The ability to make structured decisions about the optimal funding for operation, maintenance and renewal of roads and railways is currently limited. This creates significant risks that the funds are used in an inefficient manner. It is therefore important that the Swedish Transport Administration develops a transparent model for decision support in this field. VTI has undertaken a review of the state of knowledge in various areas required to bring about an economic analysis of operation, maintenance and renewal. The review shows that there are good prospects to produce a decision basis within a relatively short time. This makes it possible to answer at least some of the issues formulated. The review indicates that there are great opportunities to move forward both in road and railway areas. Five specific projects have been suggested, of which three are short term and two are long term. The aim in the long run is to make transparent and structured decisions on funding needed from an economic perspective on various road and railway sections.

Economic theory advocates marginal cost pricing for efficient utilisation of transport infrastructure. A growing body of literature has emerged on the issue of rail marginal infrastructure wear and tear costs, but the majority of the work is focused on costs for infrastructure maintenance. Railway track renewals are a substantial part of an infrastructure manager’s budget, but in disaggregated statistical analyses they cause problems for traditional regression models since there is a piling up of values of the dependent variable at zero. Previous econometric work has sought to circumvent the problem by aggregation in some way. In this paper we instead apply corner solution models to disaggregate (tracksection) data, including the zero observations. We derive track renewal cost elasticities with respect to traffic volumes and in turn marginal renewal costs using Swedish railway renewal data over the period 1999 to 2009. This paper is the first attempt in the literature to apply corner solution models, and in particular the two-part model, to disaggregate renewal cost data in railways. It is also the first paper that we are aware of to report usage elasticities specifically for renewal costs and therefore adds important new evidence to the previous literature where there is a paucity of studies on renewals and considerable uncertainty over the effects of rail traffic on renewal costs.

Economic theory advocates marginal cost pricing for efficient utilisation of transport infrastructure. A growing body of literature has emerged on the issue of marginal infrastructure wear and tear costs, but the majority of the work is focused on costs for infrastructure maintenance. Railway track renewals are a substantial part of an infrastructure manager’s budget, but in disaggregated statistical analyses, they cause problems for traditional regression models since there is a piling up of values of the dependent variable at zero. Previous econometric work has sought to circumvent the problem by aggregation in some way. In this paper we work with disaggregate (track-section) data, including the zero observations, but apply censored and sample selection regression models to overcome the bias that would result from estimation using OLS. We derive track renewal cost elasticities with respect to traffic volumes and in turn marginal renewal costs using Swedish railway renewal data over the period 1999 to 2009. Our paper is the first paper in the literature that we are aware of to report usage elasticities specifically for renewal costs and therefore adds important new evidence to the previous literature where there is a paucity of studies on renewals and considerable uncertainty over the effects of rail traffic on renewal costs. In the Swedish context, we find that the inclusion of marginal track renewal costs in the track access pricing regime, which currently only reflects marginal maintenance costs, would add substantially to the existing track access charge.

We empirically investigate the effect of policyholders’ private information of risky traffic behavior on automobile insurance coverage and ex post risk. We combine our insurance company’s information with private information data that is not accessible to the insurance company. We show that being unable to reject the null of zero correlation is not necessarily consistent with symmetric information in the automobile insurance market. Our results are twofold: In contrast to much of the previous work we find a positive significant correlation for three groups of policyholders, consistent with the adverse selection prediction. We furthermore find that private information about risky traffic behavior increases ex post risk while it both increases and decreases the demand for extensive insurance. This supports our hypothesis that adverse and propitious is present simultaneously in this market.

Contract relevant information asymmetries are known to cause inefficiencies in markets. The information asymmetry is largest in the beginning of the customer insurer relationship but reduces over time; the longer a policyholder stays with the insurer the more the insurer learns about the policyholder’s risk. Two important characteristics of the market studied here imply that the information asymmetry may not be reduced for all policyholders. First, insurers do not have access to traffic violations, which are predictors of risk since policyholders with traffic violations are more likely to report a claim. Second, the insurers do not share information, such as previous claims, which means that the policyholder can flee a poor claim record by switching insurer. Hence, there may be a selection of high risk customers who switch insurer more often, such that the information asymmetry in this group is never reduced. To test this, we compare information asymmetries in two groups of policyholders; new customers who stay with the insurer for a period or less (short term), and long-term customers who stay with the insurer for several periods (loyal). The results indicate that departing policyholders are disproportionately high risks that constitute an adverse selection of risks, while loyal policyholders constitute a propitious (favorable) selection of risks.

Older version: http://swopec.hhs.se/vtiwps/abs/vtiwps2011_002.htm

By combining Contract Theory and vehicle positioning techniques, insurance companies can replace some of the proxies for risk by actual traffic behavior when pricing the premium. A mechanism design model is used to illustrate that Usage Based Insurance (UBI) can separate risks in terms of driving behavior. This makes it possible to reward safe driving habits since the pricing scheme better reflects the accident risk. The conclusion is that UBI provides an actuarially fair premium for the insuree. It is further an efficient instrument to separate risks for the insurer since it reduces the information asymmetries highlighted in this paper.

Risky driving behavior is regarded as being one of the best predictors of traffic accidents. Traffic violations certainly signal risky driving behavior, but the analysis of the linkage of traffic violations, individual and vehicle characteristics and annual mileage has so far been hampered by the difficulty of gaining access to appropriate disaggregate data. The contribution of this paper is that it sets out and explores a rich data set in order to study traffic violations, including both accident involved and accident-free individuals. The data set comprises all insurance policies from Sweden’s largest automobile insurance company covering several years, in total 9.3 million observations, as well as information on fines and convictions for traffic violations. This implies that the methodological issues associated with self-reported violations and only accident involved individuals are disused. The first purpose is to establish the role of age and gender in traffic violations. The second purpose is to make a first attempt to establish whether vehicle owners of status brands are more likely to commit traffic violations. The results support previous findings as well as confirm the association between owners of status brands and traffic violations. The main conclusion is that insurance data provides a viable option when studying behavior, but it also raises new methodological issues.

Older version: http://swopec.hhs.se/vtiwps/abs/vtiwps2011_003.htm

In this paper we investigate the impact of four cycling environments on the propensity to cycle to work. The types of infrastructure investigated were mixed traffic, bicycle lane in the road way, bicycle path next to the road, and bicycle path not in connection with the road. In the mode choice model we combined three different data sets, two with stated preference data and one with revealed preference data, restricted to only include journeys of 12 km or less. At baseline, 24% of the cycling time was spent in mixed traffic, 2% in bicycle lanes, 42% on a bicycle path near the road way, and 31% on a bicycle path not in connection to a road way. Values of travel time savings for bicycling independent on infrastructure (based on revealed preference data) was 176 SEK/h, for cycling in mixed traffic it was 241 SEK/h, for cycling on a bicycle lane in the road way it was 249 SEK/h, for cycling on a bicycle path next to the road it was 178 SEK/h, and for cycling on a bicycle path far from the road it was 167 SEK/h (all differentiated values are based on rescaled stated preference data). Using an incremental form of the logit model we found that the biggest shift to cycle that may be possible is if all cycling after the change takes place on the bike path far from the road. The proportion of cyclists in this sample would then increase from 51.0% to 61.3%, i.e. an increase of 20%.

The background to this study is an inquiry by the Swedish Transport Administration to develop methods for benefit-cost analyses for pedestrians’ appraisals of their walking environment and how different improvements in the environment affect decisions to walk. The issues studied are: 1. What type of road do pedestrians prefer when they choose which route to walk? 2. What is the willingness to pay to get more attractive footpaths? 3. How many persons will start to walk if it is built more attractive footpaths? The third issue was unfortunately not possible to answer because of the low response rate in that part of the study. One result from the study is that individuals do not seem to prefer separated pedestrian and bicycle paths or completely secluded footpaths to the extent one might expect. The main thing seems to be that the walk takes place on a footpath of some sort and not along the roadside on a road with motor vehicles. The visibility seems to be very important for which route people choose to walk. Other attributes such as maintenance, distance to a road with motor vehicles and type of crossing was not nearly as important. Finally, it seems not impossible to investigate individuals' appraisals for various types of footpath attributes and choice of footpath using stated preference methodology. However, the interest in walking issues seems not to be high and many of the questions in the questionnaire seemed to be difficult to answer. To make it easier to clarify some of the ambiguities, future studies about pedestrian appraisals should involve some kind of interview methodology.

This report compiles the results from the project Theme Environmental risks. More specifically, the project concerned how different transport related environmental risks influence different road users and how their behaviour influence the environment. The project aimed at preparing for interdisciplinary research about environmental risks at VTI. The project was divided into three parts. The first subproject aimed at compiling literature about transport related environmental risks from psychological and economic perspectives, and in the second subproject a willingness to pay study was outlined where both economic and psychological principles were considered. In the third subproject, a simulator study was outlined. The focus was to study environmental effects of driving under controlled circumstances in the driving simulator. The report is divided into two parts. In part 1, the results from the literature review and the proposal for a willingness to pay study are described (subproject 1 and 2). This part is written in English. Part 2 contains a project outline for a simulator study in the form of an research project application (project 3). This part is written in Swedish.

This paper examines the Swedish automobile insurance market by accounting for policyholders' private information on risky behaviour in terms of major and minor traffic violations. Two approaches are used: A positive correlation test and a test where private information is used explicitly. The results show that there is a positive correlation, which is not affected when including private information in the regression, that policyholders with private information on risky behaviour are less likely to purchase full coverage, and that speeders follow a varying pattern. The conclusion is that it is favourable to use private information explicitly when asymmetric information is considered, rather than base the conclusion solely on the correlation test.

The aim of this report is to study the public utility if insurance companies were given access to extended information on the traffic behaviors of the insurant. The project consists of two parts, where the primary part aims at studying how the asymmetric information on risky behavior available to the insurance companies, affects the public utility. The aim of the secondary part is to study if increased information on risky behavior (traffic offenses) could create incentives for safer traffic behavior. If so, insurance companies could function as agents in fulfilling the visions of traffic safety politics. In analyzing the primary question, three questions are in focus: • Are individuals who have received fines or prosecution for traffic offences more prone to accidents where they have been partly or fully responsible, and are these individuals more likely to get a comprehensive insurance? • Does asymmetric information on risky behavior affect society and the insurance companies? • Are owners of sports cars more prone to risk taking in traffic, compared to owners of family oriented cars? In order to answer the secondary question, we study if the use of so called Usage-Based-Insurance (UBI) could facilitate for insurance companies to identify risky behavior. Using UBI, the insurance price is based on the usage of the car, that is, when and where the car is used, which would enable insurance companies to set prices according to driver behavior, rather than by using proxies of risk which are presently used. The report also discusses how a systematic transfer of information on earlier involvement in accidents and traffic offenses to a larger extent would enable for insurance companies to base insurance prices on the individuals traffic behavior. A pricing mechanism that aims at rewarding a safe traffic behavior could in the long run contribute to a decrease in the number of accidents.

Inom samhällsekonomiska analyser utgör kostnad-nyttoanalys (CBA) ofta en viktig funktion och detta gäller särskilt vid dagens transportpolitiska beslutsfattande. Samtidigt är det en metod som är i centrum för en del diskussioner. Följande uppsats avser att analysera dessa diskussioner ur ett ekonomisk metodologiskt perspektiv. Tre arenor kommer att beaktas: filosofers kritik, den inomdisciplinära debatten bland nationalekonomer samt den svenska samhällsdebatten. I huvudsak nås slutsatsen att det är blandad kvalité i såväl kritik mot CBA som dess försvar. Den filosofiska kritiken måste inhämtas även om den inte slår fullt mot CBA som samhällsekonomisk metod. CBA-anhängare är medvetna om delar av problematiken och jobbar med det, främst kring värderingsstudier. Dock kan detta prioriteras ännu mer framöver. I den svenska samhällsdebatten förs det fram kritik som inte når fram. Allt detta sammantaget tillsammans med avsaknaden av alternativ innebär att CBA får ses som lämplig i nuläget. Framtida forskning bör särskilt utreda interaktionen mellan CBA och beteendeekonomi samt lyckoforskning. Det är också lämpligt att betrakta CBA utifrån vilken funktion det har inom ett beslutsunderlag. Särskilt intressant är då att vidare studera Vägverkets "samlad effektbedömning".

Investing in developing bicycle trail networks is in many countries seen as strategy to develop the tourism industry, especially as part of regional development efforts. The starting point for this study is the preconditions for development of bicycle tourism by public spending on bicycle trails in Sweden. This study discusses the methods of estimating a bicycle tourism effect within the socio-economic analysis framework. Secondly, the method of estimating the economic contribution of bicycle tourism is exemplified by data gathered in two specific destinations in Sweden, Varberg and Gotland. Finally a stated choice scenario is used to estimate the willingness to pay for changes in key variables of importance for the tourist’s choice of bicycle destination. Questions asked in this study are: how large are the benefits from bicycle tourism and who gains from a developed bicycle trail network? One finding from the study is that inbound bicycle tourism gives rise to mostly regional effects. A bicycle tourism effect on national level only occurs in cases where a tourist chooses a destination within Sweden instead of going abroad thanks to a new or developed bicycle trail. New incoming bicycle tourism is always a net contribution to the national bicycle tourism effect. The findings from the study of bicycle tourism in Varberg and Gotland are that there is a vast difference in the economic contribution of bicycle tourists. The range for the guest night spending is 466 SEK – 1,233 SEK depending on region and type of visitor. The conclusion is that it is important to not only having knowledge about total number of tourists but also about tourist type. Hence, the size of the bicycle tourism effect varies depending on type of bicycle visitor to the destination. Finally, the findings from the stated choice experiment are that longer bicycle trails are preferred above shorter and that there seems to be a willingness to pay of about 0.5 SEK per kilometer to increase the length of the bicycle trail. The conclusion is that it is not only factors attached to the specific bicycle trail, like length and signage, that makes a trail attractive, but also factors like the tourism industry’s size and structure, like quality of lodging and restaurants, that is of importance for a bicycle tourist’s destination choice.

We report a vehicle-fleet experiment with an economic incentive for keeping within speed limits using a speed-alert device. A traffic insurance scheme was simulated with a monthly bonus during two months reduced by a non-linear speeding penalty. Participants were randomly assigned into four treatment and two control groups. A third control group consists of drivers who had the device and were monitored, but did not participate. We find that participating drivers reduced severe speeding during the first month, but in the second, after having received feedback reports with an account of earned payments, only those given a penalty changed behaviour.

The purpose of this report is to cartographically visualize the potential increase in the geographical size of labor markets in those areas that would be affected by investments in tracks for high speed trains in Sweden. The VTI researchers have used forecasts on the number of work related trips by public transport that would result according to three different future scenarios. Two of them include investments in high speed rail but differ in terms of the exact location of where the tracks would be built. The third scenario is used as a reference and pertains to the option of not building any tracks for high speed trains. All forecasts are obtained from the national travel demand forecasting tool SAMPERS. This analysis suggests that the largest impact of high-speed rail is located in an area stretching between the metropolitan area of Gothenburg over the cities of Borås and Jönköping (in forecast region West) and then towards the area around the cities of Linköping and Norrköping (in forecast region Southeast). However, the forecasts indicate relatively small increases in labor market potentials, in general.

This article estimates the Value of Commuting Time (VOCT) among Swedish males in an empirical on-the-job search model. It uses a large sample of employee-establishment linked data obtained from administrative registers. The sample lacks information on mode choice for the journey to work. We therefore estimate a mode choice model on another sample and use this model to link the administrative data to the relevant set of travel times, costs and distances. The VOCT is found to be 1.8 times the net hourly wage rate in the sample. The relatively high estimate results from a high VOCT among cohabiting men.

This paper compares estimates of the value of commuting time, working time and household working time from empirical models of subjective assessments of life satisfaction and job satisfaction, respectively, to the corresponding estimates obtained from an empirical search model of the labour market. The results indicate that all three variables produce rather high estimates of the value of commuting time. The results regarding the value of working time differ more between the different outcome variables and it is only significantly different from zero in the model of life satisfaction. Perhaps less surprisingly, the estimate of the value of household working time is also only significantly different from zero in the model of life satisfaction in contrast to the models of job satisfaction and job durations where it is insignificantly different from zero. This paper compares estimates of the value of commuting time, working time and household working time from empirical models of subjective assessments of life satisfaction and job satisfaction, respectively, to the corresponding estimates obtained from an empirical search model of the labour market. The results indicate that all three variables produce rather high estimates of the value of commuting time. The results regarding the value of working time differ more between the different outcome variables and it is only significantly different from zero in the model of life satisfaction. Perhaps less surprisingly, the estimate of the value of household working time is also only significantly different from zero in the model of life satisfaction in contrast to the models of job satisfaction and job durations where it is insignificantly different from zero.

The capacity of railway tracks is a scarce commodity that is, by nature, more complex than many other commodities. This paper presents results from a series of economic testbed experiments on the performance of different auctioning mechanisms for allocating track capacity between competing users. The auction mechanism will not only decide the price, it also serves to define the commodities (the particular departure–arrival time slots) demanded, and selects which of these are sold. Four combinations of pricing and stopping rules are compared. Realised allocations are very efficient for all four combinations and also generate approximately equal revenue. The research provides input for the process of re-regulating an industry undergoing profound institutional change.

Civil servants in governmental agencies regularly both propose environmental policies for the elected politicians and make own decisions. In making these decisions they may be influenced by legal norms, agency policy and culture, professional norms acquired through education as well as personal political preferences. This study tests how students in late stages of professional training in economics, biology and social sciences handle information in order to make a stylized choice of a national nutrient limit for lake water, or choose a program at a municipal level to lower the nutrient level in a local lake. The purpose is to test whether professional norms acquired during academic education and/or the presence of an international standard influences decision-making. We examine three hypotheses. Firstly, students’ political attitudes affect their choice of major, i.e. biology, economics or social sciences, and thereby indirectly their decisions. We find that the distribution of the political values among disciplines is compatible with the hypothesis, which therefore is not rejected. Secondly, a student’s major influences the kind of information they use and consequently the policy choice they will recommend. In plain words we expected biology students to go for environmentally more ambitious (lower) nutrient limits and economics students to prefer economically efficient (higher) levels. The central result is that while economics majors are more likely than biology or social science majors to choose a cost-efficient nutrient limit, the mean and median values of the nutrient levels chosen by the three groups do not differ from one another in a statistically significant way. Economists thus have a higher standard deviation in their answers than the other majors. The third hypothesis is that the presence of an internationally approved standard level for the nutrient content will significantly influence the choice of national nutrient limit. We find that biology students are influenced to set a lower nutrient limit when presented with the standard than otherwise, thereby rejecting the null hypothesis for this group. For students in economics and social sciences, no significant effect is found. Our results have implications for the feasibility of micromanagement in government agencies as recruiting economists to environmental agencies may not be sufficient to ensure economically efficient decisions. The findings also should sound a warning about the skills learned by economics majors at the two largest universities in Sweden: while some students seem familiar with the concepts of optimality and cost efficiency and able to use them, this applies to far from all of them.

This report deals with a concept applying residual value estimations to applications in optimisation and procurement of road construction and maintenance. The purpose is to develop a framework and concept for tieing together technical and economical considerations in order to contribute to more optimised construction and maintenance of roads in a long-term perspective. This report is limited to investments in the pavement. Initially, the term residual value and its application in this context is investigated. Then, possibilities for prediction of pavement deterioration and performance are presented. These models are also linked to prediction of maintenance needs. Finally, a concept for cost predictions is developed with corresponding residual value applications, for example performance procurement, payment models, as well as more optimised pavement management from a life cycle perspective.

This paper focuses on the effects of commuting time on sickness insurance utilization by applying a generalized propensity score estimator to a large sample of Swedish employees. We analyse the effect of commuting time both on the probability of using sickness insurance at all and on the probability that an individual on sick leave is on so-called partial sick leave rather than being completely absent from work. Insurance utilization is in both cases defined as being ill for more than 14 days. The results indicate, in general, that individuals do not use sickness insurance because of their commuting time. However, commuting time seems to increase the risk of being on sick leave among females with relatively low annual wage earnings. The results indicate, furthermore, a relatively weak and negative relationship between the probability of being on partial sick leave and commuting time in the group of individuals who have utilized sickness insurance. The latter result applies to both men and women.

Transport is an area where the public sector plays an important role for the design and the functioning of the system. In Sweden the overriding goal for transport policy is to ensure the economically efficient and sustainable provision of transport services for people and businesses throughout the country. When making changes to the system there is a need for information on the advantages and disadvantages of different policy options so that the decisions are based on balanced evidence. To meet these ends, the methodology of cost-benefit analysis is applied as a decision support tool, especially regarding decision related to infrastructure investment. The Swedish Transport Administration and the Swedish Transport Agency have the main responsibility for the design and functioning of the transport system in Sweden. The former is responsible for the infrastructure while the latter is more concerned with the management of traffic and the design of rules and regulations. The Swedish Transport Agency also exercises supervision. In 2012 the Swedish Transport Agency commissioned VTI to develop a first version of a calculation handbook to be used in the impact assessments performed by the Agency, together with a plan for education on how to perform this type of assessment. Our proposition is presented in this report. Based on a number of case studies of impact assessment recently performed at the Agency we have assessed what kind of information that needs to be included in their impact assessments. We have also investigated which methods are used internationally, and by the Swedish Transport Administration, to perform this type of analysis. Using this information we present a draft for a calculation handbook based on the experience and material used at the Swedish Transport Administration. We also present an education plan. However, since there is a difference between issues related to investments in infrastructure and management issues, we also suggest a plan for development of the calculation handbook and its use within the Agency.

The purpose is to provide a background for a discussion concerning the methods and values used in cost-benefit analysis in Sweden for air pollutions', from traffic, impact on human health and the research needs in this area. We provide an overview of the current state of the art of models used for and input needed for external cost calculations of the health impacts. The calculations are not straightforward and depend on the collaboration between several research disciplines. In the ExternE projects, which have been used as a reference point in this study, there are still uncertainties concerning which pollutants to take into consideration. Regarding the health impacts, we have recapitulated some of the main conclusions in a review by the American Heart Association (2010). They state that e.g. the following issues need further research: the importance of ultrafine particles, what constituent parts make traffic related air pollution more harmful than PM2.5 in general and the importance of coarse particles.

This project was conducted upon a request from the Swedish Agency for Transport Analysis (Trafikanalys), with a governmental assignment to annually report the rate of internalisation per mode for passenger and freight transports. In its 2013 report, the Agency wishes to show examples of how the marginal costs and the internalising taxes and fees vary within and between European countries. With this background, VTI was given the assignment to analyse ten freight routes in Europe within the Narvik (Norway)–Naples (Italy), and Oslo (Norway)– Rotterdam (the Netherlands) corridors. The corridors were stated in the assignment from the Transport Analysis Agency. During the project, two reference group meetings were held with the following participants: Kenneth Wahlberg (Swedish Transport Administration), Stefan Back (TransportGruppen), Katarina Handel (Swedish Maritime Administration), Gunnar Eriksson (Transport Analysis), Rein Juriado (Vinnova) and Anders Ljungberg (our Transport Analysis contact). Further, Glenn Hakansson (former truck driver) helped out in selecting the routes for the road transports. The authors would like to thank all participants for their helpful comments.

The aim of this project is to analyse when, if and how a transport cost reduction, following an infrastructure investment affecting international freight transports, should be allocated between countries in a cost-benefit analysis (CBA). In order to analyse this question, the project has been split into two stages. This first stage aims at presenting a more general picture of how the user benefits could be allocated according to the scientific literature, how recommendations on this issue are designed in other countries CBA guidelines, and whether this issue is treated in the planning process of transnational infrastructure projects. The available, but scarce, scientific literature indicates that the allocation of user benefits can have substantial effects on the profitability of infrastructure measures. Having studied CBA guidelines and CBAs of transnational infrastructure projects, the conclusion from our study is that to our knowledge, no other country has a well-founded allocation method that could be implemented in Sweden. Finally, the literature does not offer any strong recommendations or straightforward theoretical methods, with the exception of a first suggestion by Fosgerau and Buus Kristensen (2005).

External effects or externalities “consist of the costs and benefits felt beyond or ‘external to’ those causing the effect” (Anderson, 2006). In the case of transportation, the negative externalities (costs) can take the form of air pollution, noise and accidents. Since external effects do not have a market price, external effects are a form of market failure.Wear and tear of the infrastructure isexternal to individual drivers andoperators,and thus also includedin the analysis.

External costs can be internalised in various ways e.g. through regulatory measures, technological development or taxes and charges. Some forms of taxation are more effective than others in internalising costs. For example, fuel tax is effective in reducing CO2emissions as it will tend to promote technological change to reduce emissions per kilometre travelled as well as reducing the kilometres driven. A fixed, undifferentiated annual tax on owning a vehicle will, on the other hand, be ineffective in relation to reducing CO2emissions. While it will have some impact on reducing vehicle ownership (and thus indirectly vehicle use), it will not affect kilometres driven by individual vehicles. In this paper the focus is on the “rate of internalisation”. This term is used to describe to what extent the marginal external costs, based on existing regulations and technology (e.g. the European Emission Trading Scheme and emissions classes for road vehicles), are compensated for through charges or taxes. Internalisation at a certain time is thus expressed as the ratio between average charges and taxes on the one hand, and marginal external costs on the other. In this case, a full rate of internalisation would imply that the transport companies are fully charged for the marginal negative effects caused by their transport. If the ratio is below 1, the taxes and charges levied are lower than the existing marginal external costs to society, i.e. there is an under-internalisation.

The aim of this project is to study the rate of internalisation of external effects through taxes and charges in two European freight corridors during 2012; for road, rail, and sea transport, respectively.The study is based on two presumed freight corridors, between Norway (Narvik) and Italy(Naples), and between Norway (Oslo) and the Netherlands (Rotterdam).

The analysis is further differentiated on a national level, where each country constitutes one segment of the transport.

In 2012 the Swedish Civil Contingencies Agency (MSB) was commissioned by the government to develop and establish a procedure and methodology for national risk assessment in Sweden. In 2013 MSB continued this work and also initiated work to develop a more coherent and reliable process for producing national risk and capability assessments. An assignment was therefore given to VTI where the questions was how economics can be implemented in practice in this more comprehensive work. To provide a basis for discussion, the current system for national risk- and capability assessments undertaken by the public sector is described in the beginning of the report. Next, based on findings in the scientific literature, the report contains a discussion of how economics can be of use in risk assessment and management. Since cost-benefit analysis is the analytical tool used, this overview also contains a short summary on how to perform this type of analysis. Based on this background information a method is proposed on how to analyze a decision problem in this kind of risk context. The method comprises the following logical steps: - Scenario analysis to develop an analytical model of the risk context focusing on a description of the capabilities needed to reduce the probability of and the consequences of a certain hazard. - Capability assessment to quantify the current level of the relevant capabilities. - GAP-analysis to identify if there is a lack of important capabilities and if so, what measures that can address these insufficiencies. - Cost-benefit analysis to evaluate different policy measures to improve the capability. - Stress test and evaluation to test the functioning of the risk management system and the effect of the policy changes made. The analytical model developed in the first step can be used for this purpose.

This paper measures the external health cost due to emissions from different sources in the Stockholm area using the Impact pathway approach. The estimated health impact is the result of detailed dispersion modelling with high spatial resolution. We make separate calculations for the impact that occur within the Stockholm area, the surrounding region and the rest of Europe. The pollutants considered are combustion and secondary particulate matter (PM) from the burning of fuels and also road wear (non-exhaust PM) that makes a large contribution to measured concentrations of PM locally in Stockholm. We also investigate the influence of assumptions made regarding the exposure-response functions used in these calculations since PM of different origin are expected to have different health impacts. According to the results road traffic makes important contributions to the external health cost both on a local and a regional scale compared to other sources. This is in part due to emissions being released in close proximity to where people live but also because of the amount of pollutants emitted. Although non-exhaust PM makes a large contribution to local population exposure within Stockholm the external health cost is relatively small which is due to other health impact being relevant for this emission source. Residential heating also makes an important contribution to exposure and external health cost on a local scale while power plants have a large influence regionally.

Disaster risk management is an example of a public good where political decisions determine the content and extent of the services provided. For the policy maker the question is how much to spend on these services since resources are limited. The question addressed in this report is how economic analysis, including cost-benefit analysis, can be used in order to achieve an efficient level of these services The report is commissioned by the Swedish Civil Contingencies Agency. It is a contribution to their work with development of a methodology for National Risk Assessments and Disaster Risk Management. The former is prepared in response to an EU directive. According to the EU commission: Risk assessment and mapping are carried out within the broader context of disaster risk management. Risk assessment and mapping are the central components of a more general process which furthermore identifies the capacities and resources available to reduce the identified levels of risk, or the possible effects of a disaster (capacity analysis), and considers the planning of appropriate risk mitigation measures (capability planning), the monitoring and review of hazards, risks, and vulnerabilities, as well as consultation and communication of findings and results.” This report starts with a description of the current work with disaster risk management in Sweden and changes in the organization that has taken place in recent years. It also describes the evolution and use of economic analysis, including cost-benefit analysis, in policy making in different contexts. Based on these overviews it is concluded that economic analysis is rarely used in practical policy making regarding public goods in Sweden, and it has not previously been used in decisions concerning disaster risk management. Therefore, based on a literature review, we present a basic economic model that can be used in this context to define what a policy measure is and the aspects that needs to be considered in an economic evaluation of such measures. Furthermore we provide an example of how a method developed for economic analysis proposed by OECD, Regulatory Impact Assessment, can be applied to this kind of decision making. In the example we use information collected in a risk assessment made regarding the impact of climate change for one of the largest rivers in Sweden, Göta Älv. It is concluded that economic analysis can provide important information to this type of decision making, not the least through providing structure to the collection of information. However, further work is needed before this type of analysis can be used in practical policy making and the report ends with suggestions for further development work.

Emissions from traffic impose negative effects on human health, and recent evidence indicates that particulate matters (PM) are the detrimental air pollutant that causes most life years lost. To improve the efficiency of resource allocation, various mitigation measures have been proposed for reducing these emissions. However, whether or not the policy instruments are welfare improving, and if yes, how much more efficient they can be remain to be studied. To answer the questions, we need to both assess the economic cost of emission control and the health benefit due to the reduced PM emission by all proposed control instruments. This paper focuses on the cost efficiency for reaching pre-determined emission targets. We are concerned with reducing the concentrations of PM in Stockholm by local policy measures. Contrary to other cost-efficiency studies we have in this study included adaptations in behaviour in addition to the conventional technical measures alone. Since there are different emissions of PM, targeting PM10 may not be a good indicator of the health benefits. We therefore compare the performance of targeting PM and of targeting years of life lost (YOLL) and found interesting differences. We find that if the ultimate objective is to save lives or say life-years, it should be more appropriate to target YOLL, provided that YOLL can be properly predicted. Moreover, since the collected data on the effectiveness and cost of the policy instruments involve large uncertainty, we have employed a stochastic control model to explore the implications of the degree of uncertainty. We find that the higher fulfilment probability, the larger the marginal cost as expected. Also, for a given fulfilment probability, the more uncertain we are about the true effectiveness parameters, the larger the marginal costs.

Although the value of reducing mortality risks and that of reducing life year losses are closely related to each other, the valuation literature seems to treat them rather separately resulting in conflicting value estimates. While the former is more concerned with saved statistical lives from accidents, the latter is more directed to the lost life years due to air pollution etc. In this paper, we attempt to conduct an integrated valuation study for both types of values in the same choice experimental design. We formulate an econometric model which simultaneously takes into account both mortality risk reduction and life year loss. The results indicates that conditional on given remaining life years upon survival, the marginal willingness to pay is constant for each statistical life saved, which indicates strong scope effect. The marginal value per extra life year, however, is a diminishing function of the number of life years. We have also examined the effect of other covariates such as the respondents’ characteristics (e.g. gender and age), their self-confidence in making choices, and possible categorical behavior on the final value estimates.

Many countries have begun to require benefit-cost analysis as a way of informing key regulatory decisions. However, its actual use seem to be limited, especially in the area of environmental, health, and safety regulation. Reasons for this seem to be lack of knowledge and experience among decision makers and that established quality objectives prevent the use of this type of analysis and deliberation. We present the results from an experiment designed to investigate choice behavior in a public sector context. Students with different academic majors were asked to act as decision makers. There were two choice situations: one in a municipality deciding on an action plan and one in a government agency having to propose a national limit value. In both settings, the outcome that would pass a benefit-cost test would not achieve a natural state of the environment, hence a social dilemma choice situation. We find that a majority of the respondents prefer outcomes that can be considered environmental “optimum” but that there is a difference depending on academic major. The choice context also influences the response behavior and so does the information about an international standard. The latter increases the likelihood to accept alternatives that imply higher costs.

In 1988, Sweden made a vertical cut in its nationalised railway monopoly; since then, infrastructure is handled by a public-sector agency while trains were initially run by a government-owned monopolist. This paper seeks to describe this reorganisation, the subsequent process towards free entry and competition in parts of the sector and the consequences of these changes. It is argued that the policies have not focussed on (ticket) prices and competition issues and have rather been directed towards the sector’s inability to recover costs, which seems to be a Europe-wide phenomenon. Some recommendations for further changes of the industry are suggested.

The use of market mechanisms for timetabling of trains is discussed in three different time perspectives in the report. Motives for charging for booking and de-registering trains in the upcoming time table is discussed, too. The point of departure is that a substantial number of trains in a timetable are never operated.

Three different time perspectives on the basic timetabling problem are discussed. The short term approach would be to use a bidding mechanism for solving remaining conflicts. It is suggested that a one shot, sealed bid second price procedure is developed. This means that bids from the two or more bidders for each conflict are submitted once and for all and that the highest bidder pays a price which equals the second highest bid. There are strong reasons to believe that this would work to guarantee a truth-revealing process resulting in an efficient allocation.

It is further recommended that posted prices for use of bottlenecks is developed in the medium term. In the long run, it is necessary to develop an optimization algorithm which is capable to solve the computationally challenging problem of establish a value maximizing solution to the allocation of competing demands for track access. As a complement, a mechanism for efficient bidding needs to be developed in order to provide incentives for operators to participate in the process with truth revealing bids.

The point of departure for the second document is that a substantial number of (freight) trains in a timetable are never operated. The reason may be that the service provider’s ex ante estimates of demand may turn out to be wrong, i.e. that actual demand is lower than the initial estimate. There is a simultaneous pressure for new slots which emerges after that a time table has been established. The document makes suggestions for a system of reservation charges and charges for cancelling trains on short notice.

High speed is an important determinant of accidents for speeders as well as for other motorists. This paper develops a framework for analyzing instruments that encourage drivers to internalize the full consequences of their behavior with respect to choice of speed using Pay-As-You-Speed (PAYS) insurance, possibly as an extension of Pay-As-You-Drive (PAYD) insurance. We demonstrate how the combination of a Pigovian taxation scheme and PAYS can be designed in a setting involving two principals (the state and an insurance company) that affect the incentives of commuters to choose between driving and other modes of transport and for those that use the car mode to drive carefully. While the government is assumed to maximize overall social efficiency and therefore wants to implement marginal cost pricing, insurance companies do actuarial pricing, i.e. average cost pricing within risk classes that are homogeneous to the degree that the insurers have information about actual behavior. PAYS insurance improves the insurance industry's possibility to differentiate premiums according to behavior and therefore to target risk classes in a better way than today. Moreover, since our framework is designed to accomplish differentiation by self-selection, compulsory regulation is not necessary, although there may be reason for the government to facilitate the implementation of the new technology.

Konkurrensverket (the Swedish Competition Authority) has commissioned the Swedish National Road and Transport Research Institute (VTI) to provide an overview of the consequences of four regulatory reforms in the transport sector during the past 20 years. In brief, the following core observations are made. The market for domestic flights was opened for entry in 1991. After a few years with prices going both up and down, the last 10 years or so have seen prices increase much faster than the consumer price index. After a peak in 1990, patronage first stalled and has subsequently decreased. Much of this can be explained by a number of external changes, i.e. it does not seem to be directly related to the way in which the market is organised. The taxi market was deregulated in 1990. Prices for private users have subsequently increased at twice the speed of consumer prices; negotiated prices for tendered services providing disabled persons etc. with taxi services has not increased at the same pace. After the reform, the number of vehicles has increased by 22 per cent. As a result, waiting times have been reduced. The market for domestic railway services was opened for entry in late 2011. The degree of entry has since been small, and it is too early to see any consequences for ridership and prices of the reform. The annual, compulsory vehicle control was previously provided by a national monopolist. This market was opened for entry in 2010. While accessibility for consumers has improved slightly since some additional inspection sites have been established, it is too early to see any major consequences in terms of entry. The government is, however, partitioning the incumbent and gradually selling it on commercial terms.

The purpose of this paper is to answer the question of whether train delays are a price-relevant marginal cost. The question has been raised by the Swedish infrastructure manager (Trafikverket) which is responsible for setting track access charges. The charging of track access fees is regulated in the Railway Act and consists mainly of marginal cost pricing and fees for cost recovery above marginal cost.

The main reason for charging track fees according to the marginal cost principle is to give economic incentive in order to influence the market agents to take these externalities into account in their decision-making. When an externality is correctly priced this externality is no longer "external" on behalf of the market agents and, in this way, economic efficiency is achieved through a decentralized decision-making.

In order for a certain cost to be price-relevant, with respect to the marginal cost pricing principle, it is required that there are some externalities involved and also that there is a relationship between cost and traffic volume.

Rail services are conducted according to a detailed timetable where each train is regulated geographically with minute precision. Delays primarily occur through an incident, such as infrastructure failure or breakdown of vehicles, leading one or more trains to deviate from the time table. Subsequently this initial delay is spread in the system through the interaction between trains that is built into the timetable.

In the short run the capacity of the infrastructure is fixed. Train delays can therefore be influenced by the number of faults occurred and by the construction of the timetable (which is crucial for the spread of the initial disturbances to other trains).

Recently a new track fee, called "quality fee", has been introduced which is aimed at influencing the number of faults occurring, both on behalf of train operating companies and the infrastructure manager. The fee is initially set at a rather low level and may be raised in the future if it will be considered necessary.

In Sweden, pricing within the rail sector should mainly depart from the principles of marginal pricing. The pricing mechanism should be designed so that the negative external effects are compensatedthrough taxes and charges. Today, the track charges are to some extent differentiated, but it is possible to further differentiate the track charges to achieve a better use of the capacity of the railway and to reach a higher level of efficiency in the sector. In this report, the results from three VTI studies on marginal costs within the railway sector are analysed. These studies focus on the cost categories maintenance, renewals and operation. The aim of this report is to break down the results from these studies into smaller groups in order to get an idea of how the track charges could be further differentiated. The analysis will focus on the marginal costs of track sections and segments.The results shows that it could be problematic to differentiate the estimates intothe smallest fraction track section, as well as some of the minor segments. Some of the smaller track sections and segments have negative marginal costs, since the modelseem to fit poorly where traffic volumes are low. It is also clear that there is a need for a more concentrated focus on the marginal costs analyses, since the three studies analysed here are based on somewhat differing data. For example, it would be interesting to include station data in all three studies