EKONOMI TRANSPORTASI

Lecture 9 : Road Pricing

 Introduction
Road pricing, in general, is a transport policy for charging
motorists a fee for using their vehicles within specific areas or
on specific roads.

Other names:
• Road user charging
• Congestion charging
• Congestion pricing
• Other specific terms e.g. road tolling, value pricing, variable
pricing and peak period pricing
 Why road pricing is interested?
• New sources of revenue for transport projects
• Failure of alternative policies to cope with the growth of traffic
congestion

SO
 Road pricing is widely accepted as an effective tool for:
alleviating traffic congestion,
reducing environmental impacts,
generating revenue to finance transport improvements

 BUT there are a number of barriers in implementation,

e.g. questions on public acceptability and practicability.
 Economic background

Price Marginal social cost

Pigouvian tax
Marginal personal cost

P*
P0

Deadweight lost
due to miss price

Demand curve
Q* Q0
Demand
 Experiences
• Implementation
– In Singapore in 1975 - the Area Licensing Scheme
(ALS) and replaced by Electronic Road Pricing (ERP)
in 1998
– In Norway - toll rings were installed to raise revenue
• Bergen in 1986
• Oslo in 1990
• Trondheim in 1991
– In London on 17 February 2003

• Interest
– Hong Kong, Netherlands, Sweden, USA, AUS, and
other cities in Britain e.g. Leeds, Bristol, Edinburgh,
Derby, Durham, Leicester ect.
 Singapore’s road pricing
• Singapore was the first country to introduce urban road
user charging.
• the objective was to restrict traffic at peak periods into the
Central Business District in order to alleviate congestion.
• Initially, the system applied was Area-Licensing
Scheme (ALS).
• In 1998, the ALS was replaced by Electronic Road Pricing
(ERP).
• The tolls would be varied according to the average
speed on the network.
• Prices applied under ERP are subject to maintain traffic
speeds of 45-65 km/h on expressways and 20-30 km/h
on arterial roads.
Singapore’s road pricing
 Singapore
• Area 650 sq km
• Road length 3800 km
• Vehicles 705,000
• Car:population ratio 1 : 10
• Modal split (% age)65:35 work trips
52:48 all trips
• Veh speeds 25-30 kph city
45-60 kph expressways
 Electronic
Road Pricing

Aim is to charge vehicles for the use of

the road at times and at places of
congestion
For congestion management
Not for raising revenue
Every entry or pass under a control
point is automatically charged a fee
 Number of Control points
City Expressways &
other major
(7.2 sq. km) roads
28
ERP 14
(a cordon
overhead gantries congested
around the
city) locations

7:30 am -
Operation 7:00 pm on weekdays
hours
7:30 am –
9:30 am on weekdays
ERP Gantry at control point
Types of Invehicle Units (IU)

Colour-coded for different types of vehicles

Uses passenger car unit (pcu) for fixing
charges
Car = 1 pcu, Motorcycle = 0.5 pcu,
Truck = 1.5 pcu , Bus = 2 pcu
 CashCards (for payment)

A pre-paid stored value ic chip card managed

by a consortium of local banks

Top-up cash at Automated Teller Machines and p

ERP Control Center

24-hour monitoring of street equipment

Settlement of financial transactions with
CashCard provider at end of each day
Processing of violations and errors
Simple Instructions
for Motorists

At start of journey, insert CashCard into

the IU (fixed permanently and powered by
vehicle battery). This does a health check
of IU and CashCard .
On going under the ERP gantries, the
cash balance after ERP charge deduction
is shown on IU display for 10 secs.
 How does ERP work?
Central Local
Comms. AVID Controller
Computer
Controller Controller Housing
System

1st Antenn
a ECS Site Detector 2nd
Controller Controller Controller Antenna
Controller

In-vehicle Unit
 How does it work?
Central Local
Comms. AVID Controller
Computer
Controller Controller Housing
System

Antenna ECS Site

Controller Controller
Detector Antenna
Controller Controller

Detector Controller

In-vehicle Unit
 How does it work?
Central Local
Comms. AVID Controller
Computer
Controller Controller Housing
System

Antenna ECS Site

Controller Controller
Detector Antenna
Controller Controller
 Choices offered by ERP
• Pay and enjoy good ride
• Change time to pay less/nothing
• Change route to non-priced roads
• Change mode
• Change destination
• Abandon trip
 Business Model
Capital cost: S$197million
(1998)
Annual Operating cost: S$16m
Annual Revenue: S$80m
Manpower: 30 staff for operations
35 dedicated staff for
maintenance
(US $1 = S $1.76)
 Violations & Errors

• Monthly ERP transactions 6 million

• Daily Violations - 5 per 1,000 transactions
– No IUs - Fine of S$70
– No CashCards - Administrative Charge
of S$10
• Daily Errors - 5 per 10,000 transactions
– No fines. Motorists asked to have IUs
inspected and CashCards checked
– A third are human errors
 Norwegian’s cordon systems

• Cordon pricing schemes

– Bergen in 1986
– Oslo in 1990
– Trondheim in 1991
• The main objective of the toll rings was to raise
revenue to finance road projects and, to a lesser
extent, public transport.
• The scheme was not designed to reduce traffic.
• Nevertheless, some impacts on travel
behaviour and traffic volume were found.
• The lesson from Oslo shows that acceptance
has increased over time after
implementation.
 London Congestion Charging

Started on 17 February 2003

Objectives
 reduce traffic congestion
 increase journey time reliability
 decrease of air pollution
 The History (1)
• In the early 1960s, ‘Smeed report’ - the technical
feasibility of various methods for pricing systems.
• In the 1970s, the Greater London Council (GLC) proposed
the charging system called ‘supplementary licensing’.
• In the 1980s the London Planning Advisor Committee
(LPAC) concluded that improvement of public transport by
itself was not seen as sufficient; there was a need for direct
measures to restraint road traffic and to obtain a better
balance between the demand and supply of road space.
Congestion charging was seen as the most favourable.
• During the early 1990s, ‘The London Congestion Charging
Research Programme’ was sponsored by the Department
of Transport to study various charging systems.
 The History (2)
• In 1998, Road Charging Options for London
(ROCOL) study forms the basis for the today
London Congestion Charging Scheme.
• In 1999, the Greater London Authority (GLA)
Act provides full powers for the Mayor to
introduce congestion charging schemes in
Greater London.
• In May 2000, Mr. Ken Livingstone was elected to
be the Mayor of London on the basis of a
manifesto which included a promise to introduce
a congestion charging scheme in central
London.
• Finally, the congestion charging scheme went
live on 17th February 2003.
 London Congestion Charging
 Bounded by the Inner
Ring Road
 7am-6:30pm, Mon.-Fri.
excluding Public Holidays
 £5 per vehicle per day
(£8 from 4 June 2005)
 Discount for e.g. residents
who live in the zone,
disabled people, taxis,
coaches and minibuses
 Exempt for e.g. emergency
See Transport for London Web site
services on behalf of the
(www.tfl.gov.uk)
NHS, police, fire, ambulance
 London Congestion Charging
Proposed area of enlarged
zone
 London Congestion Charging

Impacts
- 15 % traffic reduction
- 30% congestion reduction
- 12% pollution reduction (NOx, PM10)
- Journeys had become more reliable
- Buses significantly gain in reliability
- Substantial reductions in road traffic accidents
- No evidence that increased average traffic speeds have had any
noticeable effect on the severity of casualties
- No evidence of any significant adverse traffic impacts from
the scheme outside the zone
 London Congestion Charging
Impacts
- Neutral impact on the economy of central London
- Small Impacts on individual business sectors, including retail
- Around £50 million of net transport benefit for the first year,
mainly through quicker and more reliable journeys for road
and bus users.
- Net revenue for the first year is about £68 million and over £90
million in 2004/5, which have been spent largely on improved
bus services
- 68 percent of respondents said that they had gained overall
from the scheme or that it had made no difference to them.
 London Congestion Charging

Factors that helped success

 built and maintained public support
 integrated with other policies (e.g. public
information, bus lane, revised traffic signal, banned
turn, access control, and improvement on bus
service)
 delivered the scheme quickly so that benefits can
be seen as soon as possible
Other road pricing schemes

• Hong Kong
• Netherlands
• Stockholm, Sweden
• …
• ..
• .
 Learning from the experiences (1)
Barrier to the implementation
 Public acceptability
 Charge for something which is free before
 Unfair and favour the rich
 Possible economic and land use impact
 No alternative
 Political leadership and acceptability
 Legislation and institutional framework (inappropriate
legislation and organisation structures, and contradictory
policies elsewhere)
 Time dimension (the temporal development of policy from
conceptualisation and planning, through decision-making,
to implementation and operation)
 Learning from the experiences (2)
Making road pricing work
• Existing circumstance. Congestion and
pollution must be bad enough.
• Benefits and objectives
• System characteristics
• Revenue allocation
• Equity issues
• Alternative means of travel
• Technology
• Communication and marketing strategy
 Learning from the experiences (3)
Way forward
 Need political leadership (e.g. London Mayor)
 Need clear objective and trust
 Public consultation and involvement
 Provision of alternatives to road (improve public
transport)
 See road pricing as a tool in integrated transport
policy
 Conclusions
• Road pricing is efficient and
environmentally beneficial available tool for
congested cities.
• However, road pricing cannot by itself deal with
the transport problems.
• It must be seen as a part of comprehensive
policy package, which includes substantial
improvements to public transport and other
alternative modes, environmental
enhancements, and in the long term, new
approaches to land use planning and more
usages of intelligent transport systems.
• Moreover, objectives and benefits of charging
need to be clear to the public. On the other
hand, they should be convinced that society as
a whole will be better off.