Working Papers, Swedish National Road & Transport Research Institute (VTI)
Marginal Cost Pricing of Noise in Railway Infrastructure
() and Mikael Ögren
Abstract: In order to mitigate negative effects from traffic it has
been decided that infrastructure charges in the European Union (EU) should
be based on short run marginal costs. The Swedish Parliament has legislated
that operators in the Swedish railway infrastructure must pay charges based
on short run marginal social costs in order to mitigate externalities in
railway infrastructure. Internalization of the social cost of noise is of
particular interest, since it is the only environmental problem perceived
as more troublesome today than in the early 1990s.
Inclusion of a
noise component in rail infrastructure charges raises two issues: (i) the
monetary evaluation of noise abatement, since noise is a non-market good,
and (ii) the estimation of the effect on the noise level that one extra
train will create. Regarding the latter, we are interested in the marginal
noise, since infrastructure charges based on the short-run marginal cost
principle should be based on the effect from the marginal train, not the
noise level itself.
Using already existing knowledge, this study
shows that it is possible to implement a noise component in the rail
infrastructure charges. The values that are used today to estimate the
social cost of noise exposure in cost benefit analysis can also be used to
calculate the marginal cost. We recommend, however, that further research
be carried out in order to get more robust estimates based on railway
traffic. We also show that the existing noise estimation models can easily
be modified to estimate the marginal noise. Noise infrastructure charges
give the operators incentives to reduce their noise emissions. We believe
that this kind of charge can be used to reduce overall emission levels to
an optimal social level, but that it is important for the charge to be
based on monetary estimates for rail-traffic and not road-traffic.
Keywords: Externalities; Marginal Cost; Noise; Railway; (follow links to similar papers)
JEL-Codes: D62; Q51; R41; (follow links to similar papers)
23 pages, July 1, 2008
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- This paper is published as:
Andersson, Henrik and Mikael Ögren, (2009), 'Marginal Cost Pricing of Noise in Railway Infrastructure' in Scott, Nicholas P. (ed.) Railway Transportation: Policies, Technology and Perspectives, chapter 4, pages 141-162, Nova Science Publishers.
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