This paper aims at defining a pricing scheme to internalize environmental costs into rail access charges based on five principles: 1) marginal social cost pricing, 2) consistency with current European Union (EU) legislation, 3) balancing incentives with system transaction costs, 4) taking into consideration external costs in all competing modes, and 5) charging only external costs that are directly generated by the operators.

The resulting charging scheme is assessed in terms of its impact on passenger modal split on the Barcelona-Madrid and Barcelona-Lyon transport corridors considering different environmental charging scenarios for competing modes.

Data and methodology

Once the charging structure is defined according to the above mentioned principles, the level of charges is set according to environmental marginal cost estimates. These are based on a clustered bottom-up approach deriving from a deep review of both prediction and environmental impacts valuation models.

A similar environmental charging scheme is then adapted to air and road transport to provide a homogeneous and comparable environmental pricing framework across all competing modes. Current tariffs and taxes are analyzed to determine whether they are already internalizing environmental costs.

To evaluate changes in passenger modal split it is adopted a two-step methodology that estimates transfers of environmental charges into fares and computes the resulting effects on modal split using a multinomial logit model. This is calibrated with available historical data for both corridors. Besides travel time and cost, other attributes of level of service are considered as relevant variables of the utility function.

Expected results

The expected outcomes of this paper are the definition of environmental rail access charges for rail transport consistent with EU legislation and optimal in terms of social welfare. On top of that, an assessment tool is proposed that evaluates the effects on passenger demand along a transport corridor for different environmental charging scenarios across all competing modes.

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