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Lessons Learned From International Experience in Congestion Pricing

1.0 Introduction

Background

Over the past thirty years, congestion pricing concepts have received considerable attention outside of United States. Compared to the U.S., Britain, Europe, and countries in Asia and the Pacific region have a longer history of interest in exploring the potential of pricing approaches to address congestion, environmental and transportation funding problems. Individual countries, as well as the European Union (EU), have established road pricing initiatives aimed at studying, implementing and evaluating a wide range of congestion pricing demonstrations and operational programs.

Pricing approaches have been considered seriously in nearly all EU member countries, in Southeast Asian countries and in Canada, Australia and New Zealand. Numerous cities across Europe, Asia and Pacific region have set up limited demonstration projects. Additionally, large-scale operational pricing projects have been implemented in Canada, U.K., France, Norway, Sweden, Germany, Switzerland, South Korea, Singapore and Australia over the past three decades. These projects have demonstrated that pricing can be effective means of managing demand and generating revenues and can be politically and publicly acceptable. Pricing reduces congestion on facilities and in priced areas, changes travel behavior, improves utilization of existing road capacity and achieves the goals of demand management, emission reductions and revenue generation. Revenues from pricing have been used to provide funding for transportation improvements.

Much like the U.S experience, overseas pricing projects are breaking new ground and providing important lessons for those interested in exploring the use of market-based approaches in responding to traffic congestion. Projects implemented to date reveal that travelers are willing to pay for improvements in transportation service and that pricing can lead to more efficient use of existing facilities. People respond to price signals when making transportation decisions. Although pricing is operational in a number of locations abroad, it is still a new and innovative concept, one that requires careful planning, coalition building, public education and participation, and sufficient time and resources for the development of well designed and locally acceptable project plans.

All in all, international experience with pricing appears to holds great promise for reducing congestion, enhancing mobility and economic productivity, reducing environmental and energy costs, and providing new sources of funding for transportation investments.  However, despite the promise and potential shown in early pricing projects, experience suggests careful planning, design, outreach and evaluation are still important project components.

Purpose and Overview

Some international cities and countries have been successful in implementing congestion pricing, and others have conducted detailed feasibility studies.  States and metropolitan area transportation professionals and elected officials in the United States can benefit from an understanding of the key travel, traffic, equity and environmental impacts, and acceptance issues evident from these international pricing projects.  These are key issues of interest to those in the United States who are weighing potential congestion pricing pro­posals and plans. 

To further understanding of international pricing, this “Lessons Learned from International Experience in Congestion Pricing” report provides a summary of selected operational congestion pricing projects outside of the U.S. The report draws lessons from a sample of projects with the richest and most relevant experience, as well as from the most relevant literature relating to the acceptability of congestion pricing based on more than past twenty years of   experience with adoption (and rejection) of pricing proposals overseas. 

Starting in 1975 when Singapore implemented its area wide pricing program, more than twenty pricing projects have become operational outside the United States. While the U.S. pricing programs to date have focused largely on introduction of variable pricing on single facilities, most of the pricing projects abroad have introduced area or region wide congestion pricing. Many of these overseas pricing projects charge for entering or traveling within a congested zone (such as downtown). Some have focused on pricing traffic entering entire urban regions. Others have introduced congestion pricing on expressway networks.

Following this introduction, Section 2 provides a summary of selected projects with lessons most relevant for U.S. officials. Of more than twenty pricing projects implemented overseas, this report focuses on three comprehensive area wide projects that have become operational after long gestation periods. The projects are in Singapore, London and Stockholm. Each received in depth attention during planning, design, implementation and operational phases and have been monitored and evaluated carefully. These projects have been selected because U.S. cities are beginning to look with much interest at similar area wide pricing strategies to address congestion, environmental, energy and funding problems that have become endemic in heavily congested downtown areas. Although the U.S. pricing projects sponsored by the Value Pricing Pilot Program over the past twenty years have generated many important lessons relating to adoption of various pricing concepts, area wide pricing applications have yet to be implemented in the U.S. The overseas experience with area wide pricing projects can help inform this promising pricing concept for the U.S. audience.

In addition to the lessons derived from the three key projects, Section 3 includes a summary of findings from literature on the acceptability, economic and business impacts, and equity implications of congestion pricing based on more than past twenty years of experience with adoption (and rejection) of over 30 pricing proposals overseas. Much evidence relating to public and political acceptance of congestion pricing has been synthesized in Europe and United Kingdom and can provide valuable lessons for U.S. cities interested in pursuing such policies.

General conclusions and lessons are provided in Section 4.  In addition to lessons learned related to mobility (driver behavior under pricing and the impacts on traffic throughput and delay reduction), we also provide lessons related to revenues and costs; equity; environmental benefits and impacts; and public acceptance.
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