National Road Pricing Conference
Proceedings
LUNCH PRESENTATION
International Pricing Scan Presentation
Bob Arnold, Federal Highway Administration
Mr. Arnold presented findings from an international scan for reducing congestion using public transportation and road pricing. The problems identified globally are: sustainable funding, environmental issues such as greenhouse gases. The scan looked at demand management in Stockholm, England and Singapore and revenue generation in Germany and the Czech Republic. A summary of the scan is on the FHWA website at http://www.international.fhwa.dot.gov/pubs/roadpricing/.
The point of the scan was to look at other countries that are doing this (pricing) or have advanced the state of practice.
Demand Management
In Stockholm there was a huge public outreach campaign which was a big part of getting the public involved. A lot of people got to vote on the project but the people whose vote seemed to count the most were the people that live inside the city because they received the largest benefit from the project.
London has a pricing system that is important for the city center. In London the purpose was to reduce congestion, but the congestion came back. Why did the congestion come back? They took advantage of the reduction in congestion and transferred some of the capacity that they picked up and transferred it to transportation with an example being express bus lanes. Other congestion came from the closing of some major streets around attractions and converting them to pedestrian malls. These roadway closures diverted traffic from some busy streets onto other arterials. Additionally the reduction in congestion allowed the city to do some major renovations on sewer and water construction which closed parts of streets and created additional congestion. The sewer and water construction is due to be completed by the time the Olympics come to London and the city will exchange congestion due to construction with tourists. This is an example of where they had one purpose in mind, set up the program accordingly and took advantage of the reduction in congestion. While the congestion came back, however, London has offset the congestion with other livability or transit benefits. There is a little bit of a pushback going on with the western expansion of the program in London but they are still moving ahead.
Singapore has had congestion pricing programs for quite a while due to a very serious congestion problem. Singapore has an aggressive pricing program and do change prices on a monthly basis. They have been through many different phases. Initially they had someone at the gateway to the city counting and looking for stickers and now they have an electronic system. The cost of a car in Singapore is stunning. The government puts a lot of effort into minimizing the supply of cars to the public which is one of their main strategies. The average cost of a car in the US is $13,000. A car in Singapore after taxes, permits and fees can cost up to $50,000, but the public still has the desire for cars and are willing to spend a lot of their income on a car. In Singapore the government is looking at new value added systems that can be added to cars. An example is a reader device that can read a card that is similar to a debit card that you put into the reader and will allow you to pay for things like tolls and parking fees. Singapore has a massive system that accepts these debit cards.
Revenue Generation
The Czech Republic has a truck tolling network. The Czech Republic bans trucks on Sunday to allow public use during weekends for enjoyment of life.
Germany has a truck tolling system which is used as a revenue generation program. When Germany was reunified they became a crossroads and one of the issues is trucks cutting through Germany in route to other countries. These trucks that were cutting through were not stopping and added no economic value to the country. The trucking industry in Germany was on board with the tolling system from the beginning because they wanted a fair playing field. The trucking industry wanted a system that would do everything. The problem with a system that "does everything" (all of the objectives that the government set up) is that the toll road is very expensive at about 5 to 6 cents a mile for administrative costs alone. It is important for projects to have a clear focus of what the system must do from the beginning.
The Netherlands have a system we might want to look at as a national model system. The system that the Netherlands wants to implement will capture tolls system-wide. Currently there is a problem on the political side which has stalled out the program. Mr. Arnold believes the toll authority is just waiting until the current government moves out in order to put the system in place. The benefit of system is moving from ownership fee taxes (as in car registration fees) to user/mileage based fees. It was very expensive to own a car but to provide more equity the Netherlands is moving to the mileage based fees. The good news for the Netherlands is that the country has a lot of technology to implement the program but the bad news is it will be expensive. Right now the best guess estimate of how much it will cost the user is ¾ cent per mile. On a slide presented earlier Mr. Arnold calculated the current cost of ownership in the US as 1.5 cents per mile. So, if the US changed from a fuel base fee to vehicle miles traveled (VMT) based fee the government would be increasing tax revenues by 50 percent just by changing the way money is collected. The problem here is that in the US we are probably not any smarter than the Netherlands and so we would assume our tax would be increased by 50 percent just by changing the way we collect it but it does not provide additional revenues to the government and would not do anything for the public. So at this time, Mr. Arnold does not believe the American people are ready for the conversion to mileage based fees. A big challenge in the US to implementing this is technology and the interoperability between systems. The US would have to decide how to collect a non-fuel based fee. An additional challenge is to bring the administrative cost down to where it is acceptable to American public. Once the US can bring down the administrative costs, then we can address additional items such as mobility and congestion pricing through that technology. The Netherlands does not have their system in place but they still have political problems to get through and the high administrative costs.
Major findings of the report are that most countries with clearly defined policies and goals achieved their target outcome effectively. The scan looked at congestion management in Stockholm, London, and Singapore and revenue generation from in Germany and the Czech Republic. The Netherlands is moving from an owner-based fee to a user-based fee. To be clear, the Netherlands is not expecting to make additional revenue but just changing the way fees are collected.
A large scale test in Stockholm was a great way to garner acceptance for the project. The government set up all the equipment and assured the city that the fee collection method was just a test. After the test, the government turned the system off and held a vote but it seems (in Mr. Arnold's opinion) that the vote only counted people getting the biggest benefit from the change in pricing. Additionally, Stockholm did a lot of outreach before the implementation of the program. Performance measures and overall goals were important in order to manage and operate the system. Additionally the performance measures allow the public to see the benefits and understand what the government is doing with the money. The public outreach focuses on showing the users that the additional fees are a good thing to help manage congestion. When implementing a project it is important to link the pricing structure with the benefits to the user. Show users how money from a project is being spent and how the pricing structure reduces congestion and travel times.
The Germans wanted to ensure they did not divert trucks to non mobile alternatives. Although they did not put up permanent enforcement stations on off routes they monitor them and if they see diversions on the secondary or local routes they go in and get trucks back on the major truck routes. Public outreach and communication is a key component at every stage from the decision making phase to the operational phase.
When implementing a system, make it an open source system (not proprietary system) because it makes a big difference. The Germans were able to quickly implement their system and did a good job of getting online as fast as possible but the problem was the system they adopted was a relatively closed system. The proprietary systems can be implemented fast but drive up operating costs because the government is basically boxed into using one system. The Czechs have the same problem. The toll collection units in the trucks are very expensive. Since the Czechs went to a proprietary system the cost is still fairly high. When implementing a system it is important to balance performance and expectations with the cost of the system.
Interoperability has been a problem as systems expand. In the US we will be able to save on administrative costs as more systems become interoperable and more back offices are linked due to costs going down and less overhead.
Equity and privacy are issues for most of the international systems. Privacy problems seem to be the main reason the Netherlands system has stalled out.
The most important lesson learned in the scan is that as countries collected revenue they use the money as an investment in the public transit system. For example, London has parlayed their reduction in congestion with the express bus lane. Providing transit with tolls goes over well with the public because it shows the revenue goes to a higher purpose. Diversely you can have all the public transit you want but it is the price (of driving) that drives people to it. It is important to have a good transit system because people will move from their car to transit once a pricing system is established.
The scan showed that road pricing works and can work for different objectives (revenue generation versus demand management). The success in the US will be dependent on driving down overhead costs, so we will not just be collecting revenues for revenues sake. People will need to see improved services with pricing plans and something worth-while being done with their money.
Audience Questions
It is politically incorrect to say that primary goal of congestion pricing is to generate revenue. What can different regions do to get things going?
Revenue generation for a specific project(s) is politically acceptable. The public needs to get a sense that the revenue that it generated will be used for a project in the future. The two examples that listed revenue generation as primary goal were Germany and a former communist block country where taking the word of the government is fairly common. The public outcry was not there when these programs started. The people in Germany and Czech Republic saw the need and accepted the programs. When implementing a program the agency must have a clear objective that the public understands and the agency must be able to relate the toll/fee to that objective and report back to the public on progress with the project.
What about building a bus transit lane and selling as capacity lessens?
We are sort of doing with some of our UPAs, working with FTA using FTA money to do that. When I talk to them they seem to be onboard with it but I do not disagree that there is a lot of push back from FTA rank and file saying we are just using transit money for growth, but their leadership seems to be okay with the concept.
