Additional transport costs for goods produced in areas eligible for regional operating aid

The purpose of this report is to document additional transport costs of goods which have been produced or processed in areas within the regional aid map, as well as suggesting a model by which these additional transport costs can be compensated for. The authors estimate such transport costs to be, in average, 22% of the costs for outgoing transport and 21% of the costs for ingoing transport for firms within these areas eligible for operating aid. The authors also argue that the additional transport costs are progressive with respect to the transport distance. Calculations suggest that today’s rates for operating aid are justifiable; they seem to capture the additional transport costs with just a slight overcompensation that is well within the error margin of the model. The authors also propose a new scheme with more differentiated rates, higher rates for shorter transports and lower rates for medium transports, compared to today’s scheme. The expected aid will be similar to today’s level at average. However, the authors argue that the progressivity of the new scheme will match that of the additional transport costs to a greater extent.