Impacts of freight and passenger transport pricing policy

State-of-the-art review

Changes in the prices of fuels, air tickets and public transport affect mobility behaviour. Passenger movements by public transport and plane prove to be fairly sensitive to pricing, as does private vehicle fuel demand. Road haulage is also reasonably sensitive to changes in transport costs, particularly over long distances. 

In this desk study, encompassing both Dutch and international literature, the Netherlands Environmental Assessment Agency and the environmental consultancy CE Delft review the impacts of price changes and various kinds of pricing measures on transport volumes.

Road pricing: more car ownership, less car use 
Higher petrol prices reduce fuel consumption as well as car ownership and use. Introduction of road pricing to replace today’s fixed vehicle taxes (on car purchase and circulation) would increase private vehicle ownership by several percent. Car use would decline, though, in the short term by 2 to 6 percent and in the longer term (10-15 years) by over 10 per cent.

Free public transport attracts mainly new users
Any increase or decrease in the price of public transport is soon reflected in the number of users, particularly in off-peak hours and away from urban conurbations. Trials with free or cheaper public transport generally lead to a distinct rise in passenger numbers, but only a slight decline in car use. Reduced-rate public transport attracts mainly new users and people who previously cycled.
Mainly recreational travellers sensitive to air ticket prices
Increases or decreases in air ticket prices impact mainly on the number of short-haul recreational travellers. Business travel is less sensitive to price changes and effects on passenger numbers are less pronounced on long-haul than short-haul flights. This is probably because there are good alternatives for the latter.

Road haulage mainly price-sensitive on long distances
Road haulage proves to be fairly sensitive to changes in transport costs, particularly on long hauls. On short hauls there are generally few alternatives available and there is less price sensitivity. Besides distance, the type of freight is also important, with bulk transport and container transport relatively sensitive to price changes, for example. The impact of introducing road pricing on freight movements on Dutch roads will depend on tariff level and design. If today’s fixed-rate taxes for freight vehicles are replaced by road pricing, road freight movements are anticipated to decline only very slightly (by less than 1 percent). This minimal decline is due in part to the relatively low charge per kilometre compared with overall transport costs.

report (only available in Dutch)

Authors CE

Huib van Essen
Arno Schroten

Bilthoven/Delft, May 2010