Road wear and the kilometre charge - A computable general equilibrium analysis

This paper investigates the effects of a re-introduction of a distance-related charge on heavy trucks in Sweden. The kilometre charge is set to cover the annual road maintenance costs and is calculated for 10 different truck and trailer configurations. Three scenarios are simulated in a CGE model of Sweden: (i) the charge alone is imposed; (ii) the charge is imposed while the sum of the annual Eurovignette charge and the annual vehicle tax is lowered to the minimum level set by the European Union; and (iii) as in the former but with twice the level of the kilometre charge. The results imply that the charge leads to significantly reduced road wear although it appears that most of the reduction stems from reduced trucking activity and not from substitution towards less damaging trucks. Extensive substitutions towards other modes take place and only between 56 and 78 per cent of the ex ante statically predicted amount of tax revenue could actually be expected to be collected once the charge is imposed. The effects seem to cancel out on aggregate.