Why are rail infrastructure charges seldom used to internalise external costs? This presentation will review experience of rail infrastructure charges in Europe and suggest a number of reasons. First and foremost, the lack of internalisation on other modes reduces the appropriateness of doing so on rail, at least in terms of the overall level of charges. Secondly there remain practical problems with the  measurement and valuation of externalities and with the complexity of charges that accurately reflect these valuations, and constructing charges to reflect some aspects of externalities and not others may be counter productive.  Thirdly there remain doubts as to the effectiveness of differentiated charges in influencing the decisions of rail operators, particularly at the level of detailed decisions about rolling stock. Evidence on all three issues will be considered before concluding that, whilst there is truth in all the arguments, nevertheless more should be done to reflect external costs in rail infrastructure charges.


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