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A Foundation of Road User Charges Contents Harald M. Hjelle A Foundation of Road User Charges Thesis submitted to The Norwegian University of Science and Technology (NTNU), Faculty of Engineering, Science and Technology, Department of Civil and Transport Engineering for the Dr. Ing. Degree Thesis no. 2003-49 ISBN 82-471-5600-8 URN:NBN:no-3422 URN:NBN:no-3422 A FOUNDATION OF ROAD USER CHARGES CONTENTS CONTENTS CONTENTS..................................................................................................................................... III LIST OF FIGURES....................................................................................................................... VII PREFACE....................................................................................................................................... XV ACKNOWLEDGEMENTS ..................................................................................................................XV BACKGROUND AND MOTIVATION .............................................................................................. XVII OUTLINE XVIII 1 THEORETICAL FOUNDATION OF USER CHARGES ................................................. 1 1.1 THE POINT OF DEPARTURE: ECONOMIC WELFARE THEORY ............................................ 1 1.1.1 Social efficiency........................................................................................................... 1 1.1.2 External effects ............................................................................................................ 2 1.1.3 Pigouvian taxes ........................................................................................................... 5 1.2 ECONOMIC AND POLITICAL CONSIDERATIONS FOR THE SHAPING OF ROAD USER CHARGES .......................................................................................................................... 8 1.2.1 The basic principle: Price equal to short term marginal cost ................................... 8 1.2.2 Second best pricing regimes...................................................................................... 11 1.2.3 The problem of choosing the appropriate tax instrument ........................................ 14 1.2.4 Other policy (non-price) instruments........................................................................ 23 2 THE MARGINAL COSTS OF ROAD USE....................................................................... 27 2.1 DEFINITIONS AND BASIC ASSUMPTIONS ......................................................................... 27 2.2 THE COMPONENTS OF MARGINAL EXTERNAL ROAD USER COSTS ................................ 28 2.2.1 Cost items related to Road Use................................................................................. 28 2.2.2 The notion of Cost Responsibilty - Average or Marginal approach........................ 29 2.3 NON-MARKET VALUATION.............................................................................................. 30 2.3.1 Shadow prices............................................................................................................ 30 2.3.2 Estimating the Value of Time .................................................................................... 35 2.3.3 Estimating the Value of Statistical Life..................................................................... 36 2.3.4 Estimating the Value of Environmental Impacts ...................................................... 38 2.4 NEWBERY’S FUNDAMENTAL THEOREM OF ROAD USER CHARGES................................ 39 2.5 ELABORATIONS ON NEWBERY’S MODEL ........................................................................ 53 III URN:NBN:no-3422 A FOUNDATION OF ROAD USER CHARGES CONTENTS 3 STUDIES OF MARGINAL ROAD USE COSTS ..............................................................57 3.1 ALTERNATIVE APPROACHES TO STUDYING MARGINAL ROAD WEAR ..............................57 3.2 STUDIES FROM THE UNITED STATES AND CANADA ........................................................61 3.2.1 The AASHO Road Test...............................................................................................61 3.2.2 Small’s Proposed New Highway Pricing and Investment Policy.............................65 3.2.3 The US Federal Highway Cost Allocation Study......................................................75 3.2.4 A Canadian Study with a different approach............................................................86 3.3 RELEVANT EUROPEAN STUDIES......................................................................................91 3.3.1 A review of current cost allocation practices and recent research action on marginal cost estimation ..........................................................................................91 3.3.2 The EC High Level Group on Transport Infrastructure Charging ..........................94 3.3.3 Recent European research programmes ...................................................................99 3.3.4 Norwegian marginal cost studies ............................................................................109 3.3.5 Swedish marginal cost studies.................................................................................115 3.3.6 Comparison of national and international cost estimations...................................120 3.3.7 Summary of the findings in the review of marginal cost estimation studies ..........124 4 THE FAMAROW-MODEL: ESTIMATING ROAD WEAR USING THE NORWEGIAN ATC-UNITS AS WIM-SENSORS ........................................................129 4.1 THE BASIC IDEA: REGRESSING FACTUAL ROAD WEAR AGAINST FACTUAL ROAD TRAFFIC ........................................................................................................................129 4.2 WEIGHING VEHICLES IN MOTION..................................................................................131 4.3 MEASURING ROAD WEAR .............................................................................................134 4.3.1 Types of road wear...................................................................................................134 4.3.2 Factors that affect rutting........................................................................................135 4.3.3 Factors that affect roughness ..................................................................................137 4.3.4 Indicators representing roughness and rut-depth...................................................137 4.4 PRESENTATION AND CRITICAL EVALUATION OF THE DATA SOURCES FOR THE FAMAROW MODEL.....................................................................................................142 4.4.1 Traffic data...............................................................................................................142 4.4.2 Roughness and rut depth measurements .................................................................151 4.4.3 Climatic data............................................................................................................167 4.5 REGRESSION MODELS FOR ROAD WEAR .........................................................................173 4.5.1 Regression of roughness ..........................................................................................173 4.5.2 Regression of rut-depth............................................................................................180 4.5.3 Using the rut-depth model for calculating average road wear costs.....................183 IV URN:NBN:no-3422 A FOUNDATION OF ROAD USER CHARGES CONTENTS 4.6 FURTHER RESEARCH ISSUES RELATED TO THE FAMAROW-MODEL........................... 191 5 CALCULATION OF TAX-RELEVANT EXTERNAL EFFECTS............................... 197 5.1 CATERU – CALCULATING TAX RELEVANT EXTERNAL COSTS OF ROAD USE............... 197 5.2 THE BUILDING BLOCKS OF THE MODEL ......................................................................... 199 5.2.1 A: The Input Parameters module............................................................................ 199 5.2.2 B: The Statistics and Calculations module............................................................. 200 5.2.3 C: The Accident Externalities module .................................................................... 200 5.2.4 D: The Vehicle Depreciation module ..................................................................... 201 5.2.5 E: The Output module, and F: The Graphic Output module ................................. 205 5.3 THE CALCULATION OF EXTERNAL ELEMENTS ............................................................... 205 5.3.1 Global emissions ..................................................................................................... 205 5.3.2 Local emissions, including noise ............................................................................ 209 5.3.3 Time costs ................................................................................................................ 216 5.3.4 Accident costs .......................................................................................................... 217 5.3.5 Road wear................................................................................................................ 234 5.4 MODEL OUTPUT............................................................................................................. 238 5.4.1 The scenarios........................................................................................................... 238 5.4.2 Comparing the results of the TØI-model with the CATERU Base Scenario ........
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