How the Transport System can Contribute to Better Economic and Environmental Outcomes in the Netherlands

Congestion has become a burden for the Dutch economy. Commuters and businesses are suffering from the time lost in traffic and the unreliability of travel time. Expanding infrastructure can potentially solve such problems, albeit only in the long term and at a high cost. Thus short to medium-term solutions will have to be oriented at improvements in the use of existing infrastructure, more efficient public transport and better demand management. In this light the Dutch government proposed an innovative country-wide road pricing scheme. This scheme aims to make users pay for road usage and could bring about significant benefits in terms of lower congestion and less pollution. The full benefits of road pricing can be reaped by adjusting the prices to encourage more efficient economic and environmental outcomes. If the implementation of a fully-fledged road price system is delayed or aborted, the government should rely on alternative measures such as fuel taxation and congestion charges to obtain similar outcomes. Reforms to the transport system, including public transport, together with a more flexible housing market should reduce the economic and environmental burden of transport, thereby improving prospects for sustainable long-term growth. This Working Paper relates to the 2010 OECD Economic Survey of the Netherlands (www.oecd.org/eco/surveys/ netherlands).