Mots clé modal split; sustainable transport

Subsidies can be defined broadly as comprising all measures that keep prices for consumers below the market level or keep prices for producers above the market level or that reduce costs by giving direct or indirect financial support to consumers or producers. Transport subsidies can be measured either by comparing the total transport-related costs and total revenues (to determine the share of costs paid by transport users and the share covered by explicit or implicit subsidies), but also by examining the total social cost due to externalities important in the transport sector (considering the relationship between marginal social cost and price and viewing the part of the marginal social cost not covered by the price as a subsidy). While the first approach to measuring subsidies is more important politically, the second approach is more appropriate in the consideration of economic efficiency, particularly in the transport sector that has many important externalities such as congestion, noise, air pollution and accidents.

According to a study presented at an OECD workshop on environmentally harmful subsidies, the removal of subsidies altogether to make the transport user cover the total social cost of each mode of transport would be inefficient for the economy and damaging for the environment. The suggested solution is to undertake a pricing reform in order to achieve prices based on marginal social cost, which would lead to modest reductions in traffic on the most environmentally damaging modes of transport and consequently lead to a reduction in environmental damage cause by transportation.

In urban areas, transport pricing policies are more and more relevant in dealing with rising road traffic congestion, environmental impacts and sustainable mobility requirements. Subsidies for public transport services have been a traditional pricing policy to promote the use of public transport, which, however, often did not produce the required changes in modal split. To achieve a fair and efficient pricing regime, the costs of private transport should be considered in comparison to public transport costs. If the correct prices for private transport were to be paid, the resulting modal shift to public transport could bring about decongestion benefits that might in fact benefit the whole transport system, including the remaining private car traffic. Resulting revenues could also be used to transform transport system financing.

Several studies and research projects in various countries, and at the pan-European level, have analysed urban transport pricing policies, actions and measures towards changing modal split in favour of public transport, including road use charging options. However, there is still considerable reluctance by local authorities to implement integrated transport pricing policies due to a perceived lack of public acceptability, particularly related to road use pricing. Demand or mobility management actions have focused on the implementation of physical, traffic control and public transport priority measures which, although having a positive effect, have not produced the drastic modal split changes that are usually required to achieve sustainable mobility. Transport pricing measures offer several possibilities of changing modal split in urban areas in favour of public transport, park and ride, and non-motorized modes. They can also provide significant revenues for financing appropriate transport systems and environmental improvements.

The EEA TERM 2004 report finds that “passenger fares in rail and bus services are increasing faster than the cost of private car use. This trend favours the private car over public transport. Transport prices for freight continue to fall, pushing transport demand higher and enabling more transport-intensive economic activities and logistics. Both trends are moving away from the Common Transport Policy’s target of revitalizing rail transport.”

An important role for Governments in transport is the provision of infrastructural goods and services. Road transport subsidies could be the costs of providing roads, space and complementary traffic services that road users alone do not pay for. Detailed analyses of road transport subsidies conducted by the Organization for Economic Cooperation and Development (OECD) show that road transport subsidies in the USA, Japan and Germany range from US$ 85 billion to US$ 200 billion annually. There are, however, also developed countries that charge road users more than their fair share of road costs. As a result of relatively high fuel levies and prices, road transport subsidies are, on average, much lower in Europe and sometimes even turn into net taxation. Cross subsidies exist both in the case of subsidisation and taxation. Passenger transport commonly subsidizes freight transport. Similarly, urban users may be subsidized by rural users who pay more than their share. Finally, there are cross subsidies between different types of vehicles, notably from gasoline to diesel vehicle users.

In developing countries, there are likely to exist huge road transport subsidies as well.

However, comprehensive transport studies for developing countries are lacking and only incomplete evidence on road transport subsidization exists. EECCA countries have reduced part of the subsidies for transport through rising prices for transport, energy and industry during the transition period of their economies. There is, however, a high yearly expenditure in these countries on road rehabilitation that could be avoided by more efficient road maintenance. In the urban areas in particular, free parking space should be regarded as a heavy subsidy, offering strong incentives to commute by car. Private road transport dominates the transport sector. Car ownership and passenger mobility are strongly linked to economic development. In developing countries, accelerating growth and low quality transport systems will increase pressure to supply and build transport capacity, with the risk of increasing subsidies and further aggravating transport problems.