An attempt to evaluate level of external costs internalisation in Poland

Abstract

Full internalisation of external costs of transport is a basic need for better intermodality as it was shown in European policy documents and analyses. Only then real costs of transport will be bared by user. This should force him to seek for the best transport solution not only from his point of view, but also from the point of view of the society. Different modes of transport will be able to compete equally on the free transport market without a risk that we are heading for a one-mode monopoly, because it is handicapped by the non-internalised external costs. Elimination of this risk should lead to enhanced cooperation of transport operators, especially intermodal cooperation.

In the article we attempt to assess the level of internalisation of external costs in Poland. For that we propose a simple and as it may seem universal methodology. We use recent estimates of transport external costs for Poland, which provide a view on the cost borne by different transport problems as congestion, noise, infrastructure, accidents or gas exhaust. For each problem we show tools used to internalise the costs in Poland. We assess the tool correctness with external cost internalisation theory and we count the percentage of costs it internalise. On top of that we summarise the overall percentage of the external costs which have been internalised separately for car and rail transport modes. This lets us to compare the level of internalisation at least for two modes of transport and set valuable conclusions for competition and intermodality issues.

In addition we also assess the level two discussed modes of transport are donated by the public. We assume that every donation is also an external costs to recalculate the level of cost internalisation and broader the scope of conclusions. We also shed light on the tools for cost internalisation. From the comparison of tools used in Poland we can conclude that this issue matters at least for competitiveness. The last discussed theme is organisation of transport administration of car and rail modes. The evidence showed in the article results in recommendations for the way this administration should be organised. In the background of the cost internalisation assessment we also show hints on how unequal cost internalisation, unfair public subsidies and differences in administration organisation diminishes intermodality opportunities.

Probably the most compelling result of the assessment is that until this study there have been no cost internalisation assessments made in Poland however, this should be the most handful tool in sustainable transport policy.

An attempt to evaluate level of external costs internalisation in Poland

Introduction

European Transport Policy in perspective to 2010 focuses on internalisation of external costs in transport sector as a main condition to be met in order to fulfil its goals. Therefore Polluter Pays Principle have been accepted and road to its full implementation opened [1]. Internalisation of external costs of transport should encourage free market competition without harm to environment and lead to sustainable modal split. To ensure effective implementation of Polluter Pays Principle every member state should make costs of for example: transport accidents and air pollution an element of price for transportation service unit. For calculation of external costs however, a consistent methodology is needed. So far we are lacking such a methodology, in spite of the fact, that a considerable amount of surveys and studies have been done. An extensive overview of them constitute a handbook prepared for European Commission [28]. We need such a reference methodology, but it is rather obvious now, that a choice will be made rather politically, making it indifferent how deep it may be grounded on rational and academic arguments. From this point of research we may go at least two ways. First, to answer how to internalise calculated external costs wisely. And this have been done intensively since EC announced its pathway to internalisation of costs in European transport [29]. Second, to assess and review current status of external costs internalisation in European countries, which have not been so popular at times. What we do in this article is to go the second path to propose an internalisation assessment methodology and to show results of its application on Polish example. In this context interesting results and recommendations can be set not only for external costs internalisation, but also for intermodality.

Theory and background

Theory tells us, that internalisation of external costs should provide money to reduce impact of external effects on environment. Benefits from internalisation should be used for example: to treat victims of accidents in hospitals, to mitigate air pollution, to build noise insulations. Internalisation should make the relation between prices of transport services real for the final user – which means that prices cover external costs. When external costs are not paid by the user we have hidden handicaps for this modes of transport, which price does not reflect their full costs. In such case free market competition is unfair. As a result modal split changes: share of modes which cause high external costs rise and share of modes, which cause low external costs, drop. In Poland this tendencies have been evident for last 15 years. Performance of road haulage since 1995 raised from 51 000 mio tkm to 128 000 mio tkm in 2006. On the contrary performance of railway transport dropped from 68 000 mio tkm in 1995 to 53 000 mio tkm in 2006 [9]. Tendencies in passenger transport were similar. Road transport boosted from 110 mio pkm (1995) to 219 mio pkm (2006), and railway pkm sinked from 26 mio pkm (1995) to 18 mio pkm (2006)[9]. Modal split in Polish transport in general leads toward modal split of Western European countries, which is deemed to be unsustainable.

The connection between internalisation of external costs and intermodality is worth to mention. Lack of external costs internalisation produces a fairly monomodal transport market – in most European countries 80% of travel is made by car [9], in United States of America – more than 95%. People tend to use only one mode of transport for a trip, the mode which is the cheapest because it causes the most external burden to society. Full implementation of Polluter Pays Principle allows to use modes of transport more efficiently – only there, where their usefulness is higher than burden placed on environment (real benefits exceed real costs). Probably it is the intermodal travel, that would make a passenger pay the least for the best possible effect.

According to 1995 estimation of transport external costs for Europe they were 7,8% of European Union GDP and reached even 14% of GDP in East and Central Europe. Estimation for Poland gave 12,6 mio EUR (about 39,8 mio PLN, settled with use of Polish National Bank exchange rate) – about 13% of GDP [2].

Costs to produce transportation services in Poland in 2006 were 87,4 mio PLN [3]. According to prognosis provided by Gdansk Polytechnic University Polish external costs in 2006 may have reached 70,1 mio PLN [4]. If we assume no internalisation mechanism implemented so far, external costs would be about 44,5% of full costs of transport in Poland. This share is not big if we consider possible reluctance of users to pay it. Following this numbers internalisation should cause rise price of transport unit not even twice, whereas possible internalisation of external costs in electricity or waste management sector may cause bigger increase [5]. In fact there were many internalisation tools in Poland in 2006, so price of transportation service unit would rise rather insignificantly.

Methodology

Whole article is an example for a simple methodology based on a comparison. On one side of the weight we place estimation of national external costs of transport and on the other estimation of the costs borne by users to internalise external costs. Most current studies on internalisation policies focus on something slightly different – try to foretell impact of the full internalisation of the external costs on the transport market. They ask how modal split will change due to different policy scenarios. Assessment of current internalisation status is done more moderately in the course of those studies. This have been done for example by O’Mahony, Kirwan and McGrath [30]. The have worked out a TRENEN model seeking for a macroeconomic “social equilibrium” based on possible full internalisation of transport internalities in Dublin. This study have been followed by a more comparable approach between Dublin, London, Amsterdam and Brussels prepared by Gibbons and O’Mahony [31]. “Do nothing” scenario presented there provided an assessment of current internalisation policies in those cities. The most well known, recent and criticised paper have been produced in CE Delft by van Essen, Boon, Maibach and Schreyer [32]. It proposed six scenarios for external costs internalisation in Europe, one of the being a reference scenario – an assessment of current internalisation policies. All this studies are more or less a theoretical foresight, whereas internalisation policies are in most European countries a practical reality and need more evaluation. Most of the policies are lacking an comprehensive assessment of a level to which national transport external costs are really internalised. However, there have been studies of this issues in Great Britain or Sweden. Piecyk and McKinnon have used the same comparison as we do in this study, but relating only to British road haulage subdivides to classes of lorries. Another difference is that they have presented two scenarios on estimation of air emission, which resulted in slightly different level of internalisation. Overall they have acquired a result of 62-67% coverage of external costs by cost internalisation policy imposed on road haulage in UK [33]. SIKA Report from Sweden focuses on estimation of external costs in Sweden, but as an addition make assessment of current level of internalisation for road, rail and sea transport of goods. This study brought a result of about 30% internalisation of road transport external costs, and somewhat similar level for ail transport. Provision of a fair result for sea transport proved not to be possible for SIKA [34].

Our example is based on data from Poland. The most difficult task was to estimate sums on both aforementioned sides of the weight. Firstly, we would like to shed a light on few problems with this calculations. Both estimations were made for the year 2006. It is very important to have such a comparison up to date in order to make valuable policy decisions, therefore we did not make it for the earlier date. Besides growing number of decisions is based on forecasts of cost and benefits, not on historical analyses. Calculations made for year 2001 or 1995 would be nothing for a politician, but an academic paper. Moreover, last few years brought new internalisation tools to Poland and discussion on their implementation have been set. We wanted to include in our analysis potential impact of this instruments. Finally data for a year 2001 on the side of costs already borne by users were more difficult to find, than for a year 2006.

In our comparison only road and rail transport modes are considered, as those are the two most important modes of transport in Poland (99% of passenger travel and 88% of goods transportation [3]) and there have been no comparable estimations made to date for external costs of other modes of transport in Poland.

Lack of scientific calculation of external for a year 2006 was the main obstacle for this research. The last valuable and acceptable calculation have been made in 2004 by INFRAS-IWW project team and provides us with external costs estimation for Europe in 2001 [6]. Unfortunately, this estimation does not contain data for new member states and for Poland especially. Polish transport external costs have been estimated only twice: for 1995 [2] and 1997 [7]. Those estimations are incomparable and made with use of total (not marginal) values. But there have been an estimation of marginal external costs by mode of transport for Poland made by Gdansk Polytechnic University [4]. It provide us with more or less comparable data for years: 1995, 2001, 2006. This estimation have been made in the course of the TREMOVE project, where a computational model for external costs calculation have been worked out. Cost estimations for 1995 and 2001 are considered factual, and for 2006 prognostic. Data from this study allows also recalculations into total values and comparison of total external costs between years.

Various financial tools are used to internalise external costs from excise taxes to tooled roads. Each instrument internalise different category of external costs, so it is possible and even more interesting to have a view into structure of a total value. This structure consists costs which result from various transport impacts on environment, which are the causes of external costs. Most studies realised so far calculated total external costs in this way. In our analysis we consider the following ingredients of total value: costs of transport accidents, air pollution, infrastructure construction and noise. Structural calculation causes another problem. Share of ingredients changes between different periods of time due to changes in car fleet, upgrades of infrastructure, ups and down in transport accidents etc. The structure of total external costs is different every year – no consistent research about it have been done so far (Gdansk Technical University [4] provided data about share of air pollution and accidents external costs, but no other shares were given, so this data could not be used for calculations). Simple recalculation of total external costs for separate years gives no information how this structure changes. To cope with it, we have chosen one indicator for every category of transport impact on environment. Knowing changes of this indicator through the years we may adjust structure of total estimated value between years and compare different categories of external costs. For external costs of transport accidents number of car accidents and rail accidents have been taken; for air pollution car fleet and rolling stock; for infrastructure and noise costs length of road and rail infrastructures (Data for those indicators come from [2] and [9]). Basic structure of total external cost value have been adopted from INFRAS-IWW [7] research for a year 2001.

The reader should bear in mind, that this recalculation was made only for the purpose of above mentioned comparison and should not be considered as a new method of external costs estimation. Especially there have been made with many vague assumptions, which are not necessarily based on scientific findings, but on personal experience and intuition. Such a comparison have been made for the second time and with different methodology for recalculation of costs between years. First comparison have been made in 2006 and its results were issued in Green Light quarterly, number 9 – winter 2006 [8]. New results have been shown in a table 1, 2 and 3.

Table 1. External costs by mode of transport.

		1995	2001	2006
railway	[mio PLN]	0.66	0.96	1.4
roads	[mio PLN]	32.47	46.82	68.73
total	[mio PLN]	33.13	47.77	70.13
share of railway in external costs	[%]	2%	2%	2%
share of roads in external costs	[%]	98%	98%	98%

Table 2. External costs by cause – railway.

		1995	2001	2006
accidents	[mio PLN]	0.02	0.03	0.04
air pollution	[mio PLN]	0.37	0.63	0.93
infrastructure	[mio PLN]	0.08	0.08	0.12
noise	[mio PLN]	0.20	0.22	0.31
accidents	[%]	3.18%	2.78%	2.79%
air pollution	[%]	55.50%	65.75%	66.51%
infrastructure	[%]	11.55%	8.80%	8.58%
noise	[%]	29.77%	22.67%	22.12%

Table 3. External costs by cause – roads.

		1995	2001	2006
accidents	[mio PLN]	13.77	16.86	20.22
air pollution	[mio PLN]	13.21	22.51	37.96
infrastructure	[mio PLN]	2.26	3.06	4.34
noise	[mio PLN]	3.23	4.38	6.20
accidents	[%]	42.42%	36.01%	29.42%
air pollution	[%]	40.68%	48.09%	55.24%
infrastructure	[%]	6.96%	6.54%	6.31%
noise	[%]	9.95%	9.35%	9.03%

To show costs bore by the users it was mostly a statistical investigation through various data sources from budgets of transport funds to financial reports of transport companies. As far as possible no sophisticated recalculations were made – they have been explained further in this article when necessary.

Transport accidents

According to initial findings [2] accidents in Polish transport were responsible for 54% of road transport external costs and less than a thousand part for rail transport. INFRAS-IWW [7] study however, shows different shares: for road accidents about 36% and for rail accidents about 3%. Main and only tool for internalisation of this external costs in Poland is obligatory civil responsibility insurance for cars (OC). Insurance of railway stock is not obligatory, what somehow corresponds to the low external costs of accidents for railway. This slight difference indicates, that here we may have a mechanism leading to the fair relation of prices. Until 2007 obligatory car insurance covered only costs of car reparation for victim and doer. This was not consistent with internalisation theory, as not every damage from external effect was covered. Especially loss from medical treatment for injured in accidents was not. At the beginning of 2007 new law was implemented which removed this inconsistency and decided that 12% of obligatory car insurance must be transferred by insurance companies into medical treatment system. Income from obligatory car insurance in 2006 was about 5,6 mio PLN [10]. External costs of accidents for 2006 are estimated at about 20,2 mio PLN. Comparing this two numbers we find that obligatory insurance cover only ca. 28% of external costs of road accidents. If we consider also voluntary car insurances then internalised costs rise to 9,8 mio PLN [10] and the coverage of road external costs of accidents to 48,5%. Recalculated external costs of rail accidents are about 0,04 mio PLN. Incomes from voluntary insurances of railway rolling stock reached 0,8 mio PLN in 2006 [10] – more than needed to cover external costs.

Air pollution

Air pollution external costs are the most important share for both road and rail transport modes. According to INFRAS-IWW road transport produces 48% of his external costs through air pollution, rail transport 67% [6]. Nevertheless we should be aware of the fact that in global values road external costs are about 40 times higher than rail external costs.

Pollution of air is internalised through various taxes imposed on prices of energy resources or fees for exhaustion of harmful gases. Excise tax on liquid and gaseous fuels is the first kind of tool used by Polish authorities. From 2006 there is also a separate fuel fee as a secondary instrument. Until 2006 income from excise tax was a normal position of national budget usually not earmarked to any kind of expenditure – again it was not in alliance with internalisation theory. But it was not very harmful violation, while in 2006 Polish government earmarked 12% of revenues from excise tax on fuels to road construction and in 2007 – 18% [11][12]. As well fuel fee has been earmarked to be an income of Railway Fund (20% share) and National Highway Fund (80% share)[13]. Expenditure from both funds is taken only for development of those modes of transport, especially for construction of new, potentially harmful to environment, transport infrastructures. This shows that internalisation instruments have absolutely opposite goal to the one proposed by internalisation theory. When we take into consideration sky-rocketing growth of road transport (road haulage rose between 1995 and 2006 2,5 times, private car travel 2 times [3]) a vicious circle emerges. Rising fuel fee profits from road transport cause a significant rise of funds devoted to construction of new road infrastructure, so the number of new roads rise and cause increase to car travelling and fuel sales what benefits the profit from fuel fees etc.

Income from fuel fee in 2006 was 1,075 mio PLN [14]. Preliminary national budget projected revenues from excise tax on fuel at a level of 18,85 mio PLN [11]. As about 10% of Polish car fleet is powered with LPG gas [15] we also need to know excise tax income from gas sales – this was about 1,2 mio PLN [16]. To have a correct sum only for road transport we also need to know, how much fuel fee and excise tax is paid by rail and road users. Some part of sold fuels are also used for different purposes than transportation. Unfortunately, division of this incomes has not been possible. We can mention that only 6% of railway transport in Poland [17] is made by internal combustion railway stock, what in comparison with level of road transport is about 40 times less. Therefore we make only little error taking all budgetary incomes from fuel taxes and fees on the road transport, what gives about 21,1 mio PLN. This show 55% internalisation of road external air pollution costs, which were 38 mio PLN in 2006.

About 94% of Polish railway transportation is made by electric railway stock [17]. This causes a problem for estimation of income earned by internalisation of external costs of electricity generation. We know that very close to 100% of electricity used by railway transportation in Poland comes from a company PKP Energetyka Sp. z o.o [18]. This company produced 1,58 mio PLN income from energy sales in 2006 [18]. 57,4% of energy was sold to railway companies (railway track energy) – 0,91 mio PLN [18]. Coincidentally this is almost the same sum as external costs of railway air pollution estimated for 2006 – 0,92 mio PLN. Part of this value were ecological fees paid by energy generation and coal mining companies. According to data presented by Polish Association of Delivery and Division of Electric Energy and newspaper Rzeczpospolita ecological fees form about 26% of energy price. Therefore external costs covered in income of PKP Energetyka Sp. z o.o. equal 0,24 mio PLN [5][19]. This 26% we may take as a relevant assessment of external costs internalisation for railway air pollution. We can double-control this calculation knowing that ecological fees paid for air pollution and mining in 2006 were 0,78 mio PLN [20] – 31% share of electricity and mining companies in this value seems reasonable. Ending up we should add, that all ecological fees paid in electricity price go in Poland to special Environment Protection Funds. This funds manage money for benefit to the environment, financing mitigation investments, ecological education etc.

There is also an interesting fact related to electricity consumption by Polish Railways. PKP Energetyka Sp. z o.o. buys about 3,4% of whole Polish energy generation [18]. Of this 57,4% goes to railway companies – so only 1,97% of energy generated in Poland is used by railway transport. If we know, that share of renewable energy in total energy generated in Poland is 2,8% [20], we can show, that potentially whole energy used by railway companies in Poland could be “green”.

Infrastructure and noise

INFRAS-IWW team has calculated that for external costs of road transport share of infrastructure costs is 7% and share of noise costs is 9%. Similarly for rail transport this shares reach 9% and 22% [6]. However, noise is generated by movement of vehicles it is mostly infrastructure management institutions who have to pay this cost by construction of noise insulations and other technical solutions to minimise noise. Taking it into consideration and because we have no separate source for verification of noise external costs, we add infrastructure and noise costs for the purpose of comparison with level of internalised costs. If so, then infrastructure and noise costs taken together are 16% of road transport external costs and 31% of rail transport external costs. Further we assume, that no one else but infrastructure management institutions pay for external costs of infrastructure during its construction. When thinking economically this costs should be placed onto the user of infrastructure by system of various instruments.

Polish system of payment for infrastructure differs for railway and road users. On the railway market every user pays for each kilometre travelled according to tariff prepared by infrastructure management institution – PKP PLK S.A. This is in general consistent with internalisation theory. The more you travel, the more you pay, what forces you to use transport service efficiently and also ecologically. There are no exceptions from this payment.

On the road market only road haulage and coach services pay for infrastructure utilisation. This is only 14% of road users, while 86% [3] users left do not pay at all for infrastructure services or pay only for special roads – tooled highways. There were ca. 210 km of tooled highways in Poland in year 2006 – less than 1% of roadway network [3]. Vignette for road haulage and coach services is valid only for national roads – there is no payment for travel on local or regional roads. National roads are only 5% of whole Polish road system [3]. System of vignettes does not force user to travel efficiently. On the contrary, it encourages him to maximise his profit by maximisation of number kilometres travelled and thus maximisation of his external costs. Vignette is paid periodically in spite of kilometres travelled. This short description depicts highly unfair system beneficial to road transport. How this results in prices for kilometre travelled we show with following example.

Lets assume that we want to transport 320 people or 15 containers between Warsaw and Białystok. In this case we need for passenger travel one electric railway car of a typical Polish kind – EN57 or 8 typical Polish buses – Autosan H9. For goods transportation we need train with 15 container wagons lead by electric locomotive or 15 road haulage trucks. Payment for infrastructure utilisation by different modes of transport will reach numbers shown in table 4. Costs paid by road company in this case are 96 PLN, whereas by rail company 1037,5 PLN. In goods transportation road taxation results in 405 PLN bill, whereas in railroad goods transportation 3201,7 PLN.

Table 4. Price of infrastructure for the user.

	Passenger travel	Goods transportation
Road [21]	96 PLN	405 PLN
Rail [22]	1037,5 PLN	3201,7 PLN
Rail/road costs ratio	10.8	7.9

This calculation shows disproportionate prices of road and rail transport in Poland. This fact has very important results for intermodal transportation. There is simply no bait for a transport firm to put its trucks on rails. There is also no interest for passenger to travel by train or even in a car-train intermodal chain. Because of this visible disproportion neither passenger, nor transport manager feel lust for paying more, in spite of other costs to bear (fuel, insurances).

Income from vignettes was 0,258 mio PLN in the first half of 2006 [23]. Unfortunately, we have to use this half-a-year data to estimate yearly income, as no reliable source of yearly data were found. This estimation shows about 0,51 mio PLN income from vignettes in 2006. We can also take into consideration costs bore by users of tooled highways, which are managed by two private companies: Autostrada Małopolska S.A. and Autostrada Wielkopolska S.A. Income of the first one reached 0,121 mio PLN [24], and of the second one 0,189 mio PLN [25] – overall 0,310 mio PLN. Vignettes and tooled roads give 0,82 mio PLN internalised infrastructure costs. Road infrastructure and noise costs estimated for 2006 equalled 10,54 mio PLN. Infrastructure and noise costs of road transport in Poland are internalised by this tool only in about 7,8%. No wonder that payment for roads causes so much concern among Polish drivers, while their perspective is to pay 13 times more after full internalisation of costs.

Payment for railway utilisation reached in 2006 about 2,42 mio PLN. This was an income from railway utilisation service earned by main Polish railway infrastructure management firm – PKP PLK S.A. manages 94% of Polish railways [26]. This income is big in comparison with estimated external costs of infrastructure and noise caused by railway in 2006. External costs are only 0,43 mio PLN – 7,4 times less. This shows, that railway users pay not only for external costs, but also much of other costs of infrastructure within a mechanism of Polluter Pays Principle.

Money from vignettes and tooled highways is reinvested in road infrastructure and money paid for railways utilisation is reinvested in rails. But internalisation theory should back this fact away, as those are expenditures mostly given for restoration of infrastructure – somehow this is a reduction of results caused by external impacts. No new roads or railways are build from it – this is a job for public donations.

Public donations to infrastructure construction

Except of unequal internalisation of external costs, free market competition is hampered by public donations. European Union allows to donate construction of infrastructure, as this kind of support is treated not as a state aid. However, because of donations to construction prices paid by users for infrastructure utilisation drop. The more donations were given, the less the price is going to be. This causes a problem, that every donated cent works against internalisation of external costs, because it leads users to choices which are not ecological end efficient. Therefore our comparison of external costs should pay attention also to donations given to each mode of transport considered. It would be to much to write, when we would like to calculate donations for all of the Polish roads, therefore we will focus only on national roads. Moreover we are not going to consider European Union aid, but only Polish government donations. Network of national roads equalled 18 255 km in 2006 and this is more or less the same length as network of operated railways – around 17 000 km (while in total 20 173 km of railways exist)[3]. Donation to construction of national roads from National Highway Fund in 2006 were 4,7 mio PLN, all taken by General Management of National Roads and Highways [27]. Railway Fund in the same year had only 0,2 mio PLN, but PKP PLK S.A. took only a pinch of this money [26]. Instead PLK were given 0,6 mio PLN directly from national budget [26]. So aid to roads was 7,8 times higher, than donation to railways. This adds up to the discrepancy between costs bore by users of different infrastructures. No wonder that public transport looses passengers in favour of individual road transport, and if so, intermodality as a matter of public transportation is not at all interesting for them.

Management issues

Except of the financial issues there are considerable differences between railway and road administration. The most important one refers to the form in which national infrastructure management is organised. General Management of National Roads and Highways is a governmental agency and its budget is considered a part of national budget. The most important consequence here is, that this budget does not have to be balanced within infrastructure management institution. Government can simply donate it without expectancy of any revenues from this investments – in fact many politicians advocate for non-tooled highways, what means a permanent donation to road transport. It is also important that any credit taken by General Management is guaranteed to the level of national budget, so it may be much higher than a budget of the institution itself. National railway management institution – PKP PLK S.A. is a state owned company and has its own, separate budget. Therefore PLK has to balance it without help of other national incomes. Moreover, credits for PLK cannot be considerably higher that its own budget. This situation causes much more trouble for railway investments to find financing and emerge, than for road investments. As intermodality is mostly considered with railways this is also a problem for intermodal investments.
Since 2004 to 2007 was also significant difference between road and rail modes of transport related to administration procedures for construction of infrastructure. National roads significantly benefited from special law on preparation and construction of national roads, which gave them less environmental requirements, easier public consultation path and much more priority for dispossession. In some cases this law might cause road planning procedures shorter for 2-3 years and thus much cheaper. This special law for roads still exists, but railways have gained at the beginning of 2007 some similar privileges.

Results

Recapitulation of our calculations has been presented in a table 5. First column is a description of factors taken into consideration. Second column contains values of external costs and state aid caused by different external effects and by different mode of transport. Third column presents external costs paid by the users in 2006 – internalised costs. The level of internalisation is shown in percentage in the fourth column.

Table 5. Level of internalisation of external costs in Poland [2006].

	external costs [mio PLN]	internalised costs [mio PLN]	cost coverage [%]
railway
accidents	0.04	0.80	2044.53%
air pollution	0.93	0.24	25.73%
infrastructure + noise	0.43	2.42	561.92%
donations	0.60
roads
accidents	20.22	9.80	48.46%
air pollution	37.96	21.1	55.58%
infrastructure + noise	10.54	0.82	7.78%
donations	4.70

This summary shows a very wide discrepancy between external costs in fact fully internalised by railway transportation in Poland and external costs of road transport which are internalised only in 46%. Road users should pay 37 mio PLN more in 2006 to minimise their externalities – this is about 2050 PLN per one Polish car. The most of this income – 53%, should pollution abatement. If we consider donations as external costs then internalisation of road externalities drops to 39% and every driver should pay 2310 PLN more yearly. On the railway side we can show that external costs and their internalisation benefits are balanced – only air pollution is covered in less than 100%, but other externalities are overpaid. It seems that users of railway might even pay 1,5 mio PLN to much for their external costs. If we take this surplus as a potential donation to a single passenger, he could have travel yearly for 75 PLN less (10,7 PLN less per one travel, as Polish railway passenger travel in average 7 times a year only [3]). For a single person this is a significant money, which definitely have potential to change behaviour in favour of environment and to make intermodality more popular. Is spite of this marginal prices global costs for production of transport services should rise only 31% (or 45% if public donations are considered).

Recommendations

To implement Polluters Pay Principle we need not only knowledge of external costs resulted from operation of each mode of transport, but first of all we need political will to internalise them. In Poland such a will was confirmed by adoption of sustainable development principle in constitution and by accession to European Union, which back away sustainable development in its policies. Secondly, we need tools which would internalise external costs and make final prices more real. Such instruments are frequently used however, sometimes this use violates rules of internalisation theory. Thirdly, we need to assess how advanced we are in internalisation process. So far little studies have been presented on this problem – this is the first attempt for Poland. Results show that Poland is far away from making prices fair in transport, as we prefer and donate road transport sector. The level of internalisation is a half of the British result and fairly similar to the Swedish findings only in road transport. Rail transport seems to be the one, that pays to much. This causes considerable trouble not only to other modes of transport, but also for intermodality issues. Car transport simply takes it all.

Presented study shows that internalisation should not be conducted separately for different modes of transport – intermodal approach is needed. It is a matter of a system coherent for the whole transport system, what backs away European Commission efforts to find the right policy before its implementation.

Consideration of public donations in our study is a somehow new attempt. It shows that there might be an alternative for already proposed internalisation policies such as provision of donations to less harmful modes of transport, to the level of external costs caused by the most harmful mode. We may as well consider mixed system, where payment and donations meet somewhere in between the full costs scale. What if this attempt will be less costly that the full external costs internalisation.

When donations are considered management issues also seem important for the internalisation system. Institutions which will implement the internalisation policies should have the same possibilities for action, be it taxing or receiving donations, in different modes of transport. Otherwise the results of internalisation policies might be doubtful, some modes might be under and some over taxed or donated.

Presented assessment once again proves to be a powerful tool in a political debate and should be used widely, if we are to act wisely in the field of transport policy.

Finally, to make transport more environmentally friendly and more intermodal Poland should:

– considerably drop the level of donations to road transport or rise aid to rail transportation;

– make every road user to pay for infrastructure utilisation;

– change form of payment for road infrastructure utilisation from vignettes to the form which promotes efficient travelling (eg. only tooled roads);

– change organisation of infrastructure administration – it is recommended to commercialise at least the General Management of National Roads and Highways.

Bibliography

[1] European Commission (2001), European transport policy on the road to 2010: Time to decide, Luxembourg

[2] Rydzyński Piotr (2004), Koszty zewnętrzne transportu, in: Rynek Kolejowy 10/2004, ZDG TOR, Warsaw

[3] Central Statistical Office (2007), Transport activity results in 2006, Warsaw

[4] Calculations based on data provided by Gdansk Technical University (2003), Faculty of Comparative Transport Systems Studies to Sectoral Operational Program “Transport”, Sopot. Data considered only railway and road external costs; marginal values in PLN/tkm, PLN/pkm and PLN/km of transport network; shares of accidents and air pollution in overall costs, share of external costs in GDP.

[5] Kozmana Magdalena (2008), Za ekologiczne inwestycje zapłacą klienci, Rzeczpospolita from 26-04-2008, Warsaw

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[9] European Union, European Commission, Directorate-General for Energy and Transport in cooperation with Eurostat (2007), Energy and Transport in Figures 2007, Part 3: Transport, Luxembourg

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[11] Law on National Budget Plan for 2006, URL: www.mf.gov.pl

[12] Law on National Budget Plan for 2007, URL: www.mf.gov.pl

[13] Law on financing of land transport infrastructure from 16th December 2005

[14] Calculation based on [13] and information provided by Janusz Piechociński, parliamentary deputy and member of ZGD TOR consultancy group – Kto szybko daje-dwa razy daje, February 2007, URL: www.spedycje.pl.

[15] Kublik Andrzej (2006), Polska światowym liderem w autogazie, In: Gazeta Wyborcza from 19-04-2006, Warsaw

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[20] Central Statistical Office (2008), Ochrona Środowiska 2007, URL: www.stat.gov.pl, Warsaw

[21] Disposition of Transport Minister from 8th August 2006 on vignettes for travel on national roads

[22] Calculation made with use of special software – KALKULACJA 2007 – provided by PKP PLK S.A. to the tariff on railway utilization 2006/2007, URL: www.plk-sa.pl

[23] Piechociński Janusz (2006), Krajowy Fundusz Drogowy w I półroczu 2006 roku, In: Zielony Sztandar from 27-08-2006, Warsaw

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[26] PKP PLK S.A. (2007), Annual report 2006, URL: www.plk-sa.pl, Warsaw

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[29] European Commission (2008), Commission Legislative and working programme 2008, URL: http://ec.europa.eu/atwork/programmes/docs/clwp2008_roadmap_strategic_initiatives.pdf

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[32] van Essen H.P., Boon B.H (CE Delft), Maibach M., Schreyer C. (INFRAS) (2007), Methodologies for external costs estimates and internalisation scenarios, Discussion paper for the workshop on internalisation on March 15, CE Delft, Delft

[33] Piecyk M, McKinnon A.C. (2007), Internalising the External Costs of Road Freight Transport in the UK, Logistics Research Centre, Heriot-Watt University, Edinburgh

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About

Author: MSc Wojciech Szymalski, LINK Forum National Focal Point, Warsaw University, Faculty of Geography and Regional Studies and Green Mazovia association.

Article published in: Passenger Intermodality – Current Frameworks, Trends and Perspectives, Studies on Mobility and Transport Research, Gronau Werner (ed.), Mannheim, 2008.