Economic Benefit of Maximum Truck Weight Regulation Change for Estonian Forest Sector
Discussions on Estonian Economic Policy No. 2/2011
14 Pages Posted: 6 Feb 2012
Date Written: November 1, 2011
Current paper is focused on analyzing the economic benefit of increasing maximum allowed truck weight for Estonian forest sector. It is producing economic benefits to the firms of forest sector in two broad areas. The change in truck weight limit regulation is causing the reduction of transportation costs for forest sector firms.
Increase of the truck weight limit from current 44 up to 60 tonnes is going to reduce the share of transportation costs in roundwood material prices from 17.7% to 14.2%.
Secondly, the growth of demand for roundwood as the result of decreasing transportation costs was determined. Using own and cross elasticities between road and rail transportation, the apparent domestic consumption is expected to grow in the range from 0.7-4.6 % depending on the change of regulation from 44 to 60 tonnes, whereas in the most probable situation (change from 52 to 60 tonnes) the growth in apparent domestic consumption is 0.3-1.1%.
Keywords: maximum truck weight, forest sector, transportation demand, modal shift, economic benefit, elasticities
JEL Classification: L51, L92
Suggested Citation: Suggested Citation