GRACE
03.27
2007
The GRACE project aimed to provide new evidence on the user costs of transport infrastructure and the impact of passing these costs on to users. TML analysed the effects of marginal-cost pricing on transport composition and welfare.
The aim of GRACE was to provide new evidence on the user costs of transport infrastructure across all modes and on the consequences of passing these costs on to users. This goal implied studies to measure the marginal costs of wear and tear, congestion, accidents, and environmental impacts. For road and rail, the focus was on filling the gaps in existing knowledge on costs; for air and water, there was much less to build on.
Using the estimates for external costs made within the GRACE project, we analysed the effect of introducing marginal-cost pricing on transport composition and welfare. We used the TREMOVE model to analyse three possible pricing scenarios. These scenarios differ in their complexity. The main results are as follows:
The aim of GRACE was to provide new evidence on the user costs of transport infrastructure across all modes and on the consequences of passing these costs on to users. This goal implied studies to measure the marginal costs of wear and tear, congestion, accidents, and environmental impacts. For road and rail, the focus was on filling the gaps in existing knowledge on costs; for air and water, there was much less to build on.
Using the estimates for external costs made within the GRACE project, we analysed the effect of introducing marginal-cost pricing on transport composition and welfare. We used the TREMOVE model to analyse three possible pricing scenarios. These scenarios differ in their complexity. The main results are as follows:
- It is very difficult to internalise the external costs of cars and motorcycles using only a fuel tax.
- How the additional tax revenue is used is as important as the selection of the price scenario.
- The welfare benefits come mainly from the decrease in external accident costs, the decrease in external congestion costs, and the good use of the additional tax revenue.
- The price scenarios used here do not consider the full mix of possible instruments. Some externalities such as accidents need finer instruments such as fines for speeding or drunkenness so that drivers take into account the social cost of their behaviour.
