Financing of infrastructure by users: The Norwegian experience

1
Financing of infrastructure by users The
Norwegian experience

• Harald Minken
• TØI
• Workshop on New Public Management in Transport,
  Oslo 4-5 September 2006

2
Widespread use of user charges

• Ports
• Airports
• Rail and local public transport
• Toll roads

3
Toll roads and toll rings

• At present, 35 per cent of funds for road
  building come from tolls
• 44 projects in operation
• 6 of them are toll rings Bergen, Oslo,
  Stavanger, Kristiansand, Tønsberg and Namsos
  (Trondheim stopped)
• Average collection cost 12 per cent of toll
  revenue (2003)

4
Trends

• The share of funds from tolls is rising (4-5 per
  cent 20 years ago)
• The share of tolls in each project is rising (1/3
  to 2/3)
• Technical From manual collection to electronics
  to unified national system
• Formerly predominantly in districts (crossing
  fjords, bridges and tunnels), now bulk of revenue
  from urban rings
• More complex objectives, time differentiation,
  use of funds for public transport
• Towards centrally initiated schemes?
• Public-private partnerships

5
Organisation of the toll road projects

• Two laws (Road act and Road traffic act, road
  pricing from 2002)
• Limits on the tolling period
• Local initiative, approval by Parliament
• The roles of the Road Administration, the tolling
  company, the bank and underwriters
• Price structure, discounts

6
Public debate on tolling

• One of the most hotly debated themes in Norwegian
  politics
• Fear that government no longer takes full
  responsibility for roads
• Paying twice or waiting in line?
• Toll projects as a tool to elicit state grants
• The move to the county border
• The utility principle
• Toll rings A shaky alliance between proponents
  of road building and proponents of public
  transport and demand management (Oslo packages 1,
  2, 3)
• Its never going to go down its just a new tax
  it doesnt make me reduce car use

7
Three rational arguments for tolling (uncongested
case)

• Earlier implementation of good projects (in the
  sense of economic efficiency)
• Is it true?
• Taxpayers money might in some cases be costlier
  than tolling
• Is it true?
• The group of losers and the group of winners are
  the same
• Is it true? Does it improve equity? Does it
  improve efficiency?

8
Economic efficiency arguments for urban toll
rings

• A crude form of marginal cost pricing
• Might be improved upon
• The break-down of the toll ring principle (for
  instance, tolling each new road) means a loss of
  efficiency in urban transport and a loss of
  coordination and control of the whole system
• In principle, it should provide finance for
  approximately the right amount of new
  infrastructure
• But to decide on projects and then find ways of
  financing them might get the level of charges
  wrong

9
Lessons to learn from Norway

• The tolling technology
• The toll ring concept
• Innovative contracts with public transport
  companies

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Need for research

• With respect to efficiency
• interactions with the labour market
• urban externality costs and values of time
• efficient packaging of urban packages
• With respect to coordination and control
• coordination of national and local initiatives
• expert/politician interaction
• the right planning level