Singapore Economic Review Conference 2009 Singapore, August 7th, 2009 Germany's Autobahn Toll for Heavy Goods Vehicles After Four Years: Experiences and Perspectives Andreas Knorr / André W. Heinemann / Alexander Eisenkopf

1 Outline 1.Introduction 2.The German tolling system 3.How to increase the efficiency of the LKW-Maut? 4.Implications 5.Conclusions

2 1. Introduction  January 1st, 2005: Germany introduced a road charging system for all heavy goods vehicles (HGVs) using the country‘s Autobahn system  Historical moment in Germany´s transport policy  First ever deviation from the traditional tax-based approach of financing road infrastructures  Partial adoption of user-pays principle

3 1. Introduction  Germany is at the very heart of the European Union and borders on nine countries  Many key East-West and North-South transit routes run across Germany  The Autobahn network in Germany stretches over 12,531 kilometres; handles 1/3 of all traffic (total mileage)  The federal government is the owner of all federal roads

4 2. The German tolling system – precursors  1990: First attempt to introduce a user charge for trucks thwarted by EU legislation  1994: German government passed the ”Fernstraßenbaufinanzierungsgesetz“  PPP permitted  2002: Motorway Toll Act

5 2. The German tolling system – technical details  The German tolling system offers three payment options:  GPS and On Board Units (OBU)  Manual payment terminals  Internet

6 2. The German tolling system – technical details Source:Toll Collect (2009)

7 2. The German tolling system – fee structure Emission categoryToll categoryAxlesToll per driven kilometre From 1 January 2009 From 1 January 2011 EEVCategory A Up to 3 axles:14.1 cents14.0 cents 4 axles or more:15.5 cents15.4 cents Euro VCategory A Up to 3 axles:14.1 cents14.0 cents 4 axles or more:15.5 cents15.4 cents Euro IV or Euro III with PAC 2, 3 or 4 Category B Up to 3 axles:16.9 cents16.8 cents 4 axles or more:18.3 cents18.2 cents Euro III or Euro II with PAC 1, 2, 3 or 4 Category C Up to 3 axles:19.0 cents21.0 cents 4 axles or more:20.4 cents22.4 cents Euro IICategory D Up to 3 axles:27.4 cents27.3 cents 4 axles or more:28.8 cents28.7 cents Euro I /Euro 0Category D Up to 3 axles:27.4 cents27.3 cents 4 axles or more:28.8 cents28.7 cents Source: § 1 of the Regulation Amending Motorway Toll Legislation and the Vehicle Licensing Regulation of 20 November 2008, Federal Law Gazette I, p

8 2. The German tolling system – average toll per kilometre Source:Bundesverband Güterkraftverkehr Logistik und Entsorgung (BGL) 2009.

9 3. How to increase the efficiency of the LKW-Maut?  What kind of good is the Autobahn infrastructure?  Public good? Private good? Mixed good?  Characteristics are crucial for optimum fee structure  Key factor: “degree of rivalry“

10 Economic characteristics of goods Exclusion possibleimpossible Rivalry in consumption yes Pure private goods Common-pool goods no Club goods/ Toll goods Pure public goods

11 Production costs  Production costs can be written as  Congestion parameter  For = 0  pure public good  For = 1  pure private good

12 Degree of rivalry  The elasticity of provision costs is defined as  Multiplication of and obtains   

13 Goods and their respective degree of rivalry  N´N´´N  = 0  = 1 0 <  < 1 Pure public good Club (collective) good Pure private good

14 Degree of rivalry – implications  The equilibrium condition is  Typically in specific time periods infrastructure goods are characterized by     From follows(Grossekettler, 1991)  From follows and

15 MCs and welfare loss of tolling in ”jam free“ periods P X PBPB PAPA MC XBXB XAXA MWP Source:Jakubowski/Lorenz (2008, 528)

16 Degree of rivalry – implications  It is obvious that:  From follows The costs must be covered by basic fees  From follows and The costs should be covered by a basic fee (because ) and a variable congestion-related price (because )

17 4. Implications for the German LKW-Maut  Because of  a basic fee must be charged  Because of  a variable congestion-related component must be charged  Users should contribute to the set-up costs through a usage- independent (basic fee). Currently, the German vehicle tax may be interpreted as a basic fee in this sense  For maximum efficiency the toll for a road with variable demand should include a (variable) congestion-related component

18 5. Conclusions  After four years the German Lkw-Maut may overall be considered a success story  The toll has become widely accepted among road haulage companies for creating a more level playing field between German an foreign-based trucking companies  A convincing economic case can be made to include a congestion-related component in the toll  To extend the scope of the toll to include passenger cars as well would create the most comprehensive, universal and technologically advanced electronic road pricing system worldwide.

19 Thank you very much for your attention!