs of noise pollution, owing to their dependence upon local factors. Transferability in the case of average costs based on national scale values is therefore easier, although it has to be handled with care.

Practical application: according to the Handbook, most studies differentiate between transport modes, especially bottom–up studies which derive values for both road and rail transport at different levels (urban, inter-urban, rural, etc.). Conversely, time of day is only considered in some studies, such as INFRAS/IWW and UNITE.


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Tab. 4.4 Recommended values for marginal noise costs for road and rail transport (€ct/vkm)

Time of Day Bandwidth Urban Suburban Rural

Lower 0.76 0.04 0.01Central 0.76 0.12 0.01DayHigher 1.85 0.12 0.014Lower 1.39 0.08 0.01Central 1.39 0.22 0.03

Car

NightHigher 3.37 0.22 0.03Lower 1.53 0.09 0.01Central 1.53 0.24 0.03DayHigher 3.70 0.24 0.03Lower 2.78 0.16 0.02Central 2.78 0.44 0.05

MC


Bus


LGV

NightHigher 16.84 1.1 0.13Lower 7.01 0.39 0.06Central 7.01 1.1 0.13DayHigher 17 1.1 0.13Lower 12.78 0.72 0.11Central 12.78 2 0.23

HGV

NightHigher 30.98 2 0.23Lower 23.65 10.43 1.30Central 23.65 20.61 2.57DayHigher 46.73 20.61 2.57

Passenger train

Night Average 77.99 34.40 4.29Lower 41.93 20.68 2.58Central 41.93 40.06 5DayHigher 101.17 40.06 5

Freight train

Night average 171.06 67.71 8.45

Source: IMPACT Handbook, based on INFRAS/IWW

Potential for aggregation: multi-country studies are usually more suitable for calculating general values. This is the case for most of the European-wide top-down studies, although a few bottom-up studies, such as HEATCO or INFRAS, also include cost estimates that may be applicable to other European countries.

4.3.5 Congestion and scarcity

For the external costs associated with congestion and scarcity, the IMPACT Handbook distinguishes two types of study: (i) national congestion monitoring studies, which apply the delay approach and (ii) general research studies (COMPETE, UNITE and GRACE), which observe the performance of transport infrastructure or service operators.

Where the recommended values for congestion of non-road transport modes are concerned, IMPACT makes use of the estimates already considered in section 3.7.4, on the


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basis of the different studies surveyed. For road transport, instead, the recommended values – derived from different studies - are presented in Table 4.5.

Tab. 4.5 Proposed ranges of marginal social cost prices of congestion by road class and type of area (€/vkm 2000)

Source: IMPACT Handbook

In brief, the Handbook draws out the following considerations and recommendations:

the values estimated in the various studies are considered to be robust in relation to varying parameters and assumptions, even though a broader geographical coverage of European areas would be necessary;

the costs are given in € (2005) per vkm for morning peak traffic and are lower for afternoon peak and off-peak traffic;

the costs of freight vehicles are calculated according to those of passenger cars in proportion to their passenger car unit (PCU) value. This value ranges between 2 and 3.5 for heavy trucks. PCUs are lower for LGVs and for motorcycles and a common value of 0.5 is used.

Scientific accuracy: the IMPACT Handbook points out that it is rather difficult to assess the scientific accuracy of the congestion studies in detail, since they make use of models the overall architecture and structure of which are not always publicly available. However, it also highlights how many surveyed studies use up-to-date traffic models. With regard to area speed/flow estimates, the Handbook does not identify major methodological problems.

Quality of data basis: the Handbook judges the selection of input parameters to be accurate for all studies. Data quality is critical for public transport, since restricted data availability makes the evaluation particularly difficult.

Completeness: regarding cost categories, the Handbook notes that most studies cover time costs only, or do not clearly or explicitly describe other cost categories.

Transferability: the Handbook stresses how different studies (especially ITS and UNITE) show limited transferability of congestion costs (even within towns in the same country): the reason is the importance of local conditions for individual user reactions to increasing demand or to internalisation strategies.

Practical application: as stated in the Handbook, there is increased awareness of the practical application of results for congestion charging schemes. However, since these schemes are generally designed as a cordon toll, the distance-based values need to be transformed into daily charges by average travel distances.


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Potential for aggregation: as with transferability, the potential for aggregation is difficult, as well. An attempt on this was made by the ITS study, but the results do not make it possible to elucidate a systematic relation between urban sprawl and the level of congestion costs.

4.3.6 Other external costs

In addition to the comparative analysis of the most relevant external cost categories –accident, climate change, air pollution, noise and congestion and scarcity – the IMPACT study also carried out an analysis of the so-called other external costs and made a comparison between the few studies that addressed this issue.

In addition to the other external costs already presented in section 3.8, the IMPACT study considers a further category which is represented by oil dependence. Studies of this issue are currently available only for the United States and, according to the Handbook, the differences in the economic structure and energy mix do not make US values transferable to European ones. Consequently, a best-practice approach does not exist in Europe.

The most relevant study mentioned is the research conducted by Green and Ahmad (2005), which stresses how oil-consuming economies include the following three types of economic costs, which are mainly a consequence of market failure: (i) costs due to transfer of wealth, (ii) potential GDP losses due to the increased economic scarcity of oil, and (iii) macroeconomic adjustment costs in the case of sudden, large price changes.

Based on this, Greene and Ahmad quantified the total costs of oil dependence to the US economy as US$ 3.6 trillion between 1990 and 2005. The three cost components of oil dependence costs are equivalent in size.

4.4 Summary of the IMPACT study

In brief, the IMPACT study conclusions are as follows:

cost of scarce infrastructure (congestion for road, scarcity for other modes), parts of accident costs, and environmental costs have to be treated as external costs;

the level of existing fuel and vehicle taxation needs to be considered so as to compute optimum charge levels for the internalisation of external costs;

the level of externality differs according to the different cost categories and modes;

marginal cost estimation is more suitable for estimating values relating to specific traffic situations: if aggregation is difficult, the average or total costs based on national values have to be preferred.

Table 4.6 shows the main strengths and weaknesses of the IMPACT study. It can be underlined that the IMPACT Handbook may be considered as a valuable starting point for the analysis of external costs, owing to its comprehensive coverage in terms of both external costs and transport modes.


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Tab. 4.6 Main strengths and weaknesses of the IMPACT Handbook

Strengths Weaknesses

It provides a comprehensive and exhaustive review of the existing literature on the evaluation of transport-generated external costs.

It does not provide its own calculations, but only reports those quoted in the literature.

It provides a significant number of input and output values, which may allow a high level of accuracy.

It produces a wide range of estimates that differ significantly between the various selected case studies. This leads to some difficulties in properly understanding which is the most promising internalisation strategy to be applied.

It covers all main externalities, and also makes an effort to analyse other external costs.

It makes an effort to cover all transport modes, thus producing estimates for all of them where possible.

On the basis of IMPACT values, the figures on the following pages present an overview of the relative size of the specific external costs by transport mode. In particular, two transport modes are considered: road and rail transport, and values have been taken on the basis of the following parameters: time of day (day and night); geographical area (urban and inter-urban); and type of transport service (passenger and freight)10. The specific purpose of these figures is to show the relevance each externality has within the selected transport mode. This implies that the analysis has to be seen as 'vertical' rather than 'horizontal' (e.g. comparison between modes), owing also to the fact that the load of the different transport modes is different, as is their consequent impact on the traffic unit (pkm or tkm).

10 For road transport a disaggregation for type of vehicle, road network, size and EURO standard was provided in

the IMPACT study (here, the following values were considered: for passenger cars, 1.4-2.0 litres EURO2 and EURO4 standard petrol vehicles; for trucks, 7.5-16 tonnes weight EURO2 and EURO5 standards. Conversely, no similar disaggregation level for rail transport was available.


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Fig. 4.1 Example of external costs in urban areas (daytime, in €/cent)

Source: IMPACT HandbookNote: Values are expressed in €ct/vehicle km for road transport and €ct/train km for rail transport.

Fig. 4.2 Example of external costs in inter-urban areas (daytime, in €/cent)



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Fig. 4.3 Example of external costs in urban areas (night-time, in €/cent)


Fig. 4. 4 Example of external costs in inter-urban areas (night-time, in €/cent)



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5 ANALYSIS OF THE GREENING TRANSPORT PACKAGE

5.1 Overview of the Greening Transport Package

The Greening Transport Package, launched on 8 July 2008 by the European Commission, proposes two steps to make road and rail freight transport more environmentally friendly: the proposal to amend the Eurovignette Directive on road charging for HGVs and the Communication on rail noise abatement. Furthermore, the package explains what has been done and what will be done by the European Commission with reference to all modes of transport.

The Greening Transport Package is composed of five parts:

Greening Transport Communication, which summarises the whole package and sets out what new initiatives the European Commission will take in this field up to the end of 2009;

Greening Transport Inventory, describing the actions already taken by the European Union to green transport and on which this package builds;

Strategy to Internalise the External Costs of Transport, which focuses on making transport prices better reflect their real cost to society so that environmental damage and congestion can be reduced, while boosting the efficiency of transport and ultimately the economy as a whole;

Proposal for a Directive on road tolls for lorries, which would enable Member States to reduce environmental damage and congestion through more efficient and greener road tolls for lorries;

Communication on rail noise, which sets out how to reduce the perceived noise from existing freight trains by 50% and defines the measures that the European Commission and other stakeholders will need to take in the future to achieve this.

All five documents consider air pollution, noise, congestion, accident and climate change costs, and not other externalities. These documents contribute to the framing of a strategy which sets out how external costs can be internalised in all modes of transport. By internalising external costs, the intention is to give the right price signal, so that users will bear the costs they create and will thus have an incentive to change their behaviour in order to reduce those costs.

The main economic instruments for internalising external costs are taxation, tolls (or user charges) and, in certain circumstances, emissions trading. In fact, the package documentation stresses that each external cost has specific characteristics which require the use of appropriate instruments. Some external costs (congestion, air pollution, noise and accidents) relate to the use of infrastructure and vary according to time, place and type of network. The use of differentiated charging is the best way of taking those variations into account. Climate change, on the other hand, has no such local dimension. As greenhouse gas emissions in general, and CO2 in particular, do not vary according to time or place but are linked to fuel consumption: it would then be more appropriate to use an instrument directly linked to that consumption, such as a fuel tax or even a CO2 emissions trading system, rather than apply differentiated charges.

Social marginal cost charging is proposed as the general principle for internalisation.


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5.2 Proposed measures for more sustainable transport

The Greening Transport Inventory summarises existing EU measures in the field of sustainable transport and lists the large number of, and diverse, measures that are already in place to reduce the negative impacts of transport in relation to accidents, climate change, local and noise pollution, and congestion. In particular, the document emphasises how the European Commission has already adopted measures to permit the internalisation of external costs and to help reduce negative externalities. A summary of the initiatives addressing each type of externality is shown in Annex B.

Harmonisation of energy taxation in 2003 was an important step forward: it is scheduled for review in 2008, and the intention is to give greater consideration to CO2 emissions. In 2006, the Commission proposed reducing the impact of emissions from aviation by including it in the EU’s ETS. In this respect, the Council and the European Parliament agreed in June this year on a compromise deal requiring all flights – both domestic and international – to participate in the European Union’s carbon cap-and-trade scheme from 2012.

On the basis of the result of the impact assessment, explained in the next chapter, the European Commission has decided to adapt the overall strategy to the characteristics of each mode of transport; in particular, there are immediate measures and future measures. The first ones are the proposal for a Directive on HGV charging for the road freight transport sector (see section 5.4) and rail noise abatement measures (see section 5.5).

Future actions are considered for the other modes of transport, as the impact assessment looked at the various options for internalising external costs also in maritime, aviation and rail. Relevant initiatives will be taken in these fields before the end of the Commission mandate, as shown in Table 5.1.

Box 5.1 The consultation process for the internalisation of external costs

15 March 2007: workshop with stakeholders to test the main assumptions and orientations undertaken in the IMPACT study. The aim of the workshop was twofold: the first objective was to make use of the broad expertise of the invitees on the issues presented with a view to incorporating their comments into the project deliverables of the IMPACT study; the second objective was to gain support for the results of the project, which was deemed crucial for any further step towards policy development on the internalisation of external costs.

22 November 2007: technical meeting with experts nominated in different Member States. The objective of the meeting was to have a diverse panel of scientific and technical experts nominated by the Member States to peer-review the final draft handbook and give their comments on how the document could be improved before it was published.

29 October 2007 - 31 December 2007: internet consultation on the internalisation of external costs of transport. The on-line questionnaire was completed by 469 respondents, and 17 position papers from organisations representing air transport, road transport, logistics, rail transport, maritime and inland waterways, and also others from manufacturers and trade associations, were collected. The objective of the consultation was to get feedback on the general principle of internalisation and on the various policy options developed in a consultation paper.

31 January 2008: high-level conference to present the main findings of these consultations and to provide feedback for the impact assessment study.


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Tab. 5. 1 Overall strategy for the internalisation of external costs for all modes of transport

Strategy for the internalisation of external costsMode of transport

Immediate measures Future measures

Freight

Proposed revision of Directive 199/62/EC which takes into account the external costs of air pollution, noise and congestion.

Intelligent Transport System Action Plan (Autumn 2008) to implement interoperability of electronic toll system; it will help to reduce congestion and air pollution.

Road

Passengers

Intelligent Transport System Action Plan (Autumn 2008) to implement interoperability of electronic toll system; it will help to reduce congestion and air pollution.Urban Mobility Action Plan (Autumn 2008) which looks at how to improve mobility in urban areas.Proposal on taxation of private cars is under discussion in the Council in order to take into account CO2 emissions.

Rail

Communication on measures and incentives for reducing noise levels.

The revision of Directive 1999/62/EC will make it possible to internalise external costs in rail transport, too.Directive 2001/14/EC already allows the internalisation of external costs, but only if charging is applied at a comparable level to competing modes of transport.Proposal for review of the first railway package, with possible legislation on rail noise.

Aviation

Decision to include CO2 emissions in the EU ETS. 2012 target date for the aviation sector to start trading CO2.

Energy for railway systems is covered by the ETS as part of emissions from large emitters in the power and heat generation industry. From 2011 or 2012 aircraft operators will be required to surrender allowance to cover their emissions ('polluter pays' principle).Proposal by the end of 2008 to reduce NOx emissions.Proposal for a Directive on airport charges in 2007 on the basis of environmental damage.

Maritime

Possible inclusion in the post-2012 agreement on preventing climate change.IMO would develop a series of measures over the course of 2009 to reduce greenhouse gases. If the IMO does not make sufficient progress, the Commission would include the maritime sector in the EU ETS.

Inland waterwaysInternalisation of external costs by 2013.Integrated European Action Programme for Inland Waterway Transport (NAIADES) (2006-2013).

Source: Communication from the Commission, Strategy for the internalisation of external costs, COM (2008) 435 final.

5.3 Impact assessment of the internalisation of external costs

The impact assessment is part of the Greening Transport Package and was conducted by units of DGs TREN (maritime and inland waterways, railways, road, air and logistics), ECFIN, EMPL, ENTR, ENV, SG, JRC and TAXUD. The analysis focuses on the internalisation of the external costs of noise, air pollution, climate change, congestion and accidents in transport through market-based instruments, such as charges, taxes or tradable permits.

5.3.1 The degree of internalisation by modes of transport and externality type

The impact assessment document devotes a relevant part of the analysis to the definition of the external costs internalisation problem: providing details on the reasons for the internalisation of external costs, making reference to the need to maintain the sustainability of transport activities and, in particular, tackling the issues relating to the current degree of internalisation of external costs.


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The existing situation relating to the differing level of internalisation has to be taken into account to avoid double charging for the same external costs. In fact, in the transport sector there are some external costs which are already internalised. The IMPACT Handbook (section 2.4) highlights the problem stating that 'Parts of environmental costs could be seen as already ‘paid’ for, such as through energy taxes or environmental charges (e.g. noise related charges on airports). (…) the allocation of environmental charges in the transport sector may be arbitrary (e.g. climate change and fuel taxes)'. The issue is also relevant for accident costs, as parts of 'these costs are paid by third-party insurance and other parts are ‘paid’ by the victim having itself caused the accident (either through own insurance or through suffering uncompensated damage, etc). Thus, it is very important to consider the total volume of insurance fees related to the transport sector and the damage paid for outside the insurance system (also sometimes called ‘self-insurance’). (…). Translating the external part into internalisation measures, the national liability systems have to be considered.'

The Commission document assesses the level of internalisation, comparing costs and payments in each mode of transport on the basis of the equity and efficiency approaches. In the first case, total social costs and total resources are analysed by mode of transport and by country by means of the REFIT indicator system11. In the second case, the comparison is made between marginal social costs and prices; although more appropriate for its ability to better reflect the principle of social marginal cost pricing (and thus leading to the possibility of providing the right incentives for transport users), the method is also much more difficult to apply owing to the non-linearity of some external costs (some results from the IMPACT study are reported in the document). The picture provided by the two methods is quite different and the analysis carried out by the impact assessment document concludes that, although there is some evidence that some degree of internalisation of external costs is already in place, 'transport users do not bear all these costs or they pay in ways not related to external costs. In most cases, government measures are fragmented and do not tackle explicitly these market failures. The problem is that the structure of existing levies does not give a price signal efficient enough to influence the mobility behaviour.'

Box 5.2 Existing charges and taxes by mode of transport

In road transport, fuel taxes are applied in all Member States and they may partially serve to recover infrastructure costs or other general purposes (Directive 2003/96/EC on energy taxation). For freight road transport, the existing pricing schemes still show little consistency with the pricing principle of internalisation of external costs: the current Eurovignette Directive allows Member States to levy tolls or user charges based on the principle of recovery of infrastructure costs and does not permit the internalisation of external costs.

Only a few Member States have implemented charging schemes that actually differentiate the tolls for the recovery of infrastructure charges: for example, HGV tariff differentiation by emission category (EURO classification) applied in Germany and the Czech Republic; also some experiences of charge modulation according to time, as with the French motorways, which take into consideration congestion levels. It is useful to mention the Swiss experience: uncovered costs of heavy traffic include health costs and damage to buildings caused by air pollution and the external cost of noise and accidents. The other toll available is the mark-up for HGV charges in mountainous areas, but it is only allowed in exceptional cases and in mountainous corridors where priority projects of the Trans-European network are located. There are also some cases of

11 REFIT is a Sixth Framework Research Programme project that developed a 'modelling-tools-based'

methodology that, through the analysis of selected indicators, permits ex-ante evaluation of the European Common Transport Policy taking into account the economic, environmental and social dimensions ofsustainability (www.refitweb.eu).


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urban tolls to combat congestion or environmental problems for passengers and freight transport.

Accident costs are a special case, as insurance covers some accident costs. The insurance premiums, for example, via the bonus/malus system, take into account the risk profile of the driver, although the level of premiums is correlated with the payment of damages which generally do not cover all the costs.

For rail transport Directive 2001/14 requires charging for variable infrastructure costs and allows charging for the environment or congestion, but infrastructure managers charge according to marginal cost pricing in only a few Member States .

In air transport Directive 2003/96/EC establishes fuel tax exemption for international air transport for legal reasons; at the same time, the Directive allows for the taxation of aviation fuel on domestic flights and, under certain conditions, for intra-Community transport. In 2006, the Commission proposed including aviation in the fight against climate change. As a result, air transport would be subject to the Emissions Trading Scheme from 2011. Moreover, many airports are already applying differentiated charges for some external costs: the situation is not homogeneous, not only across countries, but also across airports.

In maritime transport, Directive 2003/96/EC establishes fuel tax exemption for maritime transport, and the same optional fuel taxation envisaged for aviation also applies to navigation within Community waters. There is a great variety in port charging practices: port charges can vary by type of infrastructure, by charge description and by port institutional arrangements. Lastly, a large share of European inland waterway transport is concentrated on relatively few watercourses, where charges are prohibited.

Source: Commission Staff Working Document, Impact assessment on the internalisation of external costs, SEC (2008) 2208.

5.3.2 The methodology

A set of internalisation policy options was analysed using qualitative methods as well as quantitative models (TRANSTOOLS, TREMOVE and ASTRA) to assess the impact on transport demand and on the rest of the economy. The analysis was carried out at European Union level12 and the policy options (listed in Table 5.2) include:

the reference scenario, which does not consider any new proposal to ensure the internalisation of external costs, but takes into account the forthcoming measures to reduce environmental nuisances. They relate to the external costs of climate change, are not part of the impact assessment strategy and do not cover all modes of transport;

the second scenario, which analyses the impact of charging external costs in road freight transport. This would lead to a revision of Directive 2006/38/EC and it envisages three variants:

o charging for air pollution and noise costs,

o charging for air pollution, noise and CO2,o charging for air pollution, noise and congestion (with a variant which considers

charging for congestion from HGVs and private cars);

12 The impact assessment stresses that many external costs of road transport relate to the use of vehicles in

cities, but it will not provide a specific pricing strategy, as it is considered that in this field it is better to take policy decisions at a level that is closer to the citizens and their particular circumstances. The possibility of addressing internalisation in urban areas in order to create a common framework in this field is left to the forthcoming Action Plan on urban mobility.


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the third scenario, in which external costs are charged not only in road freight transport, but also in all modes of transport, with two variants:

o charging for air pollution and noise in all modes of transport, and charging for CO2

in maritime, IWW and rail, o charging for air pollution, noise and CO2 in all modes of transport.

Tab. 5.2 Policy options analysed for the internalisation of external costs

Policy option Road freight transport All modes of transport

Policy option 1 (reference scenario) No new measures.

Policy option 2A Charging for air pollution and noise.Charging on all roads.

Policy option 2B Charging for air pollution, noise and CO2.

Charging on all roads.

Policy option 2CCharging for air pollution, noise and congestion. Charging on all roads.Variant 2C (ALL) extends charging for congestion to passenger cars on all roads, as well.

Policy option 3A Charging for air pollution and noise.Charging on all roads.

Charging for air pollution and noise in all modes. CO2 charge in maritime, inland waterways and diesel train modes.

Policy option 3BCharging for air pollution and noise.CO2 mark-up.Charging on all roads.

Charging for air pollution, noise and CO2 in all modes.


Box 5. 3 Implementation costs of a charging scheme

HGV charging per km would be more efficient if carried out through a GPS-based technology, and for that reason, the implementation costs of such a system will be estimated using the cost figures found for HGV charging in Germany. Based on these figures the investment costs for HGV charging per km on all roads in the EU 29 would be equal to € 5 billion, and the operational costs would be € 4 billion. The GPS-based technology installed in lorries can also be used for other road freight regulatory (e.g. tachograph) or commercial (fleet management) applications.

To estimate the implementation costs for passenger cars in applying congestion charging in Europe, the costs per user found by the Ministry of Transport in Germany (2005) are multiplied by the total number of passenger cars in Europe. In this way, the implementation costs are probably overestimated, because not all European passenger cars are confronted with bottleneck charges. If it is therefore assumed that 50% of all European passenger cars are confronted with congestion charges, the implementation costs for congestion charging for passenger cars would be around € 8 billion(investment) and € 5 billion (operating costs). In comparison, implementation costs in other modes would be lower, as they would not require additional investment.



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5.3.3 Use of revenues

The use of revenues contributes to improving the economic impact in the short term, as it compensates for the draining of resources that has taken place through charging. Recycling revenues in the economy boosts investment and consumption in the short term, which results in a smoother impact on employment and GDP. It may happen by lowering direct taxes or earmarking for transport and/or for the reduction of externalities. In all cases, public expenditure has to be subject to appraisal with the same quality benchmarks. The impact assessment stresses that the revenues of internalisation might be used for:

government debt reduction,

reducing taxation, specifically wage taxation,

general increase in government spending,

financing of existing transport infrastructure,

compensating externality victims,

spending on mitigating measures,

financing transport alternatives and promoting interoperability.

All options have their rationale, strong points and risks, depending on the specific circumstances and local social and political preferences. However, there may be some rationale for earmarking revenues for transport: financing transport alternatives, promoting interoperability and innovation in the transport sector appear to be the most effective way to improve transport sustainability. An issue that might deserve some attention is also the possibility of earmarking part of the revenues for international connections, which might not receive sufficient support from individual Member States, as they tend to underestimate the benefits of sustainable mobility at Community level.

5.3.4 Analysis of impacts

According to the Commission impact assessment document, the modifications in transport users' choices and modal split attributable to the internalisation of external costs do not hamper mobility in Europe but, on the other hand 'it appears that charging for congestion in road transport leads to more positive effects as it contributes to saving time while decreasing fuel consumption and environmental nuisances'.

A short-term negative economic impact triggered by the increase in transport costs is recognised by the document, which also emphasises that the share of transport costs varies between industrial sectors and would probably lead to increased efficiency in the transport of goods.

The document also assumes that 'On the whole, there are grounds for believing that the reduction of external costs13 and the reduction of fatalities will improve Europe's overall competitiveness as these costs are currently borne by European society at large. Moreover, charging for congestion induces time savings which will be translated into productivity gains for business.'

While the distributional impacts of internalisation are assumed to be quite modest and not to contribute to an increase in inequalities, the methodology applied for the impact

13 According to the TREMOVE model (results of scenario 1), the total marginal external cost of climate change, air

pollution, noise and accidents for all modes in the EU 19 in 2010 is estimated at € 158 billion, excluding congestion costs and the cost of maritime shipping and intercontinental aviation.


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assessment is not able to capture the positive effects of the reduction in external costs on health.

The study recognises that 'the absence of transparency and accountability could result in some cases in overcharging of international transport, which in turn may impact negatively on mobility, freedom of movement and the internal market. Overcharging may also have negative impacts at local level. (…) The most important provisions in the current Directive to ensure accountability of infrastructure costs are the recourse to a common method for calculating costs and the adoption of common charging principles. Member States can decide to recover only some of the costs calculated according to this common methodology. As to external cost charges, a similar approach could be envisaged.'

5.3.5 Conclusions

The conclusions of the impact assessment analysis can be summarised as follows:

The policy option including congestion charges offers the best results and provides higher welfare effects: reduction in time spent brings about positive effects in the economy; less congested traffic reduces fuel consumption, which in turn reduces CO2

emissions;

For reasons of fairness, all modes of transport should be concerned with internalisation. When charging all modes of transport, mobility is largely maintained, while environmental emissions and fatalities are decreased. This is relevant from the acceptability point of view, as this choice also had strong support in the public consultation process. However, it is stressed that - given the international context of maritime, air and inland waterways transport – such a strategy will be developed in the longer term. For rail transport, it is mentioned that charging for external costs was already envisaged in the existing EU legislation (Directive 2001/14/EC). For aviation, its inclusion in the ETS is considered an important step in fighting CO2 emissions, while the ongoing work on reducing NOx emissions would give the opportunity to analyse a pricing mechanism. For maritime transport, a solution such as the ETS is presented as a possible approach.

Given that road freight transport contributes to a large share of external costs, 'internalising these costs, which requires Directive 1999/62/EC to be amended, is therefore an essential component of the broader strategy to internalise external costs in all modes of transport. (…) Acting in road transport while other policy initiatives in other modes are being developed would not negatively affect the trend in externalities since it would be consistent with higher relative charging of the mode with larger externalities.'

The recommended policy option corresponds to charging for air pollution, noise and congestion in freight road transport. The document also states that congestion charging is more efficient if applied to both passenger and freight transport (as supported also by the results of the public consultation), also because reducing travel time contributes to reducing CO2 emissions.

The Commission’s position is that the cost of climate change does not depend on the time and place where the vehicle is used, but on fuel consumption14. Hence, fuel taxes are considered a simple and efficient way of internalising this cost. In relation to the achievement of the target agreed at European Union level for reducing CO2, the

14 Given the relevance of the climate change problem and its prominence among the European Union policy

actions, the appropriateness of the marginal costs approach proposed by the IMPACT study, which givesclimate change cost a minor role among the external costs, might be questioned.


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Commission has already proposed a review of the general Energy Taxation Directive to ensure that it better reflects the EU's climate change and energy goals.

Road accidents are not addressed in the proposed Directive and this is explained by making reference to two main reasons. First, the level of external accident costs depends to a large extent on the insurance system applicable and the costs that it covers. Secondly, the external costs of accidents relate not only to the distance travelled but also to complex factors such as speeding, driving under the influence of alcohol or failure to use seat belts; instruments such as insurance rates might be a more effective tool. According to the Commission document, this issue will be further reflected upon in the review of the European Road Safety Action Programme that the Commission intends to carry out by 2010.

To be consistent with the current legislation the proposed approach is optional, so that flexible and gradual phasing-in would allow the new charging schemes and toll technology to be trialled in Member States where the geographical conditions are the most appropriate.

'For subsidiarity reasons, the Directive will not cover passenger cars. However, charging to reduce congestion is more effective if other road users outside the scope of this Directive are also covered by a similar scheme. This positive impact should be acknowledged.'

5.4 Proposal for a Directive on HGV charging

The proposal for a Directive on HGV charging aims to establish a common framework to calculate road tolls on the basis of both infrastructure costs and external costs. Indeed, the Directive currently in force (Directive 2006/38/EC of the European Parliament and of the Council amending Directive 1999/62/EC on the charging of heavy goods vehicles for the use of certain infrastructures) does not make it possible to levy charges specifically to cover external costs.


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Tab. 5.3 Main items in the proposal for the revision of the Directive on HGV charging (Eurovignette)

Item Description

Network All the road network or certain sections of the network can be tolled.

TollIt is a specified amount payable for a vehicle based on the distance travelled on a given infrastructure and comprising an infrastructure charge and/or an external cost charge.

Infrastructure charge It relates to construction costs and the costs of operating, maintaining and developing the infrastructure network.

External cost charge

It is related to the cost of traffic-based air pollution, the cost of traffic-based noise, and also to the cost of congestion during peak periods.

It will vary according to the type of road, EURO emission class and also to time period.

Discounts or reductions They are forbidden in charges based on external costs, while they are allowed for the infrastructure charge on specific conditions.

Mark-up on infrastructure charge

Mark-up is also possible on alternatives to the main route on which a mark-up in mountainous areas is levied.

In mountainous regions the external charge may be added to the toll only if the mark-up is applied.

Urban road regulatory chargesSpecifically designed to reduce traffic congestion or combat environmental impacts, including poor air quality, they will be applied on any urban road located in a built-up area.

TechnologyAn external cost charge will be levied and collected by means of an electronic system (Directive 2004/52/EC) which does not hinder the free flow of traffic and cause local nuisance at tollbooths.

Use of revenue (external costs)

Revenues will be earmarked for measures aimed at facilitating efficient pricing, reducing road transport pollution at source, mitigating its effects, improving the CO2 and energy performance of vehicles and developing alternative infrastructure for transport users.

Use of revenue (infrastructure costs)

Use of revenues will be determined by each Member State. The revenue should be used to benefit the transport sector and optimise the entire transport system.

Source: Proposal for a Directive of the European Parliament and of the Council amending Directive 1999/62/EC on the charging of heavy goods vehicles for the use of certain infrastructures, COM (2008) 436/3.

The current Directive only includes the possibility for the Member States to apply it to road freight vehicles weighing over 3.5 tonnes (compulsory from 2012 onwards), and a charging scheme on those roads that are part of the trans–European road network. However, the Directive stipulates that the level of tolls cannot be higher than the recovery of infrastructure costs, the only exception being mountainous areas, where a mark–up of up to 25% is allowed in order to finance the implementation of priority trans-European projects along the same corridor. Moreover, certain levels of differentiation (for example, EURO classes) of tolls are also permitted by the Directive, but again these may not be a source of additional toll revenues. In this connection, the Directive states that 'the use of road-friendly and less polluting vehicles should be encouraged through differentiation of taxes or charges, provided that such differentiation does not interfere with the functioning of the internal market'. Additionally, the Directive also specifies that 'the rates of user charges should be based on the duration of the use made of the infrastructure in question and be differentiated in relation to the costs caused by the road vehicles'.

In addition to this, and again under the current Directive, Member States can, on a voluntary basis, apply charging schemes to roads that are not part of the TEN–R, even by designing tolls or user charges that reflect the internalisation of external costs. This optional aspect concerns charging schemes for passenger cars.


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The proposed revision of Directive 2006/38/EC aims to modify this scenario by extending the scope of the current legislation, namely by allowing Member States to charge road freight vehicles of over 3.5 tonnes both for recovering infrastructure costs and in particular for including those costs that are associated with congestion, noise and air pollution. The proposed revision intends to introduce common charging principles, through a method for (i) calculating chargeable costs and caps, as well as for (ii) setting up monitoring tools that should avoid discriminatory implementation of the charging scheme. As a result, the amount of chargeable cost elements is limited.

For three types of externality – air pollution, noise pollution and congestion – the proposal builds on the values recommended by the IMPACT study and sets out the formulae that should be applied to calculate the chargeable values and their 'cap' values.

As a general rule it is suggested, in fact, to settle on the lowest value between that calculated using the formulae and that presented in the maximum values table. More specifically:

The cost of traffic-based air pollution is seen as the cost of the damage caused by the release of certain harmful air emissions (PM, NOX and VOC) in the operation of a transport vehicle.

The cost of traffic-based noise pollution means the cost of damage caused by the noise emitted by a vehicle or created by the interaction of a vehicle with the road surface.

The cost of congestion relates to the additional cost in terms of time loss imposed upon other vehicles when infrastructure use approaches capacity limits.

The sum of these three costs is equal to the external cost charge, which will vary according to the type of road and EURO emission standard of the vehicle and also according to the time period, when it includes the cost of congestion and/or traffic-based noise pollution.

The introduction of cap values for the formulae means that – for some external costs and in specific situations – the chargeable cost might be less than the actual external cost as calculated using the formulae. Tests carried out by the GRACE research project15 show that in general (with the exception of the high-peak inter-urban road congestion cost) the selected cap values do not significantly alter the price signal provided by the actual calculation of the external costs (see Annex C for practical examples of the calculation of external cost charges and the cap values effects). In the case of noise and air pollution, the proposed value caps impose a reduction of not more than 10 to 20%, while the situation is different for congestion costs (which have the highest values), where in some cases – such as high-peak inter-urban roads – the cut imposed is quite significant.

The following three boxes illustrate how to calculate the chargeable costs for traffic-based air pollution, noise pollution and congestion.

15 The GRACE research project has developed an interactive web tool to calculate external cost estimates for all

the modes of transport (www.grace-eu.org). Results of the test related to the application of the external costs with and without caps have been presented by Andrea Ricci at the hearing of Transport Committee in Strasbourg on 22 October 2008.


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Cost of traffic–based air pollution

PCVij = Σk EFik * PCjk

where:PCVij = air pollution cost of vehicle class i on road type j (€/vkm)EFik = emission factor of pollutant k and vehicle class i (g/km)PCjk = monetary cost of pollutant k for type of road j (€/g)

Maximum air pollution cost per vehicle


Cost of traffic–based noise pollution

NCVij (day) = Σk NCjk * POPk / ADT

NCVij (night) = n * NCVij (day)where:NCVij = noise cost of vehicle class i on road type j (€/vkm)NCjk = noise cost per person exposed on road type j to noise level k (€/person)POPk = population exposed to daily noise level k per km (person/km)ADT = average daily traffic (vehicle)n = night correction factor

Maximum chargeable noise cost per vehicle


€ cent/vkm Day NightSuburban roads 1,1 2Other inter-urban roads 0,13 0,23

€ cent/vkm Suburban roads Other inter-urban roadsEURO 0 16 13EURO I 11 8EURO II 9 8EURO III 7 6EURO IV 4 4EURO V and less polluting 3 2


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Cost of congestion

CCV = MEC(Qo) – IDC

MEC (Q) = [VOT * Q/v(Q)2] * [(v(Q)-v(Q-ΔQ)/ΔQ]where:CCV = chargeable congestion cost (€/vkm)IDC = infrastructure development cost already charged (€/vkm)Qo =optimum hourly traffic (vehicle/hour)MEC(Q) = marginal external cost of congestion (€/vkm)VOT = value of time (€/hour vehicle)Q = average hourly traffic (vehicle)ΔQ = small change in hourly trafficv(Q) = average traffic speed (km/hour)

Maximum chargeable congestion cost per vehicle

where Time period A is an off-peak period with stable flow of trafficTimer period B is a peak period or close to peak period with unstable flow of trafficTime period C is an extreme period with forced or breakdown flow of traffic

Source: Proposal for a Directive of the European Parliament and of the Council amending Directive 199/62/EC on the charging of heavy goods vehicles for the use of certain infrastructures, COM

(2008) 436/3.

It is relevant to mention that the cap values have been introduced by the proposed Directive and were not part of the IMPACT Handbook. The choice to apply caps, which followed an intense discussion among Commission departments and the IMPACT experts, has several reasons: first of all, it tends to smooth the variety of values that derive from the application of the proposed formulae in the different contexts of a typical European long-distance trip which passes through different Member States at different times of day and in different levels of urbanisation. In fact, in addition to the variability of the external cost charge attributable to the different contexts – which is intrinsic in the marginal cost approach – there is another level of possible variation of values across Member States that is linked to the specific parameters adopted for the congestion cost formulae in relation to the value of time and the speed/flow curves (and such 'levels of freedom' might lead to overcharging in some cases). Another point in favour of the use of caps is linked to the simplification of the charging system and its acceptability for transport users.

The Directive also states that, for each vehicle class, type of road and time period, an independent authority designated by each Member State will determine a single specific amount. The resulting charging structure must be transparent, openly published and available to all users on equal terms. The independent authority will be guided by the principle of efficient pricing, that is, a price close to the social marginal cost of the use of the vehicle charged. The charge will be set as close as possible to the external costs which can be allocated to the category of road users concerned.

The charge must be collected through electronic systems which do not hinder the free flow of traffic and cause local nuisance at tollbooths, and which can be extended to other parts of the network at a later stage without significant additional investment.

The proposal extends the scope of the current Directive beyond the trans-European network to avoid inconsistent pricing schemes between major corridors and other inter-

€ cent/vkm Time period A Time period B Time period CSuburban roads 0 20 65Other inter-urban roads 0 2 7


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urban roads. It makes the provisions in the current Directive on the mark-up levied in mountainous areas to co-finance EU-labelled priority projects more practicable. It does not prevent Member States from applying, to urban roads, regulatory charges specifically designed to reduce traffic congestion or to combat environmental impacts in built-up areas.

Finally, it has to be stressed that, as far as the use of revenues is concerned, those from external costs should be earmarked for measures aimed at mitigating the negative impacts generated by transport activities and, at the same time, promoting alternative infrastructure for transport users.

Even though the resulting charging scheme might be quite complex, partly as a result of non-homogenous implementation among the Member States, the Greening Package does not envisage further investigation/analysis of the reactions of freight hauliers, particularly in relation to their ability to calculate the total cost of a long-distance trip. This may lead to practical difficulties among operators in implementing and accepting the proposed charging scheme.

5.5 Rail noise abatement measures

The European Community has already adopted measures in the environmental and rail interoperability fields: the Environmental Noise Directive 2002/49/EC provides for strategic noise maps (to be set by June 2007) and action plans (by June 2008) for major railways and large conurbations.

The aim of Community action is to reduce the exposure of citizens to rail noise by promoting the establishment of 'rail noise abatement programmes', to curb the noise emissions of freight trains without threatening the competitiveness of rail freight, mainly by retrofitting freight wagons with low-noise brakes as the most cost-effective type of measure.

Retrofitting should in principle include all European freight wagons (up to 370 000 wagons) with an annual mileage of more than 10 000 km and a remaining life expectancy of at least five years; the target date for completing the retrofitting exercise would be 2015. The main benefit of retrofitting is the reduction in freight train noise emissions by up to 50%, and hence a reduction in the number of people highly affected by rail noise by about 16 million. The main obstacle to retrofitting freight wagons on a large scale is financial, as stakeholders do not have sufficient resources or incentives to do it.

A combination of noise-differentiated track access charges, noise emission ceilings and voluntary commitments was identified as the most appropriate solution. The main advantages of this option are the highest benefits in terms of noise reduction, potentially lower costs than those of other instruments such as direct subsidies, and its wide application to wagons registered in different Member States, or even outside the European Union.

Consequently, the Communication stresses the benefit of the noise emission ceiling that limits average emissions within a determined period at a certain location along the line. The railway undertaking may therefore use vehicles with lower emissions to increase the number and/or speed of trains without exceeding noise limits. Noise emission ceilings could directly address noise 'hot spots' in the European network as well as the sensitive evening and night periods.


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Finally, in order to reduce rail noise as soon as possible the Commission recommends voluntary implementation of differentiated track access charges in addition to legislative activities.

5.6 Future measures

On the basis of the analysis of the impact assessment, a work programme would be drawn up by the European Commission, taking into consideration the desirability of charging for external costs (mainly air pollution, noise and CO2) in other modes of transport.

The impact assessment mentions that in the Railways Directive, charging for external costs was already envisaged in the existing EU legislation (Directive 2001/14/EC). Once the Eurovignette has been revised to allow internalisation, railways would have further opportunities to internalise external costs.

In air transport, inclusion in the ETS is an important step in fighting CO2 emissions. Ongoing work on reducing NOx emissions would give the opportunity to analyse a pricing mechanism in this context. In maritime transport, the growth of CO2 and air pollutant emissions shows the need to take measures in this field. Given the international framework for maritime transport, a solution such as the ETS could be one of the outcomes of the analysis.

Finally, consideration will also be given to inland waterways, taking into account the fact that many of them have their specific environmental regulatory framework, e.g. the Mannheim Convention.

5.7 Stakeholders' positions on the Greening Transport Package

The Greening Transport Package, and in particular the proposed Directive on HGV charging, has provoked many reactions from the major stakeholders involved. They mainly argue that not all external costs have been considered in the proposal, that it has allowed Member States to levy tolls where is no obligation to do so, and that other transport modes should be charged in order to internalise external costs.

According to the European Federation for Transport and Environment (T&E, 2008) some key elements of the proposed new Directive on HGV charging should be outlined as follows, in particular:

o Member States will not be obliged to introduce road charging schemes;

o accident costs are not charged, but there is an external component to accident costs that is not internalised through insurance premiums, as shown in the IMPACT study;

o charges will be capped to such a degree that the areas that suffer the worst environmental impacts will be unable to set charges which reflect the real costs;

o the European Commission has taken a long time to propose this legislation: seven years ago Switzerland started charging road freight operators for the environmental and health impacts of their journeys, with the result that Switzerland has improved its efficiency in the road transport sector, reduced emissions and improved its competitiveness ranking, all without negative effects on the labour market.


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In the position (ACEA, 2008) expressed by the Association des Constructeurs Européens d’Automobiles (European Automobile Manufacturers' Association – ACEA) attention has been paid to each single external cost considered in the Greening Package and in the proposed Directive. The main conclusions may be summarised as follows:

o congestion should not be considered an external cost (Baum, 2008), as each user contributes the same level of congestion. In fact, every motorist constitutes a burden to other motorists and at the same time is burdened by them. Including congestion costs in an external cost analysis is equivalent to double counting;

o air pollutant emissions have been significantly reduced and further progress will be obtained owing to new vehicles’ compliance with the forthcoming EURO standards. In this context, for ACEA there is no need for new rules, as the current system already includes the possibility of introducing differentiated rates, which has proved to be very successful in reducing overall emissions through fleet renewal;

o noise costs, or at least a majority thereof, are already internalised (Baum, 2008): people are choosing to live on noisy major streets owing to cheaper rents; on the one hand residents suffer from the noise, but on the other they profit from lower rents. Moreover, noise is only considered relevant for urban areas and its negative impact may be reduced by prevention measures within the infrastructure;

o regarding climate change, the Commission’s point of view that fuel taxes are a simple and efficient way of internalising climate change cost is accepted by the ACEA, which also fully supports its non-inclusion in the proposal.

The position of the European Commission that accident risks do not relate to the distance travelled but mainly to factors associated with drivers' behaviour (such as speeding, drinking and failure to use seat belts) is also supported. The major part of accident costs is already internalised by insurance, so further charging is not necessary: tools relating to road safety might provide more effective results.

Moreover, it is also highlighted that the arithmetic averages of the values recommended in the Commission’s proposal are just broad estimates that result in arbitrary unit values. This approach would clash with the supposed scientific methodology on which the Commission claims it is basing the proposal.

According to the ASECAP (Association Européenne des Concessionnaires d’Autoroutes et d’ouvrages a Péage – the European Association of Tolled Motorway, Bridge and Tunnel Concessionaires), the European Commission has proposed an incomplete set of ideas, as it is necessary to address all modes of transport step by step and go beyond the Eurovignette Directive, which needs to be examined thoroughly, mainly in the current era of energy imbalances in the transport sector. Practical measures on greener policies are supported, but there is an expectation that EU decision-making bodies should apply a more realistic and detailed analysis to:

o the calculation methodologies for internalising external costs;

o more clarity on, and a better definition of, the polluter payer principle in relation to the use of revenues;

o the earmarking of collected revenues for allocation to real infrastructure needs;

o the implementation of an electronic toll system.

The Commission’s proposal to revise the Eurovignette Directive, including the suggestion to promote the development of more sustainable mobility through the earmarking of revenues, is evaluated positively by the rail stakeholders: the Community of European Railway and Infrastructure Companies (CER), European Rail Infrastructure


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Managers (EIM), and the Association of the European Rail Industry (UNIFE). The Commission’s proposal to revise the Eurovignette Directive is particularly viewed (CER, EIM, UNIFE, 2008) as an important milestone, since it aims to put the 'polluter pays' principle into practice for the road sector and to create a more level playing field between transport modes. This revision is expected to allow rail freight to compete on more equal terms with road, although it is stressed that the European Commission should have gone much further, taking into account the comprehensive proposals made by the IMPACT Handbook in order to promote a stronger modal shift in favour of sustainable modes of transport,. According to the rail stakeholders it is not clear, however, why two external cost categories (CO2 emissions and accidents) are excluded from the proposal. In fact, the rail stakeholders stress some arguments as to why CO2

emissions should indeed be included in the Eurovignette charging scheme, such as:

o the exclusion of CO2 emissions would be contradictory to the recently approved Climate Change Package of January 2008, which sets binding targets for reducing CO2 emissions in sectors such as transport;

o the suggestion that fuel taxes should be used to control CO2 emissions would not be realistic. In the view of the rail stakeholders, politically it is becoming more and more difficult to increase taxes in most Member States, and raising the fuel tax, even on environmental grounds, will be opposed by many citizens as merely a convenient excuse to raise more revenue through taxation. Against the background of sharply rising oil prices (and consequently fuel prices), this option has become a purely theoretical alternative. Additional taxes on fuel would hit everyone (including private car drivers), while a CO2 charge through a revised Eurovignette Directive would be much more targeted, as it would only affect freight transport (which is the purpose of the Directive).

Furthermore, it is believed that the exclusion of accidents does not make sense, as a substantial part of accident costs is not covered by insurance premiums and needs to be internalised, as shown in the IMPACT study.

The maximum values and other limitations proposed in Annex IIIA of the proposal are rejected by the rail stakeholders (CER, EIM, UNIFE), because they seem out of place and not based on scientific evidence; moreover, there is no reference to adjusting the values for inflation, although the proposed values were calculated for the year 2000. The following are welcomed, instead:

o the use of revenues generated by external cost charging in order to promote a more sustainable transport system, as it should favour the development of more environmentally friendly modes;

o the extension of the scope to all inter-urban roads, as it may avoid the problem of traffic diversion from toll motorways to non-toll inter-urban roads and it also prevents inconsistent pricing schemes between major corridors and other inter-urban roads.

A negative assessment is included in the positions expressed by the Comité de Liaison Européen des Commissionnaires et Auxiliaires de Transport (European Association for Forwarding, Transport, Logistic and Customs Services – CLECAT), the European Shippers’ Council (ESC) and the International Road Transport Union (IRU), since the Commission's new initiative is not expected to contribute significantly to the current drive towards cleaner engines, lower emissions and more efficient freight transport in any way. It is repeated that the Commission has been asked to apply the internalisation of external costs simultaneously to all modes of transport. Thus, and until there is equal and neutral treatment of all modes, with equivalent measures (in proportion to the


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externalities of each mode), there should not be any justification for the urgency in placing additional charges on road freight with a rushed revision of the Eurovignette Directive. In particular, when looking at the position of the IRU (IRU, 2008), it is believed that the pricing policy of the Greening Package will simply make road transport, and thus the goods transported, more expensive, with a marginal environmental impact. Making road transport more expensive by increasing user charges will harm Europe’s competitiveness and position in the global market and cause further delocalisation which, in turn, will generate more road transport from abroad. Based on the results produced by some studies (such as Piecyk and McKinnon, 2007), two thirds of the external costs for road transport are already internalised through duties on petrol, road tax, insurance premiums, existing Eurovignette charges and tolls for particular stretches of road, tunnels and bridges, equal to 99% of total externalities, while the percentage of externalities paid by rail freight is only approximately 2.5% of the total: consequently, the modal shift policy applied by the European Commission would be unrealistic. Conversely, the cheapest cost avoider Principle (CCAP) has superseded the PPP, according to the IRU. The European Commission needs to apply this principle in its internalisation approach, if the intention is to solve the problem rather than to collect another tax.

Little faith in the proposal reviewing the Eurovignette Directive has also been expressed by the Union Européenne des Transporteurs Routiers (UETR), in particular because the proposed legal framework for internalising external costs would not include all of the transport sector. This fact is particularly upsetting for road hauliers given the existence of restrictions (time limits) for loading and unloading, driving time and rest periods, and stricter EU provisions which do not facilitate road transport operators. Finally, the need for transport infrastructure investment is emphasised, as the only realistic way of creating synergy between the growth in transport of goods and persons in the next 20 years and congestion reduction.

In its comment to the proposed revision of the Eurovignette Directive, the reasons formulated by the Commission are questioned by Eurocommerce, since they would impose charges only on road transport. In fact, road transport is already charged more heavily than other modes of transport and suffers from increasing fuel prices. Using other modes or combining different modes of transport is essential in order to solve the problems of the many environmental consequences of transport. However, to make the switch to other transport modes or to promote co-modality, efficient and effective alternatives must be available. The Commission should encourage the take-up of clean and efficient solutions, vehicles providing fiscal advantages for the users of cleaner, efficient and less noisy vehicles, and increasing the use of new technologies and innovative solutions for improved traffic flow.

5.8 Conclusions

Table 5.4 below summarises the sustainable EU transport policy that meets society’s economic, social and environmental needs. It includes a set of initiatives in all modes of transport according to type of external cost (for accidents there is no initiative in the Greening Package, as previously explained).


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Tab. 5.4 EU strategy for the internalisation of external cost by mode of transport

External costs Road Rail Aviation Maritime Inland waterways

Accidents No measures for the moment.The situation will be reassessed in 2013.

No measures.Low number of accidents and strict regulations are already inplace. A price signal to modify behaviour is not necessary/ effective.

No measures.Low number of accidents and strict regulations are already in place. A price signal to modify behaviour is not necessary/ effective.



Climate change

Proposal for revision of energy taxation.

Is already subject to ETS on electricity, proposal for revision of energy taxation for diesel.

Inclusion of aviation in the ETS from 2012.

Measures are being discussed in the IMO, EU action in 2009 if no progress.

Possible proposal for internalisation of CO2 with a 2013 horizon.

Air pollution

Review of Directive 1999/62/EC.Urban Mobility Action Plan.Intelligent Transport System Action Plan.

Possible review of the first railway package.Existing Directive 2001/14/EC.

Proposal to charge aircraft operators on the basis of their emissions. Proposal to reduce NOx emissions.Proposal on airport charges.

IMO agreed to the revision of MARPOL Annex VI to reduce SOx, NOx, VOC and PM emissions. Proposal for amendments to the Directive on marine fuels to implement changes to MARPOL in 2009.

Possible internalisation of external costs.

Noise Review of Directive 1999/62/EC.Urban Mobility Action Plan.

Communication on noise abatement measures, proposal for noise-differentiated track access charges in the recast Directive 2001/14/EC in late 2008.

Proposal for noise directive in December 2008.



Congestion Review of Directive 1999/62/EC.Urban Mobility Action Plan.Intelligent Transport System Action Plan.

Scarcity charges already possible.

Slot allocation rules already in place.

Congestion only in ports and already priced in port charges.



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6 Conclusions

6.1 The scientific basis of the IMPACT Handbook

The purpose of the IMPACT Handbook, consistent with the request formulated by the European Commission, was to review and undertake a comparative analysis of the existing literature on the external costs generated by transport activities. The IMPACT Handbook was therefore not asked to produce its own estimations, but only to present the output values calculated by the surveyed studies and to compare them in order to identify the reference values.

On the basis of these assumptions, and as a result of the overall assessment, it is our belief that it may be concluded that the scientific basis of the IMPACT Handbook has been found to be robust and accurate. It successfully set in order all relevant literature on external costs, in such a way that data has become comparable, transferable and ready for policy use. Indeed, the IMPACT Handbook not only reviewed a broad set of both Europe–wide and country–specific studies, but also paid attention to the most relevant methodological approaches that the surveyed studies have used in estimating the external costs caused by transport activities. This has produced a comprehensive analysis of the current state of research on transport–generated external costs, and enabled the IMPACT Handbook to identify best practices for calculating the values of external costs.

For us, this therefore leads to the conclusion that the IMPACT study carried out a comparative analysis based on good, comprehensive coverage and quality of data. Moreover, the IMPACT Handbook also carried out an exercise in introducing the evaluation of other external costs, which was not an easy task owing to the various uncertainties and difficulties that still characterise the research in this field.

6.2 The Greening Transport Package and the IMPACT Handbook

As highlighted in Chapter 5, the Greening Transport Package represents a key step in the European Commission’s strategy to make transport more environmentally friendly. This strategy has been worked out on the basis of the impact assessment and the IMPACT study, and the European Commission has considered, in particular, both the values and the methodological approaches proposed by the IMPACT Handbook for estimating external costs.

The Greening Transport Package is therefore almost in line with the recommendations of the IMPACT study, although the comparison between the two documents shows that some relevant discrepancies still may be highlighted in relation to the transport modes covered and the external costs considered.

6.2.1 Transport modes coverage

Although the impact assessment – in line with the recommendations made by the IMPACT study – stresses the need to internalise the external costs produced by all transport modes, for reasons of fairness and efficiency, the Greening Package proposes specific and short–term measures only for road freight transport. The impact assessment analysis also states – again this is consistent with the IMPACT study – that congestion charging is more efficient where both passenger and freight transport are concerned (as supported also by the result of the public consultation), while, for 'subsidiarity' reasons, the proposed Directive does not cover passenger cars. The Commission document justifies this choice since road freight


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transport contributes to a large share of external costs and may react more efficiently to price signals. Internalising these costs through the revision of the Eurovignette Directive is then considered by the Greening Transport Package as a key component of the strategy to internalise external costs in all modes of transport. However, in our view the likely weakness in this approach may be that the Commission’s proposal does not envisage any further steps, since as explained in section 6.3.3 the intended policy actions are still not precisely defined in terms of either timing or implementation schemes.

To summarise, for the other modes of transport the Package lists a set of priorities that will be developed in the longer term. For rail transport, it is mentioned that charging for external costs was already envisaged in the existing EU legislation (Directive 2001/14/EC). For aviation, its inclusion in the ETS is considered as an important step in fighting CO2

emissions while the ongoing work on reducing NOx emissions would give the opportunity to analyse a pricing mechanism. For maritime transport, a solution such as the ETS is presented as a possible approach.

6.2.2 Types of external costs

Whereas the IMPACT study provides values for all main categories of external costs (accidents, climate change, air pollution, noise and congestion), the Greening Package proposes charging only for air pollution, noise and congestion in road freight transport, and among primary pollutants only PM, NOX and VOC emissions are included. This may be reasonable, given that these pollutants are those directly emitted by the various transport modes and have direct harmful impacts, since for instance (i) SO and SO2 are today only relevant to maritime transport, and (ii) ozone is not a direct pollutant in itself but generates harmful effects only as a consequence of interaction with other pollutants.

The rationale for the choice to include these three external costs – and thus exclude accidents and climate change – has been motivated by the fact that these externalities (i) are closely linked to the location where transport takes place and (ii) their costs vary according to various parameters, such as the distance travelled or the environmental performance of a vehicle. It is considered that tolls are the best pricing instruments for fairly and efficiently assigning these costs to users, by better reflecting the real use of vehicles and therefore the external costs that users actually cause.

Finally, the proposed Directive also considers external costs in sensitive areas through the possibility of applying mark-ups to tolls in mountainous areas, as already provided for in the current Directive (1999/62/EC) and in its amended version (2006/38/EC). On the basis of the IMPACT values for an Alpine area, the European Commission has included in the proposal the opportunity to extend the application of mark-ups to alternatives to the main route on which a mark-up in mountainous areas is levied. This also shows a link to the current Eurovignette Directive, which already allows for a mark-up of 25% to be applied to sensitive corridors where revenues are used to enhance the transport capacity of both road and rail infrastructure.

In this respect, the position expressed by Maibach (Maibach 2008), stressing the need to keep a clear distinction regarding the use of mark-ups for charging in Alpine corridors may be considered a valid approach. This implies that mark-ups are justified both in the case of higher external costs and in that of plans for constructing alternative corridors, but the usefulness of charging in the same corridor to internalise external costs and to generate revenues for railway infrastructure may be questionable. This last issue may be addressed by the Member States in accordance with the subsidiarity principle.


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As far as the other external costs are concerned, the following considerations may be made:

Climate change: almost in line with the conclusions of the IMPACT study, the Commission Package states that 'the impact of motor vehicles is global. Its cost does not depend on the time and place where the vehicle is used but on fuel consumption. Hence, fuel taxes are usually considered a simple and efficient way of internalising this cost, irrespective of any other measures taken to achieve the target agreed at the level of the European Union for reducing CO2'. On this issue, the European Commission is willing to review the general Energy Taxation Directive so to as consider climate change and its problems. In particular, and as already mentioned before, the inclusion of air transport in the ETS scheme is considered paramount for tackling the GHG emissions issue. Technically, it might be possible to charge vehicles’ distance travelled (on the basis of their emission characteristics) for the internalisation of external costs associated with climate change, as proposed for the other external costs. Since the impact is global, the final result will be equivalent if a charge is applied either to kilometres travelled – regardless of the route – or to fuel consumption. On the policy level it may be considered more appropriate, instead, to address the issue in the context of the revision of the Energy Taxation Directive, and taking into due consideration the current fuel taxation level in the various EU Member States.

Accidents: in this case the Commission Package states that a differentiated kilometre charge system would hardly meet the accident costs of drivers, since these types of external costs rely not only on parameters such as location, time and vehicle type, but also on individual driver characteristics and accident history (speeding, driving under the influence of alcohol or failure to use seat belts). Instruments such as insurance rates might be a more effective tool, although implementing an EU-level scheme would be very difficult because of the diversity of insurance systems in the Member States. The Commission document postpones this issue to the review of the European Road Safety Action Programme that the European Commission intends to carry out by 2010. From the technical point of view, the reasons adopted by the Commission for not including accident-related costs in the Package appear to be convincing.

6.2.3 Cap values

A further difference that is worth mentioning is the introduction of cap values to smooth the results of the specific application of the formulae which calculate different external costs according to the specific time of day, road section (suburban or inter-urban) and Member State. The introduction of cap values is justified for the purpose of simplifying the pricing scheme, which helps in terms of comprehensiveness and acceptability, and of harmonising the values to avoid over-pricing. The proposed cap values are in general quite appropriate and, with the exception of the case of peak-time congestion costs in inter-urban areas, do not alter significantly the specific estimates deriving from the application of the formulae (see Annex C).

Table 6.1 below shows the main differences between the IMPACT Handbook and the Greening Transport Package according to the externality examined and the evaluation method used.


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Tab. 6.1 The IMPACT study and the Greening Transport Package

Type of externality IMPACT study Greening Transport Package

Accidents Values for road transport for network type and for passenger cars, motor cycles and HGVs per country.Average cost for air transport.

The issue of accident costs is addressed, but no specific and short-term measures are planned.Measures are postponed until the review of the European Road Safety Action Programme in 2010.

Climate change Costs for passenger cars and trucks according to EURO class and network type.Costs for passenger and freight trains according to network type (electric or diesel).Costs for freight transport on inland waterways for vessel type.Costs for aviation according to flight distance per passenger and per flight.

The issue of climate change is addressed, but no specific and short-term measures are planned.Actions are postponed until the inclusion of commercial aviation in the ETS, and until the review of the general Energy Taxation Directive.

Air pollution PM, VOC , SO2, NOx and NMVOC emissions are covered.Costs of each pollutant for road, rail and waterways per country.Marginal cost for air transport.

Part of the strategy, but only measures for road freight transport are proposed.Only PM, VOC and NOx emissions are covered.Calculated by multiplying emission factor of pollutant on road type per monetary cost of pollutant (from IMPACT study).Cap values are imposed.

Noise Unit values for marginal costs for different network type for road and rail according to time of day.Marginal noise cost in air transport.

Part of the strategy, but only measures for road freight transport are proposed.Calculated by multiplying noise cost per person exposed on road type (from IMPACT study) per population exposed to daily noise level, divided by average daily traffic (night correction factor used for the night-time noise cost).Cap values are imposed.Proposal of rail noise abatement measures by retrofitting freight wagons with low-noise brakes.

Congestion Ranges of marginal social costs by road class and type of areas in off-peak and peak periods.Estimates for other modes of transport.

Part of the strategy, but only measures for road freight transport are proposed.Values are calculated subtracting infrastructure development cost already charged from marginal external cost of congestion, where marginal external cost of congestion is calculated on the basis of value of time, average traffic and incremental change in traffic.Cap values are imposed.

Source: Proposal for a Directive of the European Parliament and of the Council amending Directive 199/62/EC on the charging of heavy goods vehicles for the use of certain infrastructures, COM

(2008) 436/3 and IMPACT study.

6.3 Final remarks

The following points, relating to the policy use of the Commission document, are in our opinion useful to complete the analysis of the study.

6.3.1 Current levels of internalisation

The IMPACT study and, based on it, the impact assessment of the Greening Transport Package, stressed that in the transport sector there are some external costs which are


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already internalised and that the level of existing taxation (and subsidies) has to be taken into consideration in order to define optimum charge levels for the internalisation of external costs. The Commission document acknowledges (i) the heterogeneity of internalisation across Member States and modes of transport and (ii) that the market signals given by existing charges and taxes are not clear, while recognising their relevance in order to avoid double charging for the same external cost. The issue is thus of very great relevance and, we believe, would probably deserve more incisive action, particularly as far as a revision of the current taxation scheme for vehicles is concerned.

6.3.2 Use of resources

More attention should be paid to the use of revenues from internalisation policies, as this also has direct implications in term of acceptability to users. Given the prospect of scarcity of funding owing to the economic crisis and likely poor GDP performance of the European Union in the coming years, the revenues from the charging schemes applied to internalise external costs might attract a lot of attention from both the European Union and the Member States. It is thus crucial to give precise indications (and public information) on how these revenues have to be used, bearing in mind that the choice of earmarking them according to the principle of 'sustainable transport' is not always clear enough.

6.3.3 Coordinated measures for all modes of transport

The time gap in the implementation of short-term and long-term measures may cause a lack of coordination among interventions in the different modes of transport. While short-term initiatives for road freight transport are laid out in operational terms, the intended policy actions are still not precisely defined in terms of either timing or the implementation of schemes. It is our belief that a more precise road map for long-term measures might be of great help.

6.3.4 Time horizon for implementing the HGV charging system

In line with the current legislation the proposed approach illustrated in the Eurovignette Directive is optional, so that flexible and gradual phasing-in would allow the new road freight charging schemes and toll technology to be trialled in Member States where the geographical conditions are the most appropriate. However, the proposal should fix a precise time horizon for implementing the internalisation measures, in order to ensure the smooth introduction of such measures and thus to assess their impact on users properly.

6.3.5 Interoperability of IT tools

Another relevant issue for an effective pricing system across the European Union is the interoperability of IT tools for electronic pricing throughout the Member States. This has to be ensured, and – while waiting for the Galileo System – intermediate steps are needed, taking into consideration the implications in terms of data protection.


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WEBSITES

http://www.acea.be/

http://www.asecap.com/

http://www.businesseurope.eu/

http://www.cer.be/

http://www.clecat.org/

http://ec.europa.eu/transport/index_en.html

http://www.eimrail.org/

http://www.euractiv.com/

http://www.europeanshippers.com/

http://www.iru.org/

http://www.transportenvironment.org/

http://www.uetr.eu/

http://www.unife.org/

http://www.grace-eu.org/

http://www.refitweb.eu/


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101

ANNEXES

ANNEX A OVERVIEW OF SELECTED OUTPUT VALUES FOR COST CATEGORYTab. A.1 Accident costs in road transport

Passenger cars HGVsStudy Base year

for results Unit

Urban Inter-urban Motorways All roads Urban Inter-urban Motorways All roads

INFRAS/IWW 2000 €/vkm 0.020-0.156 0.027-0.084 0.008-0.027 - 0.007-0.098

0.018-0.045 0.005-0.017 -


€ct/vkm Average of 1.0 Average of 1.20

PETS 1998 €/vkm Lisbon: 0.038-0.054

- - Finland: 0.087-0.0277

Lisbon:0.085-0.093

- Trans-Alpine:0.011-0.023

European average:

0.011-0.021

Finland:0.079-0.091

UNITE (case study Switzerland)

1998 €/vkm 0.010-0.084 - - - 0.038-0.058

- - -

UNITE (case study Sweden)

1998 €/vkm 0.048 0.016 0.003 0.012 0.107 0.027 0.018 -

CE Delft 2002 €/vkm 0.027 0.015 . . 0.078 0.021 - -


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Tab. A.2 Accident costs: selected values for rail transport

Study Base year for results Unit Rail passenger Freight

INFRAS/IWW 2000 €/train km 0.08 0.67


2000 €/train km 0.12 0.89

PETS 1998 €/train km 0.014-0.112 0.046-0.092

UNITE (case study Switzerland)

1998 €/train km 0.30 0.3

CE Delft 1998 €/train km 0.31 0.19

The Calculation of External Costs in the Transport Sector_______________________________________________________________________________________________

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Tab. A.3 Air pollution costs: selected output values for passenger cars

Traffic scenariosStudy Monetary

unitEURO norm

Metropolitan Urban Inter-urban Motorways All roads

EURO2 Petrol: 0.9-1.4Diesel: 3.2-4.9

Petrol: 0.4-0.8Diesel: 1.5-3.0


Petrol: 0.3-0.8Diesel: 1.2-2.7CAFE CBA €/vkm





GRACE €ct/vkm

EURO3

(EURO4)Petrol: 0.46-1.63Diesel: 0.77-2.54Hybrid: 0.57-1.75




Petrol: 0.3-0.8Diesel: 1.2-2.7HEATCO €/vkm




EURO2INFRAS €/vkmEURO3

Average value for Germany 0.58

EURO2OSD €/vkmEURO3

Average value for Switzerland 0.14

€ct/vkm EURO2 Petrol: 0.25Diesel: 0.14

Petrol: 0.37 Diesel: 0.63

UNITE€ct/vkm EURO3

(EURO4)Petrol: 0.14Diesel: 0.37

(EURO4)Petrol: 0.15Diesel: 0.24


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Tab. A.4 Air pollution costs: selected output values for HGVs

Traffic scenariosStudy Monetary unit EURO norm

Metropolitan Urban Inter-urban Motorways All roads

EURO2 30.7-65.5 19.1-51.2 10.1-29.4 9.2-26.4CAFE CBA€ct/vkm

EURO3 32.6-59.7 17.8-43.5 8.3-23.9 6.7-18.7

EURO2 8.58-26.01GRACE €ct/vkm

EURO3 (EURO4)5.92-17.81

EURO2 30.7-65.5 19.1-51.2 10.1-29.4 9.2-26.4HEATCO €ct/vkm

EURO3 32.6-59.7 17.8-43.5 8.3-23.9 6.7-18.7EURO2INFRAS €/vkmEURO3

Average value for Germany

4.63EURO2OSD €/vkmEURO3

Average value for

Switzerland 6.48

EURO2 17.52 6.91UNITE €ct/vkmEURO3


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Tab. A.5 Noise costs: selected output values by traffic scenario

Mode of transport

Road transport Rail transportStudy Area Time of day Traffic scenario

Passenger HGVs Passenger FreightLight 0.14 1.27 28.8 30.3DayDense 0.06 0.58 17.4 18.4Light 0.25 2.31 52.4 55.2

Rural

NightDense 0.12 1.06 31.8 33.5Light 1.19 10.99 198.9 209.5DayDense 0.43 3.94 121.2 127.7Light 2.18 20.01 362.2 381.5

Suburban

NightDense 0.78 7.18 220.7 232.5Light 18.49 170.11 0 424.8DayDense 7.63 70.16 274.8 322.5Light 33.68 309.82 821.2 963.8

INFRAS/IWW

Urban

NightDense 13.89 127.79 500.4 587.4

Hvid 40.3-53.6 94Central Copenhagen 103.4 665.8> 100 000 inhabitants 41.6 201.320 000-100 000 inhabitants

26.9 110.1

5000-20 000 inhabitants 16.1 92.61000-5000 inhabitants 17.5 95.3

Kristensen et al

200-1000 inhabitants 6.7 51Urban 159.9-545.4

3.3-13.9RECORDIT Non-urbanNight 55.9-312.5


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Mode of transport

Road transport Rail transportArea Time of day Traffic scenario

Passenger HGVs Passenger FreightHelsinki urban 2.20-5.29 15.8-38.5

Day 20 255Stuttgart urbanNight 40 767Day 4 78Berlin urbanNight 15 215Day 1 30Strasbourg to

Neubrandenburg Night 2 50Day 55 220Basel-KarlsruheNight 449 154

Strasbourg to Neubrandenburg Day 20 40

Day 0.1 0.9 14 131.7Milan-ChiassoNight 0.4 3.5 40.9 99.8Day 0.01 0.06 0.4 3

Study

Bologna-BrennerNight 0.02 0.21 0.3 5.9


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Tab. A.6 Estimates of congestion costs for urban roads in €/vkm

Value according to type of roadStudy Area Output value Average value

All roads Centre Motorways Main roads Trunk roads

GRACE Model city Average cost 0.30

Brussels Marginal social cost 0.25 0.34 0.23 0.31

Edinburgh Marginal social cost 0.12 0.49 0.13

Salzburg Marginal social cost 0.16 0.08 0.23UNITE

Helsinki Marginal social cost 0.05 0.02 0.11

TRENEN- II- STAC Brussels Marginal social cost 0.67 (peak)0.42 (off-peak)

UK cities Marginal external cost 0.40(peak)0.21 (off-peak)

1.44 (peak)0.78 (off-peak)

Central London Marginal external cost 0.84 0.11

Inner London Marginal external cost 0.31 0.85ITS

Outer London Marginal external cost 0.49 0.44Marginal external cost 6.33NorthamptonMarginal social cost 2.84Marginal external cost 2.93KingstonMarginal social cost 1.62Marginal external cost 1.18CambridgeMarginal social cost 0.76Marginal external cost 1.73

NEWBERY

AverageMarginal social cost 0.96

Paris centre Marginal social cost 0.38Brussels centre Marginal social cost 0.47MC-ICAMHelsinki centre Marginal social cost 0.10Oslo Marginal social cost 1.00PROD’HOMMEStockholm Marginal external cost 2.53 (€/trip)


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Tab. A.7 Habitat fragmentation and habitat loss in Switzerland: average costs per km of infrastructure (road and rail transport)

Average costs (in €/(km*a)Mode of transport

Habitat loss Habitat fragmentation Total

Road total 3.591 7.101 10.691Motorways 18.639 91.643 110.2821st-class roads (national) 3.222 12.642 15.864

2nd-class roads (regional) 4.191 2.715 6.906

3rd class 2.249 1.606 3.855Railway total 5.955 10.186 16.141Single track 3.286 5.620 8.906Double track 13.513 23.115 36.628

Source: OSD

Tab. A.8 Habitat fragmentation and habitat loss in EU 15 (plus Switzerland and Norway): average costs per km of infrastructure (road and rail transport)

Mode of transport Average costs (in €/(km*a)

Road total 4.056Motorways 49.1211st-class roads (national) 5.4802nd-class roads (regional) 4.0023rd class 3.125

Railway total 1.671

Single track1.303

Double track 2.094

Source: INFRAS/IWW

Tab. A.9 Separation effects: input values and cost factors for road and rail infrastructure in urban areas in Switzerland

Road

Regional road Main street(2-3 lanes)

City motorway(4 lanes or more)

Rail

Average number of crossings per day and person

3 2 1.5 1.5

Average time lost per crossing 10 45 260 260

Time cost factor for pedestrians (road and rail)

6.5 €/hour

Source: OSD


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Tab. A.10 Scarcity problems: specific cost factors for the construction of bicycle lanes in urban areas in Switzerland

Cost rates

Bicycle lane: painted lane on the road carriageway € 1900/(km*a)

Bicycle lane: track € 24 100/(km*a)

Source: OSD

Tab. A.11 Additional costs in urban areas: unit costs for road and rail transport in the EU 15 (plus Norway and Switzerland)

Mode of transport Unit cost (in €ct/km)

Passenger car 0.26Buses and coaches 0.66

Motorcycles 0.11

Vans 0.37

Road

HGVs 0.77Rail total 16.83

Rail passenger 16.50RailRail freight 17.93

Source: INFRAS/IWW

Tab. A.12 Up– and downstream costs in the EU 15 (plus Norway and Switzerland)

Mode of transport Unit costs in €ct/vkm

Unit costs in €ct/pkm

Unit costs in €ct/tkm

Passenger car 0.87 0.52Buses and coaches 7.02 0.36

Motorcycles 0.33 0.30

Vans 1.66 2.24

Road

HGVs 4.99 0.74Rail total 52.29Rail passenger 44.17 0.34

Rail

Rail freight 79.76 0.24Aviation total 15.41Aviation passenger 0.10

Aviation

Aviation freight 0.74

Waterborne Water freight 212.62 0.33Source: INFRAS/IWW


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Tab. A.13 Up– and downstream costs in Switzerland

Mode of transport Unit costs in €ct/vkm

Unit costs in €ct/pkm

Unit costs in €ct/tkm

Passenger car 0.22 0.14Buses 0.85 0.07

Coaches 0.72 0.04Motorcycles 0.14 0.12

Vans 0.32 0.81

Road

HGVs 0.92 0.16Rail total 7.83Rail passenger 5.59 0.06

RailRail freight 17.89 0.05

Source: OSD

Tab. A.14 Local air pollution for road and rail transport in the Alpine area

Impact pathway Cost driver Factor Alpine/flat

Road transport

Gradients 1.06 (1.02-2.28)

Emissions

Altitude 1.35 (1.10-1.60)

ConcentrationsTopographical and meteorological conditions

4.22 (2.50-6.25)

Impacts Population density 0.87

Total 5.25 (2.44-19.8)Rail transport

Emissions Gradients 1Concentrations Topographical and meteorological

conditions 4.22 (2.50-6.25)

Impacts Population density 0.83Total 3.5 (2.08-5.19)

Source: GRACE

Tab. A. 15 Local noise pollution for road and rail transport in the Alpine area

Impact pathway Cost driver Factor Alpine/flat

Road transport

Emissions Gradients 1Concentrations Topographical and meteorological

conditions 5 (2.5-12.5)


Rail transportEmissions Gradients 1Concentrations Topographical and meteorological

conditions 5 (2.50-12.5)


Source: GRACE


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ANNEX B WHAT THE EUROPEAN UNION HAS ALREADY DONE

The European Union has already done a lot in all transport modes in order to make transport greener and more sustainable, as shown in the Table B.1 below, where the measures are grouped according to the type of externality.

Tab. B.1 Main EU initiatives for greening transport

External cost EU Initiative

Accidents

Requirements for new road vehicles,obtaining driving licences, limiting the speed of buses and coaches and ensuring the roadworthiness of vehicles and the infrastructure itself.

Safety measures in the rail and inland waterways sectors, addressing both rolling stock and vessels, and infrastructure and organisation in the rail sector.

In the maritime sector many measures to increase safety, prevent accidents involving vessels, passengers and crew and reduce the environmental impact of accidents.

In the aviation sector safety measures for aircraft design and maintenance, use and personnel licensing.

Requirements for accident investigation and reporting for the aviation, rail and maritime sectors.

Climate change

Kyoto Protocol (2002) committed the European Union to an 8% reduction in GHG emissions in 2008-2012; in 2007 the European Union proposed a 20% reduction in GHG emissions by 2020.

Limiting CO2 emissions from new cars and applying differentiated annual circulation and registration taxes for cars based on their CO2 emissions.

Inclusion of aviation activities in the EU’s ETS from 2012 onwards.

Local pollution

Limiting emissions from new vehicles (EURO standards) and from vessels or recreational craft.

Applying maximum levels of certain pollutants in fuels, such as sulphur in marine fuel or lead in petrol.

Taking into account energy consumption, CO2 and pollutant emissions costs during a vehicle’s use for all public purchases of cars, vans, buses and lorries.

NoiseAssessing and limiting noise emissions from all new, motorised, inland transport modes

Applying limits for aircraft and more stringent restrictions at certain EU airports.

Congestion

Existing measures for charging HGVs for infrastructure use.

Proposal on airport charging.

Trans-European networks and the Marco Polo programme: most funding for infrastructure provision for rail, inland waterways and maritime transport in order to encourage a shift from road transport.

Technological improvements in the road sector.

Promoting fleet management and optimising transport routes to avoid congestion and prevent accidents.

Source: Communication from the Commission to the European Parliament and the Council, Greening Transport, COM (2008) 433 final.


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113

ANNEX C EXAMPLES OF PRACTICAL APPLICATION OF THE PROPOSED EUROVIGNETTE DIRECTIVE AND CALCULATION OF CAP VALUES

The following tables show the indicative values of the internalisation charge based on the application of the proposed revision of the Eurovignette Directive. The calculations have been carried out with the interactive web tool developed within the GRACE16 research project for a sample of three European corridors, and according to a series of assumptions which are described below.

Times of departure assume somewhat rational behaviour on the part of drivers (for instance, starting the journey at night to avoid major congestion) and are as follows: 9 a.m. for the Strasbourg-Vienna corridor; 7 a.m. for the Brindisi-Chiasso corridor; 1.30 p.m. for the Kilkenny-Monaco corridor.

A further basic assumption is that the truck has two drivers, complying with the EU regulation about rest and driving times. The examples are for EURO 4 HGVs with a maximum total weight of over 18 tonnes.

Time periods are: 'high peak' periods, that correspond to the time slots 7-9 a.m. and 6-8 p.m.; 'medium peak' periods that are immediately before and after 'high peak' (6-7 and 9-10 a.m., 5-6 and 8-9 p.m.); 'off-peak' periods that are between 10 a.m. and 5 p.m. and 9 p.m. and midnight; and night that is between midnight and 6 a.m..

N MP HP MP OP MP HP MP OP

0 6 7 9 10 17 18 20 21 24

The average speed in free flow (off-peak period) is 80 km/h (inter-urban areas) and 70 km/h (suburban areas). In medium peak periods speed goes down to 60 km/h and 50 km/h, respectively, and further decreases to 50 km/h and 40 km/h in high peak periods. At night, average speed is taken to be 90 km/h (inter-urban) and 80 km/h (suburban).

Tab. C.1 Average speed in free flow in km/h

Inter-urban Suburban

High peak 50 40Medium peak 60 50Off peak 80 70Night 90 80

For each corridor there are two types of unit cost:

baseline unit costs are calculated using the GRACE tool, with no caps or other constraints;

unit costs with caps are derived by applying the caps laid down by the European Directive.

16 The GRACE research project developed software which makes it possible to obtain external cost estimates for all

the modes. This tool, available at www.grace-eu.org provides a useful illustration of the quantitative stages to be set up and gives a first approximation of the results.


114

Peak Night High Peak

Medium Peak

Off Peak Night

Congestion

71,90 1,10 7,00 2,00 0,00 0,00Noise 0,40 2,20 0,13 0,13 0,13 0,23Air Pollution 4,60 4,60 4,00 4,00 4,00 4,00Total 76,90 7,90 11,13 6,13 4,13 4,23Congestion

113,71

1,10 56,86 20,00 0,00 0,00Noise 2,70 11,30 1,10 1,10 1,10 2,00Air Pollution 4,70 4,70 4,00 4,00 4,00 4,00Total 121,1

117,10 61,96 25,10 5,10 6,00

Congestion






71,15 1,08 9,23 2,81 0,00 0,00Noise 0,54 2,68 0,17 0,17 0,17 0,31Air Pollution 4,47 4,47 4,00 4,00 4,00 4,00Total 76,15 8,23 13,40 6,98 4,17 4,31

Unit Costs (€cent/vehicle km)

Cost categorySegmentGRACE basecase

(no caps) With caps

Off Peak

Strasbourg-Munich Dachau

1,800,704,607,101,803,204,709,70

Munich Dachau-Munich Brunthal

Munich Brunnthal-Salzburg

1,700,704,607,00

Salzburg - A1 / E55 / E60 KM 60

1,700,804,206,70

A1/E55/E60 KM 60 -Traun

1,700,804,206,70

Traun - Sankt Pölten

1,700,804,206,70

Sankt P6lten -Vienna West

1,700,804,206,70

Total corridor

1,750,854,477,06

When the GRACE values are higher than the cap values, the latter are adopted, otherwise the GRACE values are maintained. The introduction of cap values means that the chargeable cost might in some cases be less than the actual external cost as calculated using the formulae, and the implication is that the price signal cannot be used to its full extent.

Tab. C.2 Trip scheduling of Strasbourg-Vienna corridor

Tab. C.3 Strasbourg-Vienna corridor: unit cost with and without caps

Segments Area Start Arrival Km Period

Strasbourg Munich Dachau inter-urban 9 a.m. 2.02 p.m. 402 Off-peakMunich Dachau Munich Brunnthal suburban 2.02 p.m. 2.38 p.m. 39 Off-peakMunich Brunnthal Salzburg inter-urban 2.38 p.m. 4.20 p.m. 133 Off-peakSalzburg A1/E55/E60 KM 60 inter-urban 4.20 p.m. 5.00 p.m. 60 Off-peakA1/E55/E60 KM 60 Traun inter-urban 5 p.m. 6.00 p.m. 60 Medium peakTraun Sankt Pölten inter-urban 6 p.m. 8.00 p.m. 100 High peakSankt Pölten Vienna West inter-urban 8 p.m. 9.00 p.m. 78 Medium peakTotal 872


115

Tab. C.4 Trip scheduling of Brindisi-Chiasso corridor

Tab. C.5 Brindisi-Chiasso corridor: unit cost with and without caps


Brindisi Bari inter-urban 7.00 a.m. 8.22 a.m. 73 High peakBari Molfetta inter-urban 8.22 a.m. 9.00 a.m. 33 High peakMolfetta Canosa di Puglia inter-urban 9.00 a.m. 10.00 a.m. 60 Off-peakCanosa di Puglia Faenza inter-urban 10.00 a.m. 5.00 p.m. 560 Off-peakFaenza San Lazzaro inter-urban 5.00 p.m. 6.00 p.m. 60 Off-peakSan Lazzaro Bologna inter-urban 6.00 p.m. 6.22 p.m. 17 High peakBologna area suburban 6.22 p.m. 6.45 p.m. 15 High peakBologna A1 KM 55 inter-urban 6.45 p.m. 8.01 p.m. 55 High peakA1 KM 55 A1 KM 155 inter-urban 8.01 p.m. 9.00 p.m. 60 Medium peakA1 KM 155 Milan A1 inter-urban 9.00 p.m. 9.55 p.m. 75 Off-peakMilan Chiasso inter-urban 9.55 p.m. 10.30 p.m. 48 Off-peakTotal corridor inter-urban 1055

Peak Off Peak Night High

PeakMedium

PeakOff

Peak Night

Congestion

60,40 1,60 1,00 7,00 2,00 0,00 0,00Noise 2,30 2,70 9,70 0,13 0,13 0,13 0,23Air Pollution 3,00 3,00 3,00 3,00 3,00 3,00 3,00Total 65,70 7,30 13,70 10,13 5,13 3,13 3,23Congestion






104,60

1,70 1,00 52,30 20,00 0,00 0,00Noise 2,30 2,70 9,70 1,10 1,10 1,10 2,00Air Pollution 3,00 3,00 3,00 3,00 3,00 3,00 3,00Total 109,9

07,40 13,70 56,40 24,10 4,10 5,00

Congestion





65,52 1,61 1,00 7,64 2,26 0,00 0,00Noise 0,64 0,87 2,90 0,14 0,14 0,14 0,26Air Pollution 2,91 2,91 2,91 2,91 2,91 2,91 2,91Total 69,07 5,39 6,81 10,70 5,31 3,06 3,17

A1 KM 55-A1 KM 155

A1 KM 155-Milano A1

Milan-Chiasso A9

Total corridor

Faenza-San Lazzaro

San Lazzaro-Bologna

Bologna (suburban

area)

Bologna- A1 KM 55

Brindisi-Bari A14

Bari-Molfetta

Molfetta-Canosa di

Puglia

Canosa di Puglia-Faenza

Unit Costs (€cent/vehicle-km)

Segment Cost category

GRACE basecase (no caps) With caps


116

Tab. C. 6 Trip scheduling of Kilkenny-Monaco corridor

Tab. C.7 Kilkenny-Monaco corridor: unit cost with and without caps


Kilkenny Rosslare Harbour inter-urban 1.30 p.m. 3.00 p.m. 105 Off-peakIRISH FERRIES port 3.00 p.m. 4.00 p.m.Rosslare Harbour Cherbourg sea 4.00 p.m. 10.42 a.m.Cherbourg area suburban 10.42 a.m. 10.45 a.m. 4 Off-peakCherbourg Paris inter-urban 10.45 a.m. 3.30 p.m. 350 Off-peakParis area suburban 3.30 p.m. 3.43 p.m. 11 Off-peakParis Reims inter-urban 3.43 p.m. 4.24 p.m. 37 Off-peakReims Sainte Menéhould inter-urban 4.24 p.m. 6.05 p.m. 75 Medium peakSainte Menéhould Metz inter-urban 6.05 p.m. 8.17 p.m. 118 High peakMetz Puttelange aux lacs inter-urban 8.17 p.m. 9.17 p.m. 62 Medium peakPuttelange aux lacs Stuttgart inter-urban 9.17 p.m. 12.09 a.m. 236 Off-peakStuttgart Monaco inter-urban 12.09 a.m. 2.45 a.m. 237 NightTotal corridor 1235

Peak Off Peak Night High

PeakMedium

PeakOff

Peak Night

Congestion

70,418

1,810 1,114 7,000 2,000 0,00 0,00Noise 0,575 0,942 2,858 0,130 0,130 0,130 0,230Air Pollution 2,852 2,852 2,852 2,852 2,852 2,852 2,852Total 73,84

55,604 6,824 9,982 4,982 2,982 3,082

Congestion: 113,058 1,803 1,109 56,529

20,000

0,00 0,00Noise: 2,656 3,086 10,98

51,100 1,100 1,100 1,100

Air Pollution: 5,061 5,061 5,061 4,000 4,000 4,000 4,000Total 120,775 9,950 17,15

561,629

25,100

5,100 6,000Congestion: 71,45

31,740 1,071 7,000 2,000 0,00 0,00

Noise: 8,164 3,775 2,376 0,130 0,130 0,130 0,130Air Pollution: 3,775 3,775 3,775 3,775 3,775 3,775 3,775Total 83,39

29,290 7,222 10,90

55,905 3,905 4,005

Congestion: 113,06

1,800 1,11 56,529

20,000

0,00 0,00Noise: 2,700 3,100 11,00

01,100 1,100 1,100 2,000

Air Pollution: 5,060 5,060 5,060 4,000 4,000 4,000 4,000Total 120,7

89,95 17,16 61,62

925,100

5,100 6,000Congestion: 71,45

31,740 1,071 7,000 2,000 0,000 0,000

Noise: 0,436 0,714 2,164 0,130 0,130 0,130 0,230Air Pollution: 3,775 3,775 3,775 3,775 3,775 3,775 3,775Total 75,66

46,229 7,010 10,90

55,905 3,905 4,005

Congestion: 65,302

1,678 1,033 7,000 2,000 0,00 0,00Noise: 0,436 0,714 2,164 0,130 0,130 0,130 0,230Air Pollution: 3,775 3,775 3,775 3,775 3,775 3,775 3,775Total 69,51

36,167 6,972 10,90

55,905 3,905 4,005

Congestion: 65,302


36,167 6,972 10,90

55,905 3,905 4,0,05

Congestion: 65,302

1,678 1,039 7,000 2,000 0,00 0,00Noise: 0,436 0,714 2,164 0,130 0,130 0,130 0,230Air Pollution: 3,775 3,775 3.775 3.775 3.775 3.775 3.775Total 69,51

36,167 6,972 10,90

55,905 3,905 4,0,05

Congestion: 65,680


27,025 7,867 11,13

06.130 4,130 4,230

Congestion: 71,866


87,088 7,906 11,13

06,130 4,130 4,230

Congestion: 69,576


67,393 7,505 11,52

96,146 3,927 3,925

With caps

Unit Costs (€cent/vehicle-km)

GRACE basecase (no caps)Segment Cost category

Kilkenny -Rosslare Harbour

Cherbourg

Cherbourg -Paris

Paris

Puttelange aux lacs - Stuttgart

Stuttgart -Munich

Total corridor

Paris -Reims

Reims - Sainte Menéhould

Sainte Menéhould - Metz

Metz -Puttelange aux

lacs


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