Saturday, June 1, 2013

Why Congestion Pricing is working in Singapore?

Singapore is the first country in the world to implement congestion pricing. Singapore has been implementing congestion pricing since 1975. It began operating pricing in the form of Area Licensing System (ALS). Under ALS vehicle were charged to enter in the central business district (CBD). Within few months since the implementation of ALS traffic in the CBD area had been reduced by 18%.  In 1998 Singapore implemented more advanced pricing system known as Electronic Road Pricing (ERP). This made charging process faster and more efficient. Initially during ALS, commuters were charged flat rates during peak hour.  Since implementation of ERP commuters are charged depending on the location and time of the day and the traffic speed. ERP is expected to encourage motorist to change the time of travel or mode of transport or change the route. Charges are different for expressways and other roads. ERP gantry sensors are set for optimal speed which is 45-65 km/hr. for highways and 35-45km/hr. for other roads. If vehicle speed increases the maximum optimal speed the charging rate reduces and if the speed reduces the minimum speed the charging rate increases. 

It is no surprise that ERP is unpopular among people. The reason behind taking such drastic measures of charging and restricting vehicle population growth were limited land area. Singapore is a very small state with land area about 650 With increasing population and increasing urbanization, just increasing road infrastructure would have been impractical and insufficient.
One of the major reasons that congestion pricing has been successful  in Singapore is because it has been delivered as a transport package with  excellent public transit (bus and MRT). Similar approach has been implemented by London and Stockholm. In both the cities congestion pricing is complemented by excellent public transport (Although the nature of congestion pricing is different). More than 60% Singaporeans use public transit. Considering increasing population, Singapore is investing heavily in high speed rails, light rails to make transportation faster and flexible. Another point we would like to raise is that the flexibility of the congestion policy. ERP has improved as per the demand over the years. Beginning with manually operated toll system, transitioned into ERP with sophisticated logistics and now transforming into even more improved version as “Graduated Pricing System”. Drivers were trying to avoid the heavy ERP fee by raising the speed while passing through the gantry. This unsafe behavior is prevented by GPS where the rates change gradually along with the speed of the vehicle. 
Role of government is very crucial in this entire process. I always wondered about the role of government against people’s will for congestion pricing. As per LTA officials, people are being charged, however the money they pay is being utilized for better transportation and other welfare activities. Improved roads, air quality, improving rails and buses has helped reduce the anxiety of pricing among people.
Apart from congestion relief, pricing has been able to generate revenues which has proven helpful in improving public transit system. ERP is operated by Land Transport Authority (LTA) and revenues generated by ERP go directly to the government. LTA is paid by the government to operate and maintain the system. Average revenues generated every year from ERP are around S$80 million dollars with annual maintenance costing about S$16 million dollars. 
The government determination, efficient public transport and effective policies has made ERP successful in Singapore. London, Stockholm have followed congestion pricing and have been implementing since last six to eight years. Being recent in this field of congestion pricing, it will be interesting to observe if these cities will be able to achieve sustainable traffic congestion release in future, as has been achieved by Singapore.


  1. I was reading about why the New York proposal for congestion pricing failed twice now. One of the key reasons which Singapore seems to have mastered is making tangible differences from the generated revenues. New York's problem, according to some journalists, was that "bus and rail improvements" were too vague, and didn't include road improvements. Most of the policymakers who prevented this from becoming a reality, represented those burroughs who were more car-friendly. Roads are important but so are alternatives to paying the fee. Did Singapore always invest in a mixture of roads and transit?

    The next candidate for Mayor said in February that though she still supports congestion pricing, she doesn't see the issue coming up again.

    1. You are right! It is very important to give another transit option if congestion is being charged. Singapore has always been improving their public transit system. ERP has been generating revenues, which are in surplus to the O&M of ERP, and part of surplus is invested in public transit. They are investing more in rails than roads. Singapore has limited land area being a small state. Currently 12%of their land area is occupied by roads. Mainly they are concentration on making rails easily accessible and faster.
      Pricing is not very popular among people, it could be the reason that politicians stay away from it. However Mayor of London, was re-elected for the second term despite implementing the area charging scheme.


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