Better use of infrastructures to reduce environmental and congestion costs

Transport infrastructures are well developed, but growing traffic commuter and freight volumes are putting them under increasing pressure, leading to some of the worst peak time congestion in the OECD and declining air quality in inner cities. Investments to address bottlenecks would benefit from more systematic cost-benefit analysis, which is currently under used. Investment choices would also benefit from better co-ordination between the federal government, in charge of railways, and regions, in charge of roads, ports and inland waterways. Increasing the size of infrastructure, however, could be only part of the answer. Traffic volumes are boosted by large commuting subsidies and a cost-efficient policy would be to develop congestion pricing in both road and railway transport to reduce congestion and address negative externalities in terms of environmental impact and cost to the economy. Extensive public service obligations also contribute to low cost-recovery ratios and should be subject to more systematic evaluation. Investments in inland waterway infrastructures have aimed at shifting freight transport from roads and rail. Nevertheless, road freight transport is contributing to congestion and a more ambitious road-pricing scheme than the one currently planned for trucks is necessary.