GRACE - Generalisation of Research on Accounts and Cost Estimation
Overview
Background & policy context:
Successful implementation of the pricing reform, as put forward in the White Paper, is a complex issue. This requires first cross-modal research on cost calculation to ensure a coherent approach and level playing field in support of the European legislation currently being prepared and put in place.
Policy makers and the public also need further and more detailed information on the benefits of pricing. One way of demonstrating these are through real-life demonstration projects. These should be carefully designed to tackle both the technical and socio-economic complexities and to address acceptability problems, which can be particularly striking in urban areas.
GRACE addressed Task 3.4.1.4.8 of the SUSTDEV-2002 Work Programme 'Costs of transport infrastructure use', by facilitating the implementation of transport pricing systems that reflect the costs of infrastructure use in order to support the development of sustainable transport systems.
This project expected to benefit from the results achieved by two FP5 projects: MC-ICAM and UNITE.
MC-ICAM has contributed to the identification and understanding of possible barriers to the implementation of marginal cost pricing and to the identification of optimal and feasible implementation paths (including an estimation the benefits that can be derived from the implementation), by carrying out theoretical and methodological analyses, studies on barriers and constraints, and modelling case studies.
The UNITE project has provided:
- a comprehensive set of marginal cost estimates relevant to transport contexts around Europe;
- pilot accounts for all transport modes in all EU countries, Switzerland, Estonia and Hungary (which show the social costs - the cost of infrastructure, accidents, environmental damages, delays and the costs of supplying transport services - and the revenues from taxes, charges and subsidies of transport for two analysis and one forecast year);
- a framework for integration of accounts and marginal costs, consistent with public finance economics and the role of transport charging in the European economy.
Objectives:
The objectives of this project were:
- to undertake new case study research to address gaps in the existing level of knowledge of marginal social costs in road and rail transport (particular attention will be given to specific aspects, namely infrastructure wear and tear, road congestion, rail scarcity costs, accidents, air pollution and global warming, noise nuisance and environmental costs in sensitive areas), as well as in air and waterborne transport (particular attention will be given to all cost categories);
- to develop and refine the methods of using transport accounts to monitor the implementation of transport pricing reform in an enlarged Europe (in particular to apply results from the case studies to split between fixed and variable costs, to close gaps in the accounts, especially for air transport and waterborne transport and to provide qualitative and quantitative inputs for the generalisation of marginal cost case studies - cost drivers);
- to undertake innovative research on the issue of the appropriate degree of complexity in transport charges, to provide guidance on the effective trade off between pricing systems that give appropriate incentives by portraying variations in marginal social cost in time and space in detail and pricing systems that are easily understood and acted upon.
- to provide clear guidance on the marginal social cost of the different modes of transport in specific circumstances and on simple and transparent methods for determining charges (this will involve bringing together results of previous research on costs, cost drivers and cost functions and the production of a software tool designed to enable derivation of costs and charges even in situations where detailed analysis does not exist);
- to refine the use of models to address the broad socio-economic impacts of pricing reform (particular attention will be given to modal shares, accidents, sensitive areas, regional economics and equity issues);
- to draw clear conclusions and recommendations for policy and for research in the field of transport infrastructure costs and charges.
Methodology:
The objectives were pursued within a set of seven inter-related groups of activities, one per objective, each led by internationally recognised experts in the field and involving a highly experienced team.
Each group of activities produced a document with the results and achievements relating to its specific project objective. The title of these documents were:
- 'Marginal cost case studies for road and rail transport' (first objective);
- 'Marginal cost case studies for air and waterborne transport'(second objective);
- 'Monitoring pricing policy using accounts (third objective);
- 'Optimal complexity of transport pricing' (fourth objective);
- 'Generalisation of marginal social cost estimates' along with the accompanying software tool (fifth objective);
- 'Socio-economic impacts of transport pricing reforms' (sixth objective);
- 'Policy conclusions on marginal social cost pricing' (seventh objective).
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