A Duration Approach for Estimating the Marginal Renewal Cost at German Motorways

Neil Murray and Heike Link

No 1898, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: We estimate the marginal costs of road renewals as part of a social marginal cost scheme for road user charging. Within an analytical approach that mirrors the relationship between road deterioration, traffic load and road renewal, we use an accelerated failure time model for road pavement with the purpose to derive the effect from traffic increase on the length of road renewal cycles. Based on a comprehensive dataset for German motorways we fit a Weibull duration model with covariates such as traffic load from heavy vehicles as well as various control variables and derive the road deterioration elasticity with respect to heavy traffic. Similar to available studies for Sweden we find a deterioration elasticity below one, implying that Newbery’s (1985) fundamental theorem does not hold for the German motorway network. The shape parameter of the Weibull function indicates that there is an ageing or weathering effect, and higher traffic loads are not the sole factor impacting on shorter pavement lifetimes. Our estimations yield a marginal renewal cost, which makes up approximately 40% of the average renewal cost. It implies that road user charges based on marginal costs will not yield a sufficient revenue to cover total costs.

Keywords: Duration model; accelerated failure time model; fundamental theorem; marginal cost; road transport (search for similar items in EconPapers)
JEL-codes: C41 R42 R48 (search for similar items in EconPapers)
Pages: 32 p.
Date: 2020
New Economics Papers: this item is included in nep-tre and nep-ure
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