[sustran] Transportation costs

[Kerry Wood]

Greetings


New Zealand is in the process of thrashing through new transport policies
and there is a real hope that we shall see major improvements. The Ministry
of Transport has done a lot of work on costs and it is clear that road
users are nowhere near covering their costs, particularly environmental
costs, and particularly in congested urban conditions.

Identified costs are (All US$, for a population of 3.6 million):

Capital spent on roads is effectively written off on the day it is spent;
there is no capital charge for infrastructure. If such a charge were
introduced it would amount to some $M 630 to $M 1500 per year, with a
mid-range estimate of $M 1060. If land values are ignored (on the same
basis as for rail, which has been privatised and pays $ 1.00 per year for
the easements) the new funding needed is about $M 920 per year.

Environmental damage caused by road use are very difficult to cost but the
MoT has come up with these figures:
                        Lowest          Best            Highest
                        Estimate        Estimate        Estimate
                        $M/yr           $M/yr           $M/yr

Noise                   150             190             1700
Local air quality       (no estimate)   450             (no estimate)
Greenhouse gases        15              190             370
Water quality           20              65              110

Environmental problems not quantified in the study include severance
(difficulty, danger and unpleasantness in crossing the road) and disposal
of vehicles, oil, tyres etc. The report describes the figures as very
preliminary and cautions against simple totalling of figures, which may
lead to double counting.

However, they are the best there is. Totalling the best estimates gives an
environmental polution cost of about $M 880 or say around $M 800 with an
allowance for some double counting. In practice some of this cost would be
transferred to road users by regulation rather than direct charges, for
example by requiring catalytic converters (no, not yet).

The cost of crashes is estimated at about $M 350/yr for accident
prevention, and $M 2200/yr for social costs, but what proportion of social
costs are external to road users is not known. A recent OECD report quoted
by MoT assumes 30 %, or
$M 650/yr in New Zealand.

It is now possible to compare today's budget with a possible future budget,
taking the MoT's 'best estimate' figures, but bearing in mind that some of
the figures are alarmingly crude:


TODAY'S BUDGET

INCOME from road users                                          $M

Petrol taxation, road user charges and registration             770
Property taxes                                                  170

Total                                                           940

EXPENDITURE on roading etc                                      $M

State highways                                                  200
Local roads  - funding from central government                  150
Local roads - funding from peoperty taxes                       170
Administration                                                  15
Transfer to central government funds                            405

TOTAL                                                           940



TOMORROW'S POSSIBLE BUDGET

(Not a Ministry of Transport Estimate: taken from an article in EnergyWatch)

INCOME                                                          $M

Petrol taxation, road user charges and registration             770
Additional taxation to cover:
-   Local authority roading costs                               170
-   Return on capital (excluding land)                          920
-   Social costs (deaths, injuries etc)                         650
-   Environmental costs                                         800
Less present transfer to consolidated fund                      -405

Total                                                           2900

EXPENDITURE                                                     $M

State highways                                                  200
Local roads  - funding from central government                  320
Transfers to consolidated fund for:
Return on capital (excluding land)                              920
Social costs (deaths, injuries etc)                             650
Environmental costs                                             800

Total         (there is some rounding going on here)            2900


If these figures are anywhere near correct, road charges will have to
increase more than threefold before they reflect costs.

Information missing from all this includes:

-       Rail environmental costs
-       Costs imposed on others: For example, cyclists have very high
safety costs imposed on them by car users
-       A cost breakdown between cars and trucks
-       Severance costs
-       Land use costs??



Kerry Wood
Transport Consultant
Phone/fax + 64 4 801 5549  e-mail kwood at central.co.nz
1 McFarlane St  Wellington 6001  New Zealand