The Land Transport Sector

This paper provides a broad overview of policy goals and instruments and commonly used performance and policy indicators related to land transport. Two policy aspects, infrastructure investment and externalities, are explored in more depth. A review of planning and decision making in individual countries reveal significant variations between countries as regards how cost-benefit analysis affect decision making about infrastructure investment. There is scope for improvements in the use of cost-benefit analysis. Estimates of external costs for fifteen European Union countries are provided, together with estimates on the extent of pricing to internalise external costs. Fuel taxes amounted to around 2% of GDP in 2000, roughly corresponding to estimated external costs related to environmental and health effects. There is a potential to reduce congestion by introducing congestion charges. This can be done in a revenue-neutral manner by transforming existing vehicle taxes and road tolls.