As of October 1, 2016, the SWUTC concluded its 28 years of operation and is no longer an active center of the Texas A&M Transportation Institute. The archived SWUTC website remains available here.


SWUTC Research Project Description

Transportation Funding for a Changing Light-Duty Vehicle Fleet: Pricing Model and Evaluation of Impacts on Society

University:  University of Texas at Austin

Principal Investigator:
C. Michael Walton
Department of Civil and Environmental Engineering
(512) 471-4636

Project Monitor:
Duncan Stewart
Transportation Research Engineer
Research & Technology Implementation Office
Texas Department of Transportation
Austin, TX 78701

Funding Source:  USDOT and State of Texas General Revenue Funds

Total Project Cost: $79,285

Project Number:  600451-00073

Date Started: 5/1/12

Estimated Completion Date:  6/30/13

Project Summary

Project Abstract:
Changing light-duty vehicle fleet composition due to increased fuel economy standards and alternatively fuel vehicles have caused a decline in transportation revenue for surface transportation programs by requiring that less fuel be consumed per-capita. This project investigates the impact that the changing vehicle fleet has on transportation funding and proposes alternative transportation funding strategies that are not sensitive to fuel consumption much like state and federal gas taxes. Pricing models are proposed for each alternative strategy, which meet funding and equity objectives, and societal impacts are assessed. Finally, policy and implementation recommendations are made.

Project Objectives:
This study aims to meet the following objectives:

  • Understand how the changing, more fuel-efficient, light-duty vehicle fleet will impact state and federal transportation revenues
  • Explore alternative transportation funding strategies and gain understanding of their feasibility and potential for revenue generation
  • Develop a pricing model for each revenue generation strategy that would make transportation revenue accounts at least revenue neutral
  • Assess impacts that each revenue generation strategy would have on society

Task Descriptions:
Task 1. Complete literature review on alternative transportation revenue strategies
The literature review will provide a discussion of the current status of various alternative revenue generation strategies in terms of their stage of development, public acceptance, and other characteristics. Findings will be drawn from pilot studies, which have been completed (and some are still on-going) in various states, and from academic papers.

Task 2. Research evolving fuel economy, light-duty vehicle fleet, and impacts on revenue
Research will be conducted on changing fuel economy standards and the relationship between these standards and their effects on the composition of the light duty vehicle fleet will be determined. Insights into other factors that will effect fleet composition such as increased alternative fuel vehicle market shares will also be researched. Finally, a statement of understanding of how such factors will impact revenue, and to what extent, will be produced.

Task 3.  Develop list of feasible alternative revenue generation strategies for pricing model development
A list of feasible alternative revenue generation strategies will be developed based on the literature review and further research on revenue generation strategies. Revenue strategies will be selected based on their ability to meet funding objectives such as revenue generation ability, implementation barriers and cost, public acceptance.

Task 4.  Research pricing models
Research will be conducted, which will be used to inform the development of pricing models for each of the revenue generation strategies. Emphasis will be placed on understanding how tax rates are developed in practice and how prices are determined. In addition, further information required to develop pricing models will be gathered.

Task 5.  Develop pricing models
In accordance with research gathered, pricing models will be developed for each revenue generation strategy.

Task 6.  Evaluate impacts on society for each revenue generation strategy
The impacts that each revenue generation strategy is projected to have on society will be investigated. Each pricing model will be evaluated in terms of its impact on social equity, driving behavior, and other factors will be considered.

Task 7.  Final report with policy and tax recommendations and presentation of results
A final report on changing fleet composition, alternative revenue generation strategies, pricing models and societal impacts will be completed along with policy recommendations for implementation. A presentation of finding will be made to state transportation officials.

Implementation of Research Outcomes:
Advanced fuel economies in both traditional internal combustion engine vehicles (ICEs) and electric vehicles (EVs) have a strong influence on transportation revenue by reducing fuel consumption per vehicle and ultimately drawing down the amount of fuel tax revenue received. It is expected that more ICE vehicles with advanced fuel economies and EVs, especially gasoline hybrid EVs, will enter the roadway in coming years, and fuel tax revenues and the Highway Trust Fund will increasingly become more affected. This study estimated the impact that increased sales of advanced ICEs and EVs will have on future fuel tax revenues by drawing on industry estimates of future EV and ICE market shares and anticipates future fleet mix and fuel economy for both vehicle technologies. An estimation process overview is provided and assumptions are described.

Products developed by this research include:

Poster Presentation:  At the Transportation Research Board Annual Meeting, January 2013.

Poster Presentation:  At the Center for Transportation Research Symposium, April 2013.

Impacts/Benefits of Implementation:
This research is one the first studies to take a comprehensive view of the impact that advanced fuel economy and electric vehicles may have on transportation funding in the U.S. through reduced fuel consumption and fuel tax revenues. Study findings will be helpful for public transportation agencies that seek supporting arguments for development of alternative transportation revenue generation methods. In addition, the findings could serve to improve public knowledge and attitudes, as well as changing behavior, practices, decision-making and/or policies towards transportation funding in the U.S.

Web Links:
Final Technical Report