SNS Infra

Points of Departure

Increased Need for Investments and Stricter Security Requirements

A large portion of the Swedish transport, energy and water infrastructures were built in the period 1950–1980 and have at this stage reached the end of their technical life. There are also indications that the level of necessary maintenance investments has been insufficient. At the same time, changes in society, such as decarbonization, digitalization and Sweden joining NATO, lead to demands for new investments in both physical and digital infrastructures.

Expanding the digital infrastructure and the links between physical and digital systems have the potential to increase the efficiency of all these systems. High-speed networks (5G, 6G) may improve our ability to monitor, collect data and continuously analyze by means of various AI tools. At the same time, technological developments also result in being exposed to various risks, such as cyberattacks. This means that these developments not only require robust security analyses but also finding the right balance between efficiency and resilience in the systems.

Market and Regulatory Failures Prevent These Developments

Several types of infrastructures enable many people to use them but not at the expense of other people’s ability to use them. These types of public goods are frequently funded by the public sector. Otherwise, there would not be enough investments in these goods due to the fact that “free-rider problems” might easily arise. This refers to individuals benefitting from the infrastructure without contributing to its funding, which could lead to insufficient investments. At the same time, the political system faces well-known challenges that risk leading to insufficient funding for things that are not directly noticeable to voters, such as maintenance, or projects where the benefits will not materialize until well into the future.

Infrastructures are also associated with social benefits (or things that are not beneficial) that are not reflected in the costs. The typical solution to this problem is that the government addresses these so-called market failures by means of subsidies, taxes or bans. If, however, policymakers do not request relevant data/analyses or ignore the impact analyses made, we might instead refer to these as regulatory failures. These too may lead to infrastructures being either too great or too limited in scope as well as a lack of maintenance and the overuse of existing systems.

Infrastructure projects are inherently complicated. They are extensive and often require collaboration between several different actors. If there are coordination problems or uncertainties regarding responsibilities and mandates between private and public actors, between different policymaking levels or horizontally between government agencies, there is a risk of prioritizing the wrong things or having a flawed sharing of risks.

The rules in the Swedish fiscal policy framework impose restrictions on how the public sector may borrow money for infrastructure. There are also legal restrictions on how the business sector may invest in infrastructure, including rules on user fees and procurement.

Ongoing Studies

Taxes and User Fees in Transportation

The report describes the principles that usually motives taxation and the use of user fees within the system of transportation. It also provides an overview of how the Swedish transportation system is being used today, and of public revenues and costs for each mode of transportation, both measured as total and marginal costs. The report also discusses how future taxation of users of transportation is expected to develop in the future, especially against the backdrop of the rapid electrification of road traffic.

Författare: Maria Bratt Börjesson, professor of economics with a focus on transportation, The Swedish National Road and Transport Research Institute (VTI), and adjunct professor of economics at Linköping university, and Jacob Lundberg, researcher in economics at the research institute of industrial economics (IFN).

Launch 2026.

Municipal Investments in Water and Wastewater Systems: A Neglected Area?

There is a significant and underfunded investment need in Sweden’s municipal water and wastewater systems—possibly due in part to political incentives in many municipalities to keep user fees low. The sector also faces challenges related to skills supply, a shifting security landscape, accelerating climate change, and emerging environmental pollutants. This report explores whether there is a link between investments and user satisfaction, and whether organizational structure — such as municipal administration versus municipally owned corporation— correlates with satisfaction levels and other outcomes.

Authors: Andreas Bergh, Associate Professor of Economics at Lund University; Gissur Erlingsson, Professor of Political Science at the Centre for Municipal Studies (CKS), Linköping University; and Lovisa Persson, Senior Lecturer in Economics at Kristianstad University.

Launch 2027.

Resilient and Efficient Local Electricity Supply

The report examines how Sweden’s regional and local electricity networks can become more resilient to disruptions — such as extreme weather, technical failures, and sabotage — while ensuring that resources are used in a socio-economically efficient manner. Based on the current design of the electricity market and network regulation, the study analyzes the trade-offs between cost efficiency and reliability of supply, and how regulatory incentives influence network companies’ investments, outage management, and compensation schemes. The report also includes an empirical analysis of whether publicly and privately owned distribution networks differ in terms of service quality.

Authors: Pär Holmberg (Associate Professor of Economics and PhD in Electric Power Engineering, IFN), Erik Lundin (PhD in Economics, IFN), and Thomas Tangerås (Professor of Economics, Mälardalen University, affiliated with IFN)

Launch: Autumn 2027

More reports will be added.