True costs in theory and practice:
the long road to the free market
A national fund for all modes of transport?
Often forgotten: transport's benefits
Lack of acceptance for road pricing
Unfair distribution between mountain and valley
The external costs of transport in 2005
More competition for the railways
Unlimited freedom above the clouds?
Projects & Reports
Feedback
Propositions
Unfettered growth of traffic and persistent trends towards liberalisation throughout Europe present Switzerland with new challenges: in the conflict between regulation and deregulation it is important to redefine the conditions for sustainable mobility.
Transport and mobility cost money: the Confederation, cantons and communes spend almost CHF 11 billion every year on public and private transport. These financing pathways are extremely complex. An NRP 41 study has now attempted to analyse them.D9 The result is both typically federalistic and sobering: the system of numerous subsidies is in contradiction to an economical and responsible use of the limited means. In financing roads alone, the redistribution of resources is so great that some cantons profit by up to CHF 200 per capita while others lose just as much, without this redistribution having been really planned or even wanted.
A new organisation of the financing system is therefore necessary. A research team developed a package of potentially helpful reforms: for example, itwould be sensible for independent bodies to manage the motorways. The federalsubsidies could then be simplified and support for public transport in citiesimproved. Establishment of appropriate associations in the conurbations,which would be responsible for income and expenditure in the transport sector,could ease the future processing of funds.
But the complicated financing pathways and their less than ideal structures within the Swiss administration are not the greatest problems in the current political discourse. The question of true costs in transport is much more explosive. Deficits of public transport and the uncovered environmental and accident costs of road and rail transport amount to about CHF 10 billionper year. And the prognosis is that this sum will continue to grow.
Under the motto "fair and efficient prices", NRP 41 has developed paths to take us towards more true costs and to a price system that accords with the polluter-pays principle.D3 The greatest need for action is in the area of passenger transport by road, where in the long term a fundamental redesign of transport taxes would be required. The introduction of a kilometre tax would start to defuse the problem to a great extent. This tax would function in a similar way to the Distance-related Heavy Vehicle Fee (HVF) for goods traffic. Calculations show that a tax of CHF 0.05 per kilometre would cover the currently known external costs. On the other hand, the tax on mineral oil could be transformed into a CO2 tax and reduced. In this model, the cantonal vehicle tax could also be reduced or even abolished altogether.
In order to cover all state spending for road and rail, an increased revenue of CHF 4 billion is needed. A fund for all transport modes is conceivable in a legal sense. If the polluter-pays principle were to be implemented,environmental pollution could be reduced by five to 10 per cent in the exampleof CO2. However, in some sectors, state regulations as well as technicaland voluntary measures would be necessary to adhere to the legislative environmentalgoals and Switzerland's international climate protection commitments. Thestudies show this very clearly: true costs alone cannot achieve our environmentalgoals. This is particularly true for the EU's preferred concept of marginalcost pricing (additional costs imposed when one more kilometre is travelled).
Transport does not just cost, it also brings benefits: about CHF 30 billion annually (1995), almost 8 per cent of Swiss added value, are thanks to transport. The contribution of transport to regional economic development is, however, often overestimated. Furthermore, the high total benefit is not a reasonfor the transport sector to avoid paying for its full costs, since transporteither benefits those who use it directly, or the benefit is redistributedvia the market. There are no so-called external benefits, except perhapsfor emergency transports.D10
That other branches of industry profit from transport is as obvious as in the case of tools manufacture, which clearly does not just benefit the tool industry. Despite this tools are not sold for less than their full costs- but transport is. These costs include the known external costs such asaccidents, damage to buildings and human health, noise and the climate effect.
In future decisions about new transport infrastructures and services, the additional benefits and costs of a project must be compared with each other. For this, cost/benefit analyses are used. The total costs and total benefits of transport overall are insignificant for making policy decisions, since in every industry and for all consumer goods the total benefit is much greater than the total cost.
We conclude: just as in other industries, the high benefit is no reason to lower prices.
One way to improve true costs in road traffic is the introduction of road use fees, or "road pricing", an option that is repeatedly discussed, especially for conurbations. In several European conurbations, appropriate models have been tried out. One Europe-linked NRP 41 study concludes that "road pricing" meets with scepticism and rejection both in Switzerland and abroad.D11 At the same time, however, surveys showed a majority in favour of the polluter-pays principle. Overall, 500 people were questioned in each of nine European cities.
The study therefore suggests developing the idea of "road pricing" directly out of the situation in the cities affected. Two possible central approaches are suggested: "area licensing" could be introduced for areas with a strong demand for transport, in which motorists pay for the right to drive in aparticular zone. In addition, construction of new roads could be financedthrough fees, although private funding of the construction or operation ofthese stretches is also conceivable.
The question of true costs in transport is an explosive area in regionalpolicy as well, since the uncovered costs burden the different regions ofSwitzerland to different degrees. For the first time, a scientific basisfor analysis is available:D4 the deficits of public transport are primarilycarried by all taxpayers, but the wealthier Mittelland is more heavily burdenedthan other regions.
In the case of environmental damage, the situation is different: throughthe predicted climate change and the poor state of the forest, the transportsector will also cause immense costs. According to the NRP 41 calculations,these will be much higher in mountainous areas than in the Mittelland. Inthe Unterengadin, for example, the total costs per capita are therefore almostCHF 4000, and even the big cities carry higher than average burdens (e.g.CHF 2000 per capita in Zurich), while areas such as the Zürcher Oberlandor Basel-Landschaft lie well under the average at about CHF 900 per capita.
A redesign of transport taxes and compensatory payments could help to reduce these large regional differences.
(in CHF milliards)
A transport policy that applies true costs has consequences that extend beyond road traffic. Rail traffic must also improve its level of cost covering.The Railways Reform of early 1999 should therefore be followed by additionalsteps.
A far-reaching reform is sketched in the study.D2 This has the aimof increasing competition between railway companies, including passengertransport. To guarantee fair competition, the management of railway infrastructurecould be integrated into one national corporation. An independent serviceorganisation should also be established for the allocation of scarce trackcapacity, ticketing, safety, and train guidance systems. Instead of settinga fixed priority for passenger traffic, scarce track capacity could increasinglybe allocated in accordance with actual demand, and by a system of market-orientatedtrack-use fees for both passenger and goods transport.
A "Performance Agreement" between the government and the SBB was also suggested, in which the railways make increasing payments to the government for useof the rail infrastructure.
In analogy with other transport systems, passenger transport should be open to competing offers by tender from all rail companies. Continued basic provision would be ensured through orders and invitations to tender from federal and cantonal authorities. In contrast to today's situation, in this concept the task of public funding is only to lay down the conditions of public transport, and plays no part in its entrepreneurial activities. As majority shareholders of the various railways, however, the Confederation and cantons can establish a coordinated ownership strategy and thus help to design and redesign public transport.D2
Deregulation and changing mobility behaviour will also have consequencesfor air traffic. Growth in this segment is predicted to accelerate by 1 to2 per cent annually through deregulation alone. The most dynamic growth isexpected in connections to Germany, Paris and London - that is, on short-haulflights. For passengers, flying will become about 10 per cent cheaper.D8
In the long term, that means that over the next twenty years, we can reckon with about 50 per cent more air traffic. The number of passengers and the amount of freight carried will probably both double. This has an impact on the environment: about a third of all CO2 emissions and about 40 per cent of all kilometres would then be due to air traffic.M25 The most decisive factor for the environment is modernisation of the fleet: the economic position of the airlines and a high proportion of modern long-haul aircraft are advantageous for this reason.D8 This is however not nearly enough to control the CO2 emissions of air traffic. There is still a lack of effective solutions.
| S4 | Wettbewerb, Kostenwahrheit und Finanzierung im Verkehr; Teilsynthese
des Moduls D (Competition, true costs and transport financing; Module D Synthesis
Report) |
| D2 | Wettbewerb und Grundversorgung auf der Schiene (Railways:
competition and basic mobility) |
| D3 |
Faire und effiziente Preise im Verkehr (Fair and efficient
pricing) |
| D4 |
Externe Kosten im Verkehr: Regionale Verteilungswirkungen
(External costs and internalisation: regional impacts) |
| D8 |
Liberalisierung im Luftverkehr: Folgen für die Schweiz
(Deregulation of air traffic) |
| D9 |
Finanzierung des Verkehrs von morgen (Funding tomorrow'stransport
systems) |
| D10 |
Nutzen des Verkehrs (Benefits of transport) |
| D11 |
Road-Pricing in der Schweiz (Road pricing: concepts and acceptability) |
| M5 |
Anhänge zu Bericht D3 "Faire und effiziente Preise im
Verkehr" (Appendix to Report D3) |
| M25 |
Luftverkehr - eine wachsende Herausforderung
für die Umwelt (Air traffic: a growing environmental problem) |
Chiara Simoneschi-Cortesi "As a Ticinese, I view transalpine traffic as a high priority. In the Ticino we are confronted daily with the impact of heavy traffic, we live with the noise and the safety hazard. In the political world, however, the transport question is a very ideological one; on the one hand, we have the ideology of freedom, on the other, an often very fundamentalist standpoint. This polarisation does not help to solve problems.
Over the last few years, research has developed an excellent basis for aforward-looking and sustainable transport policy. However, implementationis more problematic. We must now discuss and implement these research findingswithout being blinkered by ideology. I warmly welcome the new paths indicatedby NRP 41: thus, for example we must start applying true costs in transport.Furthermore, the new possibilities offered by telematics are very importantto the introduction of modern traffic management. Another path is the useof 'road pricing' as a steering instrument to prevent traffic jams, environmentalpollution and the need for additional capacities - even if it faces someresistance.
I am convinced that we will also have to take completely new routes in transport policy. Swissmetro is a nice example. Because of the topographical structure of Switzerland, an underground high-speed train offers great advantages.But we should proceed faster with innovative ideas, since politics oftendoes not react quickly enough. The New Alpine Rail Tunnels (NART/NEAT) project is an example of an idea that arose many years ago, but is only now being realised.
Regional and conurbation traffic is another point. On the one hand, we see that as well as goods traffic, passenger traffic is also increasing markedly, but on the other, the government is not very involved in regional transport, and delegates it to the cantons under the heading of financial compensation. However, this overburdens many cantons. Here there is a need for action.The NRP 41 studies have provided us with excellent foundations on which tobase transport policy in future."
Chiara Simoneschi-Cortesi,
National Councillor (FDP/TI)
and member of the National Council Transport Committee
Although economic and competitive incentives should be more extensively exploited to improve railway efficiency, they should not jeopardise provision of an optimised, customer-friendly overall service. A stronger element of competition should be built into the next stage of the Railways Reform, and the interests of the government - owner, regulatory authority and clientall in one - should be disentangled.
Design financing pathways more fairly and effectively
The systems of financing and subsidising road and rail transport by the Confederation, cantons and communes should be fundamentally harmonised with each other, so that responsibility and transparency increase and itbecomes possible to implement the policy-makers' objectives for a regionalbalance.
Regional variation in burdens (e.g. environmental pollution, costs) should be taken into account when allotting financial resources, to give more equitable distribution.
Introduce steps towards true costs
Price structures should increasingly be designed with incentives and the polluter-pays principle in mind, i.e. they should reflect the shortage of environmental and infrastructure resources.
Uncovered external costs should gradually be charged to the polluters.
This applies equally to public and private transport (including air traffic), where certain basic public services have not previously been laid down in government policy.
Manage motorways more efficiently
"New Public Management" should be applied to the operation andupkeep of the federal motorway system, for example by service contracts toa small number of major regional (public or private) institutions.
Secure financing of local and interurban transport
New sources should be found to ensure that funding for public and private transport in towns and conurbations is ensured, taking into account the heavy burdens borne by town centres. Possible instruments include parking price policies, road pricing, and institutional innovations such as regional community associations.
Develop strategies for air transport
The environmental impact of air transport, a rapidly growing sector, is often underestimated. It should no longer be free of tax, or excludedfrom climate and energy-related planning.
One possibility would be to levy a charge, which could be used to finance cost-effective climate protection measures, even for other modes of transport or in other countries (compensatory measures). Switzerland should also exploit potential technological advances to the full at both the national and the international level.