1. DECOUPLING PROJECT MINISTERIO DE FOMENTO CENTRO DE ESTUDIOS Y EXPERIMENTACIÓN DE OBRAS PÚBLICAS DIRECCIÓN GENERAL DE PLANIFICACIÓN Y COORDINACIÓN TERRITORIAL SECRETARÍA DE ESTADO DE INFRAESTRUCTURAS Y PLANIFICACIÓN Encuentro: “Economía y transporte” Madrid, 7 de octubre de 2004 Nadia Caïd OECD Environment Directorate

2. DECOUPLING PROJECT Nadia Caïd OECD Environment Directorate OECD PROJECT ON DECOUPLING TRANSPORT IMPACTS AND ECONOMIC GROWTH ANALYSIS OF THE LINKS BETWEEN TRANSPORT AND ECONOMIC GROWTH Economy and Transport Meeting Madrid - 7 October 2004

3. DECOUPLING PROJECT OUTLINE OF THE PRESENTATION I.Objectives of the project II.Market failures III.Transport elasticities IV.Trends in the EU, US and Japan V.National accounts and transport demand VI.Transport infrastructure and economic growth VII.Major findings IIX.Further work

4. DECOUPLING PROJECT  The 1997 UNECE Ministerial Declaration  The OECD Environmental Ministerial meeting in May 2001: the Environmental Strategy  The Communiqué of the Heads of State of the European Union in Gothenburg in June 2001 WHY DECOUPLING INTERNATIONAL INITIATIVES

5. DECOUPLING PROJECT  VOC, NOx and CO emissions are decreasing  CO 2 and other GHG emissions will increase by some 30% by 2010  Noise, land take, congestion and resource use WHY IS DECOUPLING NEEDED Total impacts of transport on human health and the environment continue to increase with total external costs of transport

6. DECOUPLING PROJECT  While GDP in OECD countries has grown by 46% from 1980 to 1995  Number of motor vehicles has increased by 55%  Vehicle kilometres travelled have increased by 59% These results show that transport is strongly correlated to economic growth At the same time, total impacts of transport and externalities on the environment continue to increase TRANSPORT TRENDS

7. DECOUPLING PROJECT I. OBJECTIVES OF THE PROJECT  Understanding the relationship and synergy between transport activity and the economy  Develop policy recommendations for decoupling  Identification of effective instruments that target reducing total impacts from transport and externalities  Evaluation of a package of instruments and efficient approaches for decoupling

8. DECOUPLING PROJECT STAGES OF THE PROJECT Stage one: Review of the main economic, social and other factors responsible for transport growth Stage two: Analysis of decoupling measures and instruments based on country case studies Stage three: Identification of policy options focusing on economic instruments and policy recommendations for decoupling

9. DECOUPLING PROJECT METHODOLOGY OF THE FIRST STAGE  Analysis of: - The relevant literature in the area of transport and economy - Historic transport trends in relation to GDP in the US, the EU and Japan - Statistics and analytical tools such as transportation satellite accounts  Results from the application of these tools

10. DECOUPLING PROJECT II. MARKET FAILURES  External costs of transport are estimated around 8% of the GDP (excluding congestion) in Europe and are projected to increase  Non-internalisation leads to inefficient use of transport services and infrastructures  Transport cause large adverse impacts on environment and human health: accidents, air pollution and climate change, noise, land use, upstream processes and congestion

11. DECOUPLING PROJECT II. MARKET FAILURES (cont’d)  Combining appropriate policy mixes and regulations helps to include external costs into transport prices Market failures can be corrected by proper pricing  Tax or charges could encourage modal shifts and generate revenue for developing more environmentally friendly modes

12. DECOUPLING PROJECT III. TRANSPORT ELASTICITY TO PRICES  Income is the main factor driving vehicle ownership (with an elasticity of 1) Relationship of vehicle ownership to income tended to be non-linear indicating saturation effects  This driving factor is much more important than fuel price, vehicle price, infrastructure or population density

13. DECOUPLING PROJECT III. TRANSPORT ELASTICITY TO PRICES (cont’d)  10% increase in fuel prices leads to a: - 1% decrease of car ownership - 7% decrease of car fuel demand  Performance of different policies have different effects on old vehicles versus new vehicles, the level of vehicle use, etc. More detailed models are needed to examine in details these effects  Transport elasticity tends to increase over time as consumers can take prices into account when making long-term decisions

14. DECOUPLING PROJECT IV. TRENDS IN THE EU, US AND JAPAN Growth in World Trade and GDP

15. DECOUPLING PROJECT IV. TRENDS IN THE EU, US AND JAPAN Modal Split of Passenger and freight transport The EU, the US and Japan in 2002

16. DECOUPLING PROJECT IV. TRENDS IN THE EU, US AND JAPAN (activity in pkm, tkm per gdp)

17. DECOUPLING PROJECT IV. TRENDS IN THE EU, US AND JAPAN

18. DECOUPLING PROJECT EUROPEU.SJAPAN IV. TRENDS IN THE EU, US AND JAPAN Passenger Transport Trends by Modes

19. DECOUPLING PROJECT MAIN DRIVERS OF TRANSPORT DEMAND Passenger Transport  Income levels drive motorisation  Relative prices (boost or constrain demand)  Speed (due to vehicle technology and infrastructure)  Separation of home and workplace  More leisure time spent on travel and tourism  Family structure (single households)

20. DECOUPLING PROJECT EUROPEU.SJAPAN IV. TRENDS IN THE EU, US AND JAPAN Freight Transport Trends By Modes

21. DECOUPLING PROJECT MAIN DRIVERS OF TRANSPORT DEMAND Freight Transport  Production increases  Increase in the average length of hauls  Globalisation, outsourcing of manufacturing  Market integration (EU, NAFTA, APEC)  Changes of consumer preferences  Efficiency improvements (load factor, vehicle size)  Transport infrastructure investment

22. DECOUPLING PROJECT EUROPEU.SJAPAN IV. TRENDS IN THE EU, US AND JAPAN Trends of GDP and Transport Activity (in terms of tkm,pkm)

23. DECOUPLING PROJECT V. NATIONAL ACCOUNTS AND TRANSPORT DEMAND  Transportation-related goods and services contributed 12% to US GDP in 2000  Value of transportation used by each sector is about 3% of the sector’s output and slightly declined between 1992 and 1996  Agriculture, forestry, fisheries and construction: largest users of transport

24. DECOUPLING PROJECT V. NATIONAL ACCOUNTS AND TRANSPORT DEMAND (cont’d)  Sectors with a larger contribution to GDP have a relatively smaller transport demand (manufactured goods)  Sectors with a lower contribution to GDP have large transport demands (e.g. agriculture) The increase in the share of the service sector could help to decouple transport impacts from economic growth

25. DECOUPLING PROJECT VI. TRANSPORT INFRASTRUCTURE  Public infrastructure investments has smaller effects on productivity growth  The economic effects of transport infrastructure investment depend on the existing level and quality of the network Some issues to be examined are whether additional infrastructure will lead to net economic benefit, taking into account externalities  Certain types of infrastructure have greater economic effects than others (e.g. highways)

26. DECOUPLING PROJECT VI. TRANSPORT INFRASTRUCTURE (cont’d)  New infrastructure of transport will always be needed but capacity expansion cannot continue indefinitely  Transport policies need to focus on : - generators of demand - maintenance and upgrade of the existing infrastructure If transport infrastructure demand is not well managed, the benefits of new investments are small or could even lead to a waste of money

27. DECOUPLING PROJECT VII. MAJOR FINDINGS  The analysis of historic trends shows that road transport is the driving factor of transport demand (for passenger and freight) from 1970 to 2000 in the EU, Japan and the U.S Policy for decoupling has to focus on instruments addressing impacts from road transport  External costs of transport are high and mainly caused by road transport

28. DECOUPLING PROJECT VII. MAJOR FINDINGS (cont’d)  Taxes based on distance driven and the environmental performance of vehicles can encourage important modal shifts  They generate revenue for developing more environmentally friendly modes  Combining taxes and regulations ensures economic performance of transport while reducing harmful emissions

29. DECOUPLING PROJECT VII. MAJOR FINDINGS (cont’d)  Policies for decoupling need to combine a package of instruments including economic instruments and regulations  The internalisation of external costs of transport leads to a decrease of transport activities and to a further reduction of externalities  They also have to take into accounts relationships with policy areas like trade, industry, energy, environment and land use

30. DECOUPLING PROJECT IIX. FURTHER WORK Analysing the impacts on transport demand of :  Economic instruments  Modal shift from road to rail  Improvements in the transport organisation  Dematerialisation trends  Trends of territorialisation of production and consumption

31. DECOUPLING PROJECT 1) Austria: Analysis of decoupling potential of, dematerialisation, changes in spatial structure of production and consumption, optimisation of transport organisation 2) Italy: Behavioural study on personal mobility 3) Japan: National and regional analyses 4) Spain: Optimizing the transport demand from the agricultural sector in the Mediterranean 5) Sweden: A closer look at freight transport growth CASE STUDIES 6) Switzerland: To be specified 7) U.S: Smart Growth