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TRIMIS

UNIfication of accounts and marginal costs for Transport Efficiency

PROJECT

UNITE

UNIfication of accounts and marginal costs for Transport Efficiency

Background & policy context: 

Fair and efficient pricing of transport infrastructure use is a fundamental aspect of developing a sustainable transport policy that takes account of the full social costs and benefits of transport. UNITE will supply policymakers with the framework and state-of-the-art cost estimates to progress this policy.

UNITE is a part of the European Union's Fifth RTD Framework Programme (1998-2002) in the thematic programme Competitive and Sustainable Growth.



It builds on previous European research such as the Concerted Action on Transport Pricing Research Integration (CAPRI) and the High Level Group on Infrastructure Charging. At the empirical level, projects such as ExternE and QUITS (environment) and TRENEN, PETS and the ongoing UIC study on the External Costs of Transport (multiple cost categories) have provided valuable evidence on the nature and valuation of costs. For transport accounts, examples of accounts for multiple modes are available for Germany, France and Switzerland, whilst focusing on the road sector, the UK Road Track Cost and USA Federal Highway Cost Allocation Study provide illustrations of attempts to compare costs with revenues for individual vehicle classes. A range of cost allocation approaches have been examined in DIW et al. (1998) - that work will be extended and developed within UNITE.

Objectives: 

UNITE has three core objectives:



  • To develop pilot transport accounts for all modes, for the EU-15 and additional countries;
  • To provide a comprehensive set of marginal cost estimates relevant to transport contexts around Europe; and
  • Deliver a framework for integration of accounts and marginal costs, consistent with public finance economics and the role of transport charging in the European economy.
Methodology: 

The workplan for UNITE includes three stages of:



  • methodological development (year 1),

  • empirical estimation (year 2),
  • and synthesis (year 3).

To maximise exploitation, key European and National decision-makers will be integrated within the project from day 1, through an Advisory Board and a Research User Group.
In the first stage the overall UNITE methodology has been established and the accounts approach and marginal cost methodology was created. These provide fundamental inputs into the integration of approaches.



In the second stage, the emphasis moves towards the implementation of the accounts and marginal cost methodologies, in parallel with the elaboration of the integration of approaches work. This second phase also includes substantial methodological development for both the accounts and the marginal cost approaches.



In the final stage the focus becomes the determination of future strategies for developing the three core aspects of the project, and the overall consolidation of the research results. The need to support the policy development process means that in all stages producing deliverables early is a key priority.

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

Regarding methodology, the conclusion was that a combination of cost allocation, econometric and engineering models are needed in practice. Whilst there may be a strong preference for econometric methods in that they provide firm statistical evidence on the relationship sought, lack of sufficiently disaggregated data, or problems such as multicollinearity between explanatory variables, mean that often it is necessary to use econometric and engineering studies as ways of informing work based on cost allocation methods. This is particularly true for infrastructure and operating costs. Congestion cost estimates have been produced for road, rail and air transport, although the latter two modes are little researched and more evidence is needed. Scarcity costs - the value of creating or taking up a path or slot in a capacity-constrained network - are even less well understood and remain a priority for future research. For accident costs, a methodology is put forward that (unlike many previous studies) correctly distinguishes between external and internal costs, and finds evidence that this leads typically to lower estimates than previous studies, but it does rely on the measurement of risk elasticities, and these are still subject to uncertainty. The impact pathway approach for the measurement of environmental costs appears to be the only reliable approach, but transferability (except for the costs of global warming) appears limited.


 


A major effort in UNITE was devoted to the development of so-called pilot accounts for all transport modes in all EU countries, Switzerland, Estonia and Hungary. The UNITE pilot accounts 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 a core year (1998) and two other years of analysis and forecast (1996 and 2005). For the first time, a comprehensive set of transport accounts, using a standard methodology, has been attempted for all EU countries. The accounts compare the social costs and revenues of transport on a national level. They were not designed to be a tool for directly setting transport charges or taxes but were intended to provide the data necessary for in-depth policy analysis. Furthermore the use of three years allow to monitor the development of transport related costs and revenues over time.


 


The main purposes of the UNITE accounts are to monitor: 



  • the

    Policy implications

    In the UNITE work programme the following where considered to be policy implications which would arise as a result of the project.


     


    Firstly, the marginal cost approach provides information for efficient pricing in different traffic situations. Even though pricing policy in transport involves consideration of multiple objectives and constraints, an important starting point for policy is the pattern of efficient prices by mode, area type and route type. The marginal cost case studies provide relevant information to help populate that approach. However, it is unrealistic to expect a comprehensive set of marginal costs to be derived from such an approach on its own.


    In practice, we need to rely on social accounts data as a generic source of information, and to derive approximate or 'average' marginal costs information from such data using such evidence on cost/output relationships as can be found in the literature. It is the use of case study and accounts data together which is likely to be the most practical means of generating practical marginal cost estimates which feed into pricing policy.


     


    Secondly, the creation and maintenance of a set of consistent social accounts for the transport sector is particularly valuable for monitoring the impacts of policy, including pricing policy. To achieve consistency across modes and countries is a formidable task to which we believe UNITE has made a contribution.


     


    Thirdly, in practice, pricing policy may involve balancing a mixture of considerations. Efficiency is clearly one but notions of equity, fairness, cost recovery and revenue raising are others. Thus, second-best questions such as how to set efficient prices in relation to marginal cost in the transport sector while achieving a given budgetary result, or how to set transport sector prices in relation to marginal cost given distortions in related sectors elsewhere in the economy are clearly relevant policy issues which may draw on both marginal cost and accounts information and which the integration strand of UNITE has addressed.


     


    Fourthly, the information both from marginal costs and accounts may provide relevant inputs to other decisions such as decisions on investment and to non-price regulation. The interrelationship between pricing and efficient investment is an issue of considerable policy interest, both in an economic sense and in relation to the case for Trust Funds and other ways of ring-fencing revenues for trans

Partners: 


  • Institute for Transport Studies, University of Leeds (ITS)
  • Deutsches Institut für Wirtschaftsforschung (Germany)
  • NEI B.V (Netherlands)
  • Katholieke Universiteit Leuven (Belgium)
  • Transport, Inovação e Sistemas (Portugal)
  • Universitaet Karlsruhe (Germany)
  • Swedish National Road and Transport Research Institute
  • Universitaet Stuttgart (Germany)
  • Ecole nationale des ponts et chaussées (France)
  • Dr Max Herry (Austria)
  • Universidad de Las Palmas de Gran Canaria (Spain)
  • Istituto di Studi per l'Informatica ed I Sistemi (Italy)
  • JP-Transplan (Finland)
  • STRATEC S.A (Belgium)
  • SYSTEMA Systems Planning & Management Consultants SA (Greece)
  • Government Institute for Economic Research (Finland)
  • ECOPLAN (Switzerland)
  • INFRAS (Switzerland)
  • Ekono Energy Ltd (Finland)
  • Linköpings Universitet
Contact Name: 
Professor Chris A. Nash
Organisation: 
Institute for Transport Studies
Address: 
University of Leeds
City: 
Leeds LS2 9JT
Telephone: 
+44 (0)113 343 5337
Fax Number: 
+44-113-343-5334