Road Pricing, the Economy and the Environment

This volume is a collection of research papers that examine the possibility of reducing the negative impacts from traffic by using new information and communication technologies. The focus is on passenger transport and most papers study various aspects of road pricing as an instrument to decrease traffic.

Despite the considerable benefits of road pricing that economists and other analysts have shown, and despite the efforts of the EU to get road pricing implemented, it has not been implemented on a broad scale. It is still widely considered to be a radical and controversial policy. This chapter provides a comprehensive review of experiences with road pricing in Europe and elsewhere. We consider pricing issues in urban road and interurban road transport separately. The policies in the two areas have typically been different focusing in urban transport on the private car and in interurban on freight transport. Also existing analyses, both theoretical and conceptual and those using real-world simulation models, have mostly dealt with these two topics separately. For both areas we consider the current pricing schemes, barriers to pricing and likely next steps. A central theme arising from this chapter is the importance of institutional implementation issues, including political acceptability. These questions have been given too little attention both in research and in actual attempts to implement road-pricing measures.

Congested roads seem to be an unavoidable characteristic of large cities. Transport economists and planners have regularly suggested that road pricing would be an appropriate and effective instrument in an overall policy to relieve congestion. Politicians and the public at large have usually been quite sceptical, however. In this paper, three ex ante studies of transport and location effects of alternative road pricing systems are presented and compared. Different models estimated with different data sets are applied to calculate the effects. The first two studies deal with the effects on the traffic pattern of a zone-based and a distance-based road pricing system for the Stockholm area, respectively. In the third study, location effects are also included in an analysis of optimal congestion charges in a stylised symmetric city adjusted to resemble Stockholm. All studies indicate a substantial reduction in vehicle distance travelled. For the zone-based system, traffic volumes in the inner city of Stockholm are predicted to decrease by 30% for charged hours at a charge level equivalent to 3 SEK/km. For the distance-based system, traffic volumes in the inner city are predicted to be reduced by 35 and 19% at charge levels of 4 and 2 SEK/km for peak and office hours, respectively. For the case of optimal congestion pricing, the reduction is 25% at an average charge level of 2 SEK/km. Additional effects in the first study are that speed might increase on inner city roads and arterials by around 20%. Moreover, accessibility to activities in the other half of the city will be reduced significantly. The most affected relation is the one between inner northern and inner southern suburbs. In that case, a reduction of the number of vehicle trips by around 30% is predicted. In spite of quite substantial transport effects, the location effects are predicted to be very limited.

While economic theory provides grounds to believe that a rapid implementation of marginal cost-based pricing would be a sensible policy strategy, in the practice of policy-making more gradual implementation paths (IPs) appear to be favoured. Arguably the most important reason why this should be the case is the existence of barriers and constraints. Surprisingly, however, little or no attention to the design and performance of policy IPs has been given in the transport literature. The purpose of this paper is to develop a structured economic approach to the design and evaluation of such IPs. A second purpose is to apply the proposed approach to analyse implementation paths in the context of urban transport. There is evidently great tension or gap between an idealised approach and what is feasible in applied modelling work using large-scale empirical network models. Four urban case studies are presented, which seek an optimal compromise between the theoretically ideal approach and a pragmatic approach (of ‘fully arbitrary’ IPs). We believe the results are indicative of what one might expect to encounter along a realistic IP, but at the same time acknowledge that the IPs presented are unlikely to represent the best possible path given the local circumstances.

In February 2003, the Mayor of London introduced road pricing for driving in a small area of Central London. The London Congestion Charging Scheme uses relatively simple technology, was implemented over two and a half years, faced political opposition and required the efforts of a determined political champion who refused to be put off. The £5 charge has reduced car movements by about 30%, and increased bus use and traffic speeds. The unexpectedly large reduction in car use is partly explained by the possibility of taking routes around the charging zone. For this reason, the implied elasticity of about −0.8 is greater than many other previous elasticity estimates. It is suggested that extending the Scheme to a larger area or applying a similar scheme to certain other cities may not be quite so successful.

This chapter presents the AKTA road pricing experiment in Copenhagen and its main results. Conclusions are drawn on the behavioural impacts of the different pricing schemes and the accuracy of different survey and modelling techniques. AKTA followed 500 car users equipped with a GPS-based device in their cars. The participants’ normal travel pattern was estimated using observations from a control period, after which pricing schemes (toll versus km-based) were implemented over an 8 to 12-week period. The participants earned the money they saved by changing behaviour compared to the control period. Surprisingly, it turned out that the participants’ behavioural changes were greater than expected based on prior surveys and modelling. Habits may have been expected to reduce changes, but the rather high amount of money involved (budget constraints) seems to be more important. Changes were analysed concerning the time of day, number of trips, average length of trips, costs of trips, etc. It appeared that km-based charging systems were more efficient than multi cordon-based.

Road pricing has been discussed in the context of two objectives: improving resource allocation and financing the expansion of the capacity of the road network. Financing transport infrastructure by means of toll revenues in the traditional sense has a history that dates back almost 70 years in Norway. Since 1986, with the opening of cordon toll schemes in Bergen, Oslo and Trondheim, and more recently in Stavanger there has been a major shift in the location of toll-financed projects from peripheries to urban areas. Meanwhile, the contribution from toll financing schemes to the total funds for transport infrastructure has increased by more than 35 percent and the scheduled projects for financing by tolls are almost complete. It is apparent that the Norwegian tolls have successfully achieved their purposes. The Norwegian tolls are approved for only a limited period of time, usually 15 years. There is now a growing interest in redefining the objectives of some of the Norwegian urban tolls from merely a financing scheme to a part of an integrated policy package that would address transport externalities. This chapter will discuss the performances of the Norwegian urban tolls and the issues related to their changing roles.

In this chapter, we introduce a multiregional equilibrium job search model to analyse the economic effects of intraregional and interregional transport cost changes. The key assumption is that unemployed job seekers and firms with vacancies have to search for each other. The regional unemployment and vacancy equilibrium rates, as well as the wage levels, are endogenously determined. According to the model, decreases in interregional transport costs tend to reduce local and national unemployment and increase vacancies. Model simulations indicate that wages are less sensitive compared to producer prices and that both labour-market search effects and negative externalities have substantial impacts on the overall effect of changes in transport costs.

Equity considerations are particularly important for the appraisal of road pricing schemes. We discuss and classify the most relevant aspects of equity in this context, and set out inequality measures from economics that may be used as outcome indicators with respect to these equity objectives. Road pricing is inherently a second-best problem due to the link between work trips and the labour market, where distortionary taxation exists. Consequently, efficiency and distributional issues both need to be considered simultaneously. To design the road pricing scheme in this case, it is suggested to solve the constrained optimisation problem of maximising welfare in the transport system as computed from a transport model, subject to relevant equity indicators reaching their target levels.

This chapter discusses modelling the ETE triangle from the perspective of the welfare consequences of local and regional policy measures. It argues that the interaction between the economy and the transport system needs to be modelled using sectors, household types, transport modes and spatial zones. For urban agglomerations, using a land-use/transportation interaction type of model should be weighed against using a spatial computable general equilibrium type of model. For interregional applications, a spatial equilibrium approach is superior because it enables the incorporation of economies of scale, substitution between inputs and heterogeneity of outputs. Furthermore, it is argued that — at the local and regional level — environmental externalities may be modelled without taking account of feedback effects on the economy and the transport systems. The modelling philosophy is applied to four Dutch magnetic levitation rail proposals showing that the location and trajectory of new transport infrastructures have an important impact on the size and mix of its direct transport effects, indirect economic effects and external environmental effects.

In Denmark, there has been a substantial debate in recent years concerning the consequences of introducing road pricing. This chapter examines some of the regional economic consequences of the full implementation of a GIS-based road pricing system for all roads in Denmark. A Danish model system (MERGE) consisting of an Interregional General Equilibrium model, LINE, a national transport model (LTM model) and an environmental sub-model (TIC-MAP) are presented. LINE is used to make an initial analysis of the primary regional economic effects. In the first step, price changes as a result of road pricing are calculated. In the second step, changes in regional competitiveness affecting demand are calculated. In the final step, revenue from road pricing is re-entered in order to ensure institutional balance and the effects on production, income and employment are calculated.

Negative external costs as a result of road traffic are an important issue in the process of developing new infrastructure and much effort has been concerned with how to measure, valuate and internalise the various external effects in order to establish a more efficient transport system. A flexible and increasingly popular instrument for internalisation is road charging, in order to internalise negative external effects and force a behavioural reaction towards a more efficient transport system. The aim of the present chapter is to analyse how, and to what extent, different road charging systems impact travel demand and derived external effects. The analysis is based on a recent study from Copenhagen and experience from the implemented toll-ring systems in Stockholm and London.

It is well known that exposure to air pollution can be linked to adverse health effects in the population. This has been demonstrated in various epidemiological studies. The associations determined between pollution exposure and health effects rely on the quality of the exposure assessment. Proper assessment of human exposure is therefore crucial for a correct determination of the association between the pollution load of the population and the negative health outcomes. Focus in this chapter is on assessment of the impact of traffic generated air pollution, which is the major source of human exposure in many countries including Denmark. Some of the methodologies for assessing exposure to traffic-induced air pollution are outlined and examples from Danish exposure studies are presented. To model air pollution concentrations in streets within the Danish exposure studies, a number of locally-developed models have been applied, including the regional scale model DEHM, the Urban background model UBM and the street pollution model OSPM. These models are briefly described here. However, one of the major difficulties in exposure modelling is to obtain proper input data for the calculations. In the first Danish exposure studies, these data were obtained manually or through use of questionnaires sent to local authorities. In recent years, a GIS-based tool, AirGIS, has been applied. AirGIS takes advantage of information from the unique Danish register databases that are available together with digital maps for building images and road network. Currently, AirGIS is being applied to exposure assessment in a number of Danish epidemiological studies.

It is often claimed that many drivers use their private car rather habitually. The claim gains credibility from the fact that travelling to many everyday destinations fulfils all the prerequisites for habit formation: it is recurring, performed under stable circumstances and produces rewarding consequences. Since the decision is made quite automatically and only one choice alternative is considered (the habitually chosen one), behaviour guided by habit is difficult to change. The implications of car use habits for converting drivers to commuters using public transportation is analysed based on a survey undertaken in the Copenhagen area. The study reveals that a relatively low percentage of drivers (10–20%) consider commuting by public transportation in the near future, which is hardly a surprise. A hierarchical analysis, where reported use of public transportation is regressed on intentions to do so, car use habit, and the interaction between the two, confirms the theory-derived hypothesis that car use habits act as an obstacle to the transformation of intentions to commute by public transportation into action.

Road pricing is often considered an appropriate way in which traffic can be better regulated. At the Technical University of Denmark, two research programmes on this topic have been carried out. The pre-study FORTRIN (a feasibility study) has been followed by a real life test, namely the AKTA Road Pricing Experiment in Copenhagen. Here, the city was equipped with virtual cordon rings and pricing zones and 500 test drivers had a GPS-based device installed in their cars testing different road-pricing schemes. This paper describes the technology as well as attitudes and reactions of road users in both studies.

In this chapter, a theoretical framework is proposed with the aim of understanding reduction or changes in private car use in response to road pricing. It is argued that economic disincentives may activate car-use reduction or change goals in individuals and households. However, for car-use reduction or change goals to occur, other travel demand management measures are needed that make alternative travel options attractive. A review and classification of these other measures is provided followed by an assessment of their potential effectiveness.

Stated Preference (SP) experiments are the obvious choice in order to forecast travellers’ responses to alternatives that do not exist today. SP experiments can in addition change the variables in a controlled factorial design, whilst Revealed Preference surveys (RP) have to rely on measured observations. Preferences concerning correlated explanatory variables such as travel time and travel length can therefore often be estimated more easily by SP experiments than by RP surveys. However, respondents may not act as they claim in the interview and the design may affect the results.

The chapter illustrates, based on an SP experiment compared with the AKTA data (Chapter 6), how the definition of variables can influence the results obtained. Value of travel time, VoT, (both free flow and congestion travel time), choice of time-of-day of travel and route choice are considered both without and with road pricing. It is shown that the design of the experiment seriously affects the result especially with respect to VoT. It is then shown how the income variable and distributed coefficients (taste variation) can improve the model fit and its behavioural accuracy. The model structure obtained corresponded well to the best models from the field experiment (RP) in AKTA, although the size of coefficients differed somewhat.

It appears that (marginal) cost is a problematic variable compared to trip distance as the respondents had serious difficulties in estimating the cost per kilometre. Road pricing was considered a bit worse than a pure marginal driving cost in the road pricing situation, i.e. car users preferred paying for fuel than paying road pricing. But the total cost after road pricing was introduced was weighted less than before road pricing compared to travel time — or in other words travelling time was weighted higher. This can be explained by the fact that travellers have restrictions and inertia in their possibilities of changing behaviour as well as the fact that the car-users who still use the car are the ones with the higher willingness to pay and the travellers who change behaviour have the lower willingness to pay.

This chapter provides an overview of recent research into “Virtual Mobility”, set against the context of European policy development. Based on current work with the UK Department for Transport, it explores the various impacts of e-work (telework) and e-commerce on transport, the environment and land use. In an area where there is much speculation, the approach taken is to distinguish between empirical data and conjecture, showing where significant evidence-based results have been obtained and where conclusions can be drawn to influence transport policy and analysis. This chapter also highlights where further research needs to be undertaken, and suggests an alternative approach to the “substitution versus generation” debate.

This paper discusses estimates of the extent of teleworking in Denmark and reports on a study aimed at identifying the determinants of the decision to practice teleworking. The study is based on a panel dataset obtained through a major commercial opinion poll and market research agency using a web-based survey. There are 2,680 respondents from the panel. The data set is used i) to identify the probable determinants of the choice to become a teleworker and the determinants of intensity of teleworking, ii) to make a first estimate of the consequences of teleworking for travel activity and iii) to make a first estimate of the long-term effects of teleworking on choice of place and type of residence and place of work. It appears that factors related to the place and organisation of work are the most important in explaining both propensity to telework and its intensity.

The demand of individuals for travel increases steadily. As a consequence, traffic increases as well, especially by car. Due to the negative side-effects of traffic on the environment, e.g. air quality, a change in travel behaviour is required. Innovative concepts are called for. Recently emerging information technologies offer chances to replace to a certain extent physical by virtual travel and therefore reduce traffic induced emissions.

The research project presented here examines an option that was developed for work-related travel: telecommuting. The objective of this project is to analyse the effect telecommuting has on travel behaviour of telecommuters and their household members, the households’ expenditures in money and time and traffic-induced emissions.

To determine the effects of telecommuting, a pre- and post-treatment survey was carried out using detailed travel diaries and questionnaires. Analysis of the survey leads to the following results: telecommuting changes the distribution of trips over the day. Peak hour traffic is avoided, and the total number of trips and distance travelled decrease. Expenditures in time and money change accordingly. The amount of traffic-induced emissions of greenhouse gases and air pollutants decreases.