Environmental Pricing-Theory and Practice: The Swiss Policy of Heavy Vehicle Taxation

In the transport sector, environmentally based pricing schemes are still quite uncommon. The obvious lag can be explained by technical implementation problems as well as the limited acceptance of advanced pricing schemes in transport. This paper deals with one of the rare examples where an implementation of the principle of internalising external costs did not fail: the Swiss Heavy Vehicle Fee. After a description of the fee the paper analyses to what extent it fits theoretical concepts and pricing principles. The factors that have been important for the political success of the HVF are discussed, and some conclusions are drawn from the Swiss experience of how to make environmental pricing work. © The London School of Economics and the University of Bath 2001