Dynamics in rail infrastructure provision: maintenance and renewal costs in Sweden

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.