GE541Economic Geography of

TransportOctober 30th

Congestion Pricing: Theory and Practice

• Congestion Price Charging a substantial fee for vehicle operation at times and places subject to peak demand

• Monetary incentives toward behavior modification

• Recent policy interest in pricing policies such as road tolls and parking fees

• Focus on limiting traffic congestion

Road Pricing Examples

1. Singapore (1975)

2. Bergen, Oslo, Trondheim, Norway (circa 1990)

3. Auto Route A1 (France)

4. California 91 (1995)

5. London

6. Seoul, Korea

Singapore Area Licensing Scheme (1975)

A. Fee of US $1.50 - 2.5/day (exempting car pools & taxies, motorcycles & commercial trucks).

B. Above vehicles no longer exempt

C. Afternoon peaks included Car commuting (<4 riders) dropped 48% - 27%

Carpool & bus increased 41% - 62%

More Recent Electronic System Stringent Policies

Hong Kong and Cambridge, UK

Trials and Non Adoption

Scandinavian Toll Rings

Objectives:

Revenue Generation rather than Congestion Pricing

Both in Norway and Sweden

The latter may evolve into a congestion pricing

Stockholm

Dennis Package

• Improved public transit• New bypass roads and • Road pricing

[A toll ring - 15 year investment package]

North-South bypass route west of the city

Auto Route A1 N. France

Weekend Peak Spreading

April 1992

Red Tariff - Sunday 4:30 - 8:30 pm• Toll rates 25 - 56% higher than normal toll

• Open Tariff (lower toll rates) – before and after peak hours

Riverside Freeway (California)

(CA-I-91)

Private French toll road firm (Toll approximately $2.00)

Dulles Highway Tolls

Netherlands

Randstand Region

2,000 square miles

6 million people

Road Pricing Scheme Plan

Greater London

• £5 Charge in Central London

• A Success Story

Seoul Case

New York City Plan

The Politics of Road Pricing

• The Anglo Saxon Experience

US Government tried tolls on publicly owned and operated roads and bridges

No cities bought the idea [Distinction between road and home use pricing]

ISTEA experiments in congestion pricing

More interest in tolling growing, however, in controlling air pollution

(especially in inner portions of metro areas)

- in these cases, new construction almost impossible

Tolls in such situations can induce motorists to consider:

Demand Management Role of Tolling

alternative routes alternative modes and alternative travel times

1990 Clean Air Act

• All reductions of air pollution came initially from technologies

• Further reduction must come from behavioral changes

• Auto air pollution comes fromCold engine startsVMT

No discouragement of auto use in off-peak periods

Interest in ubiquitous tolling for environmental planners

Winners and Losers

Economists - focus on CBA

Gains to winners a must > Costs to losers so that society as a whole is better off.

Planners and engineers sensitive to the fact that such compensation seldom takes place, so that some parties are left worse off by tolling than before.

Tolling on Existing Road

Winners Losers

1. High value on travel time savings

1. People with low value of time

2. HOV lane users 2. People shifting to a competing untolled facility

3. Recipients of toll revenues

3. Users of the above competing facility

4. People who decide not to make this trip

• Political support for tolling difficult to put together. • Compensation packages?

Tolling a New Road

• Less losers

• More acceptable than tolling existing one (e.g. taking away an existing lane for a tolled HOV lane not popular)

Federal Gas Tax

4 cents/gallon 1950s

9 cents 1983

14 cents 1990

18 1/2 cents 1993

Gas tax weakens the case for imposing tolls