Project summary The main objective of the FUNDING proposal is to develop a scientifically sound approach to the funding of large transport infrastructure investments in the EU. Two different avenues are explored for the funding of these investments. The first is the creation of an EU transport infrastructure fund financed by mark-ups on transport activities. The second is the use of mark-ups on the users¿costs charged by the infrastructure suppliers that make the investment. The economics of infrastructure funds and the mark up method are first explored conceptually. For the infrastructure fund we examine three questions: how to spend the resources of the infrastructure fund (what type of projects, subsidies or loans,..), how to finance the operation of the fund (contributions out of general budget or earmarked taxes on transport) and what decision rules to use for the fund (political body versus agency, accountability issues,..). These questions are explored using economic theory (political economy, risk pooling, network-spillovers) but also using experience with infrastructure funds and mark-ups in EU and other federal countries like the US. The conceptual phase leads to the formulation of a limited number of alternative scenarios for a European infrastructure fund and for the use of mark-ups. These scenarios are adjusted as a function of the financing gaps that are calculated for the horizon 2020 by mode and country given the accepted TEN investments. The financing gap is computed using the SCENES ¿ TREMOVE baseline 1995-2020. The performance of the alternative infrastructure fund and mark-up scenarios is tested using two different but complementary modeling approaches. Each of the modeling approaches tests the same set of scenarios but analyses a different dimension of the problem. The first model is a multi-modal spatial general equilibrium model of the EU that checks the spatial equity effects of infrastructure aid and mark-ups for over 1300 regions in the EU. The second approach is a case study approach. We take 5 important ¿TEN¿ infrastructure projects and use for each of them the same multi-modal pricing and investment assessment model. For every project, this model is calibrated on the basis of the cost benefit study that has led to the selection of the ¿TEN¿ project. The assessment model (MOLINO II) represents the transport flows, pricing and investment decisions related to the project itself. It is complemented with corridor analysis information provided by a corridor model for freight and passengers. The case study approach will enable the effect of infrastructure fund scenarios on each of the investment projects to be examined in terms of financial structure, advancing or delaying the investment decisions, the pricing decisions and on welfare. The conceptual analysis together with the different model tests allow a guideline for improved financing structures for new European transport infrastructures to be advanced. 2 Project objective(s) The project objectives are - to develop a scientifically sound methodology for the use of a EU transport infrastructure fund and or mark-ups to fund investments - to estimate the financing gap for investments by mode and by country at horizon 2020 - to develop alternative scenarios for investment infrastructure funds and mark-ups that range between heavy reliance on a European fund and low mark-ups and at the other extreme a small role for the European fund and an important role for the internal funding of investments via mark-ups; - to test the effect of different infrastructure fund scenarios on the transport investments and network developments in the long term using network models as well as project level models. - To develop research in the area of pricing and investment in transport