Saturday, June 8, 2013


Road congestion is a worldwide phenomenon. The problem is not only prevalent in metro-cities in the developed nations but developing nations with increasing rate of urbanization are also showing this trend.  Let it be anywhere, congestion is frustrating. Cities worldwide have tried to deal with road congestion with various ways. Some of these methodologies are: road and infrastructure expansion (everyone’s favorite!), Transit Oriented Development (TOD), land use and least favorite of all road pricing. None of these methodologies have proven to reduce road congestion in long term except for road pricing. Being least favorite among people and hence the policymakers, pricing has proven to be the most efficient long-term solution for traffic congestion. Cities like Singapore, London have implemented road pricing over the years and are dealing with road congestion more effectively.  I think with a high success rate worldwide, road pricing should be viewed as a strong resource against congestion than just a “toll”. In this paper we will discuss some of the road pricing policies implemented worldwide and its impact on the road congestion.

Congestion occurs when road usage demand exceeds the road capacity. Spending extra hours to and fro from work caught in the traffic, being stressful, is a wastage of time, and ultimately results in reduced productivity. The loss is productivity is huge and expressed by analyst in tens of billions of dollars. This cost also includes cost of environmental pollution caused by vehicular emissions in the environment as a result of vehicles in idle state, accelerating and decelerating. Across cities worldwide the number of vehicles in operation exceeded 1 billion in the year 2010. Developing countries like China, India, and Brazil are some of the major contributors towards increase in vehicle ownership. In 2010 only China was contributing to more than half of the global vehicle increase, reaching 78 million units, followed by India with a second largest  vehicle population growth up to 9% over the previous year. Lack of good infrastructure makes congestion handling even more difficult in developing countries. In 2011 IBM Technologies conducted Commuters Pain Survey for 20 cities worldwide. As per the survey the average one way length for the commuters for the cities is 12.8 miles, taking about 33 minutes. The travel speed about 23 miles/hours is considered as frustratingly “leisurely”.  The respondents from Bangalore, Beijing, Mexico City, Nairobi and Johannesburg spent maximum time in traffic, close to 40 minutes, to get to work or school. The situation in Europe and America is better than Asian cities, although not free from increasing congestion. A survey conducted by Texas AT&M reported Washington D.C. at the top of the nations congested cities. As per the survey clogged roads cost Americans $121 billion in time and fuel in 2011. With increasing vehicles on the road every year it is extremely important to think about congestion beyond expansion of the roads, which probably is solving problem temporarily but not able to stop from recurring.

Road Pricing
Road pricing is defined as charging commuters for the usage of the road. The road pricing can be achieved in various ways. It could be as simple and traditional as toll or could get advance and complex where pricing can be decided using of GPS technology depending on the distance travelled by the vehicle. Some of the congestion charging ways are:

i.                     Corridor approach: Traditional toll roads are a good example of corridor approach of pricing. The user of the roads pay a flat price for the use of the facility. The aim is mainly revenue generation for operation and maintenance of the facility than congestion release. High Occupancy Toll (HOT) which will be discussed in the coming paragraphs, is an advanced pattern of corridor approach.

ii.                   Area pricing: Singapore, London are examples where area pricing is implemented. Mainly users are charged for driving in a closely integrated area (e.g. downtown). Congestion release and revenue generations are expected results of area pricing

iii.                  National and transitional system: This is an advanced mode of charging where the charging goes beyond zone. Charging is complex and is based on the distance travelled by the vehicles in the network.

iv.                 Integration: Use of technology can let people know the most efficient way to transport. Efficient is used in terms of distance travelled and environmental emissions.

Pricing gets complex and efficient with the increasing level as described above. Let’s discuss some of the cities worldwide that have implemented congestion pricing. Given the limitations of the paper space congestion pricing conducted by Singapore, London, Germany, Stockholm are discussed briefly. United States efforts are also mentioned briefly.
Case Studies
Singapore has been a pioneer worldwide in terms of congestion charging. Singapore took its first action against congestion management in 1975 by implementing Area License System (ALS), where charges were imposed on commuters entering Central Business District (CBD) during peak hours. Implementation of ALS resulted in 22% reduction in traffic in the implemented area. Presently ALS has transformed into more sophisticated and efficient Electronic Road Pricing (ERP) System. Under ERP vehicles are charged based on the location, time of the day and the day of the week. The impact of ERP has been observed on the vehicle speeds on the roads. Average speed on the city roads is observed to be 25-30 km/hr and on highway 55-65 km/hr with occasional congestion events. ERP in combination with other vehicle pricing systems has proven to be very efficient in taking people off the roads from their vehicles. More than 65% Singaporeans use public transport as a mean of transportation.  Along with increased mobility ERP has helped in generating revenues also. Average revenues generated every year from ERP are around S$80 million dollars with annual maintenance costing about S$16 million dollars. 

London implemented congestion charging in February 2003 for dealing with the congestion problems in the Central area. The action was criticized mercilessly by the media and other welfare groups. However it did not take much long to see the results of pricing action. Since February 2003, vehicles entering the central area were charged a flat price during week days. Within a year the traffic entering the charging zone was reduced by 18% and in 2006 this percentage approached 22%. Considering the success of congestion charging, in 2008 the charging zone was expanded covering more area. This decision has left no impact on the business in the charged area. As per one study 64% people reported no impact on the business, 27% people suggested improved business while 9% reported business being affected badly by the charging system. One of the burning question about this issues is if people of London are in favor of congestion charging? Mayor of London who was instrumental in implementing congestion pricing and was re-elected for the second term as the Mayor of the city. Is that a good answer?

Germany introduced GPS based truck tolls in 2002. Aim was to reduce environmental emission, and to generate the revenues which could be used to maintain the highways. Being an important manufacturing center, heavy trucks in and out of German highways (Autobahn) have a huge impact on environmental emissions. The truck freights are charged depending on the axels, emissions in the environment and distance travelled. The truck freights that have switched to lower emission fleet has increased from 2% to 60% and of course has resulted in fewer carbon dioxide emissions in the environment. The program generates annual revenues in excess of US$4 billion, half of which are used for highways and the other half for rail and inland waterways.

Stockholm introduced cordon style congestion charging in 2007. Aim was to reduce the congestion in the central area, improve the air quality in the same area and generate revenues for transportation improvements. After 6 months of trial period Stockholm began implementing congestion pricing. Although inspired from London model, Stockholm used variable mode of pricing where pricing varied through-out the day. Since the implementation of charging, public transit ridership on inner city routes has increased by 9% than the previous year. Exhaust emissions decreased by 14% in the inner city and by 2 to 3% in the Stockholm County. The success of the pricing the congestion scheme was confirmed when the people of the city of Stockholm voted for continuing the scheme.

United States
In U.S. the pricing that has come forward is in the form of HOT (San Diego’s I-15) and priced express lanes (California’s SR-91). In the US, highways around metro regions possess High Occupancy Vehicle Lanes (HOV). Under HOT, passenger travelling with minimal occupancy in the car can use HOV bypassing congestion by paying HOT. Revenue generated from Sab Diego’s I-15 HOT lanes was responsible to finance the transit improvement resulting in 25% increase in bus ridership. Within three months of the opening of the priced ex- press lanes on California’s SR-91, a 40 percent jump occurred in the number of vehicles with more than three passengers. 
Impact of road congestion pricing: Discussion
Road pricing projects discussed and mentioned above have helped increase the mobility in the implemented area. Without exception increase in the vehicle speeds has been observed over the years. Singapore has been implementing road pricing since last 35 years and has been successful in maintaining free flow traffic on the highways and city roads during peak hours, with rare congestion events. Although being new players in pricing, London and Stockholm has been able to achieve less traffic in the Central areas during peak hours.
Another important effect of congestion pricing is revenue generation. Singapore, Stockholm, Germany, London has been able to generate revenues, which are surplus to the average maintenance cost of the system. The additional revenue generated is a good resource to maintain or improve the existing roads and public transportation. Singapore is running pricing system exceptionally well which could be due to excellent public transportation.
Even though environmental benefits were not the primary aims from congestion pricing in London and Singapore, they were seen as side effects of congestion pricing actions. London has seen reduction is carbon dioxide (15%) and nitrogen dioxide (13.4%) within a year of congestion pricing implementation. Along with improved vehicle technology fewer smoothly running vehicles can help reduce the emissions in the environment.
Equity is one of the factors that upset critics about pricing. As per pricing critics it is unfair with low income people to pay congestion charges. Except for Singapore, pricing systems and policies are fairly new to analyze equity. As per Deloitte research group the discussion of equity needs to go beyond income, and should actually revolve around fairness of the pricing criteria. One of the resources generated by pricing are revenue and it can be used to improve public transportation which in turn can benefit everyone in the society. Another notion that suggests considering low income people by giving concessions in congestion pricing. If pricing is helping in mobility increase, it is an advantage to the society despite one’s income group. 

Road pricing or charging is seen in negative connotation, mainly as a “tax”. Initiating pricing in a region is difficult as it involves changing the mindset of people. As congestion pricing is unpopular among people, politicians/policy maker conveniently avoid the issue and try to stay safe to maintain popularity and may be chance of getting re-elected.   It is painful to think about paying for the resource that was once used extensively for free. It has been observed that congestion pricing can generate revenues which can be further used for public transit improvement. If mobility, and environmental benefits are achieved by pricing the congestion, people will approve pricing as one of the traffic management options.


3. (vehicle population increase)

4. (IBM 2011 Commuter Pain Survey)



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