SPECTRUM NEWSLETTER confirmed case

							    Study of Policies regarding Economic instruments
Complementing Transport Regulation and the Undertaking of
            physical Measures (SPECTRUM)

                        SPECTRUM NEWSLETTER
Welcome to the 4th issue of the SPECTRUM Newsletter September 2005
Dear Reader,                                                     In this issue:
                                                                  About this issue
The SPECTRUM Newsletter is distributed to policy                  SPECTRUM Brief
and transport authorities, transport operators and                Modal specific inter-urban case studies
managers, user groups, academics and others.                      Multi-modal inter-urban case studies
Please forward this free newsletter to others you                 Further information
think might find it interesting and useful.                       Next issue
                                                                  Current Readings in Transport
Please address all comments to the newsletter
                                                                   Economics
editor    Dr    Torben     Holvad     (e-mail
torben.holvad@tsu.ox.ac.uk) or the project co-
coordinator    Dr     Susan     Grant-Muller,
S.M.Grant-Muller@its.leeds.ac.uk




About this issue
This issue includes an overview of the inter-urban research undertaken as part of the SPECTRUM project.
The work comprised two main parts: (1) modal specific literature review and case studies, (2) multi-modal
case study modelling. Detailed urban work has also been undertaken and the key findings will be reported
in the 5th SPECTRUM Newsletter.


SPECTRUM Brief

SPECTRUM is a project funded by the EU as part of Fifth Framework Programme. The main objective of
the SPECTRUM project is to: "develop a theoretically sound framework for defining combinations of
economic instruments, regulatory and physical measures in reaching the broad aims set by transport and
other relevant policies" in terms of efficiency and equity. As there is a tension between managing the
transport system in such a way as to minimise social costs and simultaneously managing the system to meet
increased demand, the work of SPECTRUM will address this problem by looking at the potential effects of
using either individual instruments, complementary packages of instruments, or the consequences of
substituting instruments, in managing the transport system.


Modal specific inter-urban case studies

The modal specific case studies are related to the following transport infrastructures: Madrid Barajas
Airport (Spain), the East Coast Rail Line (United Kingdom), the Port of Antwerp (Belgium) and part of




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Road Corridor IV (going through Germany, Czech Republic, Austria, Hungary). An overview of the case
studies is given below, including instruments considered.


 Mode            Infrastructure             Type           Instruments
                                                           Slot Allocation
                                                           Slot Pricing
 Air             Madrid Barajas Airport     Node
                                                           Noise Charge
                                                           Airport Expansion
                                                           Access Regimes
                                                           Access Charging
                 East Coast Main Line
 Railways                                   Corridor       New Infrastructure
                 (UK)
                                                           Quality Regulation
                                                           Subsidies
                                                           Deepening of the River Scheldt
                                                           Removing Locks
                 Port    of       Antwerp                  Standard Loading Unit
 Sea                                        Node
                 (Belgium)                                 Better Trained Seafarers
                                                           Different Handling Methods
                                                           Introduction of Marginal Cost Pricing
                                                           Fuel Taxation
                 Road    Corridor     IV                   Motorway Tolls
 Roads                                      Corridor
                 (Hungary)                                 Extension of the Infrastructure
                                                           Social Regulations

For the modal specific case studies the following key conclusions can be put forward. In the airport case
study, instruments under scrutiny have demonstrated the close relationship among them, and very
frequently they were found implemented as packages. In addition, economic instruments appeared to be
very relevant, e.g. charges for noise. Indeed, noise charges represent a valid (sometimes optimal) capacity
allocation mechanism and a market based way to internalise problematic externalities at airports.

The rail case study determined that operators should be charged for the capacity they use in accordance
with the social opportunity cost of that capacity. Simulation exercises (PRAISE) established that if
auctioning could be arranged with appropriate subsidies in place, it would give the best outcome in terms of
social welfare.

Analysis of infrastructure expansion was the main objective of the sea case study. Important benefits were
generated for shippers, passengers and shipping companies, though in the case of the instruments removing
locks a large part of the problem shifted towards the handling side, and therefore towards terminal
operators.

For the road case study, similar to other case studies, economic instruments were of much importance in the
analysis. It was found that motorway tolls would have a relatively small welfare effect compared to fuel
taxes.

Further details are available in the SPECTRUM Deliverable D3 “Review of specific interurban measures”
www.its.leeds.ac.uk/projects/spectrum/downloads/D3.zip


Multi-modal inter-urban case studies

The second part of the interurban work involves case studies on a national, regional and European scale
that concern multi-modal aspects for both passenger and freight sectors. In particular, five model-based
studies have been considered distinguishing between “passenger case studies” (the London-Paris-Brussels



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corridors and Norway as whole) and “freight sector case studies” (BENELUX and Great Britain). In
addition, the passenger and freight model SCENES has been used to examine the interfaces between modes
of interurban transport systems on a European scale. A series of interurban transport instrument packages
have been considered, including combinations of economic, regulatory and physical measures, which may
potentially improve the efficiency of interurban passenger and freight transport and equity issues.
Instruments considered in these modelling case studies are outlined below

                       Economic instruments               Regulatory               Physical instruments
                                                          instruments
 Passenger    Case     Fuel taxes                                                  Rail investment
 Study 1 (London-      Out-of-pocket costs (car)                                   Road investment
 Paris-Brussels        Out-of-pocket costs (rail)
 Corridors)            Social marginal cost pricing
 Passenger    Case     Fuel taxes                         Speed limits             Increased          public
 Study 2 (Norway)      Price regulation for service                                transport frequency
                       provision (rail fares)
 Freight   Case        Fuel taxes                                                  Rail investment
 Study        1                                                                    Road investment
 (BENELUX)                                                                         Sea port investment
 Freight   Case        Fuel taxes                         Social regulations of    Rail investment
 Study 2 (Great        Road pricing at marginal           working conditions
 Britain)              social cost
                       Financial incentives to rail
                       operators
                       Rail infrastructure access
                       rights
 European      Case    Fuel taxes                                                  TEN        infrastructure
 Study                 Social marginal cost pricing                                expansion (all modes)

The results from the multimodal case studies indicate that instruments linked to internalisation of
externalities have significant effects on welfare. Specifically, this is confirmed in the context of the
European Case Study, where the scenario involving introduction of SMCP pricing had the highest positive
welfare changes.

This highlights at least two important issues: (1) the EC initiatives concerning fair and efficient pricing are
likely to be welfare enhancing even implemented on their own, (2) the planned investment programme with
respect to the Trans-European Network (TEN) should be implemented as part of a package with fair and
efficient pricing. This could be linked to the issues concerning revenue recycling, i.e. how to use the SMCP
revenue.

Further information is available in SPECTRUM Deliverable D7 “Analysis and assessment of the practical
impacts of combinations of instruments in an inter-urban context”
 www.its.leeds.ac.uk/projects/spectrum/downloads/D7.zip


Further information

Please address any further enquiries on the scope of the SPECTRUM project to the project co-coordinator,
Dr Susan Grant-Muller, S.M.Grant-Muller@its.leeds.ac.uk

SPECTRUM information is also available from http://www.its.leeds.ac.uk/projects/spectrum/




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Next issue

The next issue of the SPECTRUM Newsletter will be available by November 2005. It is envisaged that it
will contain articles on the findings from the urban case studies.

Current Readings in Transport Economics

Of interest to readers of the SPECTRUM Newsletter is the quarterly free email alert, CRTE, Current
Readings in Transport Economics, published by Elsevier. As well as numerous articles selected from over a
dozen journals, CRTE now brings news of relevant conferences and new and forthcoming books. The most
recent issue (2005, vol. 3, no. 3) included mainly items on congestion charging: especially the special issue
of Transportation Research Part A, Vol.39/7-9 (2005), “Theory and practice of congestion charging”.
CRTE can be accessed from:
http://www1.elsevier.com/homepage/sal/socsci/transport/vej_index.html




This Newsletter is produced by the SPECTRUM                Further information can be found on
Consortium. The SPECTRUM project is an                     www.cordis.lu. Further information on
Accompanying Measure funded by the European                SPECTRUM is available from the Project Co-
Commission under its Research, Technological               ordinator Dr. Susan Grant-Muller (Institute of
Development and Demonstration Framework                    Transport Studies, University of Leeds, e-mail:
Programme for Transport.                                   S.M.Grant-Muller@its.leeds.ac.uk




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