Chapter 9 The swiss railway investment fund

The new alpine railway tunnels and the distance-dependent heavy vehicle fee (HVF) are key elements of Swiss transport policy. The tunnels are financed by the railway investment fund, which is fed mainly by a two-thirds share of the revenues from the HVF. We analyse the railway investment fund and earmarking policy using a modified version of the MOLINO model. We find that with given investment, welfare increases with the proportion of HVF revenues that are allocated to the rail fund. The current practice of using two-thirds of HVF revenues to finance new railway infrastructure is therefore welfare enhancing although full earmarking would be better still. Alternative pricing regimes with higher transport prices are also found to be superior to the status quo.