European countries are exploring new ways to fund public transport
By Bjorn Hasselgren, October 30, 2013
The UK, Sweden and Germany each fund their transport infrastructure in different ways.
Innovation must be applied to transport infrastructure systems, such as roads and railroads, if we are to meet future challenges.
the mid 20th century roads and railroads have been managed by
governments in most European countries. Funding has been dominated by
fuel taxes and taxes on vehicles. Railroads have been heavily subsidised
with general tax revenues while road traffic has more or less paid its
costs through the taxes.
In some Eur
opean countries roads have
been organised as private corporations with government concessions, but
in general that has been the exception. But this seems to be changing
Lately transport infrastructure investments and buzz-words
like sustainability and livability have been on the lips of politicians
and corporate leaders. In a time of financial austerity transport
infrastructure is seen as both a way out of the crisis and as a problem –
how to finance and how to adjust to the new technology that is coming online.
introduction of IT-based solutions is making information on capacity
more accessible than before. Vehicles and infrastructure will also
become able to communicate in the future. Suddenly new methods to reduce
congestion, to improve safety and limit environmental impact seem to be
The development and use of more fuel efficient
vehicle technology must also be taken into account. Electric vehicles
and alternative fuels to gas and diesel are gaining market shares. This
in turn introduces a threat to traditional government funding: fuel tax
suddenly erodes. And governments must look either for cost-savings or
alternative sources of revenue.
A new report
for the Swedish Ministry of Finance's expert group on public economics
shows that the UK, Sweden, other Nordic countries and Germany have
chosen different ways to handle the new situation. The UK seems to be
among the most innovative having launched a road reform earlier this
year, which aims to introduce an independent more business-like
organisation for roads.
The Nordic countries, except Sweden, are
experimenting with public-private partnerships
, fee funded projects and
toll-financing. Norway is introducing an extensive toll programme for
local and regional roads, and the government is open for additional
partnerships. Denmark is experimenting with a number of fee-financed
tunnel and bridge projects in separate government corporations and new
financing from oil-industry taxes. Finland has set up an inquiry to look
into the introduction of GPS-based road-charging. Germany has used
public-private partnerships for its large motorways.
decoupled from many of these current trends. Even if congestion charging
has been introduced in Stockholm and Gothenburg, in addition to some
fee-funded motorway sections, government-managed and tax-financed
transport infrastructure is still the dominant model.
concludes that there are many interesting signs of an increasing
innovation rate in transport infrastructure. And there are different
ways of handling the challenges. This industry might once again become a
driver for increased productivity and change, as in earlier periods of
growth and creative destruction.