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Mobility & Transport - Road Safety

Funding and resource allocation

Funding and resource allocation



Funding and resource allocation

This function seeks to ensure that road safety funding mechanisms are established, sufficient and sustainable. At the same time, a rational framework for resource allocation allows the making of a strong business case for road safety investments based on cost-effectiveness and cost benefit analyses. To achieve more ambitious performance targets, new funding sources and mechanisms may need to be established [5].

OECD [52]Recommendation

Invest in road safety

Most countries need to improve their knowledge of expenditure on the consequences of road crashes, both by government and injury insurance companies, and investment in road safety improvement and trauma prevention. Road safety authorities need this information to prepare financial and economic evidence on the costs and effectiveness of proposed interventions in order to win whole-of-government support for funding innovative programmes and for transparency in resource allocation for crash prevention and treatment. There are opportunities for targeted road safety investments that provide competitive returns. Road safety practitioners and authorities should develop business cases for this investment. A step change in resources invested in road safety management and in safer transport systems is required to realize the achievement of ambitious road safety targets in most of the world.

Funding and mechanisms

The socio-economic costs of road crashes usually represent between 1% and 3% of a country's GDP (depending on whether a human capital or willingness to pay approach is used (the latter method is considered to be better practice). Many countries are unable to estimate the annual costs of road trauma to government and injury insurers, but the available evidence suggests that costs substantially outweigh the funds put into road injury prevention programmes [52].

Levels of public sector road safety investment in different countries are not readily identifiable, because many safety related expenditures are embedded in broader categories of expenditure across the transport, health, justice and education sectors.

General tax revenues:

Many best practice countries fund large components of their road safety programmes from general tax revenues, as part of the national budgeting processes. Often the specific road safety components are embedded within larger engineering, enforcement and education programmes and are difficult to identify as individual budget items. This approach to road safety funding is relatively simple to administer, but it lacks transparency in terms of determining equitable cost sharing across road user groups and in monitoring the financial performance of investments. Earmarked resources, wherever possible, can assist transparency of road safety investment and its value.

Road funds: Revenue sources for road funds typically come from fuel taxes, vehicle registration and licensing fees, and road user charges for heavy vehicles. There are few examples of road funds being used to finance road safety investments. In some countries like South Africa a small proportion of road fund income is dedicated to road safety activities, whereas in the New Zealand Road Safety to 2010 strategy, the road fund finances the national road safety enforcement programme, national road safety education, national publicity and awareness campaigns, national strategy management and coordination processes, national and local low-cost safety engineering measures, and general road network investments that contribute to improved road safety outcomes.

Examples of earmarked funding for road safety engineering in Sweden and Great Britain

Sweden: Road safety in Sweden is mostly funded by government and general revenue which is then distributed to the lead agency - the Swedish Roads Administration (SRA) and other sectors. In 1999, funding to the SRA was doubled with a total of SEK 8.5 billion ($US 1.25 billion) allocated to road safety over 10 years. An increased and earmarked allocation was made to allow resource for physical road safety measures such as roads with median guardrails, safer intersections and road shoulders. It has been estimated that approximately SEK 75 million (just under $US 11 million) per year of the SRA budget are spent on road safety projects.

Britain: In 1974 a legal duty was place on local authorities to establish systematic programmes for identifying high risk crash sites and developing remedial measures. The legislation also required local authorities to appoint road safety officers who were responsible for developing education and publicity programmes for the local authority. Aided by the development of national road safety guidelines, multi-disciplinary specialist safety teams grew up in many local authorities to carry out road safety engineering programmes and information work. Road safety engineering on local roads is financed by Central Government Capital Funds that are bid for by local authorities. In the 1980s, the Department of Transport and local government agreed that scheme funding should be ring-fenced such that it was used only for safety schemes which proved to be highly successful over its years of its operation. Annual funding rose rapidly and by 1997, comprised 6 times the amounts recorded in 1982

Source: Bliss and Breen, 2008 [5]

User fees: Many entry and exit services concerning measures such as driver licensing, vehicle inspection and operator licensing are directly funded from road user fees, paid either to the government agencies responsible or private sector agencies working on their behalf. These fees borne by users represent a substantial proportion of a country's total road safety investment.

Insurance levies: Some countries levy a fee on vehicle insurance premiums to help fund road safety programmes, but the amount of funding raised is generally small and is often used to fund education and publicity initiatives to improve road user awareness of road safety risks. Finland provides the best-known example of this approach.

Earmarked taxes: As well as various taxes and user charges being channelled to road funds for a variety of purposes, some taxes can be earmarked (or hypothecated) for a specific purpose. For example, revenue from traffic fines is used to finance road safety activities in some countries. The most recent example of this is the United Kingdom, where fines revenue from speed cameras is earmarked for road safety intervention at hazardous locations [1].

Resource allocation: Good practice countries establish a clear understanding of the total socio-economic cost of road crashes and the true value nationally of preventing deaths and serious injuries. Identifying this cost elevates the case for investment in road safety where identifiable savings can be made. In some countries the socio-economic cost of preventing a fatality is highly underestimated which can inhibit cost-benefit analysis. A nationally recognised basis for project evaluation enables road safety programmes and projects to compete successfully with projects serving other policy aims. See Cost benefit analysis web text for further information.