Funding roads in a carbon-zero future, NZIER public discussion paper 2019/2

20 September 2019

New Zealand Institute of Economic Research (Inc)
Media release, 20 September 2019
For immediate release

In our latest public discussion paper, Principal Economist Chris Nixon looks at how to fund the cost of upgrading New Zealand’s roads in a carbon-zero future.

Funding the future

The government and local governments around NZ will have less money to fund transport investment as it moves towards its carbon-zero goal. Currently the bulk of funding for investment comes from fuel taxes, which are expected to reduce drastically as we move to electric vehicles.

At the same time, the latest Government Policy Statement on land transport will force new thinking and create significant challenges for transport planners. Success will require a heavy investment in public transport, light rail, and cycleways.

“A zero-carbon economy is a great goal, but it will require transformational thinking and a great deal of assistance from technology. One of the key determinants of success will be how we transition away from fuel taxes to a road pricing approach” said Principal Economist Chris Nixon. “Forms of congestion charging have been successful in a number of countries and cities such as London, Stockholm, Oslo, Milan and Singapore”.

We’re in for quite a ride

Traffic congestion is an everyday occurrence in cities and can add hours to your drive during the holiday season. Our research looks at the strengths and weaknesses of various approaches to road pricing, including area charging, cordon tolls, corridor pricing and high occupancy toll (HOT) and high occupancy vehicle (HOV) lanes.

“Until drivers are incentivised to stop and think about how and when they use selected roads, congestion will remain a problem” said Nixon. “Now is the time to start thinking about how to reduce congestion in a way that is fair to all Kiwis.”

The current approach does a relatively fair job in ensuring that those who do most damage to roads pay. “The focus of this paper is on congestion pricing and how to fund the cost of upgrading roads. We find that carefully implemented road pricing approaches will go a long way to ameliorating these challenges.”

Read the discussion paper here.

For further information please contact:
Chris Nixon, Principal Economist
021 633 127, chris.nixon@nzier.org.nz

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