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Sound and independent information
on the environment

Transport and prices

Indicator 14 (and 18): Transport price

 

Current prices encourage the use of the private car rather than public transport. Car transport is much cheaper relative to disposable income and public transport than it was 20 years ago.

Figure 5.2: Real changes in the price of transport, Denmark and Finland

Sources: Statistics Denmark; Department of the Environment, Statistics Finland; Eurostat

Objective
Fair and efficient pricing across modes

Definition
Real change in the price of public transport fares and the private costs of car use in comparison with the growth in real personal disposable income.

The costs of car use include all those that the motorist bears directly (i.e. purchase, maintenance, petrol, oil, tax, and insurance).



Policy and targets

Pricing is a key policy tool for promoting an environment-friendly balance between transport modes and for managing transport demand. Because the environmental effects of transport vary across modes – for example, air and road generally have greater environmental impacts than rail and shipping (EEA, 1995) – prices should be differentiated accordingly.

Community legislation provides for differentiated motor fuel and freight road-use prices. Tax differentials on motor fuels aim at promoting cleaner fuels, and variable annual road charges (through the ‘Eurovignette’ Directive (CEC, 1998b)) are higher for the heaviest and most polluting lorries. Some Member States (Austria, Denmark, Germany and Sweden) have different tax levels for motor vehicles depending on fuel consumption or air pollution performance (ECMT, 1999 draft).

However, price changes are only one factor affecting the growth in road traffic: convenience, comfort and security also have a strong influence on individual decisions on whether and how to travel.



Findings

Data is only available for Denmark, the United Kingdom and Finland. Changes in relative prices for these countries are shown in Figures 5.1 and 5.2.

In both the UK and Denmark, the costs of private car transport have remained stable in real terms whilst bus and rail fares have increased. In the UK, bus and rail fares have risen by less than disposable income, whereas in Denmark, bus fares have risen by more than, and rail fares by about the same as, disposable income. In both countries price incentives have shifted markedly towards car use.

The situation in Finland is rather different to that in the United Kingdom and Denmark, and probably in other EU countries. General tax increases in transport as well as the yearly vehicle tax (planned as an interim measure) were introduced in the early 1990s to cover a state budget deficit resulting from the recession. This affected private transport (but not public fares), thereby increasing its price. This, together with the privatisation of public transport in the largest cities, has increased the competitiveness of public transport prices. However, even here the rise in the price of car use has remained below that of public transport since 1986, so again incentives have shifted towards car use.

Box 5.1: Expenditure for personal mobility

The proportion of household expenditure on transport reflects changes in income and consequent changes in lifestyle, as well as price increases. Household expenditure on transport is dominated by the purchase and operation of private cars, and amounted to about 12 % of total expenditure in 1996 (EU average). Such expenditure increased in the 1980s, but declined again in the 1990s. Household expenditure on public transport was less than 3 % in 1996 and has been more or less constant since the 1980s.

In Belgium there has been little change in the proportion of total household income devoted to transport. In Denmark, Germany and the United Kingdom, the proportion has risen, but in France, Ireland and the Netherlands it has fallen. Greece and Portugal have also seen increases in the share of expenditure on transport because of increased vehicle purchase. Car ownership has the fastest EU growth rate in these two countries.

It is the intention in future to develop this sub-indicator into a TERM indicator. This will however require the breakdown of expenditure according to various income groups. This data is currently lacking.

Figure 5.3: Household expenditure on transport as share of total expenditure

Source: Eurostat

 

Future work

  • Since 1995 Eurostat has collected harmonised monthly consumer price indices (CPIs) for passenger transport, and it is planned that EU-wide CPIs comparable to the UK and Denmark examples will be available from Eurostat in the mid-term.
  • Similar data showing absolute rather than relative price levels would help to present overall EU figures for changes in transport price. There will however, be problems of aggregation, relating to differences in purchasing power and transport demand between Member States.

Data
Real changes in the price of passenger transport (United Kingdom)
Unit: index (base year 1980)

Year

Bus fares

Rail fares

Private car

Disposable income

1980

100.0

100.0

100.0

100.0

1981

98.9

102.2

101.1

99.5

1982

105.0

108.0

98.3

99.2

1983

106.1

109.5

100.4

101.7

1984

103.2

104.8

98.0

105.3

1985

101.5

105.0

96.7

108.9

1986

106.5

108.4

92.1

113.6

1987

108.2

109.5

93.7

117.5

1988

110.3

111.6

93.3

123.7

1989

110.4

113.0

91.4

129.1

1990

106.4

112.2

88.5

133.9

1991

114.6

117.1

89.8

135.9

1992

118.3

121.1

92.4

140.9

1993

121.5

127.6

95.0

145.1

1994

121.7

130.1

95.8

147.0

1995

122.0

131.3

94.4

150.9

1996

123.5

133.0

94.9

154.1

1997

124.1

132.0

96.9

160.0

1998

124.0

133.0

96.7

160.1

Source: Department of the Environment, Transport and the Regions (United Kingdom)

 

Data
Real changes in the price of passenger transport (Denmark)
Unit: index (base year 1980)

Year

Bus fares

Rail fares

Private car

Disposable income

1980

100.0

100

100.0

100.0

1981

114.6

105.7

97.5

97.1

1982

120.3

111

99.7

99.2

1983

136.1

115.3

97.5

101.9

1984

148.1

121.1

95.5

106.8

1985

143.4

126.6

94.3

110.9

1986

145.0

129.5

94.2

115.2

1987

145.1

132.3

96.8

115.0

1988

155.8

134.2

96.7

118.9

1989

152.1

138.3

96.6

117.7

1990

150.5

147.8

94.3

118.5

1991

154.7

155.3

97.4

119.3

1992

159.0

160.2

97.9

121.3

1993

161.9

162.7

98.4

124.1

1994

163.9

165.3

100.3

130.3

1995

163.1

168.6

100.6

136.2

1996

163.2

172.3

100.8

140.6

1997

161.2

176

100.4

-

1998

150.1

182.7

100.4

-

Source: Statistics Denmark (transport prices), Eurostat (disposable income)

 

Data
Real changes in the price of passenger transport (Finland)
Unit: index (base year 1980)

Bus fare

Rail fares

Private car

Disposable income

1980

100

100

100

100

1981

104.7

105.7

106.1

103.9

1982

108.5

111

109.2

108.4

1983

113.5

115.3

114.2

113.8

1984

117.1

121.1

117.6

118.8

1985

123.4

126.6

120.1

124.3

1986

124.1

129.5

115.7

129.2

1987

127.9

132.3

119.5

133.6

1988

132.6

134.2

123.8

138.3

1989

140.7

138.3

128.2

144.8

1990

149.7

147.8

135.5

151.8

1991

154.6

155.3

140.3

157.3

1992

152.8

160.2

142

159

1993

157.5

162.7

150.7

159.6

1994

158.9

165.3

149.8

161.6

1995

162.4

168.6

155.2

166

1996

164.8

172.3

163.4

170.2

1997

168.2

176

164

172.7

1998

173

182.7

164.1

176.7

Source: Statistics Finland

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European Environment Agency (EEA)
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Denmark
Phone: +45 3336 7100