Abstract
In this paper, we extend to the literature on marginal wear and tear cost estimation in railways, by applying a panel vector autoregressive model to rail infrastructure renewals and maintenance costs, using an extensive dataset from Sweden. This study is significant given the inherent difficulties in modelling the substantial renewals element of infrastructure costs, as well as the need to account for the dynamics in renewals and maintenance. The dynamic model allows us to estimate equilibrium cost elasticities with respect to train usage, which are significantly larger than their static counterparts. Overall, this work highlights that dynamics in rail infrastructure costs are important to consider when setting track access charges with respect to the wear and tear caused by traffic. This is particularly important given several countries, for example France, Sweden and Switzerland, are now setting access charges at marginal costs based on econometric studies.
Highlights
Infrastructure investments consume a large amount of resources
Estimation results from Model A1 and A2 are presented in Table 2, where the former only includes the endogenous variables, and the latter includes a set of exogenous variables
As well as insights into the interplay between maintenance and renewals cost over time, our results highlight that analysing costs within such a holistic dynamic model can result in different elasticities of cost and marginal cost, with respect to traffic
Summary
Infrastructure investments consume a large amount of resources. To reap the benefits of an investment, the infrastructure must be maintained and renewed due to the wear and tear caused by traffic and to some extent weather conditions - that is, maintenance and renewals will affect the performance and reliability of the infrastructure. For a given traffic level, the objective of the infrastructure manager (IM) is to minimize whole life maintenance and renewal costs (as well as train delay costs). The IM needs to consider the with-in year substitution possibilities and intertemporal relations in maintenance and renewal activities This is because maintenance and renewal activities are input substitutes in the production of infrastructure services, both between each other and in their phasing over time. A renewal is likely to be preceded by high maintenance costs and followed by low maintenance costs.1 This implies that a temporary deviation from the plan of maintenance and renewal activities, due to for example a change in traffic, will have an effect on the future pattern of these activities A renewal is likely to be preceded by high maintenance costs and followed by low maintenance costs. This implies that a temporary deviation from the plan of maintenance and renewal activities, due to for example a change in traffic, will have an effect on the future pattern of these activities
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