A study examined pricing and investment decisions in transport infrastructure planning. It found a charging scheme (e.g. tolls) can favour the creation of a particular transport infrastructure network, which may not necessarily be beneficial for users and society. Postponing the expansion of a network could be more socially beneficial if the required demand does not exist.

Pricing and investment in transport infrastructures are not independent and must be taken together. Although different infrastructure charging schemes may be applied in
practice, the best price for the use of a particular transport infrastructure should include the option of switching to other transport modes. In Europe, decisions regarding access pricing for transport infrastructure are often made by independent agencies. These agencies analyse specific characteristics of one type of transport infrastructure and decide on access pricing but do not always consider crosseffects between different transport modes. As a consequence, charging may be set in the short-term to cover full costs (i.e. operating and construction costs). Prices affect demand and, as a consequence, the social benefits derived from the investment project. Before evaluating transport infrastructure, the associated charging scheme needs to be known, such as analysing the social benefits of a toll-free bridge. If there is no charge for the bridge and there are only fixed costs, the bridge should be constructed if user benefits are higher than the construction costs. If there is a charge for the use of a bridge, this may reduce social benefits and lead to a situation where the optimal decision is not to build the bridge.

Click here to read the full study.

Source: TRIMS, European Commission