National Academies Press: OpenBook

International Perspectives on Road Pricing (2005)

Chapter: Resource Papers

« Previous: Special Topics
Page 69
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 69
Page 70
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 70
Page 71
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 71
Page 72
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 72
Page 73
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 73
Page 74
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 74
Page 75
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 75
Page 76
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 76
Page 77
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 77
Page 78
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 78
Page 79
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 79
Page 80
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 80
Page 81
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 81
Page 82
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 82
Page 83
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 83
Page 84
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 84
Page 85
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 85
Page 86
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 86
Page 87
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 87
Page 88
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 88
Page 89
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 89
Page 90
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 90
Page 91
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 91
Page 92
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 92
Page 93
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 93
Page 94
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 94
Page 95
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 95
Page 96
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 96
Page 97
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 97
Page 98
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 98
Page 99
Suggested Citation:"Resource Papers." National Academies of Sciences, Engineering, and Medicine. 2005. International Perspectives on Road Pricing. Washington, DC: The National Academies Press. doi: 10.17226/13667.
×
Page 99

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Resource Papers

6 3 RESOURCE PAPER Then and Now The Evolution of Congestion Pricing in Transportation and Where We Stand Today Martin Wachs, Institute of Transportation Studies, University of California, Berkeley The proposition that roads should be priced inpart to manage congestion by influencing trafficflows is not a new one. References to the con- cept have appeared in the scholarly literature for at least 83 years. But, like many good ideas in the realm of public policy, it has taken quite a while to catch on. The views of scholars do sometimes influence public policy, but only after being shaped by policy makers and opin- ion leaders do they ultimately make their influence felt. The question we are here to explore is whether road pricing has finally entered or is about to enter the main- stream of transportation policy. We will do this at an international conference because the history of trans- port policy, the nature of road pricing, and the response to experiments with congestion pricing are sensitive to the contexts in which they have been discussed and attempted, so there is much to learn through compari- son. Over the coming few days we will hopefully learn from and teach one another by analyzing how history and current experiments in many places interact with and depend on their physical, social, economic, and political environments. I believe our deliberations and case studies will con- vince us that road pricing is not quite yet within the main- stream of transportation policy options but that more progress has been made in that direction in the last decade than had been made in the preceding 70 years. Road pric- ing is at a critical juncture in North America today. It remains fragile, yet it is poised to be adopted on a much broader scale than would have seemed feasible only a decade ago. There is still a great deal of skepticism and some overt opposition on the part of policy makers and elected officials, but the concept has survived and has been tested in a number of applications despite widespread doubts. A decade ago I thought the odds were against achieving road pricing on a large scale, but today I am far more optimistic, and the reasons are the organizing theme for my presentation. EVOLUTION OF ARGUMENTS FOR CONGESTION PRICING IN THE UNITED STATES Congestion pricing was, to my knowledge, first sug- gested by economist A. C. Pigou in 1920. His words are reproduced in the accompanying Box 1. Pigou’s concept was amplified by economist Frank Knight in 1924, in a passage also reproduced in the box. The language used by these two distinguished economists is not terribly dif- ferent from that used in later years by such well-known advocates for congestion pricing as Nobel laureate William Vickrey in the 1960s and 1970s. It would be a mistake to interpret these early sugges- tions as a quaint historical footnote that was of limited relevance to the political debates about transportation that were current when they were written. In the early 1920s, in both the United States and Europe, automo- bile ownership and the use of motor trucks were grow- ing at more rapid rates than at any time before or since. While the provision of roads had for many centuries been a responsibility of local communities, the dramatic growth of automobile and truck travel in the early 1920s was causing much greater traffic between com- munities, and the emphasis in transport policy making

was on providing a fundamental road network to get farmers “out of the mud” and to enable citizens to drive over longer distances between towns. In Europe, respon- sibility for building new main roads most often fell to national governments, while in the United States respon- sibility for providing mile after mile of new highways fell primarily to the states. Many states found them- selves spending a major proportion of their general tax revenues on road building, yet congestion was worsen- ing because of rapid growth in travel rather than being eliminated by these projects. At exactly the time that Pigou and Knight were writ- ing, Oregon had set the tone before 1920 by adopting a motor fuel tax that was hypothecated or earmarked to be spent only on road construction and maintenance. Dozens of states adopted such taxes in the 1920s. Inter- estingly, texts of the debates held by state legislatures at that time indicate that most of them consciously adopted the fuel tax as a second-best approach. They believed that tolls were inherently the most appropriate way to raise money for roads, since the beneficiaries would pay at the time and place of use, but tolls were expensive and awkward to collect. In addition to absorbing a fifth to a quarter of their proceeds in costs of administration, tollbooths themselves created travel delays and traffic safety hazards. Motor fuel taxes were seen as imperfect substitutes, but they had the advan- tage that they were easily administered and that the costs of administering them were closer to 3% or 4% of their proceeds. Hypothecated motor fuel taxes were popular among truckers, automobile clubs, newspapers, and politicians, and they played a central role in provid- ing the basic road infrastructure that was at that time so desperately needed (Brown 2001). Over many decades we became so accustomed to paying earmarked fuel taxes, including those levied since 1932 by the federal government, that we gradually forgot there had ever been discussions of tolls as a supe- rior means of financing transport systems. As road capacity expanded, we also failed to note that discus- sion of congestion tolls was highly relevant to public debates about how to manage congestion on roads and simultaneously to raise revenue needed to build roads as part of that management program. Most Americans, unfortunately, think that where tolls are not charged their roads are “free,” while of course they are paying for their travel through a variety of other taxes and fees that they may not even know of. 6 4 INTERNATIONAL PERSPECTIVES ON ROAD PRICING PIGOU ON CONGESTION PRICING IN 1920 Suppose there are two roads, ABD and ACD, both lead- ing from A to D. If left to itself, traffic would be so distributed that the trouble involved in driving a “repre- sentative” cart along each of the two roads would be equal. But, in some circumstances, it would be possible, by shifting a few carts from route B to route C, greatly to lessen the trouble of driving those still left on B, while only slightly increasing the trouble of driving along C. In these circumstances a rightly chosen measure of differen- tial taxation against road B would create an “artificial” situation superior to the “natural” one. But the measure of differentiation must be rightly chosen. Source: Pigou 1920 (see especially p. 194). KNIGHT ELABORATING ON PIGOU IN 1924 Suppose that between two points there are two high- ways, one of which is broad enough to accommodate without crowding all the traffic which may care to use it, but it is poorly graded and surfaced, while the other is a much better quality road but narrow and quite limited in capacity. If a large number of trucks operate between the two termini and are free to choose either of the two routes, they will tend to distribute themselves between the roads in such proportions that the cost per unit of transportation, or effective result per unit of investment, will be the same for every truck on both routes. As more trucks use the narrower and better road, congestion develops, until at a certain point it becomes equally profitable to use the broader but poorer high- way. The congestion and interference resulting from the addition of any particular truck to the stream of traffic on the narrow but good road affect in the same way the cost and output of all the trucks using that road. It is evident that if, after equilibrium is established, a few trucks should be arbitrarily transferred to the broad road, the reduction in cost, or increase in out- put, to those remaining on the narrow road would be a clear gain to the traffic as a whole. The trucks so transferred would incur no loss, for any one of them on the narrow road is a marginal truck, subject to the same relation between cost and output as any truck using the broad road. Yet, whenever there is a differ- ence in the cost, to an additional truck, of using the two roads, the driver of any truck has an incentive to use the narrow road, until the advantage is reduced to zero for all the trucks. Source: Knight 1924. BOX 1 Pigou and Knight on Congestion Pricing

In Europe, tolls, fuel taxes, and hypothecation were also debated at just about the same time that Pigou and Knight were writing. Hypothecation was much more rarely adopted in Europe than in the United States. In most instances fuel taxes were merged with government revenues from other sources while appropriations for roads were made from general government funds. Nev- ertheless, fuel taxes emerged as sources of revenue for governments that, in Europe as in North America, were building thousands of miles of new roads in response to the growth of automobile travel at the time. Over many decades growth in travel continued to create congestion, but through motor fuel taxes and tolls levied on some major long-distance highways and many bridges, growth in travel also produced growth in revenue that was used to build and maintain the trans- port system. It was not until the 1960s that this method of infrastructure finance and management began to show signs of deterioration. Population and economic growth after World War II led to urban congestion. In response, urban and subur- ban highways and freeways were constructed to allevi- ate overcrowded city centers. Gradually, the earlier solutions came to be seen as inadequate. The costs of new roads grew as higher design standards were used; more property was taken; and com- munities demanded mitigation measures to address increasingly controversial losses of homes, businesses, and recreational facilities. Gradually, too, citizens and politicians became increasingly reluctant to raise the rate of motor fuel taxation, and highway budgets became more limited as inflation reduced the real value of tax col- lections (Taylor 1995). In addition, many jurisdictions believed that it was appropriate to spend highway user fees for nonhighway purposes. In some places, it was seen as reasonable and proper to use motor fuel tax revenues to support public expenditures on maintaining and upgrading public transit systems as they gradually were transferred from private to public ownership. In other jurisdictions, motor fuel tax revenues were used for non- transportation purposes. In Texas, for example, one- fourth of the proceeds of motor fuel taxes are earmarked for expenditures on public education. However well jus- tified these policies were seen to be by many citizens, they were seen by others as a “diversion” of what rightfully should be spent on highway programs (Roth 2003). And, whether or not fuel taxes rightfully should be reserved for highway programs, highway spending in real dollars has declined in relation to growth in population and travel for several decades. The effects of these trends on highway programs have been exacerbated by the gradual increase in fleet- average fuel economy. While new cars typically trav- eled about 12 miles to the gallon in 1950, today average new car fuel efficiency is well over 20 miles per gallon, and even sport-utility vehicles today are more econom- ical of fuel than were standard sedans three decades earlier (Wachs 2003). In the United States the federal gasoline tax now stands at 18.4 cents per gallon, and state motor fuel taxes range from a low of 7.5 cents per gallon in Georgia to a high of 29 cents per gallon in Rhode Island. If the fuel tax had risen sufficiently since 1957 to keep pace with the Consumer Price Index, the average tax per gallon among the 50 states would today be 9.7 cents per gallon higher than it is. If measured in revenue per vehicle mile of driving, the effects of improved fuel economy make this comparison even more dramatic. In Virginia, for example, the combination of state and federal fuel taxation today produces revenue that is 42.4% below the proceeds per mile of driving in 1957. On the one hand, the method of raising revenue for transportation projects does not meet rising costs, and so the condition of the system deteriorates and the capacity of the system expands much more slowly than travel volumes. For example, between 1980 and 1999 vehicle miles of travel on U.S roadways grew by 76 percent, while lane miles increased by only 3 percent (Wachs 2002). On the other hand, the method of collecting revenue does not itself induce more efficient use of the system, as many believe congestion pricing would do. It was there- fore quite logical that as the fuel tax gradually produced less revenue in relation to travel, many started to renew the call for congestion pricing. Proponents like William Vickrey took cognizance of its complementary proper- ties. It produces needed revenue while encouraging more efficient use of existing road capacity by inducing some to shift their travel to off-peak times, to other modes, and to less crowded roads. These properties are noted so persuasively by Vickrey in his own writings that I have reproduced some of his statements here rather than paraphrasing them (see Box 2). It was not at all coincidental that calls for increased application of congestion pricing arose in the 1960s and 1970s and accelerated in the 1980s and 1990s as high- way programs were affected simultaneously by conges- tion resulting from growth in economic activity and declining revenue from the motor fuel taxes in relation to travel. While Singapore had adopted congestion pric- ing with some success, it remained largely untested in the United States and Europe, a reflection of political realities that always make it difficult to shift direction in more than incremental ways in democratic societies. Despite growing attention to road pricing by scholars and sophisticated policy wonks, it was difficult to find many practical politicians who advocated pricing. Alt- shuler (1965) had noted several decades ago that poli- cies are adopted when they spread benefits broadly and concentrate costs narrowly, while those that spread costs more widely, like road pricing, are far more diffi- 6 5THEN AND NOW

cult to enact. In addition, in the American political sys- tem, proposals must survive many rounds of review and discussion by diverse interest groups before numerous legislative committees and often at many levels of gov- ernment. To be enacted, a proposal must be supported in most of these settings. Those that are hailed by some and condemned by others most often fade away in our consensus-directed democracy (Wachs 1994). While congestion pricing had its outspoken advocates, I wrote in the early 1990s that it also had many detractors, and the latter were often more influential. The advocates were professors and environmentalists with limited political influence, while the detractors were more numerous and more potent political adversaries, includ- ing automobile clubs, trucking associations, and cham- bers of commerce. Under such circumstances, it was difficult to anticipate, only one decade ago, the adop- tion of road pricing in the near future in democracies such as the United States. THE CURBING GRIDLOCK STUDY Under the circumstances I have outlined above, roughly a decade ago the Transportation Research Board and the Commission on Behavioral and Social Sciences and Education of the National Research Council (NRC) agreed to conduct a joint study that would • Assess and synthesize available research and expe- rience on congestion pricing, • Commission papers on critical issues raised by congestion pricing to be presented at a national sym- posium, and • Develop recommendations on the potential role of market pricing principles as a tool for congestion management, guidelines for the assessment of the impacts of congestion pricing experiments, and fruit- ful areas for further research, demonstration, or experimentation. (Transportation Research Board and Commission on Behavioral and Social Sciences and Education 1994, v) A committee of 15 experts assisted by capable NRC staff members and eight nonvoting liaison representa- tives from interested government agencies and industry associations met and deliberated over a period of nearly 3 years. The report of this committee consists of two volumes, one in which its findings and recommenda- tions are summarized and a second containing the papers that were commissioned and presented at the national symposium. The report provides a good sum- mary of the state of congestion pricing a decade ago, and thus it is an important baseline that we may use at this symposium to measure accomplishments and changes in attitudes and expectations over the past decade. The findings and recommendations contained in Curbing Gridlock are summarized in Boxes 3 and 4, respectively. I would characterize the outcomes of Curbing Grid- lock as guardedly optimistic with respect to the poten- tial of congestion pricing to become a substantial element of the transport policy agenda in the United States. Like many commissions and committees created in the public policy arena, and consistent with the man- dates of the National Academies, this study committee avoided enthusiastic advocacy. It attempted to present a balanced view based on the availability of partial evi- 6 6 INTERNATIONAL PERSPECTIVES ON ROAD PRICING There are probably few areas in modern economic soci- ety where conditions are as far from ideal as in the con- gested traffic and transportation facilities of our great modern metropolitan conurbations. This is equally true in the short run, in terms of making the best use of the facilities we have and, in the longer run, in terms of the appropriateness of the facilities for current and projected traffic needs. This relative inefficiency can be attributed in large measure to the fact that the individual user, faced with alternative ways of achieving his objectives, does not, under existing conditions, receive any obvious indica- tion of the costs which his choice will impose on oth- ers, whether by impairment of the quality of service or by the cost of expanding the facilities to the point where this impairment is prevented. To begin with it is perhaps worth observing that some- times a facility becomes worthless precisely because it is free. For example, where a high-speed or short-cut facil- ity of limited capacity has as an alternative a more cir- cuitous or slower route with ample capacity, free operation may mean that a queue builds up during heavy demand periods at the access to the faster facility until the time required for queuing and transit is equal to the transit time by the circuitous route; under these circum- stances no-one is able to make the trip any faster than if the faster route did not exist. Enlargement of the faster route may be a complete waste of money unless the route is enlarged sufficiently to take care of all traffic that might offer. Source: Vickrey 1967. BOX 2 William Vickrey on Congestion Pricing

dence. It indicated that the potential of road pricing to contribute to the lessening of congestion in urban areas was significant but largely untested at the time. It con- centrated on urging further study, research, experimen- tation, and evaluation of field experiments and on recommending governmental programs that would make them possible. It concluded that most evidence suggested that road pricing could make a significant contribution to the alleviation of worsening traffic con- gestion. Yet the report simultaneously acknowledged great uncertainty with regard to distributional issues: Could such programs be carried out without harming lower-income travelers, women, and members of minor- ity groups? The report also acknowledged that as a com- munity of interest we have less insight than we would like into the economic development and environmental outcomes of road pricing as well as the implications for land use and urban form. It is interesting to note that the majority of the recom- mendations from Curbing Gridlock have not been imple- mented, although some important ones have been. Consistent with the recommendations, when the federal government reauthorized the surface transportation pro- gram by enacting the Transportation Equity Act for the 21st Century in 1997, the congestion pricing demonstra- tion program was included and renamed “value pricing” to reflect a larger scope including, for example, high- occupancy toll (HOT) lanes. The program, however, is not slated for inclusion in the Bush administration’s cur- rent proposal for reauthorization in 2003 or 2004. In addition, a variety of approaches have been considered to remove the prohibition on the charging of tolls on the Interstate system, and this restriction no longer seems to be binding in the long term. And, consistent with the rec- ommendations of the study, Congress has acted to treat employer subsidies of public transit and employee park- ing more equally than was the case previously. However, the report’s suggestions that Congress provide incentives to fund major programs in metropolitan areas, fund extensive evaluations of experimental programs, and provide matching development funds to local govern- ments have not been enacted. Most of the recommenda- tions aimed at state and local governments and those that specifically enumerated research opportunities have not been undertaken. Despite this, as will be shown in the following sections, there have been important changes in attitudes toward congestion pricing, and it is reasonable to say that public policy makers appears more receptive to the concept than was the case at the time the study was completed. RECENT PRICING TRENDS IN THE UNITED STATES Facility Pricing in the United States Versus Area Pricing in Europe Although road pricing in the United States remains con- troversial and vulnerable to organized opposition, it has actually advanced dramatically since the publication of Curbing Gridlock, probably to a greater extent than had been envisioned when the report was published. As more fully described in the companion resource paper by two European authors, the complexion of pricing in the United States is noticeably different from that in Europe. Most of the highly publicized applications of road pricing in Europe are area pricing schemes, similar to the original application of pricing in Singapore, and involve cordons about central city locations. Fees are paid, as in London or Trondheim, to cross the cordon in order to enter a central congested area during peak peri- ods. In America, by contrast, there are few applications of area pricing schemes. Instead, most applications are located on highway facilities, where fees are required to enter certain lanes during periods of congestion. In part, the prominent difference between the growth of area schemes elsewhere and facility-based schemes in 6 7THEN AND NOW • Congestion pricing would cause some motorists to change their behavior. • Congestion pricing would result in a net benefit to society. • Congestion pricing is technically feasible. • Institutional issues are complex but can be re- solved. • All income groups can come out ahead given an appropriate distribution of revenues. • Some motorists would lose. • Congestion pricing would reduce air pollution and save energy. • The political feasibility of congestion pricing is uncertain. • Evaluation of early projects is crucial. • An incremental approach is appropriate. Source: Transportation Research Board and Commission on Behavioral and Social Sciences and Education 1994, Vol. 1, pp. 4–9. BOX 3 Findings from Curbing Gridlock

the United States reflects the extent of urban decentral- ization in America over the past several decades. Many American downtowns are thriving, but those that are successful have given greater emphasis to tourism and economic activities that cater to visitors, such as con- ventions and trade shows. They have generally all been losing employment and retail sales relative to suburban areas that provide ample freeway access and acres of free parking. In an environment of vigorous competi- tion for commercial employment and retail trade, few 6 8 INTERNATIONAL PERSPECTIVES ON ROAD PRICING FEDERAL GOVERNMENT Congress should extend the pilot program when the Inter- modal Surface Transportation Efficiency Act (ISTEA) is reauthorized in 1997. Public officials (state, local, or regional depending on who has authority) should be given discretion regarding the use of revenues collected by congestion pricing pilot projects. Congress should allow congestion pricing on urban Interstates or other federal-aid routes if called for in state implementation plans (as required by the 1990 Clean Air Act Amendments) or if local or state author- ities can demonstrate the need to manage congestion on these facilities through pricing. The federal government should provide additional incentives to encourage pricing on more than just single facilities by giving substantial grants or additional housing, transit, or community development funds to any metropolitan area with significant congestion that is willing to experiment with broader pricing strategies, for example, a regional parking management program. In cases where high-occupancy-vehicle (HOV) lanes on federal-aid facilities have clearly failed to induce ridesharing, or in cases where local officials can show that adding congestion pricing on existing HOV lanes would not undermine the region’s HOV strategy, exper- iments should be allowed that would convert under- used HOV lanes to tolled lanes while allowing HOV users to continue to travel at no charge. Because of the unique opportunities offered by con- gestion pricing projects to learn about behavioral responses to variable pricing and how they affect travel demand, the federal government should bear the bulk of the cost of extensive evaluations. Matching project development grants should be made available to local governments, states, toll authorities, and metropolitan planning organizations funded out of the congestion pricing pilot program sec- tion of ISTEA. Federal law should treat the tax-exempt status of parking and transit subsidies equally and should require employers who provide parking subsidies to give employees the option of taking this subsidy in the form of cash. STATE AND LOCAL GOVERNMENTS State and local governments should adopt statutes sim- ilar to the California law requiring “cashing out” employee parking. RESEARCH PRIORITIES Careful and extensive evaluation of congestion pricing programs introduced in the United States is the highest priority for research. Research is also encouraged in other areas as follows. • The impact of congestion pricing on business logistics and commercial carriers. • The extent to which transit services and revenues could be improved as a result of congestion pricing and how this might benefit lower-income users. • Development of improved models for simulating household travel changes in response to pricing and other travel demand management strategies. • Improved measures of congestion. • Efficiency and productivity benefits of conges- tion pricing. • Development of a program to ensure that the United States learns from current and emerging exper- iments with road pricing in other parts of the world. • Measurement of long-term land use changes that might occur in response to congestion pricing. • Studies of how the benefits and burdens of poli- cies such as congestion pricing shift over time through labor, land, and retail markets. • Constituency building and the local politics of implementation. • The efficacy of distributing tradable permits to all motorists for driving during peak periods as an alternative to charging congestion tolls (this option would allow motorists to be “bought off” of congested routes rather than being “tolled off”). Source: Transportation Research Board and Commission on Behavioral and Social Sciences and Education 1994, Vol. 1, pp. 9–15. BOX 4 Recommendations from CURBING GRIDLOCK

American central business districts could achieve a con- sensus that area or cordon pricing is an appropriate technique by which to control traffic congestion. They fear that cordon pricing in the center will only acceler- ate the migration of economic activity to outlying sub- urban centers. In their pursuit of economic growth, American downtowns can be said to fear road pricing much more than they fear congestion. It is also the case that the steady decentralization of residences and employment in America for more than 80 years has resulted in the more dramatic growth of congestion on regional freeways than on central city surface streets. Naturally, then, congestion pricing in the United States has been more facility based and located in suburban settings. HOT Lanes as a Road Pricing Innovation A number of authors who participated in the Curbing Gridlock study had observed that Americans were even more likely than Europeans to interpret road use charges as punitive, especially because, in many more instances than in Europe, roads have already been paid for by hypothecated user fees in the form of motor fuel taxes. Trucking interests and automobile clubs have been complaining for decades that road user fees would constitute charging users a second time for roads that they have already paid for directly through fuel taxes, which are themselves “surrogate tolls.” Given this back- ground, it is easy to see that the more successful path to the adoption of road user charges in America consists of charging motorists directly for the production of com- pletely new and beneficial travel options, and not charg- ing them simply for the use of congested roads in order to regulate flows. On the SR-91 project in Southern California, for example, four express lanes were added to an extremely congested freeway in a suburban setting, and users are charged to use the new capacity according to a toll sched- ule that varies with the level of congestion, while the pre- existing lanes are not tolled. By capturing those willing to pay more to travel at higher speeds, the newer lanes create benefit for those who choose to use them and for those who choose not to pay but who face lower traffic volumes on the preexisting lanes. Such projects exem- plify the specific conditions under which Americans, in an environment of politically prominent and universal hypothecated user fees, are willing to accept road pric- ing. They see marginal benefits in exchange for the mar- ginal costs that are being imposed on them. Because of preexisting requirements that new capacity expansions provide special opportunities to high-occupancy vehicles (HOVs) such as carpools and vanpools, the SR-91 proj- ect at first allowed such vehicles to travel in the new lanes free, and this suggested a more general principle that has been more widely adopted. Robert Poole, Kenneth Orski, and a number of other transportation innovators saw opportunities for simi- lar win-win situations in the networks of HOV lanes that had already been built during the past 20 years in a number of American cities. To promote carpooling, vanpooling, and transit use, thousands of lane miles had been added to freeways but reserved for HOVs. While some of these lanes actually carry more people in the peak periods than adjacent general-purpose lanes, they often appear to be less crowded than those general-purpose lanes. Poole, Orski, and others advo- cated the conversion of HOV lanes that were being used below their full capacity to HOT lanes. HOVs travel free in such lanes, while additional single- occupant vehicles (SOVs) are allowed to buy their way in through payment of a premium fee or toll. Again, those paying the toll, who already paid for the roads through their fuel taxes, are not compelled to pay a toll but instead are given an opportunity to buy an upgrade in their travel. In San Diego County an 8-mile HOV lane in the median of a crowded Interstate 15 was con- verted to HOT-lane operation during peak periods starting in 1996. Since 1998 the price on this facility has been adjusted to reflect current demand in order to assure the HOV users that their travel will not be degraded by the SOV drivers who choose to buy their way into these lanes. In Houston, Texas, the Katy Free- way performed a pilot test that charged carpools of two people a fee to travel on a similar lane that was free to carpools carrying three or more people. Other regions, including Alameda County near San Francisco and Minneapolis, Minnesota, are considering the conver- sion of HOV lanes to HOT lanes or building new HOT lanes from scratch. Later at this conference, others will provide you with more detailed accounts of these pioneering cases. I wish only to point out that they have made a huge difference in American policy making. They have moved conges- tion pricing from a hypothetical concept that many found frightening to a demonstrated concept that has worked to the advantage of many who initially had felt threatened by the concept. Many said that pricing would not work because people had little or no flexi- bility to change their travel patterns, and these lanes have shown otherwise. Originally derided as “Lexus lanes” that would serve the rich, premium lanes have been chosen by many users of many income circum- stances on occasions when they are pressed for time who would have chosen the regular lanes on other days. One author at the Curbing Gridlock conference had feared that congestion pricing would discriminate on the basis of gender because male travelers often have more resources than women (Giuliano 1994). Yet some 6 9THEN AND NOW

women have opted for the HOT lanes because of the pressure of trips from work to child care locations and have reported benefits from the increased range of travel choices. Proving the Effectiveness of Electronic Toll Collection Another important trend during the decade since Curb- ing Gridlock has been the widespread adoption of elec- tronic toll collection technology throughout the United States. As recently as a decade ago, the lay public and elected officials simply did not believe that tolls were a practical way of either collecting revenues or controlling traffic congestion, because they envisioned manually operated tollbooths at which expensive employees made change and delayed traffic. While electronic toll collec- tion using simple transponders has been most widely applied to bridges and roads that had flat tolls that do not vary with the level of congestion, their use by mil- lions of Americans is proving that electronic tolls can be user-friendly and are technically feasible at acceptable operating cost. There is no doubt that the dramatic national adop- tion of FasTrack and E-ZPass and other electronic toll payment systems is making road pricing more feasible and promising than ever. Familiarity with the operation of electronic toll collection is reducing opposition to road pricing. Gradually, by relying on electronic toll payment instruments, some heavily traveled facilities, including New York City toll bridges and the New Jer- sey Turnpike, have introduced modest price differentials based on time of day. While these fall short of full con- gestion-based pricing, they are clearly a transition toward it on a scale that I would not have envisioned to be feasible just a decade ago. In Europe a number of countries have already adopted and others will soon adopt systems of weight–distance fees for trucks based on electronic tolling and vehicle tracking systems that incorporate Global Positioning Satellite Systems (GPSS). Similarly, several states in the United States are implementing or considering the implementation of such road user charges for goods movement (Forkenbrock and Kuhl 2002). Experiments are either already under way or in the later stages of planning in Atlanta, Minneapolis, and Seattle that apply GPSS technology to the monitoring of urban passenger travel to price automobile insurance or road use in more direct proportion to use and cost. While the general implementation of electronic road user charges for passenger cars based on time and location of travel is obviously not yet under consideration, increased experimentation and accumulated experience with trucks will continue to familiarize public officials and travelers with technological options that will become more acceptable over time. Growing Traffic, Financial Pressures, and an Emphasis on Management Throughout the United States there is a widely shared perception that traffic congestion is worsening. While the reality varies greatly by location, it appears that this perception is generally accurate. Average daily vehicular volumes grew on urban Interstates by 43% between 1985 and 1999. In a study of 68 urban areas the Texas Transportation Institute reported that the percentage of daily travel taking place under congested conditions increased from 32% in 1982 to 45% in 1999 (Schrank and Lomax 2001); typical motorists faced 7 hours per day of congested roadways in 1999 compared with 5 hours in 1982. The Federal Highway Administration similarly reported that road delays, defined as travel tak- ing more time than it would under free-flow conditions, increased by 8.5% between 1993 and 1997. There are several reasons to believe that highway congestion will continue to grow. I indicated earlier that highway-related revenues are growing far more slowly than volumes of travel, and there is widespread unwillingness by elected officials to raise user fees in proportion to increasing costs. In addition, unit costs of construction and maintenance are increasing faster than the general Consumer Price Index. Higher propor- tions of state transportation budgets must be spent on maintenance and rehabilitation, which limits the avail- ability of funds for new capacity. In addition, many metropolitan areas are spending higher proportions of their transport funds on transit investments, which lim- its the availability of funds for highways. Where new highways are built or existing ones widened, it is more necessary than ever to invest in mitigation measures that lessen the undesirable impacts of highways on communities but reduce the funds available for new capacity. Despite this, highway traffic is growing faster than transit use, and urban goods movement—which cannot be accommodated by transit—is growing at a faster rate than passenger travel. For all of these reasons, more and more public offi- cials are accepting that America will be expanding high- way capacity much more slowly than highway use for the foreseeable future. This leads to the suggestion that we must do more to manage the capacity that we do have. This, in turn, is gradually leading to increasing— if still grudging—acceptance of pricing for the purpose of managing flow, especially where the management strategy is aimed, as it is on HOT lanes, at the efficient use of new capacity and the provision of new travel options. 7 0 INTERNATIONAL PERSPECTIVES ON ROAD PRICING

EMERGING PROSPECTS FOR THE COMING DECADE AND BEYOND I expect that recent trends will continue in the United States and Canada. There will be steady but gradual expansion of congestion pricing in the face of continu- ing opposition and skepticism. While proponents of congestion pricing have long emphasized its potential contributions to the improvement of system efficiency, growing shortages of revenues are likely to be as influ- ential as concerns about efficiency in the continued adoption of electronically priced congestion charges. A few older American cities, such as New York and Boston, may eventually attempt area-based pricing strategies that emulate successes that have been achieved in Europe, but I expect facility-based applications of pricing to continue to be more common in America for reasons noted above. Similarly, because strong objections remain to the “retrofitting” of congestion pricing on roads that have already been paid for by other sorts of user fees, I would predict that for some time to come pricing in North America is likely to be more commonly attempted at locations at which new capacity is being added in the form of additional lanes, such as HOT lanes, or where entirely new road facilities are being added to the net- work. In some cases, these could be new lanes that are specifically reserved for trucks and goods movement and that are paid for by tolls on the trucks that use them. Gradually, at specific bottlenecks, including heavily con- gested major bridges providing access to the cores of large urban regions, congestion pricing will be added as current toll schedules are revised, to manage flow more efficiently while increasing revenues. I expect efficiency-based road pricing to be more widely applied to goods movement over the coming decade or two than to automobile traffic. Trucks, of course, pay more through user fees than do cars, and there is more concern that current pricing mechanisms do not charge them fairly. We expect the volume of goods movement to increase over the coming decade much more steeply than highway passenger traffic. The instal- lation of electronic devices in trucks and the monitoring of truck movements through GPSS are much further advanced and much more politically acceptable than is the case with respect to passenger vehicles. I think it pos- sible that truckers will support the construction of truck- only auxiliary lanes on existing but congested Interstate highways, to be financed by electronically imposed truck fees based on precise monitoring of truck weights and distances traveled on those facilities. Gradually, as it is proven that emerging technology can facilitate more sophisticated pricing schemes with- out confusing travelers or customers, I would expect to see increased application of dynamic cost-based pricing to nonroad transportation. These approaches are already more common with respect to passenger air travel than road travel. I would expect to see additional applications to urban passenger transit systems in the form of increased use of off-peak discounts and distance-based fares. Such approaches may also be applied to far more sophisticated schedules governing the pricing of parking spaces at urban transit and commuter rail stations as well as at airports, sports stadia, and other venues that generate a great deal of automobile traffic. Because equity continues to be an overriding concern in American politics and threatens to slow the progress of pricing unless it is addressed in serious and practical ways, greater experimentation with relating pricing to income and equity is also likely. For example, I would expect to see the introduction of lower-priced or “life- line” rates for low-income travelers on some facilities that decide to introduce road pricing. In the much longer term, perhaps over 20 or more years, it seems reasonable to expect that motor fuel taxes will eventually become obsolete as the primary source of road user–based financing. Whether fuel cells or other technological innovations become the principal means of powering motor vehicles, it is reasonable to postulate that policy makers will attempt to promote the adoption of new energy technologies by designing tax incentives to encourage their introduction. With the widespread availability of electronic toll collection, however, it is reasonable to think that user fees and hypothecation, long a mainstay of American transportation system finance, will evolve from reliance on the taxation of fuel purchases to the more direct pricing of travel at the time and place roads are used. This was, of course, originally contemplated in the 1920s. In fact, those who adopted the motor fuel tax at that time thought it was a tempo- rary and second-best solution. I believe they were right, though their vision will have taken much longer to achieve than they could ever have imagined. REFERENCES Altshuler, A. A. 1965. The City Planning Process: A Political Analysis. Cornell University Press. Brown, J. 2001. Reconsider the Gas Tax: Paying for What You Get. Access, Vol. 19, Fall, pp. 10–15. Forkenbrock, D., and J. G. Kuhl. 2002. A New Approach to Assessing Road User Charges. Public Policy Center, University of Iowa. Giuliano, G. 1994. Equity and Fairness Considerations of Congestion Pricing. In Special Report 242: Curbing Gridlock: Peak-Period Fees to Relieve Traffic Con- gestion, Vol. 2, Transportation Research Board, National Research Council, Washington, D.C., pp. 250–279. 7 1THEN AND NOW

Knight, F. H. 1924. Some Fallacies in the Interpretation of Social Cost. Quarterly Journal of Economics, Vol. 38, pp. 582–606. Pigou, A. C. 1920. The Economics of Welfare. Macmillan, Lon- don. Roth, G. 2003. A Road Policy for the Future. Regulation, Spring, pp. 54–59. Schrank, D., and T. Lomax. 2001. The 2001 Urban Mobility Report. Texas Transportation Institute, College Station. Taylor, B. D. 1995. Public Perceptions, Fiscal Realities, and Freeway Planning: The California Case. Journal of the American Planning Association, Vol. 61, pp. 43–56. Transportation Research Board and Commission on Behavioral and Social Sciences and Education. 1994. Special Report 242: Curbing Gridlock: Peak-Period Fees to Relieve Traffic Congestion (two volumes). National Research Council, Washington, D.C. Vickrey, W. S. 1967. Optimisation of Traffic and Facilities. Journal of Transport Economics and Policy, Vol. 1, pp. 123–136. Wachs, M. 1994. Will Congestion Pricing Ever Be Adopted? Access, Vol. 4, Spring, pp. 15–19. Wachs, M. 2002. Fighting Traffic Congestion with Information Technology. Issues in Science and Technology, Vol. 19, pp. 43–50. Wachs, M. 2003. A Dozen Reasons for Raising Gasoline Taxes. Public Works Management and Planning, Vol. 7, pp. 235–242. 7 2 INTERNATIONAL PERSPECTIVES ON ROAD PRICING

7 3 RESOURCE PAPER One Step Forward, Two Steps Back? An Overview of Road Pricing Applications and Research Outside the United States Anthony D. May and A. Sumalee, Institute for Transport Studies, University of Leeds This paper is offered as a complement to MartinWachs’s review of developments in the UnitedStates and Canada (Wachs 2005) and aims to summarize developments in road pricing elsewhere in the world. This is a substantial challenge, particularly because it is being written at a time of rapid develop- ment in the politics of road pricing internationally. We cannot claim to be expert in or wholly up to date in our understanding of all these developments. What follows should therefore be taken as a summary of the general context rather than as an accurate account of the cur- rent state of play internationally. We hope to learn more about these developments during the conference and will update this paper in the light of those findings. In the meantime, we apologize to anyone whose country’s developments are inaccurately recorded here. As Martin Wachs notes, developments outside North America have taken a different route from those he describes (Wachs 2005). All can trace their activities back to the seminal work of Pigou, Knight, and Vickrey but can now be seen as forming three broad groups. The first and most extensive is the work on road pricing in urban cen- ters. Such pricing is usually based on charging to cross cor- dons or to be within them and is designed largely to reduce congestion and protect the environment; the London Con- gestion Charging Scheme is the latest and highest- profile outcome of this approach. The second is the devel- opment, as in the United States, of toll highways designed principally to raise revenue to finance the road. While few countries outside the United States have developed high-occupancy toll (HOT) lanes as an extension of this concept, Norway has introduced an alternative of toll rings, which are implemented on existing highways but are designed to finance new infrastructure. The third is the more recent development of proposals for distance- based interurban charging, initially for commercial vehi- cles but potentially for all traffic on congested roads. We review progress in all of these, starting with Europe and then considering Asia and finally, briefly, the rest of the world. We have, however, limited ourselves to schemes that reflect at least in part the original principles of road pricing; we have not attempted to review the wider field of toll highway developments. We conclude this international review of policy developments with a summary of the state of play. The picture presented is one of many proposals but few suc- cesses, though, as Martin Wachs notes, the potential for real progress appears greater now than it has throughout the history of the subject. At the same time it is clear that there is a recurring set of reasons for fail- ure to make progress: in particular concerns about pub- lic acceptability but also issues concerning equity, economic impacts, technology, and scheme design. Another characteristic of the differences between prac- tice in North America and elsewhere is that many of these issues have been the subject of much more inten- sive research elsewhere in the world. To complement our review of policy developments, we therefore sum- marize key findings from these research programs. We conclude by assessing the potential over the next decade and identifying those aspects of the subject area remaining most uncertain.

POLICY DEVELOPMENTS United Kingdom The United Kingdom has perhaps the longest program of research into road pricing but had, until the recently introduced schemes in Durham and London, little to show for some 40 years of research. The first major study, the Smeed Report of 1964 (Ministry of Transport 1964), was a model for much subsequent research. It set out clearly the congestion problem to be tackled (with its simple rule of thumb that at 10 mph each driver was imposing time losses on others equal to twice his own travel time), the inade- quacy of alternatives to pricing, the criteria for design of an effective scheme, and the technologies available at the time. Its nine design criteria merit repeating here as an aid for today’s designers: 1. Charges should be closely related to the amount of use made of the roads. 2. It should be possible to vary prices for different areas; times of day, week, or year; and classes of vehicle. 3. Prices should be stable and readily ascertainable by road users before they embark on a journey. 4. Payment in advance should be possible, although credit facilities may also be permissible. 5. The incidence of the system on individual road users should be accepted as fair. 6. The method should be simple for road users to understand. 7. Any equipment should possess a high degree of reliability. 8. It should be reasonably free from the possibility of fraud and evasion, both deliberate and unintentional. 9. It should be capable of being applied, if necessary, to the whole country and to a vehicle population expected to rise to over 30 million. The Smeed Report was closely followed by a practi- cal study of the relative merits of road pricing and park- ing controls in London, Better Use of Town Roads (Ministry of Transport 1967), which argued clearly for a simple form of road pricing within a cordon identical to that now in operation. The Greater London Council (GLC), which had been formed in 1965, developed this proposal further in a scheme entitled Supplementary Licensing (Greater London Council 1974; May 1975). Its preferred scheme was a charge of around £5 ($7.50) per day in 2003 prices to enter or be within an area defined by the Inner Ring Road between 0700 and 1900 on weekdays, with a charge of three times that level for commercial vehicles and exemptions for buses, taxis, disabled drivers, and emergency vehicles. It would have used prepurchased licenses and manual enforcement, much as in Singapore, with the costs of operation accounting for around 15% of revenues. It was pre- dicted to have reduced car traffic entering the center by 45% and vehicle kilometers within the area by 35% and to have increased speed within the area by 40%. The impacts outside the area were predicted to be small but positive. The proposal came close to being accepted by GLC, which would then have had to seek legislation from government, which was thinking along similar lines in its transport white paper (Department of Envi- ronment 1976). Unfortunately, GLC decided not to pur- sue the proposal, mainly because of concerns over equity implications and impacts on the economy. Simi- lar proposals emerged at the same time for Bristol and York, but this was a high point in the development of road pricing, not to be regained for another 20 years. The reemergence of interest in road pricing in the 1990s stemmed from a growing realization that “pre- dict and provide” policies were unlikely to succeed and a renewed interest in integrated transport strategies as a solution to urban problems (May and Roberts 1995). Several cities, including London, Edinburgh (May et al. 1992), Bristol, and Leicester, conducted integrated transport studies that demonstrated the benefits of road pricing as a means of controlling demand and financing other strategy elements, as discussed further below. However, it was the national government that commis- sioned the next major study, of London congestion charging, in 1992 (Richards et al. 1996). This again was comprehensive in its coverage, with investigations of alternative schemes, potential technologies, administra- tive and enforcement arrangements, and overall costs and benefits. It was recommended that charges be imposed for passing points in the road network or for being within a defined area. The previous proposals for a cordon around central London were reexamined. A charge of £10 ($15) per crossing was predicted to reduce traffic in the area by 25%, increase speeds by 32%, and generate revenues of around £400 million ($600 mil- lion) per year. The most complex scheme studied, with three cordons and four radial screenlines, was predicted to have a similar impact in the center but also to improve speeds in inner London by 10% and to gener- ate almost twice as much revenue and three times the economic benefits (May et al. 1996b). This study had been commissioned, but was not acted upon, by the last Conservative government. It was part of the evidence used by the incoming Labor government to decide to provide local authorities with the power to implement congestion charging schemes (and taxes on private parking) and to retain the net revenues for other transport projects (DETR 1998). This legislation was a breakthrough on three counts: it passed the initiative to local government, albeit with a requirement for approval by the central government; it allowed revenues to be 7 4 INTERNATIONAL PERSPECTIVES ON ROAD PRICING

hypothecated for at least 10 years and thus addressed a key concern in public attitude surveys (Jones et al. 1996); and it established congestion charging as a potentially central element in an integrated strategy (May and Roberts 1995). Initially almost 30 local authorities expressed interest and joined the government’s Charging Development Partnership. However, outside London only four or five remain interested, partly because the government has recently appeared less supportive and partly because it has been more willing to provide alter- native funding for public transport schemes that might have been financed from hypothecated revenues. Durham introduced a single point charge on a sensitive road lead- ing to the cathedral in 2002 and achieved a 90% reduc- tion in traffic. Bristol is developing proposals for a single cordon, although recent changes in political control have raised questions over their development. Edinburgh has recently confirmed its proposals for a scheme with two cordons, one around the center and the other inside the outer ring road, and a charge of £2 ($3) to cross either or both; these will be the subject of a referendum in 2004. London’s implementation of congestion charging in Feb- ruary 2003 has, of course, eclipsed all these develop- ments. We will not describe it further here, since it is the subject of later presentations. However, it is worth recording that its design and impacts are remarkably sim- ilar to the proposals for supplementary licensing 30 years ago, with two notable exceptions: operating costs have proved to be a much higher proportion of revenues, which substantially reduces the finance available for other transport projects; and, crucially, the scheme has been implemented, while those of 1964, 1967, and 1974 gather dust on the shelves. While most of the interest in the United Kingdom has inevitably focused on urban congestion charging, recent reports have advocated the use of distance-based charges nationally on congested roads, offset by the abolition of the annual vehicle tax and some reduction in fuel taxes (Commission for Integrated Transport 2002). A system of this kind is scheduled to come into operation for commercial vehicles in 2006, and a gov- ernment field trial of the technology, based in Leeds, is expected to start shortly after some considerable delay. Norway In Norway road pricing has long been used as a supple- mentary fiscal instrument to raise finance for road proj- ects. Currently, 25% of the total annual budget for road construction in Norway comes from the road pricing schemes around the country (Odeck and Brathen 2002). Most of the road pricing schemes impose tolls on par- ticular sections of trunk roads, tunnels, or bridges. Only five of them are urban charging cordon schemes (or toll rings): those in Bergen, Oslo, Trondheim, Stavenger, and Kristiansand. However, recently discussions have taken place concerning the modification of the current toll financing schemes to congestion charging schemes in Bergen, Oslo, and Trondheim. The Bergen toll ring was introduced in 1986 with the aim of directly raising finance for completing the planned road system. In 1990 the capital city of Norway, Oslo, also introduced an urban toll ring, to finance a new tunnel under the city center. The implementation of the tolls in both cases was timed to coincide with the opening of the new tunnel and bypass projects financed by the toll revenues. In 1992 a toll ring was implemented in Trondheim, which has been gradually developed over the years since its introduction. An “amputated” toll ring with only two toll plazas was in operation from 1992 to 1996 in Kristiansand. A new package and toll charge period were recently agreed on to fund the construction of the new trunk road (E18) and two tunnels through Kristiansand. In 2001 Stavanger implemented a city toll ring. The toll will be in operation for 10 years to finance the new road and other transport projects. Table 1 sum- marizes the characteristics of the schemes in these five cases. Given the original objective of raising revenues, the lower toll level in all schemes only reduced the traffic slightly (6% to 7% for Bergen, 3% to 4% in Oslo, and 10% in Trondheim during the charged periods). Origi- nally, in Bergen the toll revenues collected were only used for road projects. A new agreement was reached in 2002 for maintaining the toll ring system until 2011, with the basic toll levels increased to 15 NKr from 2004 onward (which coincides with the implementation of electronic collection), only 45% of the revenues being allocated to road investment, and the scheme being refo- cused as a congestion charging system. In Oslo, Trond- heim, Kristiansand, and Stavanger, the revenues will help finance road projects, public transport improve- ment, and other safety instruments. New toll ring schemes are also under way. In 2003 the Namdal proj- ect (in the city of Namso) started; it is claimed to be the smallest toll ring in the world (only two toll points). Tønsberg will decide on the introduction of a toll ring by 2004. The toll ring system in Norway is currently at a cross- road. Most of the projects around the country were orig- inally initiated to finance major local transport schemes (mostly road transport infrastructure). The agreements for many existing schemes are near their end or already terminated (the case in Bergen). A decision on the future of the toll rings has to be made. At the national level in Norway a new law on tolling and road pricing has just been sanctioned by Parliament. Through this law, road user charging is accepted as a means both for revenue raising and for demand management, but the two objec- 7 5ONE STEP FORWARD, TWO STEPS BACK?

tives can never be mixed. This means that today’s tolling systems must be dismantled before any urban pricing scheme can be introduced. Public acceptance of these changes is also uncertain. While 54% opposed Bergen’s toll ring before its implementation, that had fallen to 37% a year later. It is not clear whether toll rings designed for congestion charging will attract such major- ity support. Sweden Sweden has had an interest in restraining traffic, partic- ularly in Stockholm and Gothenburg, since the 1980s. Its main focus has been protection of the environment, although relief of congestion has also been an issue. The most significant proposal for Stockholm emerged in 1991 as part of the Dennis agreement (Gomez-Ibanez and Small 1994). The Dennis package involved relieving traffic problems in the inner city by improving public transport, building an inner ring road and a tolled west- ern bypass, and introducing a toll ring just outside the inner ring road. Tolls would have been around $2 at current prices, with the possibility of variations by time of day and by standard of emission controls. With the outer bypass tolls, they would have been designed to provide the main source of finance for the investments. While the proposals initially had the support of all the main political parties, it soon became clear that both the inner ring road and the toll ring were highly controver- sial, and the proposals were dropped in 1997. However, other agencies, including the Swedish Society for Nature Conservation, the Swedish Institute for Transport and Communications Analysis, and the Swedish Environ- mental Protection Agency, have since submitted propos- als for somewhat similar pricing schemes. Most recently, the Swedish National Road Administration has pub- lished a review of the options for road pricing in urban areas (Eliasson and Lundberg 2003). While the review does not make specific proposals, it is one of the most comprehensive summaries of successes and failures in road pricing currently available. 7 6 INTERNATIONAL PERSPECTIVES ON ROAD PRICING TABLE 1 Key Characteristics of the Norwegian Toll Rings Bergen Oslo Trondheim Kristiansand Stavenger City population 213,000 456,000 138,000 70,000 103,000 Starting date Jan. 1986 Feb. 1990 Oct. 1991 April 1992 April 2001 Number of toll stations 7 19 22 5 21 Charging regime Uniform Uniform Peak and off-peak Uniform charge Peak and off-peak charge charge charge chargea Entry charge for small vehicles (NKr)b 10 15 15 (for all periods 10 10 (peak) for manual payment)c 11 (off peak) Charging period Weekdays, All days, Weekdays, Weekdays, Weekdays, 6 a.m.–10 p.m. all hours 6 a.m.–6 p.m. 6 a.m.–6 p.m. 6 a.m.–6 p.m. Discount Discount for Discount for Discount for users Discount for Several advance monthly prepaid tickets of electronic monthly payment discounts subscriptions systems subscriptions with AutoPass Annual gross reve- nues (NKr millions) 156 1,046 168 95 80 Annual operating costs (NKr millions) 30 103 17 20 21 a Peak period: 7–9 a.m. and 2–5 p.m.; off-peak period: other times between 6 a.m. and 6 p.m. b Heavy vehicles are charged double price. c For prepayment of 6,000 NKr, 9 NKr between 6 and 10 a.m. and 6 NKr between 10 a.m. and 6 p.m.; for prepayment of 3,000 NKr, 10.5 NKr between 6 and 10 a.m. and 7.5 NKr between 10 a.m. and 6 p.m.; for prepayment of 1,000 NKr, 12 NKr between 6 and 10 a.m. and 9 NKr between 10 a.m. and 6 p.m.

The Netherlands During the late 1980s, the Dutch government proposed the introduction of a large multiple cordon-based road pricing system called rekening rijden (“road pricing”) for the Randstad region (including Amsterdam, Rotter- dam, The Hague, and Utrecht, plus part of the province of Noord-Brabant). The main objective of this proposed scheme was to manage travel demand and hence to reduce congestion. Other objectives were to decrease environmental pollution and generate funds to finance new infrastructure. Because of public opposition the proposal was not pursued. In 1991 a more conventional form of road toll using toll plazas (tollpleinen) was pro- posed. The objective of the scheme was redefined to raise money for road infrastructure. However, the potential disruption of the traffic attributable to the stop-and-go operation of the toll plazas and the amount of land required for implementation caused the proposal to be rejected. In 1992 a proposal of reduced scope, which involved a system of supplementary licensing for motorists using the main road network during peak periods (spitsvi- gnet), was discussed. The peak-hour motorists would have been charged a fixed toll to travel during peak hours regardless of the area. The charge would be about $2.85 per day (1992 prices) applied during the morning peak period, 6 to 10 a.m. However, the proposal was not approved after a new government was elected in 1994. Boot et al. (1999) suggested that the most impor- tant reason for the failure of these earlier proposals was political acceptability. Subsequently, in October 1994 the Dutch parliament agreed in principle and strongly proposed the implemen- tation of a revised form of rekening rijden (referred to as “congestion charging”), which would be a system of electronic toll cordons around the four main cities in the Randstad area starting in 2001 (Dutch Ministry of Transport 1995). The charge would be in operation dur- ing the morning peak hour (7 to 9 a.m.) on weekdays. The objective of this late proposal was to improve acces- sibility of the economic centers. In 2001 congestion charging became a major political issue in the Nether- lands. The proposal of rekening rijden was opposed by several interest groups. The main objection was that the authorities failed to provide an alternative for those who were obliged to travel by car during the proposed charg- ing period. The government is now considering an alter- native proposal for a Mobimeter (“kilometer charging”) system. The idea was supported by the successful devel- opment of the technology for the kilometer charging sys- tem. In addition, the policy could well fit in with the European Commission white paper that proposed a kilo- meter charging system as a good instrument for trans- port pricing in Europe. The cabinet has now announced a proposal for legislation on the kilometer charge by the end of 2003 and stated its intention to start implement- ing the system in 2004 (the system is expected to be fully operational by 2006). The system will be a nondifferen- tiating kilometer charge first, but the possibilities of dif- ferentiating the charge in relation to congestion will be discussed further. The barriers to the success of the implementation of congestion charging in the Netherlands have been poli- tics and technology. The success of the recent proposal for a kilometer charge will rely heavily on the reliability and capability of charging technology. However, the greatest barrier to further progress still appears to be political and closely linked to public acceptability. Germany The key development of road user charging in Germany is the implementation of interurban freight charging. Since April 2001 there has been a standard emission- related tariff for motorway tolls applicable to heavy goods vehicles (HGVs), jointly implemented by Bel- gium, Denmark, Germany, Luxembourg, the Nether- lands, and Sweden (Eurovignette). The current system of Eurovignette imposes a license charge on all HGVs weighing more than 12 tonnes (except buses, coaches, and specialist vehicles) for using the road network in any of these countries. The charges are varied according to the number of axles and engine emission standards. Germany is facing the problem of continuing freight traffic growth as the consequence of the Single European Market and the enlargement of the European Union (EU) to the east and globalization. Freight traffic is forecast to grow by 64% before 2015. The German government aims to tackle the problem by creating an efficient trans- port infrastructure to accommodate the growth in traffic demand, improve the rail freight network, and create fair competition between modes. One key strategy is to rectify the price ratio between the rail and the road sec- tors. Thus, after a long discussion, the introduction of distance-related charges for the use of motorway system by HGVs was approved by the government in April 2002. The act allows the introduction of distance-based charging on the motorway network and some part of the federal highways (mainly for safety reasons), and the toll revenues can be used for infrastructure projects. The toll system will be changed in autumn 2003 from the old Eurovignette system to the kilometer charge sys- tem. The charge will still be differentiated according to engine emission standard and number of axles. It will replace the Eurovignette and some part of the fuel duty. The charge is expected to vary between €0.10 and €0.17 per kilometer and is in line with EU Directive 1999/62/EC (Commission of the European Community 1999). Driv- 7 7ONE STEP FORWARD, TWO STEPS BACK?

ers will have two charging options. The first is the auto- matic charging option, which is for vehicles equipped with an onboard unit. This automatic electronic system can be located exactly by satellite and continually trans- mits the position of the vehicle, the company and vehicle data, and the kilometers traveled on charged roads to a central computer. An automatic procedure then charges the toll in arrears to a preselected payment partner. The second option is the manual prebooking system. The manual procedure requires that the driver or the vehicle’s owner stipulate a route in advance and “buy” the route at one of the toll terminals or via the Internet before the journey. Other European Developments The European Commission has conducted research over several years into marginal cost pricing and its applica- tion to policy [Nash and Matthews (2001) give an overview]. Its 2001 transport policy sets out clearly its aspirations for a more effective pricing policy for all transport (Commission of the European Community 2001) and indicates the principles to be adopted for transport infrastructure charging. In particular, it pro- motes equal treatment of all operators and modes, argues for charges that internalize external costs, and states that charging revenues should be channeled into specific national or regional funds to finance measures that themselves reduce external costs. By these means, it argues, a double dividend is obtained. However, the commission is limited in the extent to which it can influ- ence the decisions of individual member states. It is able to assess the acceptability, from a European perspective, of proposed changes in charging structures (and is cur- rently reviewing the United Kingdom’s plans for distance-based charging for commercial vehicles), but it can only encourage governments to introduce charges in the first place. It notes that the proposals leave each member state wide scope in terms of implementation while offering a common methodology for setting price levels. At a more detailed level, a new European directive on interurban freight charging was released in 1999 (Commission of the European Community 1999), which aims to revise the current Eurovignette system. Several countries have been considering the possibility of a more advanced interurban HGV charging system, including Germany (as mentioned earlier) and Switzerland. One of the commission’s main tools for providing encouragement is demonstration projects, and two related research projects in its Fifth Framework research program involve the implementation of demonstration projects (PROGRESS) and their evaluation (CUPID) (Baker 2002). Among these eight demonstration projects, Bristol, Edinburgh, and Trondheim have been mentioned above. Two, in Gothenburg and Copenhagen, involve small field trials coupled with attitudinal and behavioral research into the likely impacts and acceptability of dif- ferent road pricing schemes. One, in Helsinki, involves only desk-based and attitudinal research into alternatives. The other two are access control schemes in Genoa and Rome, to which charges might be added. In Rome, some classes of drivers already pay for access permits, and so a simple form of road pricing already exists (Tomassini 2002). These are of interest, since the widespread use of access controls in Italian cities, with only vehicles that have been allocated permits allowed to enter, has been seen as an alternative to charging as a means of control- ling car use and has had some success (Topp and Pharoah 1994). The current proposals envisage drivers allocated permits (because they are residents or have business premises in the area) still being able to enter free of charge, but with others being able to pay to do so, thus making more efficient use of the road space. The technol- ogy is in place to check permits automatically and to iden- tify those who have paid to enter. Without exception, these pilots have taken longer to implement than had been anticipated when the research program was developed in 2000. In all cases, political uncertainty reinforced by critical public opinion surveys has been the main barrier to progress, although in one or two cases problems with new technology have also delayed implementation. Paradoxically, only the London scheme, which was not part of PROGRESS, and to a lesser extent the Norwegian toll rings that predated it will provide real evidence to other European governments of the benefits of urban road pricing. Singapore Given the limited land space, the Singapore government has foreseen the possible severe impact of traffic con- gestion on the development of the country (Foo 2000). The government has been trying to control the level of car traffic in the network through various generations and combinations of pricing measures over the past 30 years. Two means of controlling car travel demand have been adopted: the control of vehicle ownership and the restraint of vehicle usage. A tax was imposed on new vehicle registrations in 1972, and tax rates were subsequently increased as a means of controlling ownership. However, there was concern that the tax was inflexible and that it was not imposing sufficient control. In 1990 the government introduced a unique form of vehicle ownership control, the vehicle quota system (VQS), in which a quota for new vehicles in any month is determined to match an approved overall growth rate of 3% per year and the payment is determined by a bidding system. After the 7 8 INTERNATIONAL PERSPECTIVES ON ROAD PRICING

implementation of the VQS, the average annual motor growth rate was decreased to around 2.83% from 4.4%. The VQS also generated a substantial amount of revenue for the government (around $1.8 billion in 1994 alone). Although additional taxes had been in place since 1972, the Singapore government was not satisfied with the effectiveness of this measure in curbing congestion. In 1975 Singapore introduced the world’s first urban road pricing scheme, the area licensing scheme (ALS), to increase the incentive for car users to switch to public transport. The original ALS was a single cordon cover- ing the central business district (CBD) of Singapore, called the restricted zone (RZ). Under the ALS, a permit had to be purchased to travel into the RZ by car during peak traffic periods, with exemptions for those with four or more people (Holland and Watson 1978). Enforce- ment was based on manual operation by police person- nel located at each of the entry points. The morning peak car traffic volume entering the RZ in 1992 was approxi- mately one-half the level 17 years earlier, before the ALS was introduced. Speeds had increased by 20%, and acci- dents had fallen by 25% (Menon 2000). Public trans- port’s share of working trips increased from 33% in 1974 to 67% in 1992. Initially, the charge structure was simply a flat rate charge of S$3 for traveling inside the RZ in the a.m. peak period (7:30 to 9:30 a.m.) on Monday through Saturday. However, 3 weeks later the charging hours were extended until 10:15 a.m. in response to the substantial increase in traffic volume entering the RZ just after 9:30 a.m. (Chin 2002). The charge was then increased to S$4 and S$5 in 1976 and 1980, respectively. Gradually, the structure of the charge and the charging period were modified to increase the effectiveness of the scheme. In 1989 the charge period was extended into the p.m. peak (4:30 to 7:00 p.m.) with a charge level of S$3. The charge period was extended again to the whole day from Monday through Friday in 1994 with the same charge level of S$3. The ALS was considered successful, and it was claimed that there were no significant impacts on businesses inside the RZ (Seik 1998). Nevertheless, the original ALS also had unintended adverse effects such as congestion on feeder roads and expressways leading to the CBD (Goh 2002). The gov- ernment decided to introduce the road pricing scheme (RPS) to regulate traffic on the expressways and feeder roads in 1995. The RPS (manually operated) was imple- mented on the three main expressways heading into the CBD with congestion tolls to pass defined points. About 16% of motorists stopped using the expressways during the RPS operation hours (between 7:30 and 9:30 a.m.). However, the ALS and RPS were claimed to cause under- use of the roads within the CBD and not to be able to deter the congestion outside the RZ. In addition, the man- ual operation of both systems was too labor intensive and not flexible enough to permit future modification. In 1998 the electronic road pricing system (ERP) was implemented. The ERP cordon covered an area similar to the original RZ of the ALS. However, the charge is imposed on a per crossing basis, which is different from the original operation of ALS. An incomplete second cor- don has since been implemented. The ERP charge rates are set on the basis of type of vehicle (including motor- cycles). The charges are also differentiated according to location of crossing, day, and time of day. The road authority in Singapore reviews speeds quarterly on the expressways and roads where the ERP is in operation. After the review, the ERP rates are adjusted to maintain average traffic speed on expressways and roads inside the RZ at 45 to 65 kilometers per hour and 20 to 30 kilometers per hour, respectively. Immediately after the implementation of the ERP, traffic volume on the heavily congested roads fell by 17% from the condition during the operation of ALS. Traffic volume into the CBD decreased by 10% to 15% compared with the condition during the ALS operation (Chin 2002). The ERP has been effective in maintaining a speed range of 45 to 65 kilometers per hour for expressways and 20 to 30 kilometers per hour for major roads as intended. The estimated monthly revenue from the system is S$3.4 million, which is substantially lower than the revenue collected from the old ALS and RPS schemes, about S$5.8 million per month (Goh 2002). The change of the fundamental principle of charging from ALS, which allowed multiple entries for the whole day, to the ERP, which charges per crossing, is the rea- son for the significant drop in demand despite the lower charge rates. The Singapore government has adopted a “stick and carrot” policy under which a substantial amount of money has been invested in improving the public trans- port system. After gaining sufficient revenues from ALS, in 1988 the government decided to develop the Mass Rapid Transit, which is the network of heavy rail, and later a light rail network (initiated in 1999). The devel- opment of public transport has enhanced its modal share, which increased from 46% to 70% of all journey- to-work trips to the CBD between 1976 and 1991. The Singapore Land Transport Authority (LTA) plans to modify the charging area and charge levels to achieve better utilization of the road network while maintaining an acceptable level of service. Although there has been a wide range of well-documented papers on the success and implementation path of road pricing in Singapore, there has been little discussion of public responses. The stable political climate in Singapore has supported the government and LTA in adopting an aggressive transport policy over the past three decades. Despite all the suc- cesses, questions have been asked about the extent of 7 9ONE STEP FORWARD, TWO STEPS BACK?

decentralization of the city and the economic impact of the cost of the journey to work (Phang 1993; Willoughby 2001). Hong Kong In 1982 the Hong Kong government decided to adopt fis- cal controls to contain traffic. Particular measures intro- duced were the trebling of the annual fee for private cars and the doubling of the fuel tax and the registration fee for new cars. As a result of the vehicle ownership restraint, private vehicle ownership decreased from 211,000 in 1981 to 170,000 in 1984. However, the level of congestion was only reduced in the least congested (low-income) areas and during the same period rose in the most congested areas (Dawson and Brown 1985). Pri- vate car and taxi use remained high, particularly during peak periods (Lewis 1993). In response to this failure, in 1983 the Hong Kong government decided to commission a 2-year investiga- tion of the viability of introducing a road user charging scheme using an ERP. The Hong Kong government chose not to adopt a low-tech option like the ALS in Singapore on the basis that it would be too liable to fraud and require a considerable amount of enforce- ment (Borins 1988). The principles of the proposed ERP were similar to those of the current ERP in Singapore (with a charge per crossing). Three schemes were designed with different locations of charging cordons, screenlines, and charge structures. The designs were pri- marily intended to cover the most congested areas, Hong Kong Island and Kowloon. The charge structure was planned to vary by time period and area. The com- binations of different charging cordons and screenlines with different charging structures followed the idea of a theoretical optimum (Dawson and Catling 1986). The system proposed in the 1983 study was based on automatic vehicle identification with a passive electronic number plate mounted underneath the vehicle. At the charging points, inductive power and receiver loops installed underneath the road pavement surface would be used to detect and identify the vehicle crossing the point. The information of crossing vehicles and their crossing times would then be transmitted from the road- side computer to the main accounting and billing system. The motorists crossing the charging points would then receive a bill monthly. Enforcement would be conducted via closed-circuit television, which would record the rear number plates of the vehicles. Technological tests with around 2,600 cars confirmed a high reliability rate for the system. The proposed ERP was expected to decrease the traffic volume by at least 20% during the peak hours, and the capital cost of the scheme was estimated to be around $30 million (in 1983) (Borins 1988). After the success of the technological trial and the potential positive outcome of the ERP, the Hong Kong government decided to consult the district boards, which represented the public. The government faced two main arguments: the need for road pricing given the scale of the congestion problem and the potential for invasion of privacy. In early June 1985, the proposal of the ERP was unanimously turned down by the district boards (Leung and Liu 1985). Borins (1988) discussed various tactical and political errors in the process of developing and selling the ERP to the public. In 1994 the Hong Kong government revived the idea of tackling traffic congestion by road pricing. The gov- ernment commissioned a major feasibility study, which began in March 1997, with the objective of examining the practicality of implementing ERP in Hong Kong. Var- ious technological alternatives were considered, including the dedicated short-range communications (DSRC) sys- tem as currently operated in Singapore and the vehicle positioning system (VPS) based on the Global Positioning System (GPS). A cordon-based charging scheme was still the preferred alternative for the charging regime. Like the scheme designed in 1983, the charging zone would cover the most congested areas of Hong Kong and be operated on a directional and time period basis. The initial sugges- tion was that the peak-period charge would be from 8:00 to 9:00 a.m. and 5:30 to 7:00 p.m. A slightly lower charge would be applied during the interpeak hours. The charge rate would be set to maintain a target speed of 20 kilo- meters per hour. It was estimated that the implementation of the proposed ERP would reduce car trips entering the charging zones by up to 50%, with 40% diverting to pub- lic transport and 10% changing travel time. To rectify the failure of the first proposal, there was a well-planned pub- lic consultation program to allow public input into the development of the scheme. Technology trials were conducted in late 1998 with both DSRC and VPS technologies. The results showed that both DSRC and VPS could be adopted in Hong Kong and that the privacy issue could be overcome. However, in 2001 the government concluded that on the basis of the feasibility study report in 1999 there were no transport and environmental grounds to justify ERP (Legislative Council 2001). Therefore, the govern- ment decided not to pursue the implementation of the ERP, despite the promising results of the technological trials. Although the technological barrier in relation to the privacy issue has been overcome, the question of the political and public acceptability of ERP remains. Other Asian Developments Especially in Asia, the rapid growth of the economy has catalyzed the growth of traffic and vehicle ownership. In 8 0 INTERNATIONAL PERSPECTIVES ON ROAD PRICING

Seoul, after several decades of rapid growth in car usage, the Seoul metropolitan government (SMG) has taken several measures to reduce congestion in the inner city and increase the mode share of public transport. Since 1993 the government has been investigating different traffic demand management techniques through various fiscal tools including congestion charging. In 1996 SMG implemented congestion tolls (around $2.20 for both directions) on two main tunnels linking the downtown area to the southern part of the city (Hwang et al. 1999). The objectives of this implementation are threefold: to reduce the incidence of low-occupancy vehicles, to raise revenues for transport-related projects, and to assess the effectiveness of the pricing technique. Private cars with three or more passengers are exempted from the tolls. Traffic volume decreased by 20% in the first 2 years after the operation. Average traffic speed increased by 10 kilo- meters per hour. A proposal for expanding the current congestion charging system in Seoul has been developed that is based on point charging. However, this expansion of congestion charging has not been implemented to date because of political concerns. After the success of the ALS implementation in Sin- gapore, in the 1970s the World Bank funded studies of the feasibility of implementing a similar scheme in Kuala Lumpur (Malaysia) and Bangkok (Thailand). Although the studies strongly supported the implemen- tation of the schemes in both cities, initial setbacks have delayed implementation. In Kuala Lumpur, gantries were already installed at various points around the charging zone boundary. However, the operation of the ALS was ultimately deferred by the government. The reasons given were that the city needed to improve pub- lic transport and complete the inner ring road as an alternative for through traffic first (Armstrong-Wright 1986). In addition, it was claimed that the success of other road improvements at that time was able to reduce the congestion problem sufficiently in the cen- tral area. Interestingly, the same political decision mak- ers both approved the initial plan and deferred it later. In Bangkok, the proposal for the implementation of ALS was immediately rejected by the government because of political concerns. On the one hand, there has been no implementation of any form of congestion charging systems in these cities to date. On the other hand, Thailand, Malaysia, and other countries in the region (including the Philippines, China, and Taiwan) have been progressive in using road pricing as a means to finance road infrastructure projects. There are vari- ous road toll projects both in urban and interurban contexts in these countries (with the sole objective of financing road construction). In Japan, the Tokyo metropolitan government (TMG) developed the Transport Demand Management Tokyo Action Plan in 2000. The plan envisages future implemen- tation of road pricing in the center of the city. TMG set up a committee to examine the possible implementation of the road pricing scheme. In 2001 the committee produced a report that proposes four different charging cordon designs. In early 2001 an electronic toll collection system was introduced in the Tokyo area; it was expanded to cover more than 600 existing toll points and went nation- wide in November 2001. The initial purpose of this elec- tronic toll system was for financing, but the emerging policy in Japan is to price roads differentially to reflect congestion and environmental impacts. Currently, experi- ments for congestion and environmental charging are being conducted in various locations. Elsewhere There are a few road pricing proposals elsewhere in the world, and most of them are using road pricing as an infrastructure financing tool rather than as a congestion charging measure. In Australia, several high-technology tolling systems are in place: a series of tolled motorways, bridges, and tunnels in Sydney; City Link in Melbourne; and Gateway Bridge/motorway and Logan motorway in Brisbane. The interesting issue for Australia is the national policy to allow a customer of one toll road oper- ator to be able to use other toll road systems “seamlessly.” In the recent AusLink Green Paper, the possibility of mov- ing the existing toll financing scheme to a congestion charging scheme is mentioned (Department of Transport and Regional Services 2002). A road user charging sys- tem for HGVs based on variable weight and distance (a mass–distance regime) was also referred to as an alterna- tive. In New Zealand, the paper-based road user charges for HGVs, introduced in 1977, is a weight–distance tax relying on vehicle distance measurement devices. The pur- pose of this system is to recover road costs from heavy vehicles. In 2002 the government announced its intent to introduce an electronic road user charging system to increase fairness and efficiency of the charging system to vehicle operators. Migration from the paper-based sys- tem to the new electronic system will be voluntary. Cur- rently, a feasibility study is being carried out to investigate the business case and functionality design. There have been road pricing proposals in South America. There was an early feasibility study of implementing road pricing in Caracas, Venezuela. More recently, the city of Santiago, Chile, has outlined a plan to implement an urban road pricing scheme. IMPLICATIONS As noted earlier, three approaches have been developed outside North America. 8 1ONE STEP FORWARD, TWO STEPS BACK?

Most effort has been put into the design, develop- ment, and implementation of urban road pricing. How- ever, with the exceptions of London and Singapore, no significant scheme has yet been successful. This remains the least effective area of policy development, and it is important to understand the barriers to progress. The most widespread is political unacceptability, but con- cerns are also raised about equity and economic impacts; indeed, these underpin many of the wider con- cerns about acceptability. To a much smaller extent, the feasibility of pricing and of the supporting technology and the potential presented by that technology for inva- sion of privacy remain concerns. There is a growing interest in the design of alternative charging regimes and their integration with other policy instruments as ways of overcoming these concerns. All of these issues have been the subject of research, and we consider these research results further in the next section. As in North America, there has been widespread use of toll highways as a means of financing the roads them- selves. Uniquely, Norway has taken this principle and applied it to the existing infrastructure by using toll rings to pay for new infrastructure. This has clearly been successful in Norway, but no other country has imple- mented similar financing strategies. Norway is now fac- ing the question of the future of these toll rings once they have generated the necessary revenues. It has been accepted that they might continue to be used to finance further (usually public transport) projects and to reduce congestion. However, it is as yet unclear whether toll rings designed for one purpose are necessarily suitable for another and very different purpose. The third and most recent development has been the interest in using distance charging to manage congestion and to charge more appropriately for road use on interurban road networks. The German system for charging heavy commercial vehicles will be the first such scheme, and the United Kingdom is likely to follow in 2006. At present it appears that it will be another decade before such controls are imposed on all traffic. RESEARCH ISSUES Acceptability A large number of surveys of attitudes toward road pric- ing have been carried out since the 1980s, particularly in the United Kingdom. This summary is taken from a fuller review available from the authors (Jaensirisak et al. 2003b) that provides a full list of references. Selected references are cited below. A total of 29 surveys in the United Kingdom between 1989 and 2002 found levels of public acceptance of road pricing ranging from 8% to 76%. Clearly, other factors are influencing acceptability, and much of the research has focused on these factors. One of the clear- est is the question of hypothecation; among the surveys, average acceptance was 35% where there was no hypothecation and 55% where there was. Numerous studies illustrate the critical impact of hypothecation on acceptability. Jones (1998) concluded, “Most professional and governmental bodies in the UK now accept that hypothecation of revenues will be part of the price that will have to be paid to gain sufficient public support for urban road pricing to ensure its intro- duction in this country.” There is, however, inconsis- tency across the results of different studies. Some have found that the greatest impact is obtained from spend- ing on improved public transport, while in others it is investment in the road network and in yet others it is reduction in taxes. Acceptability has been found to be influenced by atti- tudes to transport problems and the perceived effective- ness of the scheme (PATS Consortium 2001). It is also influenced by attitudes relating to the environment and toward the hazards of car traffic. Those who are con- cerned about the quality of the environment and nega- tive effects from traffic are more likely to accept charging than others. On the contrary, those for whom the car has positive images tend to oppose charging. Some people use their cars because they enjoy doing so rather than through necessity, which leads to resistance to policies aimed at reducing car use (Steg and Tertoolen 1999). Other attitudinal aspects of acceptability relate to perceptions of freedom and fairness (Jones 1998; PATS Consortium 2001) and concerns over equity issues (Giu- liano 1992; Langmyhr 1997). Indeed, a distinction can be made between selfish and social perspectives. An interesting point about congestion was observed by Sheldon et al. (1993), who stated “no-one appears will- ing to accept that they contribute to the problem: it is typically something that is caused by someone else.” Nonetheless, Rienstra et al. (1999) recognize that social concerns do influence preferences toward road pricing, while Schade and Schlag (2000) identified social norms as important. Acceptability is likely to relate to personal character- istics and constraints, which may include income, age, education, transport mode used, frequency of car use, availability and quality of alternative modes, location of household and workplace, household type, and lifestyle. However, it is clear from a number of studies (Schade and Schlag 2000) that socioeconomic factors have a somewhat lesser impact on acceptability than do attitu- dinal factors. The importance of the communication process to acceptability—making clear the main objectives, addressing public concerns, and spelling out the bene- 8 2 INTERNATIONAL PERSPECTIVES ON ROAD PRICING

fits—has been highlighted (Schade and Schlag 2000). The benefits that will influence acceptability are the time savings and environmental improvements. However, it is uncertain that travel time reduction and environmental improvement are perceived by the public to compensate for the charge (Giuliano 1992; Harrington et al. 2001). System features will influence acceptability. There is a preference for simple systems (Bonsall and Cho 1999), although Schlag and Schade (2000) found little differ- ence between distance-based, congestion-based, and cordon pricing. Last but not least, the level of acceptability of road pricing can be expected to be critically dependent on the level of charge. In almost all cases where the charge has received attention, no quantified relationship between acceptance and the charge has been developed (Schade and Schlag 2000; PATS Consortium 2001). Although details are not provided, Hårsman (2001) states that “acceptance relates to the level of charges and to the use of toll revenues. Experiences from the PRIMA case cities indicate that fairly low starting levels are needed and that the charges can be increased successively to meet finan- cial requirements.” The notable exception in this context is the Harrington et al. (2001) study, which quantified the effect of congestion pricing on voting behavior. Our own research (Jaensirisak et al. 2003a) has attempted to fill some of the gaps in this understanding and developed relationships that enabled acceptability to be estimated in terms of the characteristics of the scheme. While we found road pricing to be unaccept- able to the majority, some personal characteristics made it more or less so. Charging was more acceptable to non- car users, those who perceived pollution and congestion as very serious, and, to a lesser extent, those who con- sidered the current situation unacceptable and who judged road pricing to be an effective means of reducing congestion. Conversely, older respondents were more likely to judge charging as less acceptable. Somewhat surprisingly, income did not influence acceptability. Among the potential impacts of charging, an ability to achieve substantial environmental improvements was the single most important contributor to increased acceptability, followed by contributions to reducing delayed time for cars. There was a preference for using the revenue to reduce taxes, but the impact was small. As expected, design features were found to influence acceptability, which could be increased by limiting charging to the central area and, to a lesser extent, peak periods; using cordon-based charges rather than contin- uous charging regimes; and imposing lower levels of charge. By combining all of these results, it proved possible to specify design combinations that would be voted for by the majority of the population. In London a cordon charging scheme limited to the central area with a charge of £5 per day (equivalent to the scheme since implemented) would be acceptable to the majority, and a charge of £7 would be, provided that it generated sub- stantial environmental benefits and reductions in delay for cars. In Leeds, charge levels of £2 or £3 would be acceptable to the majority, but only given substantial environmental improvements and reductions in delay for cars. Equity Equity issues have been a focus of concern for a consid- erable time (Cohen 1987; Else 1986; Small 1983). Vari- ous definitions and dimensions of equity as a result of road pricing have been suggested. Viegas (2001) and Jones (2002) pointed out that the definition of equity in transport largely concerns fairness of the right of access to transport infrastructure for different groups of people. This raises the question of whether road pricing is a fair allocation mechanism among different groups of indi- viduals. Giuliano (1994) suggested that the equity issue in road pricing must consider both the distribution of benefits associated with reduced congestion (including side benefits such as pollution reduction and improved public transport service) and the distribution of costs needed to achieve the congestion benefits. Schade and Schlag (2003) suggested the psychological view on the issue with the reference to the term “justice,” which may be different from the idea of a fair allocation mechanism. Regardless of the exact definition of equity, for ana- lytical purposes it is necessary to define groups of poten- tial winners and losers from road pricing (Langmyhr 1997). In the main, there are two dimensions of equity: vertical and horizontal. The vertical dimension of the equity issue concerns the unequal impact from the scheme across different groups of the population segre- gated by income and socioeconomic characteristics. For instance, one may argue that the implementation of a road user charging system will benefit the rich while dis- advantaging the poor (or lower-income group). The ver- tical equity analysis is mostly associated with the protection of those in the worst conditions (PATS Con- sortium 2001). Jones (2002) referred to vertical equity as social equity. The horizontal dimension of the equity impact is referred to as the spatial equity impact or ter- ritorial equity. The horizontal equity impact can be described as the impact on the population living in dif- ferent parts of a certain area. If the scheme benefits only a small group of people from some areas but the rest of the population experiences a decline in social welfare, the scheme can be argued to be inequitable. Early attempts in dealing with the equity issue were mainly involved in analyzing the impact of road pricing on vertical equity (Anderson and Mohring 1995; Frid- 8 3ONE STEP FORWARD, TWO STEPS BACK?

strom et al. 2000; Giuliano 1994; Gomez-Ibanez 1992; Langmyhr 1997). A general conclusion from various researchers was that low-income or less flexible car users (e.g., based on gender or flexibility of working schedule) are likely to be the worst-off groups as a result of road pricing. If revenues are not redistributed in any way, road pricing generally results in gains for higher-income groups and losses for lower-income groups (Else 1986; Cohen 1987). The way the revenues are distributed has a significant impact on the equity issue (Fridstrom et al. 2000; Giuliano 1994; Small 1992). Some research has examined the horizontal dimen- sion of equity. Fridstrom et al. (2000) analyzed the spa- tial impact of road pricing cordons by using spatial accessibility for each zone segregated by modes as the indicator. They suggested that the main adverse impact of a charging cordon is its boundary effect, which also depends on the actual design of the scheme. A small cor- don would affect residents inside the cordon the most, whereas those outside the cordon are the main victims in a wider cordon scheme. In the study of the Singapore ALS, Holland and Watson (1978) indicated that the cor- don gave more advantage to the commercial firms out- side the cordon. Obviously, this problem may be eliminated by the introduction of a different charging regime, such as a time-based, a distance-based, or a delay-based regime (Jones 2002). Halden (2003) also used the accessibility ratio between car and noncar from different zones for different purposes. The results showed a great diversity of the impacts on different areas in the city and classes of users. Recent research has examined the approach to includ- ing equity aspects in the design of road pricing systems. Mayeres and Proost (2001) proposed a weighted welfare indicator giving more weight to the benefit–cost incurred by less advantaged groups. The test results showed that road pricing is an important element of the tax reform even with a greater emphasis on equity. Meng and Yang (2002) developed a framework for calculating optimal road toll (to maximize social welfare) with constraints on the spatial equity impact. Recently, Sumalee (2003) proposed an ana- lytical method to identify an optimal location of charging cordon with spatial equity constraint. Jones (2002) pro- posed a simple approach to address equity concerns through scheme design, exemption, and discount. While there remain some uncertainties over equity impacts, they mainly relate to issues of scale, which will depend on detailed design, and of design approaches, which can be adapted to mitigate these impacts. Economic Impacts The economic and relocation impacts of transport schemes are notoriously difficult to measure or predict. For road pricing, the lack of empirical evidence makes the problem worse. The early study of area licensing in Singapore did not attempt to assess the impacts on land use. It did ask businesspeople for their assessment of the scheme, which was largely positive, but this may well have reflected a gen- eral view in Singapore at the time that government was making the right decisions. Ten years later an attempt was made to assess the impacts retrospectively. It was con- cluded that there was no evidence of adverse impacts on economic activity in the city center (Armstrong-Wright 1986). However, this assessment was made difficult, both because parking restrictions had been introduced at the same time, about which businesses were much more criti- cal, and because the Singapore economy had expanded rapidly in the intervening period, which masked any impact of road pricing. There is no documented evidence of any similar assessments in Norway. Empirical evidence is being sought in London in the context of early claims of a roughly 10% reduction in retail trade. An earlier study asked businesses in three cities— Cambridge, Norwich, and York—about the expected impacts of a road pricing scheme charging £3 per day to enter the city center in the morning peak (Gerrard 2000). The majority anticipated positive impacts on the environment and congestion but negative impacts on the economy and tourism and on their own staffing and profitability. When asked whether road pricing would influence their next location decision, 53% said it would and 26% that it might. Model-based predictions typically suggest much smaller impacts. An analysis of the impacts of conges- tion charging in London was carried out by using the MEPLAN model of London and the South-East, which reflects the effects of changes in accessibility on location (May et al. 1996a). For a £4 charge to enter central London, the predictions were as follows: • Central London employment would rise by 1.0%. • Inner and outer London employment would fall by around 0.5%. • Household numbers would fall by 0.2% in central London and 0.1% in outer London. • Household numbers would rise slightly in inner London. • Higher-income household numbers would increase in central London. A subsequent study in Edinburgh using the START/ DELTA model, which includes responses to both accessi- bility and environment (Bristow et al. 1999), indicated that a £1.50 charge to enter or leave the city center would increase city center population by 2.2%; an ear- lier study with a similar model but different parameters (Still et al. 1999) had suggested a 1.8% reduction in city center population and a 3.1% reduction in city center 8 4 INTERNATIONAL PERSPECTIVES ON ROAD PRICING

employment. Both studies suggested that the impacts of changes in accessibility were larger than but opposite in sign to the impacts of changes in environmental quality. This remains an area of considerable uncertainty on which more evidence is needed. Technology In the past, the operation of point-based road pricing schemes was mostly based on manual toll collection or automatic coin collection machines at tollbooths. The operation required vehicles to slow down and stop at the tollbooth. This system offers a high level of reliability and enforcement. It also involves a simple technology that is widely accepted. However, the system creates seri- ous congestion around the toll collection area. An alter- native charging regime is an area-based charging system. The original ALS in Singapore was a showcase of the application of a paper-based system involving a mini- mum level of technology (Holland and Watson 1978). The downside of the paper-based system is the intensity of manual enforcement. Electronic technology for charg- ing and enforcement is seen as the pathway to the future success of the implementation of road pricing. Key challenges for technology include reliability, the cost of implementation, and privacy. In addition, well- designed technology can provide for greater flexibility in the range of users and vehicle origins, for more com- plex charging regimes of the kinds outlined below, and for solutions to equity concerns by permitting varying charges and exemptions for different types of users. In the past decade there has been rapid development in charging technology in response to the requirements mentioned above. There are two main avenues for the current development of charging technology. The first involves use of the DSRC system. The system is made up of two main types of equipment: roadside equipment (RSE) and in-vehicle units (IVUs) that enable two-way communication using DSRC. The RSE is connected to a computer, which carries out the necessary processing. The arrangement tested in Hong Kong in the 1980s relied on a similar system (Dawson and Catling 1986). However, the Hong Kong system was claimed to violate privacy because of its IVU and back-office technology (Borins 1988). The IVU technology in the early study in Hong Kong was a read-only tag that could signify only the identity of the vehicle to the RSE. The read-only tag could not convey any information such as credits or charges incurred. The Singapore ERP overcomes this problem by introducing smart card technology for use with IVUs (Menon 2000). Instead of having an account for each vehicle, a smart card contains available funds from which charges are deducted at the charging point. The IVU technology adopted in the Singapore ERP uses a transponder with full two-way communication facili- ties with a smart card interface that is able to store and process the data. The same system is being tested and implemented widely in Japan as the basis for the future road user charging system (Kumagai 2003). The DSRC system operates at free-flow level at the charging points. Therefore, it requires a high-level enforcement technology for detecting noncomplying vehicles (Blythe and Burden 1996). The technology cur- rently adopted is automatic number plate recognition (ANPR) and closed-circuit television. ANPR has already been tested and used effectively in many cases such as the Highway 407 system in Toronto, the CityLink scheme in Melbourne, the ERP in Singapore, and recently the ALS in London (Turner 2001). At the charg- ing point, if the vehicle is detected as not having an IVU or smart card or if the card lacks sufficient funds, the number plate will be captured by the ANPR and processed. In London, ANPR cameras at various points inside the charging zone record all vehicles, and each vehicle number plate is compared with the database of registered numbers. The DSRC can operate at different frequencies. This caused a problem in terms of interoperability of different systems developed by different providers (Clark 2000). An example is the problem in Australia, where the toll systems operated in Sydney and Melbourne are based on different standards and are not compatible (Charles 2001). In the United States the 915-MHz band was cho- sen as the national standard, while the European Com- mittee for Standardization (CEN) chose 5.8 GHz to avoid the frequency band of the European Global Sys- tem for Mobile Communications. In Japan, the Associa- tion of Radio Industry and Businesses also chose 5.8 GHz as the national standard, but the standard is not compliant with the CEN standard (Guillermo Jordan et al. 2001). To overcome the interoperability problem, the Norwegian government set up a company, AutoPASS, to develop and operate the charging technology for tolling facilities in Norway. The new AutoPASS is consistent with both global ISO standards and European standards (CEN). The new specifications are used in the replace- ment of four systems in Oslo, Trondheim, Rennfast, and Hvaler. In addition, AutoPASS users can use their cards on almost half of the toll road projects in Norway. As an alternative to the DSRC-based system, the Global Navigation Satellite System (GNSS) and the Gen- eral Packet Radio System (GPRS) can be adapted to operate point and distance charging systems (Catling 2000). GNSS uses a satellite-based positioning and navi- gation system to compute the location of a vehicle in a road network. Currently, the United States and Russia provide the two navigation satellite systems (GPS and GLONASS, respectively). EU’s Galileo alternative is due 8 5ONE STEP FORWARD, TWO STEPS BACK?

to be available in 2008. Since the satellite navigation sys- tems provide only one-way communication (from the satellites to the receivers), a cellular phone system is nor- mally used for communication between the vehicle and the control system for the transaction process. For GPRS, the position can be determined by the data con- nection via the mobile phone network with an always-on connection. The resulting VPS allows a more complex charging regime to be implemented. The system also requires minimum infrastructure on the roads. The fee can be defined on the basis of crossing points, presence in an area, or per unit of time or distance. The fee struc- ture could be stored either at the main control center or in the IVU. A similar system was tested in Hong Kong and was proved to be reliable (Catling 2000). The Swiss and German governments also launched the first large- scale GPS-based project, which will soon be operable and will charge HGVs on the basis of distance traveled (Guillermo Jordan et al. 2001). The key barrier to large- scale implementation, especially in an urban area, is the required level of accuracy of the positioning system. At the moment, the accuracy of the GPS system is 10 to 15 meters, whereas Galileo promises to deliver positioning accuracy down to 4 meters. Despite the potential improved accuracy, there are various blind spots in the road network (e.g., tunnels) where the GNSS may expe- rience problems. This can be overcome by integrating the GNSS with the short-range communication system (e.g., communication with beacons) or a dead-reckoning system (Ochieng 2003). Scheme Design and Integrated Strategies The majority of proposals for road pricing have assumed that charges would be imposed to cross cordons or pass points in the road network. Point-based or cordon charg- ing is a remarkably flexible technique. It can involve single or multiple cordons, screenlines to control orbital move- ments, and point charges at particularly congested loca- tions, with charges varying by location, direction, and time of day. The early proposals for Hong Kong (Dawson and Brown 1985), those studied in London (Richards et al. 1996), and the current scheme in Singapore (Menon 2000) all exhibit this flexibility. However, even such complex charging structures have been criticized. It has been argued that they are inflexible since fixed charging points cannot readily be relocated, that they are inequitable because they impose the same charge for short and long journeys, and that they are disruptive because they encourage rerouting to avoid the charge. All of these limitations arise from the discontinuities that point-based charging introduces into the road network. These arguments have led to the alternative suggestion of continuous charging schemes, in which charges are levied on all travel throughout a defined area on the basis of distance traveled, time spent traveling, or perhaps time spent in congestion. A recent survey of the policies adopted by U.K. city planners indicated that they typically adopted a simple approach by focusing on the city center and any major traffic generators on its fringes. The single cordon would be placed just inside the inner ring road around the center, with crossing points minimized where possi- ble, a uniform charge to cross at all points, and that charge kept low enough to be publicly acceptable (Sumalee 2001). Conversely, theory tells us that the “first-best” charg- ing regime is one that results in drivers on each link in the road network incurring the marginal cost of travel on that link (Sheffi 1985). Such charges are impractica- ble and could prove expensive to implement, but they serve as a benchmark for assessing real schemes. The question of where best to locate a single cordon or a given number of charging points is altogether more chal- lenging and has been addressed by relatively few researchers (Hearn and Ramana 1998; Shepherd and Sumalee 2004; Verhoef 2002). One important theoreti- cal study comparing parking charges, cordon charges around centers, continuous charges, and charges limited to selected lanes with free parallel routes suggests that the last of these, which largely reflects HOT lane prac- tice, is by far the least efficient in its impacts on network performance (Small and Yan 2001). A recent research project has used genetic algorithms to determine optimal locations and charge levels for dif- ferent patterns of charging points. In an application to Edinburgh, it compared four single cordons largely based on planners’ designs, the same cordons with varying charges, an optimally located cordon, and charging lim- ited to 10 isolated points in the network. The planners’ cordons varied substantially in their performance, with the best producing more than twice the benefits of the worst. The optimally located cordon was about 25% more effective than the best of those suggested by the planners. Relaxing the requirement for a closed cordon and limiting charges to 10 key points added a further 20% to the benefits, and relaxing the need for uniform charges at all points a further 20% to 60%. Charging at 10 points, with variable charges, proved to be twice as effective as the best planners’ cordon with uniform charges (May et al. 2002). While this research raises sev- eral other questions, it suggests that there is much to be gained by a more analytical and flexible approach to the location of charging points in urban networks. Shepherd (2003) investigated the relative perfor- mance of cordons, a fuel tax, and a smart card–based approach for Edinburgh within integrated strategies by using the strategic model START. He concluded that small city center cordons can create boundary effects 8 6 INTERNATIONAL PERSPECTIVES ON ROAD PRICING

and increase average trip lengths. Larger cordons can also have boundary effects, though if they are large enough they have little adverse effect on those residing in the area. A simple increase in fuel tax was 84% as effective as the first-best system. This simple system would be easy to implement but would mean adding approximately €1.5 to the price of a liter of fuel. Apply- ing a smart card distance-based system with a minimum and maximum charge level of €1 and €4, respectively, increases the benefits to 96% of first-best results. A separate strand of research has compared cordon charges with those involving delay. Behavioral research suggests that drivers will be less willing to reroute or reduce their travel in response to time-based charging because the charges are variable and hence uncertain. Conversely, such responses are stronger with distance- based and cordon charges. There is also evidence that variable charges induce greater risk-taking by drivers and hence increase accident risk (Bonsall and Palmer 1997). The impacts on network performance are very differ- ent. Distance-based charging proved the most effective in reducing distance traveled and travel times within the urban areas studied, while delay-based and cordon charging were the least effective. Distance-based and time-based charging were equally effective in reducing the resource costs of travel. However, distance-based charging also had the most extreme impacts on route choice, with significant diversion to the uncharged orbital routes outside the urban area. In all cases the net impact on vehicle kilometers traveled was small, with reductions within the urban area being offset by increases outside. This argues for charges to be imposed over much wider areas than those often envisaged (May and Milne 2000). Overall, it appears that distance-based charging may prove to be more effective and flexible than point-based charging once the technology is available to implement it. Road pricing is increasingly being seen, at least in European cities, as part of an integrated strategy in which individual policy instruments complement one another or overcome the barriers to the implementation of other instruments. A recent policy review has sug- gested that integration can be achieved by reinforcing the benefits, reducing political and financial barriers, and compensating losers. It highlights road pricing as being able, uniquely, to reinforce the benefits of all other types of policy instrument, while at the same time gen- erating income to contribute to their costs. It also notes that other policy instruments can help to reduce its political unacceptability and adverse distributional impacts (May 2004). An early example of this was the integrated transport study for Edinburgh, which indirectly led to the current road pricing proposals there (May et al. 1992). After extensive analysis, six possible strategies were devel- oped, which involved differing levels of infrastructure investment, road space reallocation, fares, and road pricing, with revenues from the latter hypothecated to finance the former. Two were high-cost strategies involving roundly similar financial outlay, one with and one without road pricing. At the other extreme, two generated sufficient income to pay for the other ele- ments of the strategy with again one involving road pric- ing and the other not. The third pair involved an intermediate level of finance. Those including road pric- ing were between 50% and 200% more effective than those without in terms of their net economic benefits; their performance was also much less sensitive to the level of public finance available. Subsequent research has used optimization tech- niques to determine the optimal combination of policy instruments in different cities for a given set of policy objectives. An initial study using different transport models in nine European cities found that city center road pricing charges or comprehensive parking charges in the range €1.6 to €5.0 per day were a key element of the optimal strategy in six of the nine cities, and that in five of the six cities the resulting strategy was self- financing over a 30-year period (May et al. 2000). More recent work in four cities, using the same transport model for each, has demonstrated that city center road pricing, with peak charges in the range €1.9 to €7.9 per day, is part of the optimal strategy, together with public transport fare reductions and frequency increases (Emberger et al. 2003). CONCLUSIONS Martin Wachs (2005) comments that “road pricing is not quite yet within the mainstream of transport policy options, but . . . more progress has been made in that direction in the last decade than had been made in the preceding 70 years.” That assessment is clearly borne out in experience elsewhere in the world. The past decade has seen the introduction of electronic road pricing in Singapore and congestion charging in London; the establishment of toll cordons in Norway; and a commitment to distance- based charges in Germany and the United Kingdom, at least for HGVs. While elsewhere it has repeated the pat- tern of proposals for and rejection of urban road pricing of previous decades, we can at least claim that that activity has become more intense, particularly in the United Kingdom, Italy, Sweden, the Netherlands, Japan, and Hong Kong. Where proposals fail, the barriers to progress remain largely the same: lack of political commitment reinforced by limited public acceptance and concerns about equity, economic impacts, and, to a lesser extent, technology. 8 7ONE STEP FORWARD, TWO STEPS BACK?

However, we have also made significant progress in research into these issues in the past decade. We now have a much fuller understanding of the factors influenc- ing acceptability. We have identified the key dimensions of equity and understand better the scale of impact on different groups. Technological developments have been substantial and offer new solutions to earlier concerns. In addition, recent research into optimal scheme design offers ways of intensifying the benefits of road pricing once introduced. It is only in the area of economic impacts that significant uncertainties remain, and it appears unlikely that a much greater understanding can be obtained in the absence of empirical research. The potential for a significant breakthrough in the next decade is greater than it has ever been, but much will depend on the political commitment of local and national decision makers. London is particularly important in this regard, because it offers the first demonstration of suc- cessful application in a city to which others can relate. It also promises, over the next 2 years, precisely the detailed empirical evidence called for in Curbing Gridlock (Trans- portation Research Board and Commission on Behav- ioral and Social Sciences and Education 1994). London, of course, is not typical of most other cities that are con- sidering road pricing; even before congestion charging only 15% of central London commuters traveled by car. But the detailed empirical evidence on user and system responses should allow others to assess more reliably what the impacts would be in their own cities. London also offers evidence for political analysts on the processes that enable such a complex scheme to be implemented successfully. Central government played the key initial role in establishing the position of the mayor and providing him with the necessary enabling legislation. The appointment of a strong, visionary leader with such powers then enabled the scheme to be implemented, despite the loss of confidence and com- mitment at the central government level. Paradoxically, the most powerful ally of the left-of-center mayor proved to be the business community rather than the socialist government. As in London, much will depend in the next decade on political will at both the national and the local levels. European politicians are almost certainly ahead of those in North America in accepting that we cannot build our way out of our transport problems. But they remain cautious about policies that are likely to be unattractive in the short term and may take much of a term of office to implement. National governments need to assist by providing enabling legislation and consistent policy sup- port. Local governments will succeed where they can find visionary leaders who are supported by committed and creative professionals. REFERENCES Abbreviations DETR Department of the Environment, Transport, and the Regions PATS Pricing Acceptability in the Transport Sector Anderson, D., and H. Mohring. 1995. Congestion Costs and Congestion Pricing. Presented at Conference on Congestion Pricing, Irvine, Calif. Armstrong-Wright, A. T. 1986. Road Pricing and User Restraint: Opportunities and Constraints in Developing Countries. Transportation Research A, Vol. 20, No. 2, pp. 123–127. Baker, J. 2002. Implementing Urban Road Pricing: Achievement and Barriers. Presented at 3rd IMPRINT- EUROPE Seminar, Implementing Reform in Transport Pricing: Constraints and Solutions: Learning from Best Practice, Brussels, Belgium. Blythe, P. T., and M. J. J. Burden. 1996. The Technical and Institutional Issues Associated with the Enforcement of a Multi-Land Debiting System. Presented at IEE Colloquium on Camera Enforcement of Traffic Regulations. Bonsall, P., and H. J. Cho. 1999. Travellers’ Response to Uncertainty: The Particular Case of Drivers’ Response to Imprecisely Known Tolls and Charges. Presented at European Transport Conference, United Kingdom. Bonsall, P. W., and I. Palmer. 1997. Do Time-Based Road-User Charges Induce Risk-Taking? Results from a Driving Simulator. Traffic Engineering and Control, Vol. 38, No. 4, pp. 200–204. Boot, J., P. Boot, and E. T. Verhoef. 1999. The Long Road Towards the Implementation of Road Pricing: The Dutch Experience. Presented at ECMT/OECD Workshop on Managing Car Use for Sustainable Urban Travel, Dublin, Ireland. Borins, S. F. 1988. Electronic Road Pricing: An Idea Whose Time May Never Come. Transportation Research A, Vol. 22, No. 1, pp. 37–44. Bristow, A. L., A. D. May, and S. P. Shepherd. 1999. Land Use–Transport Interaction Modes: The Role of Environment and Accessibility in Location Choice. Presented at 8th World Conference on Transport Research. Catling, I. 2000. Road User Charging Using Vehicle Positioning Systems. Presented at Conference on Road Transport Information and Control, London. Charles, P. 2001. Begging to Differ: Tolling Interoperability in Australia. TOLLtrans, pp. 64–67. Chin, K. K. 2002. Road Pricing: Singapore’s Experience. Presented at IMPRINT-EUROPE Thematic Network Seminar, Brussels, Belgium. 8 8 INTERNATIONAL PERSPECTIVES ON ROAD PRICING

Clark, J. 2000. Sky High Tolling. ITS International. Cohen, Y. 1987. Commuter Welfare Under Peak-Period Con- gestion Tolls: Who Gains and Who Loses? International Journal of Transport Economics, Vol. 14, No. 3, pp. 239–266. Commission for Integrated Transport. 2002. Paying for Road Use. London. Commission of the European Community. 1999. Directive 1999/62/EC of the European Parliament and of the Council of 17 June 1999 on the Charging of Heavy Goods Vehicles for the Use of Certain Infrastructures. Commission of the European Community. 2001. Europe Transport Policy for 2010: Time to Decide. Brussels, Belgium. Dawson, J. A. L., and F. N. Brown. 1985. Electronic Road Pricing in Hong Kong. 1. A Fair Way to Go? Traffic Engineering and Control, Vol. 26, No. 11, pp. 522–525. Dawson, J. A. L., and I. Catling. 1986. Electronic Road Pricing in Hong Kong. Transportation Research A, Vol. 20, No. 2, pp. 129–134. Department of Environment. 1976. Transport Policy: A Consultation Document. Her Majesty’s Stationery Office, London. Department of Transport and Regional Services. 2002. AusLink: Towards the National Land Transport Plan. DETR. 1998. Breaking the Logjam: The Government’s Consultation Paper on Fighting Traffic Congestion and Pollution Through Road User and Workplace Parking Charges. United Kingdom. Dutch Ministry of Transport. 1995. Contours of Implementation of Congestion Charging (Rekening Rijden). Abstract of a Letter to Parliament from the Minister of Transport. Eliasson, J., and M. Lundberg. 2003. Road Pricing in Urban Areas. Swedish National Road Administration, Borlange. Else, P. 1986. No Entry for Congestion Taxes. Transportation Research A, Vol. 20, No. 2, pp. 99–107. Emberger, G., A. D. May, and S. P. Shepherd. 2003. Method to Identify Optimal Land Use and Transport Policy Packages. Proc., 8th International Conference on Computers in Urban Planning and Urban Management, Sendai, Japan. Foo, T. S. 2000. An Advanced Demand Management Instrument in Urban Transport: Electronic Road Pricing in Singapore. Cities, Vol. 17, No. 1, pp. 33–45. Fridstrom, L., H. Minken, P. Moilanen, S. Shepherd, and A. Vold. 2000. Economic and Equity Effects of Marginal Cost Pricing in Transport Case Studies from Three European Cities. VATT Research Report 71. Helsinki, Finland. Gerrard, W. 2000. Traffic Demand Management in Three Historical Cities: Results of a Multivariate Analysis of Business Attitudes. WP 552. Institute for Transport Studies, University of Leeds, United Kingdom. Giuliano, G. 1992. An Assessment of the Political Acceptability of Congestion Pricing. Transportation, Vol. 19, pp. 335–358. Giuliano, G. 1994. Equity and Fairness Considerations of Congestion Pricing. In Special Report 242: Curbing Gridlock: Peak-Period Fees to Relieve Traffic Congestion, Vol. 2, Transportation Research Board, National Research Council, Washington, D.C., pp. 250–279. Goh, M. 2002. Congestion Management and Electronic Road Pricing in Singapore. Journal of Transport Geography, Vol. 10, No. 1, pp. 29–38. Gomez-Ibanez, J. A. 1992. The Political Economy of Highway Tolls and Congestion Pricing. In Exploring the Role of Pricing as a Congestion Management Tool, Federal Highway Administration, Washington, D.C. Gomez-Ibanez, J. A., and K. A. Small. 1994. NCHRP Synthesis of Highway Practice 210: Road Pricing for Congestion Management: A Survey of International Practice. Transportation Research Board, National Research Council, Washington, D.C. Greater London Council. 1974. A Study of Supplementary Licensing. London. Guillermo Jordan, J., F. Soriano, D. Graullera, and G. Martin. 2001. A Comparison of Different Technologies for EFC and Other ITS Applications. Presented at IEEE Intelligent Transportation Systems Conference, Oakland, Calif. Halden, D. 2003. Using Accessibility Measures to Integrate Land Use and Transport Policy in Edinburgh and the Lothians. Transport Policy, Vol. 9, pp. 313–324. Harrington, W., A. J. Krupnick, and A. Alberini. 2001. Overcoming Public Aversion to Congestion Pricing. Transportation Research A, Vol. 35, pp. 87–105. Hårsman, B. 2001. Urban Road Pricing Acceptance. Presented at IMPRINT-EUROPE Seminar, Brussels, Belgium. Hearn, D. W., and M. V. Ramana. 1998. Solving Congestion Toll Pricing Models. In Equilibrium and Advanced Transportation Modeling (P. Marcotte and S. Nguyen, eds.), Kluwer Academic Publishers, Boston, Mass., pp. 109–124. Holland, E. P., and P. L. Watson. 1978. Traffic Restraint in Singapore: Measuring the Impacts of Area License Scheme. Traffic Engineering and Control, Vol. 19, pp. 14–17. Hwang, K. Y., B. Son, and J. K. Eom. 1999. Effect of Congestion Pricing at the Namsan Tunnels in Seoul. Journal of the Eastern Asia Society for Transportation Studies, Vol. 3, No. 4. Jaensirisak, S., A. D. May, and M. Wardman. 2003a. Acceptability of Road User Charging: The Influence of Selfish and Social Perspectives. In Acceptability of 8 9ONE STEP FORWARD, TWO STEPS BACK?

Transport Pricing Strategies (J. Schade and B. Schlag, eds.), Elsevier, Oxford, United Kingdom. Jaensirisak, S., M. Wardman, and A. D. May. 2003b. Explaining Variations in Public Acceptability of Road Pricing Schemes. Transportation Research A (forthcom- ing). Jones, P. 1998. Urban Road Pricing: Public Acceptability and Barriers to Implementation. In Road Pricing, Traffic Congestion and the Environment (K. J. Button and E. T. Verhoef, eds.), Edward Elgar Publishing Limited, Cheltenham, United Kingdom. Jones, P. 2002. Addressing Equity Concerns in Relation to Road User Charging. Presented at Conference on Acceptability of Transport Pricing Strategies, Dresden, Germany. Jones, P., T. Grosvenor, and D. Wofinden. 1996. Public Attitudes to Transport Policy and the Environment. Department of Transport, London. Kumagai, Y. 2003. Tolling Technology: Growing in Popularity. ITS International, pp. 47–48. Langmyhr, T. 1997. Managing Equity: The Case of Road Pricing. Transport Policy, Vol. 4, No. 1, pp. 25–39. Legislative Council. 2001. Electronic Road Pricing. Hong Kong. Leung, M., and L. Liu. 1985. Government Caught at the Crossroads. South China Morning Post, Hong Kong, p. 5. Lewis, N. C. 1993. Road Pricing: Theory and Practice. Thomas Telford, London. May, A. D. 1975. Supplement Licensing: An Evaluation. Traffic Engineering and Control, Vol. 16, No. 4. May, A. D. 2004. Singapore: The Development of a World Class Transport System. Transport Reviews, Vol. 24, No. 1. May, A. D., D. Coombe, and C. Gilliam. 1996a. The London Congestion Charging Research Programme. 3: The Assessment Methods. Traffic Engineering and Control, Vol. 37, No. 4, pp. 277–282. May, A. D., D. Coombe, and T. Travers. 1996b. The London Congestion Charging Research Programme. 5: Assessment of the Impacts. Traffic Engineering and Control, Vol. 37, No. 6, pp. 403–408. May, A. D., R. Liu, S. P. Shepherd, and A. Sumalee. 2002. The Impact of Cordon Design on the Performance of Road Pricing Schemes. Transport Policy, Vol. 9, pp. 209–220. May, A. D., and D. S. Milne. 2000. Effects of Alternative Road Pricing Systems on Network Performance. Transportation Research A, Vol. 34, No. 6, pp. 407–436. May, A. D., and M. Roberts. 1995. The Design of Integrated Transport Strategies. Transport Policy, Vol. 2, No. 2. May, A. D., M. Roberts, and P. Mason. 1992. The Development of Transport Strategies for Edinburgh. Proceedings of the Institution of Civil Engineers, Vol. 95, pp. 51–59. May, A. D., S. P. Shepherd, and P. M. Timms. 2000. Optimal Transport Strategies for European Cities. Transportation, Vol. 27, No. 3, pp. 286–315. Mayeres, I., and S. Proost. 2001. Tax Reform for Congestion Type of Externalities. Journal of Public Economics, Vol. 79, pp. 343–363. Meng, Q., and H. Yang. 2002. Benefit Distribution and Equity in Road Network Design. Transportation Research B, Vol. 35. Menon, A. P. G. 2000. ERP in Singapore—A Perspective a Year On. Traffic Engineering and Control, Vol. 41, No. 2. Ministry of Transport. 1964. Road Pricing: The Economic and Technical Possibilities. Her Majesty’s Stationery Office, London. Ministry of Transport. 1967. Better Use of Town Roads. Her Majesty’s Stationery Office, London. Nash, C., and B. Matthews. 2001. Why Reform Transport Prices? Presented at 1st IMPRINT-EUROPE Seminar, Key Requirements for Implementing Pricing Reform in Transport. Ochieng, W. 2003. The Future for Satellite-Based Charging Systems. Presented at International Symposium on Congestion Charging, London. Odeck, J., and S. Brathen. 2002. Toll Financing in Norway: The Success, the Failures and Perspectives for the Future. Transport Policy, Vol. 9, No. 3, pp. 253–260. PATS Consortium. 2001. Recommendations on Transport Pricing Strategies: Final Report of the PATS Project. European Commission, Brussels, Belgium. Phang, S.-Y. 1993. Singapore’s Motor Vehicle Policy: Review of Recent Changes and a Suggested Alternative. Transportation Research A, Vol. 27, No. 4, pp. 329–336. Richards, M., C. Gilliam, and J. Larkinson. 1996. The London Congestion Charging Research Programme 6: The Findings. Traffic Engineering and Control, Vol. 37, Nos. 7–8, pp. 436–441. Rienstra, S. A., P. Rietveld, and E. T. Verhoef. 1999. The Social Support for Policy Measures in Passenger Transport: A Statistical Analysis for the Netherlands. Transportation Research D, Vol. 4, pp. 181–200. Schade, J., and B. Schlag. 2000. Acceptability of Urban Transport Pricing. VATT Research Report 72. Helsinki, Finland. Schade, J., and B. Schlag. 2003. Acceptability of Urban Transport Pricing Strategies. Transportation Research F, Vol. 6, No. 1, pp. 45–61. Schlag, B., and J. Schade. 2000. Public Acceptability of Traffic Demand Management and Pricing Measures in Europe. Traffic Engineering and Control, Vol. 41, No. 8, pp. 314–318. Seik, F. T. 1998. A Unique Demand Management Instrument in Urban Transport: The Vehicle Quota System in Singapore. Cities, Vol. 15, No. 1, pp. 27–39. 9 0 INTERNATIONAL PERSPECTIVES ON ROAD PRICING

Sheffi, Y. 1985. Urban Transportation Networks: Equilibrium Analysis with Mathematical Programming Methods. Prentice-Hall, Englewood Cliffs, N.J. Sheldon, R., M. Scott, and P. Jones. 1993. London Congestion Charging: Exploratory Social Research Among London Residents. 21st PTRS Summer Annual Meeting, United Kingdom, pp. 129–145. Shepherd, S. P. 2003. Towards Marginal Cost Pricing: A Comparison of Alternative Pricing Systems. Transportation, Vol. 30, No. 4, pp. 411–433. Shepherd, S. P., and A. Sumalee. 2004. A Genetic Algorithm Based Approach to Optimal Toll Level and Location Problems. Networks and Spatial Economics, Vol. 4, pp. 161–179. Small, K. A. 1983. The Incidence of Congestion Tolls on Urban Highways. Journal of Urban Economics, Vol. 13, pp. 90–111. Small, K. A. 1992. Using the Revenues from Congestion Pricing. Transportation, Vol. 19, pp. 359–381. Small, K. A., and J. Yan. 2001. The Value of “Value Pricing” of Roads: Second-Best Pricing and Product Differentiation. Journal of Urban Economics, Vol. 49, No. 2, pp. 310–336. Steg, L., and G. Tertoolen. 1999. Affective Motives for Car Use. In Transport Policy, Planning and Practice, PTRC, London, pp. 13–27. Still, B., A. D. May, and A. L. Bristow. 1999. Transport Impacts on Land Use: Predictive Methods and Their Relevance in Strategic Planning. Presented at 8th World Conference in Transport Research. Sumalee, A. 2001. Analysing the Design Criteria of Charging Cordons. ITS Working Paper 560. Institute for Transport Studies, University of Leeds, United Kingdom. Sumalee, A. 2003. Optimal Toll Ring Design with Spatial Equity Impact Constraint: An Evolutionary Approach. Journal of Eastern Asia Society for Transportation Studies. Tomassini, M. 2002. A State of the Art of the PROGRESS Project: The Rome Experience. Presented at 2nd IMPRINT-EUROPE Seminar, Implementing Reform in Transport Pricing: Identifying Mode-Specific Issues, Brussels, Belgium. Topp, H., and T. Pharoah. 1994. Car Free City Centres. Transportation, Vol. 21, No. 3, pp. 231–247. Transportation Research Board and Commission on Behavioral and Social Sciences and Education. 1994. Special Report 242: Curbing Gridlock: Peak-Period Fees to Relieve Traffic Congestion (two volumes). National Research Council, Washington, D.C. Turner, D. 2001. Centre Piece. TOLLtrans, pp. 24–26. Verhoef, E. T. 2002. Second-Best Congestion Pricing in General Networks: Heuristic Algorithms for Finding Second-Best Optimal Toll Levels and Toll Points. Transportation Research B, Vol. 29. Viegas, J. M. 2001. Making Urban Road Pricing Acceptable and Effective: Searching for Quality and Equity in Urban Mobility. Transport Policy, Vol. 8, No. 4, pp. 289–294. Wachs, M. 2005. Then and Now: The Evolution of Congestion Pricing in Transportation and Where We Stand Today. In Conference Proceedings 34: International Perspectives on Road Pricing, Transportation Research Board of the National Academies, Washington, D.C., pp. 63–72. Willoughby, C. 2001. Singapore’s Motorization Policies, 1960–2000. Transport Policy, Vol. 8, No. 2, pp. 125–139. 9 1ONE STEP FORWARD, TWO STEPS BACK?

Next: Committee Member Biographical Information »
International Perspectives on Road Pricing Get This Book
×
MyNAP members save 10% online.
Login or Register to save!
Download Free PDF

TRB Conference Proceedings 34: International Perspectives on Road Pricing is the proceedings of the International Symposium on Road Pricing held on November 19-22, 2003, in Key Biscayne, Florida. The event was a collaborative effort of TRB, the Florida Department of Transportation, the Organization for Economic Cooperation and Development, and the federal Highway Administration. The report includes two commissioned resource papers that examine the evolution of congestion pricing and the state of the practice in road pricing outside the United States. The proceedings also explore pricing successes and the challenges that have accompanied specific projects’ implementation, as well as the potential evolution of road pricing in the future.

  1. ×

    Welcome to OpenBook!

    You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

    Do you want to take a quick tour of the OpenBook's features?

    No Thanks Take a Tour »
  2. ×

    Show this book's table of contents, where you can jump to any chapter by name.

    « Back Next »
  3. ×

    ...or use these buttons to go back to the previous chapter or skip to the next one.

    « Back Next »
  4. ×

    Jump up to the previous page or down to the next one. Also, you can type in a page number and press Enter to go directly to that page in the book.

    « Back Next »
  5. ×

    To search the entire text of this book, type in your search term here and press Enter.

    « Back Next »
  6. ×

    Share a link to this book page on your preferred social network or via email.

    « Back Next »
  7. ×

    View our suggested citation for this chapter.

    « Back Next »
  8. ×

    Ready to take your reading offline? Click here to buy this book in print or download it as a free PDF, if available.

    « Back Next »
Stay Connected!