Environmental Valuation & Cost-Benefit News

Abstract: Congestion costs are emerging as one of the most important challenges faced by metropolitan planners and transport authorities in first world economies. In the U.S. these costs were as high as 78 million dollars in 2005 and are growing due to rapid increases in travel delays. In order to reduce levels of congestion the U.S. Department of Transportation recently started a program to initiate congestion pricing in five metropolitan areas. In this context it is important not only to determine those factors helping its implementation and success, but also the problems or difficulties associated with charging projects. In this article Daniel Albalate and Germà Bel analyze worldwide experiences with urban road charging in order to extract interesting and helpful lessons.

General results
Urban road charging experiences, once implemented, have shown interesting results leading to success in the reduction of peak-time traffic. Therefore, they become a successful tool to manage demand and decrease congestion and environmental costs. In the cases of London, Stockholm, Singapore and even in the Norwegian cities where the goal was not traffic management, this measure provided significant redutions in the congestion costs associated to the entrance of city centers, providing revenue to invest in public transportation or road projects. Moreover, the measure increased average speeds everywhere, improving private and public transport productivity. The revenues helped in order to make more attractive this public transportation which at the same time received more passengers and as a consequence more revenues. In fact, modal split is found since a decrease of private cars in favour of public transportation is easily achieved. It is also considered that road pricing improve the environment in the city since reductions in greenhouse gases are found in all experiences. On the other hand, re-routing and the use of other time periods to shift trips are recognized and must be considered by the planner.

The political situation may also play an important role in order to implement the measure as we stated in the Swedish, Scottish and British experiences where the opposition used the issue against the incumbent government. On the contrary, when big parties agree in the need to use prices to restrict traffic, like in the Norwegian cases, the measure is easily introduced in spite of public opposition.

Trial periods are also recommended before any referendum since it is found that opposition against the measure declines after its introduction, especially if the revenues collected can provide better public transport and it is made visual for the citizens. The experiences of Stockholm and Edinburgh in this field are extremely opposite, also was their success. The use given to revenues and the fairness or equity considerations are considered crucial to get the public oppinion support.

Keywords: Congestion, Road Pricing, Urban Transportation, Traffic Demand Management

by Daniel Albalate and Germà Bel; Universitat de Barcelona, Departament de Política Econòmica, Av. Diagonal 690, 08034, Barcelona (Spain). Emails albalate@ub.edu; gbel@ub.edu Web pages: www.danielalbalate.com; www.germabel.cat; Tel.: +34.93.4021947 Fax: +34.93.4034573

University of Barcelona, Research Institute of Applied Economics www.ub.edu/irea
Working Paper 2008/01; 2008; 27 pages
http://www.ub.edu/irea/working_papers/2008/200801.pdf
via REPEC www.REPEC.org