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Fair and Efficient Pricing

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Complete with results
Project Acronym
D3 (NRP 41)
STRIA Roadmaps
Network and traffic management systems (NTM)
Infrastructure (INF)
Transport policies
Societal/Economic issues


Background & Policy context

The NRP 41 was launched by the Federal Council at the end of 1995 to improve the scientific basis on which Switzerland's traffic problems might be solved, taking into account the growing interconnection with Europe, ecological limits, and economic and social needs.

The NRP 41 aimed to become a think-tank for sustainable transport policy. Each one of the 54 projects belongs to one of the following six modules:

  • A Mobility: Socio-institutional Aspects
  • B Mobility: Socio-economical Aspects
  • C Environment: Tools and Models for Impact Assessments
  • D Political and Economic Strategies and Prerequisites
  • E Traffic Management: Potentials and Impacts
  • F Technologies: Potentials and Impacts
  • M Materials
  • S Synthesis Projects

According to economic theory, appropriate pricing enables the optimal allocation of scarce resources.

With their approval of distance and weight dependent HGV-tax at the end of September 1998, the Swiss people adopted an important measure for road transport pricing policy.

This has an impact at three levels: 

  • Firstly it embodies the causality principle and internalises the costs of accidents and environmental pollution, thus tending to reduce them.
  • Secondly it helps to finance ongoing infrastructure construction in Switzerland, above all for the new rail transit lines.
  • Thirdly it exploits the productivity effect of replacing the 28 tonne limit, and is thus the most important measure supporting bilateral negotiations between Switzerland and the EU.

For the first time, this measure pays for so-called external costs previously covered by public funding. Likewise at EU level, pricing policy in the transport sector is playing an increasingly important role. The EU 'Green Paper' on fair and efficient prices (EU 1995) propagates the pan-European internalisation of external costs. The current White Paper 'Fair Payment of Infrastructure Use' (EU 1998) proposes a pricing system aligned toward social marginal cost pricing: transport infrastructure users should cover the infrastructure costs they actually cause.

The EU considers above all that this will encourage more efficient use of (scarce) infrastructure resources, thus helping to relieve traffic congestion.

The present study investigates how transport infrastructure pricing policy in Switzerland can be improved for greater transparency and coherence, mainly with a view to road and rail transportation. New proposals are worked out based both on theoretical analysis and on current EU policy.

In order to identify an optimal pricing scenario for Switzerland, existing transport infrastructure costs are first evaluated and pricing rules derived as a theoretical and empirical basis for pricing policy improvements in this sector.

As a second step, three scenarios are evaluated in detail for putting these pricing structures into practice.


See objectives


Parent Programmes
Institution Type
Public institution
Institution Name
Swiss National Science Foundation SNF
Type of funding
Public (national/regional/local)


Towards fair and efficient pricing:

The external costs resulting from road traffic accidents and pollution, not covered by road taxes and other transport-related taxes, amount to a charge on our society of about CHF 10 billion per year, and this burden is likely to increase over time.

'Fair and Efficient Pricing' is the title under which the authors suggest ways to establish the true costs, and to develop a new pricing system that is related to the originators of damaging effects. Action is most urgently required in respect of private road traffic: here, the authors suggest a restructure of the road tax system.

In the long term (from about the year 2005), a tax based on distance travelled could be introduced which would be similar to the tax charged for heavy goods vehicles. A charge of CHF 0.05 per kilometre would cover today's known external costs, and a supplementary charge could be made in urban areas. In return, the fuel tax could be restructured as a CO² tax, and reduced.

Rail transport would also have to improve the level of its external cost coverage. Environmental damage could be reduced, through implementation of this pricing reform. For example, CO² emissions could be reduced by 5 to 10 per cent, and other hazardous substances reduced by about 15 per cent.

However, in some areas (e.g. emission technology, noise pollution, etc.) regulations, as well as technical and voluntary action, would still be required in order to comply with the legal requirements for the protection of the environment, and international agreements concerning the global climate.

Policy implications

aspects: Toward a differentiated pricing system

The main aspect here is the implementation of a new pricing strategy for road passenger transport (private and public). Transition from the current rather undifferentiated taxation system to a medium to long-term strategy of differentiated road pricing is much more difficult than for road freight transport or rail transport.

Implementation involves various problems such as fixing price levels, technical and legal questions, federal and institutional aspects, and last but not least: public acceptance above all of the data protection aspect.

The following eight steps form a basis for implementing these proposals in Switzerland. Most important here are the transitional aspects in road passenger transport, based on existing pricing principles, until an appropriate and cost-effective road pricing technique has been developed:

  1. Rail reform and rail infrastructure mandate
  2. Introduction of capacity-related trucking fees (HGV Km-tax)
  3. Private road traffic measures: CO² tax; Parking charges or zonal road pricing in urban areas
  4. Charges levied on insurance companies
  5. Introduction of km-related fee, new financing funds, earmarked fuel charges abolished
  6. Introduction of km-tax for light duty vehicles and busses
  7. Km-charges converted to road pricing
  8. Fee differentiation monitoring instruments: comprehensive cost charging Switzerland has a comparatively good basis for cost estimation in the transportation sector.


For effective implementation of the proposed pricing strategy, however, additional elements are required taking account in particular of a comprehensive traffic system approach.

Priority here is given to comparable infrastructure accounting between road and rail, and a wider basis for environmental cost charging. In the end, marginal costs have to be determined for all areas. This particularly applies to infrastructure cost charging, which soon will be subject to considerable changes in the road transportation sector if the truck weight limit is increased (higher maintenance costs due to increased road deterioration).

Here again, the next step will be to include for air traffic as well.


Lead Organisation
EU Contribution
Partner Organisations
EU Contribution


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