An assessment of the political acceptability of congestion pricing

There is renewed interest in implementing congestion pricing in metropolitan areas throughout the US. This paper reviews changes in the transportation policy environment that have led to this renewed interest and identifies the major interest groups that support congestion pricing. A case study is used to demonstrate that significant barriers to congestion pricing implementation continue to exist. The paper concludes with some suggestions for developing politically acceptable pricing alternatives.     

Towards marginal cost pricing: A comparison of alternative pricing systems

European urban areas are marred by the problems of congestion and environmental degradation due to the prevailing levels of car use. Strong arguments have thus been put forward in support of a policy based on marginal cost pricing (European Commission 1996). Such policy measures – which would force private consumers to pay for a public service that was previously provided "for free" – are, however, notoriously unpopular with the general public and hence also with their elected representatives – the politicians. There is thus an obvious tension between economic theory, which suggests that marginal cost pricing is the welfare maximising solution to urban transport problems, and practical experience, which suggests that such pricing measures are unwanted by the affected population and hence hard to implement through democratic processes. The AFFORD Project for the European Commission has aimed to investigate this paradox and its possible solutions, through a combination of economic analysis, predictive modelling, attitudinal surveys, and an assessment of fiscal and financial measures within a number of case study cities in Europe. In this paper the methodology and results obtained for the Edinburgh case study are reported in detail. The study analyses alternative road pricing instruments and compares their performance against the theoretical first best situation. It discusses the effect of coverage, location, charging mechanism and interaction with other instruments. The paper shows that limited coverage in one mode may lead to a deviation from the user pays principle in other modes, that location is as important as charge levels and that assumptions about the use of revenues are critical in determining the effect on equity and acceptability. Finally the results show that a relatively simple smart card system can come close to providing the economic first best solution, but that this result should be viewed in the context of the model assumptions.     

Distributional impacts of road pricing: The truth behind the myth

This paper shows that road pricing can be regressive, progressive or neutral, and refutes the generalised idea that road pricing is always regressive. The potential distributional impacts of a road pricing scheme are assessed in three English towns. It is found that impacts are town specific and depend on where people live, where people work and what mode of transport they use to go to work. Initial impacts may be progressive even before any compensation scheme for losers is taken into account. When the situation before the scheme is implemented is such that majority of drivers entering the area where the scheme would operate come from households with incomes above the average, it can be expected that, once the scheme is implemented, these drivers coming from rich households will continue to cross the cordon and will be prepared to pay the charge. In such a case the overall effect will be that on average, rich people will pay the toll and poor people will not.     

A cross-country study of fairness and infringement on freedom as determinants of car owners' acceptance of road pricing

Jakobsson et al. (2000) found that in Sweden public acceptance of road pricing decreases if it is perceived to be unfair and to infringe on freedom. The present study reports a survey investigating whether the same effects are found in the Asian countries of Japan and Taiwan. The results indicate that fairness plays the same role. However, income had a direct effect on acceptance in Taiwan but not in Japan or Sweden.     

Using the revenues from congestion pricing

The economic theory behind congestion pricing relies on using the revenues to help compensate highway users. But can practical methods of using revenues come close to achieving this compensation, and still have salient appeal to important political groups? This paper investigates the possibilities for designing a package of revenue uses that can achieve these twin goals. The suggested approach returns two-thirds of the revenues to travelers through travel allowances and tax reductions, and uses the rest to improve transportation throughout the area, including affected business centers. By replacing regressive sales and fuel taxes, this approach offsets the tendency of the prices alone to have a regressive distributional impact. By lowering taxes, funding new highways, improving transit, and upgrading business centers, the package provides inducements for support from several key interest groups. The potential amounts of money involved are discussed using nationwide data, and in more detail using a case study of ubiquitous facility pricing throughout the Los Angeles region. Illustrative calculations of the effects on various individuals confirm that such a package can create net benefits for a wide spectrum of people and interest groups.     

Traffic congestion pricing methodologies and technologies

This paper reviews the methods and technologies for congestion pricing of roads. Congestion tolls can be implemented at scales ranging from individual lanes on single links to national road networks. Tolls can be differentiated by time of day, road type and vehicle characteristics, and even set in real time according to current traffic conditions. Conventional toll booths have largely given way to electronic toll collection technologies. The main technology categories are roadside-only systems employing digital photography, tag & beacon systems that use short-range microwave technology, and in-vehicle-only systems based on either satellite or cellular network communications. The best technology choice depends on the application. The rate at which congestion pricing is implemented, and its ultimate scope, will depend on what technology is used and on what other functions and services it can perform.     

Estimating commuter mode choice: A discrete choice analysis of the impact of road pricing and parking charges

Automobile use leads to external costs associated with emissions, congestion, noise and other impacts. One option for minimizing these costs is to introduce road pricing and parking charges to reduce demand for single occupant vehicle (SOV) use, while providing improvements to alternatives to encourage mode switching. However, the impact of these policies on urban mode choice is uncertain, and results reported from regions where charging has been introduced may not be transferable. In particular, revealed preference data associated with cost recovery tolls on single facilities may not provide a clear picture of driver response to tolls for demand management. To estimate commuter mode choice behaviour in response to such policies, 548 commuters from a Greater Vancouver suburb who presently drive alone to work completed an individually customized discrete choice experiment (DCE) in which they chose between driving alone, carpooling or taking a hypothetical express bus service when choices varied in terms of time and cost attributes. Attribute coefficients identified with the DCE were used in a predictive model to estimate commuter response to various policy oriented combinations of charges and incentives. Model results suggest that increases in drive alone costs will bring about greater reductions in SOV demand than increases in SOV travel time or improvements in the times and costs of alternatives beyond a base level of service. The methods described here provide an effective and efficient way for policy makers to develop an initial assessment of driver reactions to the introduction of pricing policies in their particular regions.     

Edinburgh's Congestion Charging Plans: An Analysis of Reasons for Non-Implementation

Abstract

The City of Edinburgh in Scotland in the UK had advanced plans for a congestion charging scheme until 25 February 2005. However, these plans were abandoned at that time after a referendum that resulted in a ‘no vote’. This paper explains the origins of the scheme, outlines its nature, extent, charging technology and predicted effect; it also analyses the difficulties that exist when attempting to plan and implement such a scheme in a particular governance context, and when there is little unanimity of public opinion about the need for a scheme.

As well as the primary documentation from the proposals (e.g. public inquiry submissions, papers to government), the paper also draws upon a series of face-to-face interviews that were undertaken with key stakeholders. It also provides an analysis of press coverage in the local (Edinburgh) and national (Scottish) newspapers in the run-up to the referendum. These sources explain both the systemic and more local barriers to the scheme's implementation.

The paper draws key lessons which are important for authorities considering the implementation of a road user charging scheme, by suggesting how legislative and governance barriers to implementation can be reduced. The lessons are of relevance world wide.     

Quantifying the benefit of responsive pricing and travel information in the stochastic congestion pricing problem

This paper is concerned with roadway pricing amidst the uncertainty which characterizes long-term transportation planning. Uncertainty is considered both on the supply-side (e.g., the effect of incidents on habitual route choice behavior) and on the demand-side (e.g., due to prediction errors in demand forecasting). The framework developed in this paper also allows the benefits of real-time travel information to be compared directly against the benefits of responsive pricing, allowing planning agencies to identify the value of these policy options or contract terms in publicly-operated toll roads. Specifically, six scenarios reflect different combinations of policy options, and correspond to different solution methods for optimal tolls. Demonstrations are provided on both the Sioux falls and Anaheim networks. Results indicate that providing information to drivers implemented alongside responsive tolling may reduce expected total system travel time by over 9%, though more than 8% of the improvement is due to providing information, with the remaining 1% improvement gained from responsive tolling.     

Road pricing: some further comments

This paper extends the discussion of certain problems associated with road pricing raised in an earlier contribution to this journal. Firstly it is shown that where the value of time varies between different groups of traffic using the same congested road, optimal road pricing requires price discrimination between the groups such that those with the lowest value of time pay the highest charge and suffer the greatest losses. However, a uniform price based on an “equity” value of time would reduce the relative distributional effects. Secondly the paper takes up the suggestion that queueing (and by extension congestion) may be positively helpful in the allocation of resources and shows that this is not in general correct although there are situations in which the use of queueing alongside conventional pricing may have a role to play. Finally it is argued that governments’ apparent lack of enthusiasm for road pricing stems as much from political considerations as the more technical problems of applying it.     

Just pricing: the distributional effects of congestion pricing and sales taxes

Those who oppose tolls and other forms of road pricing argue that low-income, urban residents will suffer if they must pay to use congested freeways. This contention, however, fails to consider (1) how much low-income residents already pay for transportation in taxes and fees, or (2) how much residents would pay for highway infrastructure under an alternative revenue-generating scheme, such as a sales tax. This paper compares the cost burden of a value-priced road, State Route 91 (SR91) in Orange County, California with the cost burden under Orange County’s local option transportation sales tax, Measure M. We find that although the sales tax spreads the costs of transportation facilities across a large number of people inside and outside Orange County, it redistributes about $3 million (USD) in revenues from less affluent residents to those with higher incomes. The entire Measure M program redistributes an estimated $26 million from low-income residents to the more affluent. Low-income drivers as individuals save substantially if they do not have to pay tolls, but as a group low-income residents, on average, pay more out-of-pocket with sales taxes.

Evaluating parking reservation policy in urban areas: An environmental perspective

This paper investigates a parking reservation mechanism to reduce car cruising to find parking. To consider the benefits for drivers and parking facility providers, we charge drivers for making reservations in addition to parking fees, by introducing a reservation pricing model that makes reservation prices equivalent to the value of saved search time. By modeling the number of vacant spaces as a stochastic variable, and applying binomial pricing methods, parking reservation prices are obtained. Numerical examples based on the data for two parking facilities in Taiwan are given.     

Optimization of transport investment and pricing policies: the role of transport pricing in network design

This paper investigates the role of transport pricing in network design and describes two facts about flow pattern in a transportation system. The first, illustrated by an example of Braess paradox, is that adding a new link to the network does not necessarily minimize the total travel time. The second is that introducing of appropriate toll pricing may reduce not only the total network time but also the travel time for each individual traveller. It follows with the investigations of different system objectives and different pricing policies (only toll pricing and distance‐based pricing are considered), and shows how they affect the system performance and flow pattern. Lastly, a systematic optimization process is proposed for integrated planning of transport network and pricing policies.     

Road user charging design: dealing with multi-objectives and constraints

This paper proposes an innovative approach for designing a road user charging scheme to meet multiple policy objectives. Three practical features are integrated into the design methodology including (i) cordon formation, (ii) a set of design constraints, and (iii) multiple objectives of the scheme. The methods also consider possible responses of road travellers to the charging scheme. Two methods based on genetic algorithms (GA) are developed for optimising a charging cordon scheme with constraints and with multiple objectives. The dynamic self-adaptive penalty GA and Non-dominated Sorting GA II (NSGA-II) are applied to the constrained design and multi-objective design respectively. The objective functions or constraints considered include social welfare improvement, revenue generation, and distributional equity impact. A case study of the City of Edinburgh is presented and common characteristics of charging cordon designs which perform well against the three objectives are discussed.

Why experience changes attitudes to congestion pricing: The case of Gothenburg

Many cities have seen public support for congestion charges increase substantially after charges have been introduced. Several alternative explanations of this phenomenon have been suggested, but so far little evidence has been available to assess the relative importance of these explanations. We study attitudes to congestion pricing in Gothenburg before and after congestion charges were introduced in January 2013. Attitudes to the charges did indeed become more positive after the introduction, just as in previous cities. Using a two-wave postal survey, we separate contributions to the attitude change from a number of sources: benefits and costs being different than anticipated, use of hypothecated revenues, reframing processes, and changes in related attitudes such as attitudes to environment, equity, taxation and pricing measures in general. We conclude that the dominant reason for the attitude change is status quo bias, rather than any substantial changes in beliefs or related attitudes, although some of these factors also contribute. Contrary to a common belief, nothing of the attitude change is due to benefits being larger than anticipated.     

Distributional effects of road pricing: Assessment of nine scenarios for Paris

The starting point of this paper is to consider that there is no general answer to the question of the equity of urban road pricing. We therefore simulate and compare the distributional effects on commuters of nine toll scenarios for Paris, assuming that utility is nonlinear in income. We show that the distributional pattern across income groups depends crucially on the level of traffic reduction induced by tolling. Stringent tolls are more favourable to low-income motorists. Equity effects also vary with toll design. Compared to a reference scenario which uniformly charges all motorists driving within Paris, an inbound cordon toll is detrimental to low-incomes. Conversely, granting a rebate to low CO₂ emission cars slightly improves their situation while an exemption for Paris residents is neutral. Surprisingly, it matters little for social equity whether toll revenues are allocated to all commuters or solely to public transport users.     

Anticipating new-highway impacts: Opportunities for welfare analysis and credit-based congestion pricing

Pricing of roadways opens doors for infrastructure financing, and congestion pricing seeks to address inefficiencies in roadway operations. This paper emphasizes the revenue-generation opportunities and welfare impacts of flat-tolling schemes, standard congestion pricing, and credit-based congestion pricing policies. While most roadway investment decisions focus on travel time savings for existing trips, this work turns to logsum differences (which quantify changes in consumer surplus) for nested logit specifications across two traveler types, two destinations, three modes and three times of day, in order to arrive at welfare- and revenue-maximizing solutions. This behavioral specification is quite flexible, and facilitates benefit-cost calculations (as well as equity analysis), as demonstrated in this paper.The various cases examined suggest significant opportunities for financing new roadway investment while addressing congestion and equity issues, with net gains for both traveler types. Application results illustrate how, even after roadway construction and maintenance costs are covered, receipts may remain to distribute to eligible travelers so that typical travelers can be made better off than if a new, non-tolled road had been constructed. Moreover, tolling both routes (new and old) results in substantially shorter payback periods (5 versus 20 years) and higher welfare outcomes (in the case of welfare-maximizing tolls with credit distributions to all travelers). The tools and techniques highlighted here illustrate practical methods for identifying welfare-enhancing and cost-recovering investment opportunities, while recognizing multiple user classes and appropriate demand elasticity across times of day, destinations, modes and routes.     

Spatial impacts of road pricing: Accessibility, regional spillovers and territorial cohesion

Road pricing policies are gaining prominence in EU countries. These policies have positive impacts leading to mobility patterns which are socially and environmentally more desirable, but they also have negative impacts. One negative impact is to be found in regional accessibility, due to the increase in generalized transport costs. This study presents a methodology based on accessibility indicators and GIS to assess the accessibility impacts of a road pricing policy. The methodology was tested for the Spain’s road network considering two road pricing scenarios. It enables not only the more penalized regions to be identified but also negative road pricing spillover effects between regions. These effects are measured in terms of accessibility changes occurring in one region produced by charges implemented in another region. Finally, the study of accessibility disparities (by calculating inequality indexes for each of the scenarios considered), provides policymakers with useful information regarding the impact of road pricing policies from the point of view of territorial cohesion.     

Road safety: Research and reality 6th Reuben Smeed memorial lecture

Research has had a major influence in advancing road safety in Britain over more than 60 years. Lessons learnt in the early years provide a model for effective conduct of research of high quality to aid and influence practice and policy making. As the control of road safety research has become more widespread over the last decade and effort more diffused, problems have arisen which militate against the appropriateness and successful application of findings. Conflicts between researchers, practitioners and policy makers stem from lack of mutual understanding of their roles, the need to balance scientific rigour against the urgency of government and practice, and inadequate coherent communication.The potential for road casualty reduction in Britain has been addressed at intervals since the early 1960s. Assessment of the latest trends in casualties, set against current activities to achieve target reductions, shows the need for a further update to redefine priorities. For future advancement of road safety, a 20-point plan of activities is suggested. Technical, social, economic and institutional difficulties, of varying degrees, will need to be overcome to achieve the objectives of the plan. Most importantly, the academic and professional standing of road safety workers needs to be raised.