It will also be necessary to apply instruments and forms of action from the sphere of economic policy that are complementary to them, such as: regulatory instruments, for example in relation to the development of transport infrastructure, the promotion of new technologies and innovation, and the support of research and scientific work in this field.
Striving gradually through the solutions defined in the package to introduce an established formula for the internalization of external costs, the EC does not intend to abandon the tools already used in this area. It only wants to supplement them with effective economic instruments, which include: 1) taxes, 2) road charges (tolls), and 3) emissions trading (emission permits). However, they cannot be applied arbitrarily for the purposes of cost internalization. Each of the components of external costs has specific characteristics that make it necessary to use the appropriate economic instrument for its proper inclusion in the price base and to maintain the appropriate (desired) relationships between it and the level of charges. Thus, some external costs related to the use of transport infrastructure vary depending on time and place, the type of network, the type of vehicle, and the fuel used. These include, for example, costs that are a function of congestion, air pollution, noise, and accidents. Therefore, adopting the same criteria regarding the design of charges – their differentiation – is the best method for the proper internalization of costs and the most appropriate way to reduce them. In the case of other external costs, such as those associated, for example, with climate change and resulting from greenhouse gas emissions, and in particular CO2, there is no need to use differentiated charges. In such a situation, from the point of view of the nature of this category of costs, more appropriate economic instruments that directly relate to the source of these costs (fuel consumption) will be, for example, fuel taxes and/or the CO2 emissions trading mechanism.
Adopting this set of tools for the purposes of internalizing external costs and a general method for setting prices for transport services, based on the social marginal cost base, also requires, in addition to choosing the right cost formula, i.e., short- or long-term marginal costs, a precise selection of cost components included in the scope of external costs. In the latter case, it was generally decided to include the following types of costs arising from: climate change caused mainly by CO2 emissions, local pollution, noise, congestion, and accidents. In practice, however, in order to implement the principle of building correct prices based on social costs, it was actually limited to costs resulting from air pollution, excessive noise, CO2 emissions, and congestion.
With regard to the choice of the cost formula for pricing itself, i.e., social marginal costs, it is proposed to adopt the following principle, according to which:
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short-run marginal costs (SRMSC) form the basis for setting charges for the use of infrastructure in all those areas of transport where it is relatively difficult to quickly adjust transport capacity (potential supply of services) to demand, and thus, for example, in the rail, inland waterway, and also partially road transport sectors (scarcity costs)
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long-run marginal costs (LRMSC), on the other hand, are used wherever the possibilities of adjusting potential demand to effective and potential supply are relatively easier and can occur in a relatively short period with significant infrastructure network capacity, and thus, for example, in port terminals, airports, or sometimes in road transport.
Prices defined in this way in individual transport segments should:
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provide producers and consumers of services with correct signals regarding the choice of transport mode, transport route, and the deadline (time) for contract execution
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indicate to them the directions of rational medium- and long-term actions and behaviors within the market mechanism with modified price parameters.
For this mechanism, based on new price relationships, to work effectively and efficiently, they must be calculated with the inclusion of the external cost component in such a way as to:
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avoid the error of double-counting certain external costs in the price base based on direct costs, as due to the lack of proper cost accounting, this could lead to overcharging and thus negatively affect mobility, the efficiency of transport mode choices, and the layout of the internal market
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not generate excessive burdens within the transport system
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not limit mobility and thus not reduce the competitiveness of the economy
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not lead, while reducing external costs to the necessary minimum, to excessive resource consumption on the scale of both the transport sector and the entire economy.
The article comes from the magazine “Logistyka” 2/2009.