Lessons Learned From International Experience in Congestion Pricing

2.0 Summary Of Selected Projects And Findings

This section summarizes experience with area wide pricing in Singapore, London and Stockholm. We have described the Singapore experience in greater depth than London and Stockholm because information about the Singapore pricing programs is somewhat scarce and more difficult to access while information about London and Stockholm is relatively more abundant and accessible.

The section provides impact findings for each project relating to mobility, costs/revenues, environment, equity (where available), economic/productivity, business and public acceptance, and outreach.

2.1. Singapore Area License Fees and Electronic Road Pricing

Context

Singapore is an island nation with land area of 250 square miles. Its population has grown from 2.3 million in 1975 to 4.5 million (3.5 million in the city) in 2005. Singapore’s GDP per capita in was US$30,000 in 2007. The number of vehicles grew from 275,000 in 1975 to 750,000 (430,000 cars) in 1998. Daily trips increased from 2.7 million in 1980 to 7.7 million in 2000. Sixty-three percent of these use public transportation.

The central business area has also experienced fast growth in employment and retail and office space. In short, it has been a rapidly growing developed nation with vibrant economy and high income levels.

The central business area has limited street capacity and experienced heavy congestion as far back as in the early 1970s. In this context, Singapore started pursuing automobile demand management strategies in the early 1970s.

Pricing Program

Area Licensing Scheme (1975-1998)

Congestion pricing has been a major component of traffic management and emissions reduction in Singapore since 1975 when a charge of S$3.0 (~US$1.30) was introduced for vehicles entering the 2.0 square-mile central business area (“Restricted Zone” - RZ) between 7:30 and 9:30 in the morning. Buses, motorcycles, police vehicles and HOV 4+ were excluded from charges.

The vehicles entering the RZ along any of the 28 entry points during the pricing period were required to display a pre-purchased daily or monthly windshield license. The licenses were sold at retail outlets (banks, stores, service stations) and at roadside booths. Violators were identified at the entry points by roadside enforcers and citations were sent to vehicle owners by mail. Heavy fines were set up to discourage violations.

Introduction of congestion pricing was accompanied by: provision of new Park-and-Ride lots with shuttle service into the RZ; expanded bus service (33% increase); and a decrease of 30% in RZ parking rates.

The Area Licensing Scheme (ALS) pricing zone is shown in Exhibit 1a.

Since introduction, the Singapore congestion pricing program has gone through several modifications and expansions. Soon after introduction, the charging period was extended to 10:15 AM to reduce travel shifts to the shoulder period (9:30 to 10:15). During the subsequent thirteen years, modifications were made to the daily license rates and the extent of the downtown priced zone. By 1988, the daily rate had gone up to US$2.50. In 1989, the morning peak period ALS was extended to cover trips in the evening peak period and exemption for 4+ carpools and taxis was eliminated. In 1994, all day congestion charges were introduced for travel within the priced zone with mid-day trips paying a discounted rate of US$1.50, and windshield license-based pricing was introduced on three motorways outside of the central business zone.

Electronic Road Pricing (ERP) (1998 - Ongoing)

After extensive field tests during 1995-1997, Electronic Road Pricing (ERP) with charges varying by time of day, location and type of vehicle was introduced in 1998 for vehicles entering the central priced zone and at three points along three motorways. Subsequently, pricing has been extended to many more points on all motorways.

As of 1998, the pricing program (“Electronic Road Pricing”, or ERP) has been fully automated and charges are now collected electronically at more than 50 charge points spread across the city. The “ERP” charge point locations as of 2005 are shown in Exhibit 1b and 1c. Exhibit 1c shows the charge points for controlling access/egress to/from the central business zone (CBZ), while Exhibit 1b shows all of the charge points in operation in the entire city in 2005 – including those in the CBZ, as shown in the inset - roughly corresponding to the original Area Licensing Zone. Other charge points at selected locations along the heavily used principal expressways are also shown in Exhibit 1b.

The ERP program started with operations from 7:00 AM to 7:00 PM. The charges vary by location, time-of-day and vehicle type and are adjusted every calendar quarter to keep the traffic free flowing within the central business zone and to keep speeds on the principal expressways and arterials within the “golden ranges” (45-65 KPH on expressways and 20-30 KPH on other streets). The operating authority continues to expand the number of charge points over time as traffic conditions evolve.

Currently, the charge period in the central RZ is in effect from 7:00AM to 7:00PM (Monday through Friday) and charge rates vary from zero to approximately US$2.00 per crossing at a charge point. On expressways, the prices are in effect weekdays from 7:00AM to 9:30AM (with additional PM outbound charges on one of the freeways). The rates vary from zero to about US$4.00. Also, a few of the arterial streets are priced weekdays from 7:00AM to 9:30AM and the prices vary from zero to about US$0.80.

Any vehicle traveling through a pricing location is required to have a functioning “In Vehicle Unit - IU” (a transponder) fitted on the dashboard with a “stored value smart card” inserted in the IU and with a sufficient monetary amount stored on it. IUs have visual displays and audio signals to inform the driver about deducted charges or low balance. The “smart cards” are issued by a consortium of banks and can be topped off at banks or ATMs. They can also be used at many retail establishments for purchases.

Overhead gantries at the pricing locations, relying on DSRC technology, identify the “health” or functioning of the IU, and IU class to recognize vehicle type, and deduct the appropriate charge amount from the stored value card. Violations and malfunctions are also detected by the gantry at which time enforcement cameras are triggered to capture the license plate number for citation by mail. Vehicles with no IUs face a fine of US$50 and those with insufficient money in their “smart card” face a US$6 administrative charge. The violation rates have been kept at around 0.3 percent. The technology allows identification and charging to take place at full freeway speeds (up to 120 KPH) in a multilane open system without tollbooths or lane restrictions and without a need to slow down. Every day there are about 300,000 pricing transactions.

Over the past thirty years, the expansion of the congestion pricing program has been accompanied by major reforms and expansion in vehicle taxation policies as well as significant enhancements to public transportation services including introduction and expansion of mass rapid transit, light rail and bus systems.

Exhibit 1a: Singapore CBD Priced Zone; Area Licensing Scheme (ALS) (1975-1998)

Exhibit 1b: Singapore Electronic Road Pricing (2005) [CBD Priced Zone (Inset) and Expressways (Red)]

Exhibit 1c: Singapore CBD Priced Zone (2005)

Findings

Mobility Impacts

Introduction of ALS in 1975: In the early 1970s, the AM peak period was characterized by bumper-to-bumper traffic on many streets in the downtown business area, which subsequently became the Restricted Zone (RZ). The Area Licensing Scheme (ALS) in 1975 introduced an AM peak charge of about US$1.30s for vehicles (excluding HOV 4+, motorcycles, buses and police and emergency vehicles) entering the RZ. The program worked smoothly with low violations (1-2%).

Vehicles entering the RZ declined from 74,000 to 41,200 (44% reduction), with car entries declining by 73% (from 42,800 to 11,400). The pricing resulted in shifts to HOV 4+ and bus, shift in trip departure times and some route shifting. Among vehicle owning households with RZ employment, non-SOV share of trips declined from 48 to 27%. HOV 4+ share went up from 8 to 19% and bus share increased from 33 to 46%.

At first there was a surge in vehicles entering just after the charge period ended at 9:30 AM and, in response, the charging time was extended to 10:15 AM. This resulted in an increase, from 28 to 42%, in commuter trips with destinations within the RZ departing home before the 7:30 AM start of charging and. The shift to earlier departure times also reduced auto traffic by a further 5 percent during the charging period. Overall traffic rose 13% in period before 7:30 AM, but did not cause noticeable traffic delays. Through traffic using the RZ in the AM charging period declined by 25 percent.

Congestion inside the RZ was virtually eliminated. Speeds inside the RZ in the AM peak increased by 20 percent or more (including for buses). On most congested streets, the speeds went up from 15-18 KPH to 30 KPH. Additionally, there was a 10% increase in speeds on inbound radials leading to the RZ. However, along with these improvements, the speeds on the bypass route dropped by 20 percent.

Longer Term Impacts Through 1988: HOV 4+ as a percentage of all car traffic entering the RZ in the AM peak increased from 41% in 1976 to 54% by early 1980s, but then declined – likely as a result of major expansion and improvements in the public transportation modes (Buses, Rail Transit and LRT). From the time of introduction of the ALS in the mid-1975 to 1988, the car population in Singapore increased 72%, but the volume of traffic entering the RZ in AM peak only rose 24%. The original ALS program in 1975 had resulted in overall auto share for commuters to the RZ decreasing from 56 to 46%. By 1983, this share declined and stabilized at 23% despite large increase in auto ownership and a 34% increase in RZ employment. Over the same 1976 to 1983 period, the public transportation share of AM peak trips to the RZ increased from 33% to 69 percent.

Post-1988: In June of 1989, ALS pricing was extended to the PM peak period and the HOV 4+ exemption was eliminated. In response, during the PM peak, traffic entering the RZ declined by 54% and the AM peak traffic entering the RZ declined by 14 percent.

Post-1998 Electronic Road Pricing (ERP) Phase: Weekday traffic entering the RZ has dropped 24 percent from 271,000 vehicles to 206,000 vehicles per day. This decline has resulted in average speeds within the RZ increasing from 30-35 KPH to 40-45 KPH.

Cost and Revenue Impacts

Initial capital costs of the ALS component in 1975 were estimated to be S$500,000 (~US$210,000). The annual operating costs during the period 1975-1988 were estimated to be S$600,000 (~US$250,000). Estimated annual revenues during the period were about S$6,800,000. Thus, the revenues were about 11 times the costs.

Capital costs of the ERP System have been estimated to be S$200 million (US$110 million at the time of implementation in 1998), half of which was purchase and installation of about 1.1 million IU units. In the early 2000s, nearly 300,000 daily transaction were generating daily revenues of about S$600,000 suggesting annual revenues of more than S$150 million (US$100 million at 2005 exchange rates).

Environmental Impacts

Evaluations relied on both direct roadside measurements as well as derivations based on changes in travel. Immediately following the introduction of the ALS in 1975, measured CO concentrations in the morning peak within RZ declined to a level below that prevailing in the middle of the day. At least some of the reduction can be attributed to the pricing scheme (ALS). The measurements of NOX showed a decrease in monthly average values. This can be fully ascertained as the result of the ALS. Evaluators concluded that the tailpipe emissions most likely declined in the RZ because there was such a large reduction in automobile travel. Regarding smoke and haze, measurements showed declines, but they could not be unambiguously attributed to the ALS. Subsequent surveys also revealed overall reductions in the RZ as a result of reduced and more dispersed automobile travel patterns.

Evaluators of the ALS program included pedestrian safety and amenities as an “environmental” impact measure. The decreased vehicle traffic within the central RZ was found to have increased perception of pedestrian safety by reducing the conflicts and delays at street crossings.

Equity Impacts

The results of modeling analysis based on before and after user survey data suggested that the losers would include those destined to the RZ who switch from cars to buses or to less desirable times, those encountering increased congestion on by-pass roads outside the RZ, and those who continue to drive, pay the charges but whose value of time saved is less than the charge. On the other hand, transit riders, after some initial increase in crowding, began to enjoy much better service as public transportation was expanded significantly over time. Similarly, HOV 4+, motorcyclists and pedestrians enjoyed significant increases in travel benefits. This group who likely benefited constituted a majority (52 percent) of the pre-ALS trips to the RZ.

Attitudinal surveys carried out after the introduction of ALS pricing also provide indications regarding equity across various dimensions. Pedestrians, taxi riders and residents outside of RZ found the impact of the ALS as neutral or negative while cyclists, bus passengers and residents within the RZ judged the ALS as favorable. Car drivers and passengers judged the ALS as mildly unfavorable. Overall, middle income travelers felt adversely affected by the ALS.

Several evaluations based on before and after travel data and stakeholder surveys allow some equity related findings to be examined more empirically. The data on shift from cars to buses as a result of ALS in 1975 show that the increases in transit are fairly uniform for low, medium and high income peak period travelers to the RZ – a change of 25, 34 and 28 percent bus share, respectively. A priory expectation would have been a higher percentage of low income travelers shifting to buses as compared to the higher income groups. The evaluators concluded that, overall, there were only small differences among income groups in modal response to the ALS. There was also no evidence that trip times increased or decreased more for any particular income group. All in all, the evaluators did not find that low income travelers suffered more than high income ones due to the ALS pricing.

Addressing the fairness of pricing in Singapore, supporters claim that without pricing there was, and would be, a great imbalance between the travel conditions enjoyed by car drivers (a minority of travelers) compared to the majority who use alternative modes. The ALS is perceived as far from unfair because it is said to have redressed a greater inequity and has allowed much greater increase in public transportation and road efficiency.

Economic Productivity and Business Impacts

Productivity: Benefit-cost analysis by World Bank economists in 1978 suggested that the ALS pricing produced net benefits. The estimated rate of return on investment taking into account only the benefits of time savings was 15 percent. Realized savings in operating costs, fuel and accidents would increase the realized rate of return, as would exclusion of the large capital costs of unsuccessful park and ride lots.

Other economic assessments of the ALS program from 1975 through 1988 suggested that pricing not only reduced congestion dramatically, but also kept the RZ mostly free of congestion over the entire period even as the income, employment and business activities were growing dramatically. Thus, the ALS pricing has allowed Singapore to defer or cancel major investments for roads. The savings have been estimated to be on the order of S$1.50 billion (more than US$1.0 billion at current exchange rates).

In the public transportation sector, bus operators increased their revenues due to the significant increase in patronage. According to many analysts, increased ridership and faster speeds have almost certainly resulted in increased productivity of operations.

Business Impacts: An objective assessment of business impacts based on long-term economic data was not carried out. Instead, stakeholder surveys were conducted to derive plausible impacts of the ALS on certain dimensions of business productivity.

In the absence of time series data, the analysis of surveys suggested that ALS pricing, by itself, did not appear to be a factor in rents and does not seem to have had a negative impact on office development in the RZ. Other factors appear to be much more important to investment decisions.

Regarding retail sales, in 1976, it appeared that the ALS had a minor impact on sales in the RZ compared to other economic and developmental factors. Hotel representatives did not see any appreciable negative impact of the ALS. Overall, the ALS, by itself, was not perceived as a negative factor. In contrast, when ALS was modified in 1989 to cover PM peak travel, some retail shops reported sharp declines in afternoon trade and some resorted to offering ALS fee reimbursements.

Post-ALS implementation surveys also found that the ALS apparently did not adversely affect labor availability, though this may have been more due to improved public transportation. Over several years, when employment in the entire state of Singapore increased by 32 percent, employment in the central area increased by 34 percent.

Overall, it appears that the ALS did not, by itself, initiate changes in business conditions or location patterns. Overall, the business community responded positively to the ALS, probably believing that the combined package of actions by the government was necessary and beneficial in the long run.

Public Acceptance and Outreach

Given the governmental structure in Singapore, authorities could have implemented congestion pricing with little or no public involvement. Instead, authorities carried out a year-long intense assessment and education program. They responded to public reaction by making adjustments to the pricing program before implementation. The Government has continued to modify and expand the pricing program incrementally ever since its beginning in 1975.

The government also packaged the pricing program to enhance acceptability. Leaders introduced broad improvements that both preceded and accompanied the introduction of pricing. Among other things, congestion pricing reforms have been packaged with major expansion in public transportation modes and services and reductions in certain vehicle purchase and ownership taxes. As well, pricing came on board at the same time as other highly visible and welcome government actions such as large-scale provision of modern, new, subsidized housing outside the central area replacing old dilapidated “slum” housing in the center. The evolution of pricing since its start in 1975 has accompanied major developments of rapid transit, light rail and deluxe bus services.

The public has continued to be made aware of the success of efficiently performed and highly beneficial government functions and programs (safety, welfare, health, income security, job opportunities, etc.) and congestion pricing is portrayed as another such policy necessary to ensure long-term economic growth and quality of life.

Generally, people in Singapore reacted favorably to the pricing and accompanying package of improvements. Early skepticism has been addressed effectively via information and on-ground experience. It seems the public has come to accept and respect bold policy initiatives like pricing and have largely trusted the authorities as purveyors of effective public services.

Sources

Behbehani, R., Pendakur, V. S. and A. T. Armstrong-Wright (1984). Singapore Area Licensing Scheme: A Review of the Impacts. The World Bank, Water Supply and Urban Development Department, Washington D.C.

Dupont Teijin Films (2002), “Cash Cards Take the Heat.” 

European Conference of Transport Ministers (2006).

Evans, J., Bhatt, K., and Turnbull, K. (2003), Traveler Response to Transportation System Changes, Chapter 14 – Road Value Pricing, TCRP Report 95, TRB, Washington D.C.

Gomez-Ibanez, J. A., and Small, K. A. (1994), “Road Pricing for Congestion Management: A Survey of International Practice.”  NCHRP Synthesis 210 (1994).

Hau, Timothy D. (1992), “Congestion Charging Mechanisms for Roads: An Evaluation of Current Practice”, Working Paper WPS-1071, Transport Division, Infrastructure and Urban Development Department, The World Bank, Washington D.C.

Holland, E.P. and Watson, P.L., 1978. Traffic restraint in Singapore: measuring the impacts of area license scheme. Traffic Engineering and Control, 19: 14-17.

Land Transport Authority (2002), “Electronic Road Pricing — Passenger Cars (with effect from 05 August 2002).” Singapore.

Land Transport Authority (2008), www.lta.gov.sg, (Link to “ERP” Under  “Motoring”).

Menon, A.P.G., and P.A. Seddon (1991), “Traffic in the Central Area – Part I: Volume Characteristics,” IES Journal, The Institution of Engineers, Singapore, Vol. 31, No. 2.

Menon, A. P. G., Lam, S. H., and Fan, H. S. L. (1993), “Singapore’s Road Pricing System: Its Past, Present and Future.”  ITE Journal, Vol. 63, No. 12 (December, 1993).

Olszewski P., and Xie, L. (2003), “Modelling the effects of road pricing on traffic in Singapore” Transportation Research 39A(7/9), 755-772.

Phang S Y and Toh R S (1997) “Road Congestion Pricing in Singapore: 1975-2003”  Transportation Journal 43(2) 16-25

Pratt, R. H., Pedersen, N. J., and Mather, J. J. (1977), Traveler Response to Transportation System Changes — A Handbook for Transportation Planners [first edition].  Federal Highway Administration, U.S. Department of Transportation,Washington, D.C.

Proceedings (1998), International Conference on Transportation Into The Next Millennium, Center for Transportation Studies, Nanyang Technological University, Singapore.

Watson, P. L., and Holland, E. P. (1978), Relieving Traffic Congestion: The Singapore Area License Scheme.  Staff Working Paper 281.  The World Bank, Washington, DC (June, 1978).

Watson, P. L., and Holland, E. P. (1975), Singapore Traffic Restraint Scheme: Evaluation Program with Annex 1, Description of the Singapore Traffic Restraint Scheme: Background Design and Preliminary Results.  The World Bank, Washington, DC (October, 1975).

Willoughby, C. (2000), Singapore’s Experience in Managing Motorization and Its Relevance to Other Countries.  Discussion Paper TWU‑43.  The World Bank, Washington, DC (April, 2000).

Wilson, Paul W. (1988), “Welfare Effects of Congestion Pricing in Singapore,” Transportation, Vol. 15.

World Bank (2000), Study On World Transport Development.  The World Bank, Washington, DC (August, 2000).

Zen, I. T. (1999), “Hints to Successful Implementation of Electronic Road Pricing Systems - The Singapore Experience.”  Hong Kong Institution of Engineers.

2.2. Central London Congestion Charging

Context

Much of the information provided in this sub-section is extracted from Tfl (2004, 2005, 2006, 2007), CURACAO (2007) and Wikipedia (2008).

Congestion pricing has been on the agenda in London since the Smeed Committee Report proposals in 1964. Greater London Council supported a preliminary feasibility studies of areawide application of congestion pricing in 1965 (“Supplementary Licensing Study”) and a subsequent detailed 1973 Study which concluded that congestion pricing in central London will improve traffic and environment and raise revenues. A decision was made, however, to reject the plan in favor of greater investment in public transportation. In 1995, another research program concluded that city’s economy would benefit from congestion pricing.

In 1999, a national legislation conferred powers to the Greater London Authority to introduce road user charges. Also, for the first time in Britain, the revenues from such charges were made available to the local authorities. Mayor Livingston was elected as the first Mayor of newly empowered Greater London Authority in 2000 with central London road user charging as the top item in his manifesto. His stated objective was to promise implementation of central London charges to reduce traffic, improving the speed of buses, making revenues available for public transportation and enhancing the quality of life in Central London. 18 months of public consultation was carried out in 2000-2002. A high court challenge by Westminster City (just to the west of the charging zone) was defeated in 2002.

The Mayor had stressed the fact that the roads in and outside the area were heavily congested all day. He said the transportation system had been starved of investment for decades. Effective road and public transportation capacity had fallen well behind the growth in travel. Despite the fact that nearly 95% of the 1.0 million trips to the central zone used public transportation, the travel costs had increased, average speeds had below 11 MPH (50% of vehicle time in central London was spent in traffic queues). The business was being harmed and quality of life was deteriorating. It was estimated that delays were costing people and businesses $7 to 10 million per week in time and money.

Pricing Program

The Congestion Charging program commenced in February 2003. It covered the 8.0 square mile, heavily congested central business district shown in Exhibit 2 (The Eastern zone shown with darker shading was designed as the “charging zone”). The charging zone represented less than 1.5% of the total area of Greater London with a population of about 7.0 million. Subsequently, the charging zone was extended to the west to cover additional 8.0 square miles including Westminster, Kensington and Chelsea (shown in lighter shading in Exhibit 2). The overall program package included 40% increases in capacity of buses and train by 2011 starting immediately with expansion of bus service.

Exhibit 2: The Central London Congestion Charging Zone

2003 Original Charging Zone -  Eastern Dark Shaded Area
2005 Expansion Zone Added  -  Western Light Shaded Area
(Excludes North-South Edgware/Park/Vauxhall Roads)
2003 Original Charge Zone ~8.0 Square Miles
(Inset: Charge Zone Within Greater London Area)

London’s cordon, or areawide, road pricing program was launched in February 2003. The program entails a flat weekday fee (initially set at £5, the fee was raised to £8 in 2005) for vehicles crossing into, leaving, or traveling within the charging zone. The charging is effective between 7:00 AM and 6:30PM (modified in 2007 to 7:00-6:00). Numerous exemptions and discounts are allowed, including substantial discounts for residents of the pricing zone (90% discount). Buses, taxis, emergency vehicles, hybrid cars, and motorcycles are exempt. Initially designed to reduce weekday congestion in a central city zone bounded by a ring road, the charging zone was extended westward in February 2007, creating a single enlarged congestion charging zone (Through traffic along Edgware, Park and Vauxhall roads continues to be exempt).

More than 650 closed-circuit cameras set up at the cordon and within the zone and moving vans police the zone, capturing live video images of the license plates of all vehicles. Any applicable daily charge must be paid for a vehicle that is on a public road in the Congestion Charge Zone during the charging period. Drivers may pay the charge via a website, by SMS text message, in shops equipped with a PayPoint, or by phone. The charge may be paid the day after at an increased cost of £10. Penalty for non-payment by the next day is £40 if paid after mail receipt of the notice, but goes up to £120 if not paid within four weeks.

Findings

London Congestion Charging has accomplished its stated objectives.

Mobility Impacts

Traffic adjusted rapidly to the introduction of pricing. After the first year of operation, traffic circulating within the charging zone was reduced by 15 percent during charging hours. The number of vehicles entering the charging zone was reduced by 18 percent. Although there were increases in traffic on the inner ring road (a possible diversionary route around the charging zone), these were less than had been predicted and no operational problems were observed. There was no clear evidence of significantly increased traffic outside the charging hours or in the area surrounding the charging zone. Traffic approaching the charging zone was reduced and no significant change in traffic levels was observed on nearby local roads. According to Transport for London (TfL), the local governmental body responsible for the charging program, “…the balance of evidence was pointing to an overall ‘background’ decline in traffic in central and inner London.”

In addition to reduced traffic inside and outside the zone, traffic delays were cut by 25%. Travel speeds increased by 30% in the zone. Travel time reliability went up significantly. Bus reliability and journey time improved. Bus use increased by 40%. The shift in mode from car to bus was significantly more than the shift of cars to the ring road.

TfL (2003) reported that the average number of cars and delivery vehicles entering the central zone was 60,000 fewer than the previous year. Around 50–60% of this reduction was attributed to transfers to public transport, 20–30% to journeys avoiding the zone, 15-25% switching to car share, and the remainder to reduced number of journeys, more traveling outside the hours of operation, and increased use of motorbikes and bicycles. Journey times decreased by 14%. Variation in journey time for a particular route repeated on many occasions also decreased.

Traffic levels observed in 2003 were essentially maintained in 2004 and 2005, with some evidence of modest overall reductions in traffic coinciding with the increase in the congestion charge in July 2005. By 2006, key traffic measures were being maintained, with the balance of evidence suggesting further small declines in total traffic in and around the central London charging zone. The TfL reports that, “…overall patterns of traffic established following the introduction of the scheme in 2003 have again remained largely unchanged.” Traffic entering the central London charging zone during charging hours in 2006 was 21 percent lower than before charging began in 2002. According to TfL, “as in previous years, available traffic indicators outside the central London charging zone have continued to indicate small background declines to overall traffic levels, with no evidence of significant adverse effects.”

Cost and Revenues Impacts

According to a report issued in February 2007, the initial costs of setting up the scheme were £161.7 million.

TfL (2007) shows that revenues from the congestion charge were £250m over the financial year, representing 8.5% of TfL's annual revenues. More than half of this was spent on the cost of running the charge scheme at £130 million. Once other charges were deducted, the congestion charge brought in an annual operating net income of £89m for TfL (which, by law, must be spent on Transportation in London).

The June 2005 increase in charges by 60% only resulted in a relatively small rise in revenues, as there were fewer penalty payments. The anticipated start up costs of the Western extension were £125 million with operating costs of £33m; expected gross revenues were expected to be £80 million resulting in net revenues of £50 million.

Environmental Impacts

The reduction of airborne emissions wasn't listed as one of the reasons for introducing the
congestion charge. The pre-commencement report from TfL noted that the scheme wasn't expected to significantly affect air quality, but that offering a discount to encourage the use of greener fuels would be a positive measure. However, TfL has reported changes in air quality within and alongside the Inner Ring Road boundary of the zone. Levels of NOX fell by 13.4% between 2002 & 2003, CO2 by 15%, and particulates (PM10) by 7%. TfL (2007) states that between 2003 and 2006, NOX emissions fell by 17%, PM10 by 24% and CO2 by 3%, with some being attributed to the effects of reduced levels of traffic flowing better, with the majority being as a result of improved vehicle technology. In total, the rate of fall in CO2 has been 20%. The TfL report makes it clear, however, that only the initial reduction of emissions could be expected from the introduction of the charge. Further reductions are unlikely to be as a result of the charge. Although no areas within the Congestion Charge Zone reported NO2 levels above an upper limit of 200 μgm-3 (105 ppb), some monitoring areas near the zone boundary experienced very long periods at such levels. TfL reports that emissions may not necessarily feed through into improvements in air quality and that vehicle emissions are only one contributor to total emissions of a particular pollutant along with weather conditions and industrial use. It was also reported that pollutant concentrations were being affected by the change in the make up of the vehicle fleet. Further studies are being undertaken into the air quality effects.

Equity Impacts

1. Equity implications of the London pricing program have not been assessed in-depth. However, it has been argued that the equity consequences have been positive since public transportation users have enjoyed significant benefits resulting from the program. A very large proportion of prior trips to the priced zone used (and continue to use) public transportation and have benefited through significant improvements resulting from pricing. A majority of businesses also perceive the charging scheme as a plus overall and have continued to support it.

Economic Productivity and Business Impacts

Using early impact data from the charging program, Raux (2005) and Mackie (2005) estimated that the charging program produced a benefit to cost ratio of 1.4 and that the ratio would have been higher if prices varying by level of congestion were charged instead of the flat rate in effect.

London Authorities have monitored the impacts of the area charging since its start in 2003 based on business surveys, employment data, property values and information on business turnover and profitability. TfL (2006, 2007) report that the pricing seems to have had broadly neutral economic impacts. Annual surveys do suggest, however, that businesses in the charging zone have outperformed those outside and a majority of businesses continue to support the charging scheme, provided investments in public transportation is continued.

The experience from the Congestion charging scheme in London shows that business support for congestion charging is generally positive but relatively mixed. Businesses were, on the whole, more supportive of the scheme than opposed to it. A majority of businesses continue to support the scheme, provided that there is continued investment in public transport. When analyzed by sector, the leisure, financial and retail sectors were the most supportive of the scheme, whilst the distribution and restaurant sectors were the least positive. The increased level of support from the retail sector in 2005, compared to the previous year, is the most positive trend of all the sectors (TfL, 2005).

CURACAO (2007) report provides additional discussion on this issue area as summarized later in Section 3.2.

Public Acceptance

Nearly four decades passed after congestion pricing was first proposed for central London before finally it became a reality in 2003. The intervening forty years generated several feasibility studies and impact estimates and the merits of congestion pricing was debated at length many times over. So, the public had developed a decent perspective on the concept, its plausible impacts (both positive and negative), implementation hurdles and its potential role in London’s transportation plans. Then, in 1990s, London was granted authority to adopt pricing and have full ownership of the toll revenues. Funding for public transportation was uncertain and congestion had reached epic proportions. Pricing technology was also now available. As these conditions, so conducive to pricing, were evolving, London found a political champion in the new Mayor in 2000. He was able to garner enough support from business community bearing the brunt of the economic costs of congestion and, especially, from large proportion of the public that was highly dependent on public transportation services.

As CURACAO (2007) reports, “The level of acceptability of road user charging before the introduction was rather stable about 40%. This also holds true in comparison with other scenarios such as workplace commuter tax schemes. After the introduction acceptability has risen above 50%. Unfortunately, no time series data is available later than October 2003 to observe any long-term trends in acceptability and the influence changes to the schemes, such as the western extension, might have. The re-election of the Mayor in June 2004 with the western extension already announced suggests that London residents accepted this change as part of their future government as well.

“There are two main reasons for this rather high level of acceptability before as well as after the introduction. First, traffic levels in London had reached unacceptable levels and Londoners felt some radical measure was needed. Evidence for this is cited in the ROCOL report (2000): 90% of London residents, polled in 1999, thought that there was too much traffic in the capital, and were concerned about its impacts on travel times and air pollution. Some 41% of a representative sample polled for the ROCOL report also felt that a congestion charge was the best way to raise money for improved public transport in London. A consultation on congestion charging carried out by TfL for the Mayor in July 2000 found that, of 400 key “stakeholders”, six times as many supported the concept of a central London congestion charge as opposed it.

“Second, in London the concentration of power in the hands of the Mayor meant that “local” political concerns were less important, and thus resources could be concentrated on key projects, such as the implementation of congestion charging. In doing that the TfL and the mayor himself did an excellent job of engendering trust through open communications, a clear and well-composed presentation of the problem and the proposal, and the development of first-rate communication tools, including a highly effective website. In this way consultation as well as promotion of the scheme and its benefits was achieved.

“The legislation that permits the Mayor to implement congestion charging in London meant, the decision rested with the Mayor, without reference to a higher level of government. Another factor that might have helped is the political stability. For example, no sustained and organized opposition to the proposal has emerged. Furthermore, the fact that congestion charging was implemented early in the Mayor’s term of office gave it more chance to succeed. In summary, a high level of public acceptability together with strong political commitment made it possible to introduce congestion charging in London.”

Sources

Callaway, Ewen (2008), “Frank Kelly: London Congestion Charges Did Not Improve Air Quality”, in New Scientist.com News Service, 30 April 2008, http://technology.newscientist.com/channel/tech/motoring-tech/dn13809-london-congestion-charge-did-not-improve-air-quality.html

London Assembly (2006), Draft Mayor’s Transport Strategy Revision: Central London Congestion Charging – Westward Extension, 2006.

London Chamber of Commerce and Industry (2005), Response to the Proposed Cost Increase to the Congestion Charging Scheme.

London First (2006), “Getting London to Work”

Mackie P (2005) “The London congestion charge: A Tentative Economic Appraisal. A Comment on the Paper by Prud’homme and Bocajero, Transport Policy 12 (3) , 288-290.

Mohammed Quddus, Alan Carmel and Michael G. H. Bell (2006), “The Impact of the Congestion Charge on Retail: the London Experience, Centre for Transport Studies, Imperial College, London, U.K.

Prud’homme R. and Bocajero J.P (2005)  “The London Congestion Charge: A Tentative Economic Appraisal”, Transport Policy 12 (3), 279-287.

Raux C. (2005) “Comments on ‘The London Congestion Charge: A Tentative Economic Appraisal”, Transport Policy 12 (XXX), 368-371.

Richards, M (2006), Congestion Charging in London. The Policy and the Politics, Palgrave Macmillan

Santos, G. and Fraser G. (2006) Road Pricing: Lessons from London. Economic Policy, 21(46): 264-310.

TfL (2003), Congestion Charging 6 Months on. Transport for London, London, UK.

TfL (2004), Central London Congestion Charging Impact Monitoring, Second Annual Report, April 2004, Transport for London, London, U.K

TfL (2005), Central London Congestion Charging Impact Monitoring, Third Annual Report, April 2005, Transport for London, London, UK.

TfL (2005b), Central London Congestion Charging Scheme, Impacts Monitoring, Summary Review Jan05, p. 35

TfL (2006), Central London Congestion charging impact monitoring, Fourth Annual Report, June 2006, Transport for London, London, UK.

TfL (2006), Central London Congestion charging impact monitoring, Fifth Annual Report, June 2007, Transport for London, London, UK.

TfL (20xx), http://www.london.gov.uk/mayor/economic_unit

Transport for London (2004), Congestion Charging: Update on Scheme Impacts and Operations.  February 2004.  London, TfL.

Wikipedia (2008), “London Congestion Charge”, http://en.wikipedia.org/wiki/London_congestion_charge

2.3. Congestion Charging in Center of Stockholm

Context

Cordon pricing has been under consideration in Stockholm for over three decades. It has been proposed and studied with the goal of reducing congestion, improving the environment and generating revenues for transportation improvements. In 2002 the Green Party came to power and in coalition with the Social Democratic party, announced to introduce a full-scale congestion pricing program. The law authorizing congestion taxes was enacted in 2004 with focus on demand management and environmental protection [CURACAO (2007)].

In order to achieve political consensus and public support, it was agreed that a six-month trial project would be implemented and decision about permanent program would be made after evaluating the experience of the trial application and holding a referendum. The stated goals were to reduce congestion and enhance public transportation to increase accessibility, and improve the environment. A full-scale six-month trial was operated from January through July of 2006 and detailed evaluation was carried out.

A referendum was held in September 2006 in which 51 percent supported making the pricing program permanent and 45 percent opposed it. Despite a change in central government where “conservatives” replaced the ruling “liberal” parties’ coalition, the decision was made to reintroduce central area pricing on a permanent basis starting in mid-2007.

Pricing Program

The central city area of approximately 20 square miles (including about 10 square miles of the river and sparsely developed land) was designated as the priced zone. It covers the central city and constitutes but a small part of the urbanized county area. The population of the city area is 756,000 out of the total county population of 1.8 million. The three elements of the program are shown in Exhibit 3a (Charging Cordon, Expanded Transit Routes and New Park-and-Ride Lots) Charging cordon around the central Stockholm and the 18 pricing points are shown in Exhibit 3b.

The charges were effective weekdays from 6:30AM to 6:30PM and the price was set at 10, 15 and 20 SEK (US$1.33, 2.00 and 2.67 at 2006 rates) for off-peak, shoulder and peak period, respectively. The charges were collected when entering or exiting the zone at 18 barrier free  “control points” encircling the city center. The daily maximum charge, for multiple crossings was set at 60 SEK (US$8.00).

Exhibit 3a: Stockholm Priced Zone Shown Within The Inner County (Expanded Transit Routes and PAR Facilities Also Shown)

Exhibit 3b: Stockholm Priced Zone Cordon With Charging Locations

Taxis, hybrid cars, buses, foreign cars, handicap tagged cars, diplomats and police and emergency vehicles (a total of 30%) were exempted from charges. Vehicles traveling through the priced zone without stopping were also exempted.

Three overhead gantries at each charge point electronically identified the passing vehicle if equipped with On-Board Transponder Unit (OBU – unique for each vehicle) and allowed automatic charge deductions from pre-set accounts. License plate photos (front and rear) were captured for all vehicles with and without OBU. Vehicles without pre-set accounts or those without transponders had until noon time the next day to post payments that could be made on the web, at retail outlets, banks and kiosks. Fines for non-payment were set at 70 SEK (US$10) for the first reminder and went up to 500 SEK (US$70) for the second reminder.

Findings

Mobility Impacts

The congestion charging scheme met or exceeded expectations and project goal of 10-15% reduction in traffic. Overall traffic to and from the inner city declined by 10 to 15 percent (with declines ranging from 9 to 26 percent in different sectors. Traffic dropped further out in the county as well. Congestion was reduced dramatically and traffic speeds went up. The worst queues in and near the city center decreased by 30 percent and more. The biggest decline was during the PM peak period. Traffic also declined in the evening after the charge period ended. There was no significant increase in bypass routes. At the end of the six-month trial period, the traffic volumes increased to about the same volume as before the trial began.

There was a 14% reduction in vehicle miles traveled in the charged zone and 1% reduction in VMT outside the zone. There was an increase in travel time reliability and traffic volumes on most congested roads dropped by 20-25%. Road safety improved.

Public transportation use increased by 6 to 9 percent, though this increase could not be all attributed to congestion charges. It appears that less than 50% of car users who gave up trips during the charge period shifted to transit. Few changed time of departure. No significant increase was observed in cycling, carpooling or telecommuting.

Recent data show that the permanent charging program, reintroduced in 2007 August, appears to have reduced traffic by 18 percent. The proportion of exempted “green” cars has risen to 9%. Access to the city has again improved considerably with a reduction in travel times on city streets and approach roads.

Cost and Revenues Impacts

The capital investment totaled 3.0 billion SEK ($410 million), and the operating costs were incurred at the annual rate of 220 SEK ($30 million). The revenues from charges were running at the annual rate of 760 million SEK ($100 million) implying annual operating profit rate of 500 million SEK ($70 million). These data would suggest a “payback” period of about 4 years. In terms of economic welfare, Eliasson (2006) estimated that the trial program would have produced net annual benefit of nearly 700 million SEK ($90 million) against the investments and annual operating costs listed above. It was also estimated that more conventional measures to reduce traffic (e.g., ring roads to divert traffic away from the center) would require far greater investments to achieve comparable traffic reduction goals.

Environmental Impacts

Achievement of environmental objectives was supported by the observed reduction in the inner city of 10-14% in Carbon Dioxide (2-3% in the County), 7% in NOX and 9% in particulates. Furthermore, emissions declined near population centers. There was no measurable change in noise impacts.

Equity Impacts

Equity implications of the Stockholm pricing program have not been assessed. However, like in London, it has been argued that the equity consequences have been positive since public transportation users have enjoyed significant benefits resulting from the program. A very large proportion of prior trips to the priced zone used (and continue to use) public transportation and have benefited through significant improvements resulting from pricing.

Economic Productivity and Business Impacts

It is recognized that many of these impacts take time to show up. The Stockholm trial was too short to have significant influence on land use, real estate prices and regional economy. Surveys of business leaders suggested that charges are likely to be a minor factor in influencing these dimensions. Also, no identifiable impacts on retail business or household purchasing power were identified.

CURACAO (2007) report provides additional discussion on this issue area as summarized later in Section 3.2.

Public Acceptance

Congestion pricing has been on the political and planning agenda in Stockholm for over twenty years. During this time numerous feasibility studies were carried out and pricing proposals were modified and abandoned. Finally, the government succeeded in implementing the current program on a trial basis in 2006 and then on a permanent basis in 2007. The intervening period saw much public consultation, education and outreach effort. This period also saw worsening congestion, environmental degradation and transportation funding prospects. Furthermore, the success of the London pricing project, implemented in 2003, probably acted as a major catalyst in bringing together officials with diverse political leanings to try out pricing on a trial basis in 2006. The success of this trial has now culminated in permanent adoption of congestion pricing.

CURCAO (2007) provides a summary of the public attitudes toward Stockholm charging scheme before and after the six-month trial in 2006:

“Public acceptability has been measured before and throughout the trial period. The pattern of response is quite similar to what is known from London and the Norwegian cities). Attitudes to the Stockholm Trial have become more positive during this time. In autumn 2005, about 55% of all county citizens believed that it was a “rather/very bad decision” to conduct the congestion-tax trial. Since the congestion tax was introduced in January 2006, this percentage has continuously fallen. In April and May 2006, 53% of all citizens believed that it was a “rather/very good decision” while 41% believed that it was a “rather/very bad decision”. Significantly, even those travelling by car to/from the inner city during the charge period in the most recent two 24-hour periods have become more positive by several percentage units. In May 2006 car driver were approximately equally for and against the road pricing trial.

The following referendum resulted in a 51.3% support for the charging scheme. 45.5% voted against the scheme [City of Stockholm, (2006a)]. Municipalities surrounding Stockholm were not satisfied with the fact that their residents were not eligible to vote. A substantial number of them travel to and from work through the congestion tax area. Therefore several of these municipalities, especially those governed by at that time opposition party have decided to hold an advisory referendum. Here the majority of residents decided against the permanent introduction of congestion charging in Stockholm.  It seems that those people who benefit most from urban road pricing can be convinced if they experience in a trial the positive outcomes. However, not all municipalities held an independent referendum and the wording of the question there was different from the official Stockholm referendum. These could also be reasons for the differences in the referendum results.”

Nevertheless the program was made permanent in August of 2007.

Sources

Alarik, Oscar (2006), “The Stockholm Trial”, A Slide Presentation, Congestion Charge Secretariat, City of Stockholm.

Armenius, H. & Hultkrantz, L. (2006). The Politico-Economic Link Between Public Transport and Road Pricing: An ex-ante study of the Stockholm road-pricing trial. Transport Policy, 13, 162-172.

City of Stockholm (2006). Facts and Results From the Stockholm Trials. First version - June 2006. Congestion Charge Secretariat, Stockholm, Sweden.

City of Stockholm (2006a). Resultat från Folkomröstning miljöavgifter/trängselskatt i Stockholms stad. Stockholm, Sweden.

Congestion Charge Secretariat (2008), Website: www.stockholmsforsoket.se, Stockholm, Sweden.

CURACAO (2007), “Work Package II: State of the Art Report (Draft)”, Coordination of Urban Road User Charging and Organizational Issues, University of Leeds for the EC Curacao Project, U.K., 2007.

Eliasson J.,(2006) “Cost benefit analysis of the Stockholm Congestion Charging System”, Congestion Charge Secretariat, City of Stockholm.

Prud’homme R. and Kopp P.,(2006)  “The Stockholm Toll: An Economic Evaluation”, (Unpublished), University of Paris, Paris.

Soderholm, Gunnar (2006), “The Stockholm Trial: Congestion Charging and Improved Public Transport Aimed At Reducing Traffic Jams and Creating a Better Environment“, A Slide Presentation, Congestion Charge Secretariat, City of Stockholm.

T&E (2006). Government green light for Stockholm charge. European Federation for Transport and Environment, T&E Bulletin, 153, 2.