Cover Image
close this bookEco-restructuring: Implications for Sustainable Development (UNU, 1998, 417 p.)
close this folderPart II: Restructuring sectors and the sectoral balance of the economy
close this folder11. The restructuring of transport, logistics, trade, and industrial space use
View the document(introduction...)
View the documentIntroduction
View the documentThe significance of freight transport
View the documentPast growth and patterns of freight transport development
View the documentSpatial and transport outcomes
View the documentFuture developments affecting freight volumes and patterns
View the documentThe scope for reducing freight volumes
View the documentTaking up the potential
View the documentConclusion
View the documentNotes
View the documentReferences

Taking up the potential

In principle, the geography of economic activities and the spatial division of labour represent the outcome of choices about the use of transport system improvements and low transport costs. However, choice is contextually constrained. Competitive forces and prevailing relative prices have made a business necessity out of moving materials and goods (often repeatedly) between different points in value adding chains. To the extent that profit maximizing arrangements differ from those that would be environmentally optimal, this difference arises from the ways in which markets have been constructed (legally, institutionally, and fiscally) and how this affects relative prices. A conclusion now widely drawn is that the social and environmental costs of transport services and energy should be included within their prices.

While recognizing the problems involved, an important element of strategy in eco-restructuring must be to take up the opportunities created even by apparently negative developments and trends. Growing traffic volumes represent a negative development. But the projected growth in traffic under conditions of already congested infrastructure is now focusing policy makers' attention on the need for demand-side management. Similarly, progress toward and actual experience with free trade have highlighted the trade distorting implications both of the under pricing of environmental resources and of differences in national policies toward environmental protection. As a result, the issues are growing in political importance. They are shifting from being purely domestic policy items to a central position on agendas concerned with the topography of the "playing field" for international competition. This gives them a much higher political priority.

Environmental protection - whether by harmonization of standards or by the use of compensatory mechanisms that would factor differences in national standards into the terms of trade - is now an agenda item for the newly formed World Trade Organization, the successor to the GATT. Differences in national policies affecting transport and energy prices within EU member states are causing these to come under critical scrutiny in ways and to a degree almost unthinkable within a purely national framework. At the same time, these differences are highlighting that the sources of distortions are often linked to policy interventions through subsidies and tax differentials and that fiscal regimes often bear no clear link to third-party costs (Gabel 1994). As a result, work is under way to elaborate basic principles for transport and energy pricing from the standpoint of economic theory and optimal resource allocation.

In this respect it is interesting that, although freight transport prices are consistently predicted to fall within the EU as a result of deregulation and the creation of the Single Market, expectations on longer-term price changes are more varied. In respect to recent questionnaire surveys (e.g. Byrne 1990), substantial disagreement among respondents was found reflecting different views on the likelihood and severity of environmental legislation. Many of those approached in a Delphi study on the European outlook anticipated price increases in the longer term as transport operators are made to pay for environmental damage and bear the full costs of infrastructure use. Theirs was the prevailing view. The study concluded that road transport prices would rise by 17 per cent in real terms between 1991 and 2001. A further conclusion was that price rises in the road freight sector would be significantly above those for other modes. The predicted rise for rail was 9 per cent (Cooper 1995). A report by the Council of Logistics Management (CLM 1993) similarly foresees that the shallow fall in prices associated with the Single Market will be followed by a sharp rise in the late 1990s, continuing on beyond the year 2000.

A recent ECMT study has calculated the price corrections that might be needed to internalize some of the more significant environmental externalities of the transport sector (ECMT 1995). The external costs of road and rail freight transport were assessed across four categories of externalities (accidents, noise, local pollution, and greenhouse effects). Results were expressed as ranges, reflecting different assumptions made about loading. For road freight, total externalities were 18-30 Ecu per 1,000 tonne kilometres. For rail freight, total externalities were 4.0-7.5 Ecu per 1,000 tonne-kilometres. The lower level for rail freight is associated with lower externalities across all categories, but especially for accidents. The road freight externalities equate to 0.29-0.38 Ecu per truck-kilometre. Were these costs to be factored into fuel prices (and on the assumption of an average fuel consumption of 35 litres/100 km for trucks), they would constitute a tax equivalent to 0.7-1.1 Ecu per litre. All of these figures are calculated for operating externalities only and do not include costs associated with infrastructure provision.

As a precursor or supplement to fiscal measures aimed generally at transport and energy, several truck-specific actions have been proposed. To correct the distortions that arise from the off-loading of warehousing and inventory costs, for example' Zuckerman (1991) proposes the use of a tax based upon a combination of weight and distance criteria, which would reduce reliance on distant suppliers and increase the attractiveness of local suppliers. Alternatively, a tax based upon weight and volume would address the packaging problem, discouraging manufacturers from inefficient and wasteful packaging. A combined weight-volume-distance tax could be designed to encourage truckers to make shorter runs, consolidate their own loads, and share space with other truckers. The net effect would be fewer vehicle kilometres (Zuckerman 1991, p. 142).

There is need to institute new controls on trucks and to enforce both these and existing controls strictly. Data suggest that existing controls - many of them relevant to environmental impact - are frequently ignored. On British dual carriage ways, surveys show that 92 per cent of articulated truck drivers exceed speed limits. Over 20 per cent of trucks fail annual inspections carried out under Department of Transport requirements, suggesting that these are inadequately maintained during the year. Calculations show that operators' potential cost savings in breaking regulations (for example, loading limits) are many times higher than the fines faced if caught. Technology now exists to enable automatic spot checks to be made as trucks pass sensors in the road bed. These would allow more systematic checking of speeds and loadings. In association with increased penalties, stricter enforcement of regulations would ensure higher compliance and greater environmental protection.

Part of the needed approach would be to reduce institutionalized support to processes and decisions that lead to increased transport demands. Road programmes have already been substantially cut back in many industrialized societies. None the less, land-use planning processes that might be expected to preserve green sites and prevent decentralization are consistently prejudiced by efforts to attract investment and enterprise into regions. Land-use planning processes need to be more fully linked into the overall effort to secure sustainable development and restrictions placed on developments likely to generate extra traffic. Such restrictions, once enacted, need to be more rigorously enforced through strengthened public enquiry and appeal procedures.

Another important aspect is to focus on consumers. By providing information on the transport intensity of different products, consumers would be empowered to make informed decisions. Studies such as that exemplified by Bcould be used as the basis for product labelling schemes.