The Gothenburg congestion charges: cost–benefit analysis and distribution effects

This paper performs an ex-post cost–benefit and distribution analysis of the Gothenburg congestion charges introduced in 2013, based on observed effects and an ex-post evaluated transport model. Although Gothenburg is a small city with congestion limited to the highway junctions, the congestion charge scheme is socially beneficial, generating a net surplus of €20 million per year. From a financial perspective, the investment cost was repaid in slightly more than a year and, from a social surplus perspective, is repaid in < 4 years. Still, the sums that are redistributed in Gothenburg are substantially larger than the net benefit. In the distribution analysis we develop an alternative welfare rule, where the utility is translated to money by dividing the utility by the average marginal utility of money, thereby avoiding putting a higher weight on high-income people. The alternative welfare rule shows larger re-distribution effects, because paying charges is more painful for low-income classes due to the higher marginal utility of money. Low-income citizens pay a larger share of their income because all income classes are highly car dependent in Gothenburg and workers in the highest income class have considerably higher access to company cars for private trips. No correlation was found between voting pattern and gains, losses or net gain.