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.     

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.     

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.     

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.

Nonlinear pricing on private roads with congestion and toll collection costs

Nonlinear pricing (a form of second-degree price discrimination) is widely used in transportation and other industries but it has been largely overlooked in the road-pricing literature. This paper explores the incentives for a profit-maximizing toll-road operator to adopt some simple nonlinear pricing schemes when there is congestion and collecting tolls is costly. Users are assumed to differ in their demands to use the road. Regardless of the severity of congestion, an access fee is always profitable to implement either as part of a two-part tariff or as an alternative to paying a toll. Use of access fees for profit maximization can increase or decrease welfare relative to usage-only pricing for profit maximization. Hence a ban on access fees could reduce welfare.     

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.     

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.     

Urban delivery industry response to cordon pricing, time-distance pricing, and carrier-receiver policies in competitive markets

The paper develops a set of analytical formulations to study the behavior of the urban delivery industry in response to cordon time-of-day pricing, time-distance pricing, and comprehensive financial policies targeting carriers and receivers. This is accomplished by modeling the behavior of receivers in response to financial incentives, and the ensuing behavior of the carrier in response to both pricing and the receivers’ decisions concerning off-hour deliveries. The analytical formulations consider both the base case condition, and a mixed operation with both regular hour and off-hour deliveries; two pricing schemes: cordon time of day, and time-distance pricing; two types of operations: single-tour, and multi-tour carriers; and three different scenarios in terms of profitability of the carrier operation, which include an approximation to the best case, the expected value, and the worst case. The analyses, both theoretical and numerical, highlight the limitations of pricing-only approaches. In the case of cordon time of day pricing, the chief conclusion is that it is of limited use as a freight demand management tool because: (1) in a competitive market the cordon toll cannot be transferred to the receivers as it is a fixed cost and (2) the structure of the cost function, that only provides an incentive to the carrier to switch to the off-hours when all the receivers in the tour switch to the off-hours. The analyses of time-distance pricing clearly indicate that, though its tolls could be transferred to the receivers and provide an incentive for behavior change, the magnitude of the expected toll transfers under real life conditions are too small to have any meaningful impact on receivers choice of delivery times. In essence, the key policy implication is that in order to change the joint behavior of carrier and receivers, financial incentives—or programs that foster unassisted off-hour deliveries—should be made available to receivers in exchange for their commitment to do off-hour deliveries. As the paper proves, if a meaningful number of receivers switch to the off-hours, the carriers are likely to follow suit.     

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.     

The socio-cognitive links between road pricing acceptability and changes in travel-behavior

The objective of this study is to examine the effect of road pricing on people’s tendency to adapt their current travel behavior. To this end, the relationship between changes in activity-travel behavior on the one hand and public acceptability and its most important determinants on the other are investigated by means of a stated adaptation experiment. Using a two-stage hierarchical model, it was found that behavioral changes themselves are not dependent on the perceived acceptability of road pricing itself, and that only a small amount of the variability in the behavioral changes were explained by socio-cognitive factors. The lesson for policy makers is that road pricing charges must surpass a minimum threshold in order to entice changes in activity-travel behavior and that the benefits of road pricing should be clearly communicated, taking into account the needs and abilities of different types of travelers. Secondly, earlier findings concerning the acceptability of push measures were validated, supporting transferability of results. In line with other studies, effectiveness, fairness and personal norm all had a significant direct impact on perceived acceptability. Finally, the relevance of using latent factors rather than aggregate indicators was underlined.     

Labour market effects in assessing the costs and benefits of road pricing

Traffic congestion and the policies used to combat it have been studied extensively. One area which has received less attention is the secondary impacts of such policies. This paper uses a micro-simulation framework to study the effect on labour markets of road pricing. The key benefit of our chosen methodology is that it allows a simultaneous consideration of both commuting and migration decisions. We show that while welfare gains can be achieved through optimal charging, this may come at the price of decreased integration. This may manifest through either greater centralisation tendencies in population, or through unemployment disparities between regions.     

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.     

The tax treatment of company cars, commuting and optimal congestion taxes

In Europe, the preferential tax treatment of company cars implies that many employees receive a company car as part of their compensation package. In this paper, we consider a model in which wages and the decision whether or not to provide a company car are the result of direct negotiation between employer and employee. Using this framework, we theoretically and numerically study first- and second-best optimal tax policies on labour and transport markets, focusing on the role of the tax treatment of company cars. We obtain the following results. First, higher labour taxes and a more favourable tax treatment of company cars raise the fraction employees that receives a company car; congestion and congestion tolls reduce it. Second, in countries that provide large implicit subsidies to company cars, eliminating the preferential tax treatment of company cars may be an imperfect but quite effective substitute for currently unavailable congestion tolls. The numerical illustration, calibrated using Belgian data, suggests that it yields about half the welfare gain attainable through optimal congestion taxes. Third, the favourable tax treatment of company cars justifies large public transport subsidies; the numerical results are consistent with zero public transport fares. Finally, we find that earlier models that ignored the preferential tax treatment of company cars may have substantially underestimated optimal congestion tolls in Europe. The numerical illustration suggests that about one third of the optimal congestion toll we obtain can be attributed to the current tax treatment of company cars.     

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.     

Impact analysis of cordon-based congestion pricing on mode-split for a bimodal transportation network

This paper investigates the impact of cordon-based congestion pricing scheme on the mode-split of a bimodal transportation network with auto and rail travel modes. For any given toll-charge pattern, its impact on the mode-split can be estimated by solving a combined mode-split and traffic-assignment problem. Using a binary logit model for the mode-split, the combined problem is converted into a traffic-assignment problem with elastic demand. Probit-based stochastic user equilibrium (SUE) principle is adopted for this traffic-assignment problem, and a continuously distributed value of time (VOT) is assumed to convert the toll charges and transit fares into time-units. This combined mode-split and traffic-assignment problem is then formulated as a fixed-point model, which can be solved by a convergent Cost Averaging method. The combined mode-split and traffic-assignment problem is then used to analyze a multimodal toll design problem for cordon-based congestion pricing scheme, with the aim of increasing the mode-share of public transport system to a targeted level. Taking the fixed-point model as a constraint, the multimodal toll design problem is thus formulated as a mathematical programming with equilibrium constraints (MPEC) model. A genetic algorithm (GA) is employed to solve this MPEC model, which is then numerical validated by a network example.     

The effect of the London congestion charge on road casualties: an intervention analysis

The introduction of the congestion charge in central London on the 17th of February, 2003, led to a reduction in congestion. One factor that has not been fully analysed is the impact of the congestion charge on traffic casualties in London. Less car travel within the charging zone may result in fewer traffic collisions, however, as the number of pedestrians, cyclists, and motorcyclists increased after the introduction of the congestion charge, the number of traffic casualties associated with these groups may also have increased. Reductions in congestion can also lead to faster speeds. Therefore, there could be increases in injury severity for those crashes that do occur. An intervention analysis was conducted to investigate the effect of the congestion charge on traffic casualties for motorists, pedestrians, cyclists, and motorcyclists, both within the charging zone and in areas of London outside the zone. This was done for killed and serious injuries (known as KSI in British terminology) and for slight injuries to examine whether there were any shifts in severity outcomes. Our results suggest no statistically significant effect for total casualties in London, but within the charging zone there has been a statistically significant drop in motorist casualties, and possibly an increase in cyclist casualties. There is an associated effect of an increase in casualties of motorcyclists and cyclists in some areas outside the charging zone, suggesting that changes in the design of the congestion charge may be needed to achieve reductions in casualties.

Bus congestion, optimal infrastructure investment and the choice of a fare collection system in dedicated bus corridors

Microeconomic optimisation of scheduled public transport operations has traditionally focused on finding optimal values for the frequency of service, capacity of vehicles, number of lines and distance between stops. In addition, however, there exist other elements in the system that present a trade-off between the interests of users and operators that have not received attention in the literature, such as the optimal selection of a fare payment system and a designed running speed (i.e., the cruising speed that buses maintain in between two consecutive stops). Alternative fare payment methods (e.g., on-board and off-board, payment by cash, magnetic strip or smart card) have different boarding times and capital costs, with the more efficient systems such as a contactless smart card imposing higher amounts of capital investment. Based on empirical data from several Bus Rapid Transit systems around the world, we also find that there is a positive relationship between infrastructure cost per kilometre and commercial speed (including stops), achieved by the buses, which we further postulate as a linear relationship between infrastructure investment and running speed. Given this context, we develop a microeconomic model for the operation of a bus corridor that minimises total cost (users and operator) and has five decision variables: frequency, capacity of vehicles, station spacing, fare payment system and running speed, thus extending the traditional framework. Congestion, induced by bus frequency, plays an important role in the design of the system, as queues develop behind high demand bus stops when the frequency is high. We show that (i) an off-board fare payment system is the most cost effective in the majority of circumstances; (ii) bus congestion results in decreased frequency while fare and bus capacity increase, and (iii) the optimal running speed grows with the logarithm of demand.     

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.     

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.