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TRIMIS

Implementing Pricing Reform in Transport - Effective Use of Research on Pricing in Europe

IMPRINT EUROPE

Implementing Pricing Reform in Transport - Effective Use of Research on Pricing in Europe

Background & policy context: 

A number of 4th framework projects, including in particular PETS, TRENEN, AFFORD and subsequently the concerted action CAPRI, sought to clarify the implications of the approach advocated by the Commission to transport pricing. Essentially this approach is that known to economists as short run marginal cost pricing, whereby prices are set to reflect the additional costs to society associated with an additional km travelled or an additional trip made, given that the capacity of the transport network is held constant.

When car users, rail operators or the operators of other vehicles decide to travel additional kilometres or to make additional trips they impose additional costs on themselves, on the infrastructure-provider, on other users and on the rest of society. Costs to other users and to the rest of society are referred to as 'external' costs. External costs or benefits arise when the social or economic activities of one agent have an impact on the welfare of another agent, without that impact having been taken into account by the first agent. If monetary values can be placed upon externalities then they can be incorporated into the pricing mechanism by means of direct charges or subsidies; in this way they will then be taken into account by all economic agents.

Objectives: 

The overall aim of the IMPRINT-EUROPE thematic network has been to facilitate a two way process to enable research results to be fed into pricing policy implementation and to enable policy questions to be used to inform research. In this way it was intended to improve both the quality of policy making and research and to promote consensus by improving understanding of alternative points of view.



The specific objectives of the IMPRINT-EUROPE thematic network have been:



  1. To facilitate the exchange of experience and transfer of knowledge among scientists and practitioners in the field of pricing;
  2. To draw together the results of previous and ongoing research in the field of pricing and to make them accessible to policy-makers, practitioners, industry and other professionals in a series of seminars and deliverables designed to assist them in developing and responding to pricing policy reform;
  3. To identify, through critical comparative work, the prerequisites for the development of an integrated approach to implementing the European Commission's proposed pricing reforms.

Furthermore, IMPRINT-EUROPE has sought to answer the policy development needs of decision-makers by building upon the international state-of-the-art in pricing policy research, with comprehensive coverage of key implementation issues and of modes.

Methodology: 

The Imprint-Europe thematic network held events which brought together transport policymakers, practitioners, stakeholders and researchers to discuss research findings and experience relating to transport pricing reform, so as to develop an integrated approach to implementing the European Commission's proposed pricing reforms. On-going liaison with related projects has been an important feature of the network, most notably with CUPID, MC-ICAM and UNITE. Part way through, the project was extended to incorporate greater involvement from the Newly Associated States (NAS), extending the scope of the original objectives accordingly.

Each of the events was attended by representatives from the European Commission and ECMT, national and local governments, stake-holder groups, consultancy and academia. In total nearly 300 different individuals attended Imprint-Europe events. Aided by the papers and by additional presentations, the seminars have served to disseminate information regarding policy and research developments in the transport pricing field and to facilitate knowledge transfer between the policy and research communities. The lively debates at the seminars have led to consensus building and the identification of priorities for action and for research. In addition, a small web based survey was undertaken towards the end of the project to crosscheck a number of the findings emerging from the events.

Institution Type:
Institution Name: 
European Commission, Directorate-General for Energy and Transport (DG TREN)
Type of funding:
Key Results: 

The key areas in which Imprint-Europe reached conclusions are:<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />


 


Measurement of marginal social cost


Methodologies and data now exist for measuring all elements of marginal social cost, though some uncertainties and disagreements remain. UNITE provides up-to-date evidence, indicating a consensus on the broad direction of pricing reform necessary. It concluded that:



  • infrastructure cost is best measured by an allocation process informed by econometric studies - there is a good degree of consensus as to what are the key variables determining costs, though disagreement remains as to the precise nature of the relationships so an element of judgement is involved;
  • there is an established approach to measuring congestion costs; though it is not clear whether the highly variable results are related to different modelling techniques or to actual differences in circumstances - there are also concerns about data availability and the lack of studies on modes other than road;
  • the extent to which pricing reform can contribute to the efficient allocation of scarce capacity in rail and air remains uncertain due to the complexity of cost measurement and implementation in pricing policies;
  • identifying the external co

    Policy implications

    Priorities for action<?xml:namespace prefix = o ns = 'urn:schemas-microsoft-com:office:office' />


    A start has been made in some sectors: for instance the Rail Directive contained a sensible pragmatic approach to marginal social cost based pricing, and the proposed revised Eurovignette Directive was a step in the right direction, although still containing many constraints which would prevent fair and efficient pricing of road freight vehicles. However much disappointment was expressed that the proposed framework directive and common methodology paper for all modes seems to have been abandoned. Most members of the Imprint-Europe network felt that such a directive would be an important step forward as it would provide a clear objective towards which pricing reform should be concentrated on all modes, and encourage transparency in the setting of prices. In its absence, in the light of seminar discussions, a number of priorities for action emerged:



    • to continue working on improved pricing systems, without making 'perfection the enemy of the good';
    • reform is most needed in congested urban areas - to reduce congestion, environmental degradation and generate finance and local authorities should be supported in this process;
    • reform is also needed on trans-European road and rail corridors - to harmonise terms of competition, reduce congestion, environmental degradation and accidents and generate finance. A simple kilometre charge according to vehicle type, along the lines of the revised Eurovignette but with the link between average charge and average costs removed as soon as possible, is a good way forward. This could then gradually be refined in terms of both level and variation with time and space;
Partners: 


  • Institute for Transport Studies ITS (UK);

  • Nederlandse Organisatie voor Toegepast Natuurwetenschappelijk Onderzoek TNO Inro (NL);

  • Forschungs- und Anwendungsverbund Verkehrssystemtechnik FAV (D);

  • Istituto di Studi per l'Integrazione dei Sistemi ISIS (I).
Organisation: 
Institute for Transport Studies University of Leeds
Zipcode: 
LS2 9JT
City: 
Leeds
Contact country:
Telephone: 
+44 113 233 5337/5357
Fax Number: 
+44 113 233 5334