Assessment versions

Published (reviewed and quality assured)

• No published assessments

Rationale

Justification for indicator selection

Internalisation of external costs, a European Commission’s objective from the White Paper (European Commission 2001), sets the ground for enabling the full recovery of the external (mostly environmental and social) costs generated by the use of transport. Initially, and depending very much on the mode of transport, this will increase the costs of transport for the user, as the costs of air pollution, climate change and accidents will have to be paid for. In the long term, the effect on transport prices may be less since pricing policies should take into account the magnitude of external effects through adaptation, modal shift and reduced transport demand.

The indicator provides insight how relevant policy objectives are being met, which as:

• Introduction of fair and efficient pricing, according to the users pay principle and principles of sustainable development such as achieving a balanced shift towards environment friendly transport modes to bring about a sustainable transport and mobility system (European Council, 2006)
• Integration of environmental concerns into transport policy (European Council, 1998).

Scientific references

• No rationale references available

Indicator definition

The share of household expenditure on transport includes public transport (transport by train, bus, taxi, ferries and aircraft), operation of private vehicles and purchase of vehicles.
Total expenditure is defined as total private consumption in the National Account (CP00).
Transport (CP07) is defined as a sum of the National Account consumption groups for:

• Purchase of vehicles (CP071).
  Purchases cover purchases by households of new vehicles and purchases by households of second-hand vehicles from other institutional sectors, which are typically garages or car dealers. Sales of second-hand vehicles between households are not covered. Purchases are net of sales by households of second-hand vehicles to other institutional sectors. Member States may take either
  - a net weight for new cars (gross weight minus the trade-in value of used cars), and a net weight for second-hand cars, or
  - a gross weight for new cars (not taking into account the trade-in of used cars), and a weight for second-hand cars including any business sector trademargin.
  Purchases also cover purchases through financial leasing arrangements.
  Purchases of recreational vehicles such as camper vans, caravans, trailers, aeroplanes and boats are covered by (CP092.1).
• Operation of personal transport equipment (incl. use of petrol), (CP072).
  Purchases of spare parts, accessories or lubricants made by households with the intention of undertaking the maintenance, repair or intervention themselves should be shown under (CP072.1) or (CP072.2). If households pay an enterprise to carry out the maintenance, repair or fitting, the total value of the service, including the costs of the materials used, should be shown under (CP072.3).
• Public transport (CP073) is defined in National Account as Purchased transport services.
  Purchases of transport services are generally classified by mode of transport (passenger transport by railway, by road, sea and inland waterway, combined passenger transport and other purchased transport services). When a ticket covers two or more modes of transport, for example, intra-urban bus and underground or inter-urban train and ferry and the expenditure cannot be apportioned between them, then such purchases should be classified as combined passenger transport. The latter excludes holiday packages (can be found as CP096). Costs of meals, snacks, drinks, refreshments or accommodation services have to be included if covered by the fare and not separately priced. If separately priced, these costs have to be classified in Division 11. School transport services are included, but ambulance services are excluded (CP062.3).

The proportion of household expenditure for private transport is defined as the sum of the private transport groups (CP071 + CP072 + CP073) divided by the total private consumption (CP00).
The classification of consumption groups is made according to the COICOP classification: Classification of individual consumption by purpose (Eurostat, 2000 and Eurostat, 2009).

Units

Percentage of household expenditure on transport.
All prices are expressed in current prices.

Policy context and targets

Context description

There is a generally accepted close link between income and expenditure on transport (Bureau of Transportation Statistics, 2000). In general, people tend to spend a relatively stable share of their income on transport. Seeing this link, increasing transport prices is likely to lead to a decrease in transport demand and consequently reduced pressures on the environment. Conversely, decreases in transport prices are likely to lead to increased demand for transport. Transport pricing may thus not only be a tool to reduce the environmental pressure of transport, but also an important tool for transport demand regulation. 

Internalisation of external cost, a Commission objective from the Transport White Paper (European Commission, 2001) aims to ensure users pay for the external cost generated. The Commission recently published a Communication on a strategy for the internalisation of external costs (EC, 2008a). This strategy stresses “the need for a transport pricing system that is more efficient and more accurately reflects the true costs involved”. In order to achieve this, a range of economic instruments are suggested, including taxation, tolls and CO2 emissions trading. The general principle for internalisation of external costs is ‘social marginal cost charging’, whereby transport prices should correspond to the additional short-term cost generated by one extra person using the infrastructure, ensuring fair treatment of both transport users and non-users and would create a direct link between the use if shared resources and payment on the basis of the ‘polluter-pays’ and ‘user’ pays’ principles. This same principle is expected to be used across the various modes of transport, but with varying instruments. Initially, and depending very much on the mode of transport, this will increase the costs of transport for the user, as the costs of air pollution, climate change and accidents will have to be paid for. In the longer term, the effect on transport prices is likely to be less, since pricing policies will reduce the magnitude of external effects through adaptation.

Expenditure on transport offers insight into a driver of transport demand, which may through better transport demand management contribute to a better environment.

Targets

Fair and efficient pricing across transport modes.

Related policy documents

• COM (2001) 370 final. European transport policy for 2010.
  WHITE PAPER European transport policy for 2010: time to decideCOM (2001) 370 final
• COM(2008) 435
  Strategy for the internalization of external costs. Communication from the Commission. COM(2008)435
• Sessa C and Enei R (2009). EU transport demand: Trends and drivers
  Sessa C and Enei R (2009). EU transport demand: Trends and drivers, paper produced by ISIS as part of contract ENV.C.3/SER/2008/0053 between European Commission Directorate-General Environment and AEA Technology plc; see http://www.eutransportghg2050.eu
• WHITE PAPER European transport policy for 2010: time to decide
  The need for integration of transport in sustainable development

Methodology

Methodology for indicator calculation

The sources for the expenditure group's private and public purchase of transport can be found in the National Accounts system. 

National accounts are a coherent and consistent set of macroeconomic indicators, which provide an overall picture of the economic situation and are widely used for economic analysis and forecasting, policy design and policy making. Eurostat publishes annual and quarterly national accounts, annual and quarterly sector accounts as well as supply, use and input-output tables, which are each presented with associated metadata.

Annual national accounts are compiled in accordance with the European System of Accounts - ESA 1995 (Council Regulation 2223/96). Annex B of the Regulation consists of a comprehensive list of the variables to be transmitted for Community purposes within specified time limits. This transmission programme has been updated by Regulation (EC) N° 1392/2007 of the European Parliament and of the Council.

Household final consumption expenditure by consumption purposes (COICOP) for Transport (total) (CP07), Purchase of vehicles (CP071), Operation of personal transport equipment (CP072), Transport services (CP073) and Total (CP00) were collected for the EEA-32 (where available, see below), and the totals expressed as a proportion of Total (CP00).

Methodology for gap filling

No gap filling was used in this indicator. However, data was only used for each Member State and year when there was data for each of the four COICOP categories. This means that the Member States included varies from year to year. Member State inclusion in each year for Figure 1 is detailed in the table below. There is no gap filling for Figure 2 – only Member States  for whom data for all four CIOCOP categories were available have been included.

For the assessment jan 2011. The number of EEA-32 member states’ data used in each year of Figure 1 are (from 1990 to 2008): 12, 14, 15, 19, 19, 27, 27, 27, 28, 28, 29, 29, 29, 29, 29, 29, 27, 26, 21. Data were not available in any year for Croatia, Switzerland and Turkey.

Methodology references

No methodology references available.

Data specifications

EEA data references

• No datasets have been specified here.

External data references

• Annual national accounts (Eurostat)

Data sources in latest figures

Uncertainties

Methodology uncertainty

N/A

Data sets uncertainty

N/A

Rationale uncertainty

N/A

Work description

Resource needs

No resource needs have been specified

Status

Deadline