The Impact of Establishing a Dynamic Fuel Charging System in the Spanish Road Network



The Impact of Establishing a Dynamic Fuel Charging System in the Spanish Road Network

Authors

Pablo Garcia Vilariño, Jacobs, Pr. Daniel J Graham, Research Director Centre for Transport Studies at Imperial College

Description

The establishment of the proposed innovative national congestion-charging scheme based on the imposition of different fuel taxes regarding the territorial characteristics demonstrates to improve the network efficiency and maximizes social welfare.

Abstract

In Spain approximately 48% of the fuel’s price comprises tax, common all along the Spanish territory. This implies that those who travel in less congested areas pay exactly the same that those who do so in highly congested roads, even though the marginal cost related to each user group is different. The goal of this paper is to evaluate the effects and impacts of implementing a national congestion charging scheme based on the imposition of different fuel taxes regarding the different territorial characteristics of the road network in Spain in order to live-manage the traffic levels and internalizing the negative externalities derived from it. Many experts have generally dismissed the use of fuel tax as a way of internalizing the negative externalities derived from transportation arguing that fuel taxes cannot be differentiated geographically or by time bands, Cople. & Dodgson (2004). However there is a lack of investigation on the possibilities of implementing a dynamic fuel tax system based on geographical characteristics in a way to combat the congestion in those areas where it is needed, achieving a more sustainable and efficient overall national system.
A dynamic panel data DPD approach was performed in order to estimate the long-run elasticities in fuel demand using annual time series data to evaluate the impact that prices, income and quality of the service have over the total fuel demand in the Spanish territory, on an attempt to model the relationship between fuel consumption and the changes on its price. Given the size and characteristics of our panel, and the possibility of significant persistence on the data, the estimation was performed following a Generalized Method of Moments, one step GMM, instead of any other panel cointegration technique which makes allowances for endogeneity, omitted variables or measurement errors guaranteeing that consistent unbiased estimators were obtained despite the correlation between the regressor and the error term.
The results have showed that, at least for the Spanish case, implementing a Dynamic Fuel Charging Scheme would be highly beneficial from a network efficiency and system profitability point of view reducing congestion in the more populated areas, promoting mobility in the less developed areas while increasing the overall income for the state coffers, all of this at an affordable operating and capital expenditure.

Publisher

Association for European Transport