Assessment of transport infrastructure means (EIBURS_100113) Stef Proost - KULeuven (B) Andre de Palma ENS Cachan (F)

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1 Assessment of transport infrastructure means (EIBURS_100113) Stef Proost - KULeuven (B) Andre de Palma ENS Cachan (F)

2 Research questions a) is pricing of existing transport infrastructure efficient and is it an alternative to manage the use of scarce infrastructure? b) is decentralization of decision making in pricing and infrastructure decisions important for better decision making in transport policy? c) how is infrastructure risk dealt with particularly by the political level?

3 a) Pricing of road use: still a long way to go 1 Pricing of cars: still mainly fuel taxes We forgot that fuel taxes are a very high carbon tax (>200 Euro/ ton of CO2) Too much emphasis on fuel efficient cars Too much diesel cars Too much electric and alternative fuel cars Saving carbon emissions in transport is not priority We need to reduce importance of (federal) fuel taxes and move to more (local) parking and congestion pricing systems Vertical tax externalities Less of a problem for fine tolls than for parking

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5 a) Pricing of road use: still a long way to go 2 Pricing of trucks: tax competition on diesel fuel has led to contagious distance charges Distance charges are contagious as a country that has distance charges can undercut neighbours that do not have them. Game changer (threatens Luxemburg s excise tax profit center) Results in Distance charges >> infrastructure and external costs Barrier for internal market (return to middle ages)

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7 Need more metro or more expensive metro at peak hours? peak load pricing of PT pays off even in the presence of unpriced road congestion

8 b) Should we decentralise pricing and capacity of roads, public transport? Setting with heterogenous regions (residents with car/ without car), congestion, tolls, capacity and spillovers Either regions decide individually or federal government decides by majority voting Federal government? Risks of regional favouring Uniform (poor quality) service for everybody Local government can often do better Financial responsibility helps to be reasonable Non-discriminatory prices and budget constraints can produce good results also when there are important spillovers

9 c) How to deal with risks? Lobbying in the presence of risks could lead to good politicians selecting not enough good projects Good and bad politicians, lobbyists are successfull with bad politicians but not with good politicians When good politicians are lobbied, they may lose good reputation if they accept a good project More technical papers Nature of choice process PPP with exogenous uncertainty, adverse selection and risk averse principal and agent

10 Thanks For listening For support where researchers can explore independently EU policy questions

11 Publications Published papers De Borger, B., Proost, S. (2015). The political economy of public transport pricing and supply decisions. Economics of Transportation, accepted. De Palma, A., Kilani, M., Proost, S. (2014), Discomfort in mass transit and its implication for scheduling and pricing, Transportation Research Part B 71, p Kilani, M., Proost, S., Van Der Loo, S. (2014), Road pricing and public transport pricing reform in Paris: complements or substitutes, Economics of Transportation 3, p Proost, S., Dunkerley, F., Van Der Loo, S., Adler, N., Bröcker, J Korzhenevych, A. (2014), Do the selected trans-european transport investments pass the cost benefit test?, Transportation 41(1), p De Borger, B., Proost, S. (2013). Traffic externalities in cities: the economics of speed bumps, low emission zones and city bypasses. Journal of Urban Economics, 76, Proost, S., Zaporozets, V. (2013). The political economy of fixed regional public expenditure shares with an illustration for Belgian railway investments. Regional Science and Urban Economics, 43, Van der Loo, S., Proost, S. (2013). The European road pricing game: how to enforce optimal pricing in high-transit countries under asymmetric information. Journal of Transport Economics and Policy, 47,

12 DISCUSSION PAPERS Mandell,S. Proost, S. (2015). Why truck distance taxes are contagious and drive fuel taxes to the bottom. CES - Discussion paper series, DPS15.04, 1-44 pp. Leuven (Belgium): KU Leuven CES. De Borger, B., Proost, S. (2013). The political economy of pricing and capacity decisions for congestible local public goods in a federal state. CES - Discussion paper series, DPS13.16, 1-77 pp. Leuven (Belgium): KU Leuven CES. de Palma, A., Dunkerley, F., Proost, S. (2013). Exploring the congested parallel route problem with variable substitutability. CES - Discussion paper series, DPS13.21, 1-37 pp. Leuven (Belgium): KU Leuven, CES. MIMEO Deneckere R., A. de Palma, Leruth L. "(2015) Risk Sharing in a Principal Agent Model : A Theory of Public Private Partnerships", mimeo C. M. Fung, S.Proost, (2015), Can we decentralize transport taxes?, paper presented at the conference on the future of fuel taxes, Stockholm, September 2014 B.De Borger, S.Proost, (2015), Tax and regulatory policies for European Transport getting there, but in the slow lane, paper presented at the CESIfo/EC/IMF/PBL conference on Energy Tax and regulatory policy in Europe: reform priorities and research needs (Munich, nov 2014-) R. Khraibani, A. de Palma, N. Picard, I. Kaysid, (2013), A New Evaluation and Decision Making Framework Investigating the Elimination-by-Aspects Model in the Context of Transportation Projects Investment Choices, mimeo A. Glazer, Proost, S (2013) Politics of Uncertain Investment in Transport., mimeo A. Glazer & S. Proost, (2013), Pricing of Public Transit under Union Power, mimeo F. Dunkerley, A. Glazer, S. Proost, (2014), Can we explain current pricing and investment in Public Transport in metropolitan areas?, mimeo