road pricing and traffic congestion as economics
TRANSCRIPT
Road Pricing and Traffic Congestion
AS Economics
Introduction to road pricing
• Road pricing is a market-based approach to reducing the scale of urban traffic congestion at peak times.
• To achieve a more efficient allocation of a scarce resource (road space) - by making motorists pays for some of the external costs they create.
• To achieve a modal shift towards mass passenger transport
• To bring about a reduction in demand for road space and consequent fall in traffic congestion at peak times
Introduction to road pricing (2)
• To promote a reduction of fuel consumption and pollution emissions
• Pricing raises revenue that can be earmarked for investment in mass transport infrastructure and services
• Curb the long term need for extra road space – bringing environmental benefits
The Economics of Road Pricing
Road pricing is a term invented by economists with the theory that the price of using a road should be equal to the cost of using the road. Not a new concept…
What Are the Advantages of Road Pricing?
• Obvious de-congestion effects. • BUT – other advantages…• Congested roads can lead to negative
externalities.• This means that the social cost of
consumption exceeds the private cost.• By reducing congestion, road pricing can
‘internalise’ these externalities.
What Are These Negative Externalities?
• These major negative externalities figure prominently in transportation economics. They include:– Air pollution; – Lack of traffic safety;– Waste (of petrol);– The potential for global warming is another
major externality which is more difficult to monetize.
What Are These Negative Externalities?
• Other negative externalities include:– Health effects – NHS costs etc;– Opportunity cost of sitting in traffic jams;– Costs to employers;– Costs of policing.
Examples of Modern Road Pricing Schemes in Operation
• Traditional methods include the use of toll booths and toll roads in countries such as France and Italy;
• London congestion charge;• Durham congestion charge;• Stockholm congestion tax – differing
methods;• Trondheim toll scheme.
Current congestion charge zone
Durham Congestion Charge
Case for a congestion charge
Exemptions &
Discounts
Reliability ofPublic
Transport
BusinessDeliveryTimes
PollutionEmissions
RevenueFor
PublicTransport
Reduced trafficdelays
CongestionCharging
What are the Aims of Road Pricing?
• Discouraging Driving: Making journeys less polluting and more efficient;
• Management: Congestion pricing/value pricing. Controlling when and where people drive, e.g. London charge, peak/off-peak charges;
• Encouraging use of public transport as a greener way of getting around.
• Financing: raising money to pay back the construction of the road, or to build new facilities for the public.
Disadvantages of Road Pricing
• Perceptions of fairness: is charging for a once “free” good unfair?
• Burden falls more heavily on the poor drivers than the rich – regressive taxation.
• New toll roads in a largely free system may be seen as unjust.
• Revenue use – can consumers be sure that their money is being well spent?
Focus on London Congestion Charge
• London was not the first city to adopt congestion charging.
• The stated aim of the scheme is to encourage travellers to use greener modes of transport
Information Failure
• Market failure due to information failure?• Information failure occurs when people
have inaccurate, incomplete, uncertain or misunderstood data, and so make potentially “wrong” choices…
• Misunderstanding the true benefits of public transport;
• Uncertainty about the true social costs of driving
Congestion Charge – A Success?
• Despite dire predictions for the scheme before its launch, the toll has improved the problem of congestion in London:– By 2004, a year after the launch of the scheme, traffic
had been cut by 18%, and delays were down 30%.– London’s bus service had improved dramatically:
29,000 more people were using the service.– Trains/tubes had seen a 10% increase in passengers.– Quality of life in the city had been improved.– 75% of Londoners now support the scheme.
• Some of the previously-stated aims of road pricing and the London CC have been achieved.
[stats from Transport for London]
Congestion Charge – A Failure?
• The congestion charge in London, while it may have reduced road congestion, has now made the public transport system ‘unbearable’ according to some Londoners.
• The consumer surplus has been reduced.• Many under-estimated the enormous cost of
implementing the Congestion Charge (i.e. cameras etc.).
• Businesses and shops in London have complained of a reduction in sales and a change in consumer tastes and preferences.
• The scheme has not raised as much funds (for investment into public transport) as was hoped. £68m as opposed to £200m.
Possible Alternatives?
• Electronic monitoring system (ERP): drivers are charged for how much they use their cars.
• Rationing road use:– Using registration numbers to allow/forbid
drivers to use roads at certain times (odd/even numbers?);
– Toll-roads.
• Raising the driving age.• Increasing price of fuel.
Electronic Road Pricing
• Cons:– Full communication
with satellite is not always maintained.
– Big Brother?
• Pros:– Easy to implement:
Galileo infrastructure already in place.
– No need for toll booths/collecting machines – reduces costs.
– Convenient pay-as-you-drive method for drivers.
Rationing Road Use
• Pros:– Rationing roads for
even/odd numbers would be simple and effective.
– Toll roads: drivers have to pay there and then: no external costs.
• Cons:– Very inconvenient for
people in a rush/emergencies.
– Costly to set up infrastructure of toll booths/machines
– Inconvenient paying method for drivers.
Raising the Driving Age
• Pros:– Simple to do.– No particular internal
costs.– Easy to
control/monitor.
• Cons:– Possible loss of
revenue?– Inequitable – punishing
people who are not responsible for congestion.
– Misses the point of road pricing.
Increasing the Price of Fuel
• Pros:– Making the polluter
pay directly.– Easy to implement.– Generates more
revenue for govt. to spend elsewhere.
– Disincentive to drive, so effective in reducing pollution.
• Cons:– The price of fuel is
already very high.– Regressive.
Summary of alternatives
• Parking restrictions and higher parking charges. In Perth (Australia), a free city centre bus service is funded by the revenue from a workplace parking levy
• Traffic management e.g. dedicated lanes for high occupancy vehicles
• Improvements of existing roads including variable speed limits and road widening
• Park & ride facilities located near motorway / main road nodes and express ways for bus transport
• Improving public transport e.g. greater inter-modality at railway stations (e.g. express buses)
Summary of alternatives
• Changes in the fares of public transport e.g. tax relief on rail and bus season tickets; changes to subsidies offered to private sector bus and rail operators.
• Tighter planning regulations on new home-building in urban areas which creates extra traffic
• Encouraging home working and promoting greater use of flexible hours working
• Ramp metering - using traffic signals, similar to traffic lights, to control the rate at which vehicles join a motorway from a slip road.
• Hard Shoulder Running involves temporarily opening the hard shoulder on motorways to traffic during peak periods.
• Dynamic Lanes use lights similar to cats’ eyes set in the surface of the road to alter the number and width of lanes on a motorway, usually in order to increase the capacity of the road.
Transport 2000
Suggested web links
• Congestion charging (Wikipedia)• BBC news reports on congestion charging• Transport for London