There are a number of sources relating to the acceptability of congestion pricing proposals and programs in Europe and United Kingdom. The studies can be divided into results from (1) general attitudinal surveys (most public, some decision maker) not based on implemented pricing programs (2) surveys related to implemented programs and (3) overview or synthesis papers drawing on 1 or 2 or both. [A brief synthesis of acceptability of pricing can also be found in Curacao (2007)].
General Attitudinal Surveys
Jens Schade and Bernhard Schlag (2002) investigated public and political acceptability in Athens, Como, Dresden and Oslo by a questionnaire directed at 952 motorists across the cities; phone interviews in Como and Dresden with 14 politicians; and interviews with business associations in the four cities. Two packages of strategies were tested. The first was a “strong” package of cordon pricing, parking pricing and fuel taxes with revenue “hypothecation.” A second “weaker” package had the same pricing but a lower extent of revenue hypothecation. Findings suggest low public understanding of the concepts across cities, higher rankings of potential effectiveness but less than majority acceptability for either package, though higher for the weaker than stronger package (39 vs. 20%). Higher acceptability is associated with perceptions of higher potential effectiveness, personal advantage and importance of societal goals advanced by pricing. These results held across income groups with only small differences. Politicians reject the stronger measure but find the weaker measure “rather acceptable.” Business perceptions were highly variable across cities gaining only some support in Oslo and Como. All business respondents favored other than pricing measures, such as park and ride, improved transit, greater parking and traffic management. Overall, the authors conclude acceptance is generally tied to major and urgent traffic and related social and environmental problems; pricing must be perceived as effective; revenues must be tied to transport and environmental improvements.
Milenko Vrtic et.al. (2007) report on public attitudes in Switzerland about the acceptability of road pricing schemes, including the influence of three types of pricing:
Revenue allocation options included abolition of the fuel tax and motorway vignette (annual fee window sticker), reduced income tax, investment in public transport and an annual equal distribution to Swiss adults. Results are based on a sample of 2290 surveyed with 1005 respondents. Results show the most acceptance for motorway and km tolls, less for cordon and time dependent tolls. The authors conclude distance based tolls on motorways are more familiar to respondents from France and Italy. However, the authors also speculate the cordon and time dependent options were not well explained in the survey. Environmental coalitions were more likely to favor the cordon; auto clubs prefer time dependent pricing as it attacks congestion important to the clubs. Inhabitants of cities are more likely to be against cordon fees, but favor all other forms of pricing by over 50%. Residents of mid to small sized towns prefer all road pricing options by over 55%, including cordon. The authors suggest pricing would affect their commuting less than other groups. Residents of large cities prefer motorway tolls and the authors conclude this is because they commute within cities and depend on their cars for many work trips. Rural residents dislike distance based tolls and favor none of the pricing approaches by more than 50%. Regarding revenues, highest preference was for investment in public transit and return of revenues to all Swiss residents. Abolishing fuel taxes and motorway vignette are not preferred. A regression analysis sorting out independent effects of factors on acceptability found the most important factor for acceptability is the toll level; highest preference goes to motorway and km tolls versus the cordon; and acceptance goes up as hypothetical increased speeds increase due to pricing. No correlation could be found between acceptability and income.
Jen Schade (2004) reviews several European studies and finds groups perceiving congestion as one of the biggest problems tend to reject road pricing whereas groups sensitive to environmental problems are more willing to accept it. He also finds acceptance depends on clear and compelling definition of the problem addressed, the belief that pricing will be effective in addressing the problem and a credible demonstration of how pricing can be implemented. Well known measures tend to garner more acceptance, suggesting pricing can gain in acceptance as it becomes more familiar to the public. The author indicates in general people do not like pricing as a way to distribute public goods, preferring first-come-first-serve. However, what the author calls “procedural fairness” is as important as distribution equity, i.e. how much public participation is involved in arriving at pricing plans. Participation may not lead to economically optimal solutions, but may obtain acceptable options. The perceived locus of responsibility for congestion also is important to acceptability. Where government is perceived as the main reason for the problem versus the individual, acceptance of pricing or other demand management measures diminishes. Consequently, how the problem of congestion is framed and the degree to which government is putting forth good faith efforts to address the problem are important. As in other research, the author’s review of studies suggests income is not strongly related to acceptance.
The importance of perceived effectiveness and relation of pricing to environmental problems again appears in a German study, by Bamberg and Rolle (2003), of the medium sized town of Reutlingen (110,000) and two villages (below 9,000). A mail back questionnaire administered to 5,000 at random explored a fuel price increase with revenue returned to price discount for public transit. While not focused on road pricing per se, the study did find perceived effectiveness is “central determinate” in acceptability, equally strong with fairness. Likewise, the more respondents were convinced car use causes grave environmental problems, the more they perceived the proposed pricing measure favorably (and supported it).
Jaensirisak, Wardman and May (2005) analyze results of a stated preference survey in two UK cities. As part of the study, they review previous acceptability findings from British studies demonstrating the importance of specifying the use of revenues, showing a jump from 30 to 55% from no explicit revenue plan to revenues dedicated to auto options. The finding appears to be roughly consistent across cities. Another finding was areawide pricing nearly doubles in acceptability (from 34 to 60%) where local residents are exempted. Reviewing findings in the Netherlands, they find perceived effectiveness of pricing strongly related to acceptance but with no relation to income. They also find acceptance in Oslo came as experience with road pricing increased. Only 30% were positive before the ring in 1989, but increased to 36% after implementation and up to 46% in 1998. Likewise in Bergen, only 13% were in favor before, but 50% one year after. The result parallels Stockholm where 80% were opposed before implementation, and then in July 2006, 53% of the city residents voted to keep the implemented program [Streetsblog (2007)]. How pricing is presented also appears important. Where suspicion of the government or its proposed plans for revenue use is present, local referenda may be helpful, as in a Swiss example cited (Saas Fee). In this case, an areawide pricing plan was accepted in 1998 by popular referendum after widespread discussion, though not implemented due to purely legal reasons [Bruno, Frey (2003)].
The authors then give findings from stated preference surveys in Leeds and London, 2000 and 2001, with 830 respondents total. They found pricing acceptance related to problem perception, with more acceptability among those perceiving pollution and congestion to be very serious and those considering current traffic conditions “unacceptable.” As well, acceptability correlated with perceptions of greater potential effectiveness of congestion pricing, with a majority of car users not convinced that pricing would be effective in reducing congestion and pollution. Directing revenues to tax reductions received preference and the authors surmise the result is due to the sample containing both car and non-car users. There is preference for a limited rather than expansive areawide scheme, probably stemming from a sense of need, fairness and effectiveness. Possibly for the same reasons, preference goes to peak pricing. Charge variations by distance or time within the peak or by delay (“dynamic” pricing) were not favored compared to a fixed charge. Through modeling, the authors examine possible program designs for Leeds and London to find how majority support could be reached. They find majority support can be reached assuming certain charge levels (up to ₤5 in London, less in Leeds), type of charge (fixed preferred), size of charge area (smaller preferred) and where environmental and travel delay benefits are large.
Of course, since the author’s research, a London road pricing scheme has been implemented. A key acceptability finding is while initial reaction to the Mayor’s proposal was mixed, surveys by Transport for London three years after start showed that more than 70 per cent of Londoners said the system was effective and twice as many supported the charge as opposed it. Also, the business association First London found that 49 percent of Central London businesses believed congestion charging was working. Only 2 percent of companies say they would consider relocating to a site outside the zone because of it [Streetsblog (2007].
In a random survey of 1022 German residents, Olof Holzer (2003) explores the importance of how pricing objectives are stated. Holzer first asked all respondents about pricing and investment options for purposes of solving traffic problems. As expected, pricing was not favored compared to building new roads or encouraging auto alternatives (when asked to rank the less preferred pricing strategies, parking fees are favored over tolls). However, when the objective emphasized is solving traffic problems by investment with pricing as a means to that end, not the means itself, then support for pricing increases. The author speculates people feel they are “getting something” when pricing and new investment are tied together, whereas pricing alone and its promised traffic reduction do not hold the same allure. While the effect is not “overwhelming” at least in the hypothetical case explored in this national survey, the research suggests leading a pricing plan with an investment objective is helpful to public acceptance.
Another study from Germany examines how people’s perceptions of fairness bears on acceptability of general traffic restraint policies [Ittner et.al. (2003)]. Relying on a study of 369 respondents in Trier and another of 313 nationwide, the exploratory research is not intended to be representative of any population, but is nevertheless useful for understanding how perceptions of fairness affect acceptability. Examining measures such as limits on inner city parking and car-free zones, a key finding is acceptance hinges on perceived effectiveness. Even people highly motivated to behave in environmentally friendly ways may reject measures if they believe they are among the few who will comply. The greater the perceived “free-rider” problem, the less the acceptance and the greater the sense of “betrayal.” The authors contend such a dynamic even may lead people to accept restrictive and obligatory measures and a certain loss of freedom as long as there are no or minimal free riders. The authors go on to contend perceived fairness is vital not only in how auto restraint is implemented but how it is planned. Acceptance of a plan is more likely when people perceive a fair decision-making process leading to plan implementation (“procedural fairness”).
A few studies are of interest for attention to decision maker attitudes either exclusively or in combination with general public surveys. One of interest by Ison (1993), while dated, focuses on acceptability among decision makers about a proposed road pricing scheme for Cambridge, England as considered in 1993. The proposed scheme involved meters attached to vehicle odometers sensitive to speed and travel distance so as to impose a charge based on real time congestion. Charges were to be deducted from a driver smart card and visible by display within the vehicle. A total of 21 interviews were conducted with officials in city, county and district councils. Key findings include reactions to the proposal based on:
A study of decision makers and public reactions comes from Link (2003a). Link examined public and decision maker perspectives about road pricing along with other pricing and taxation measures. Research entailed 104 stakeholder interviews with planners, interest groups and decision makers in 9 European countries, focus groups with the general public in 3 European countries and a Delphi survey in 5 European countries, as well as an extensive quantitative survey of public attitudes in 6 European countries (1,300 individuals). Stakeholder interviews found acceptability is enhanced if:
In a supporting paper, Link (2003b) adds detail on policy maker perspectives. Link finds policy makers consider the “right of mobility” as one of the major arguments against pricing, paralleling public opinion findings elsewhere in the paper showing people consider roads and public transport as basic services to which they are entitled. Link also finds the most acceptable pricing purpose for policy makers is infrastructure cost recovery with demand management ranking second. On revenues, decision makers favored using revenues to reduce general taxes (transit managers and planners favored revenues designated for transportation improvements). Comparing road pricing to other pricing and taxation measures, decision makers prefer fuel taxation followed by interurban road and parking pricing. For road pricing, policy makers preferred differential charges (by time, area, emissions, service quality) to flat rates and agree to the principal of price reflecting the “real” cost of transport. However, once the real cost issue is phrased in terms of lower charges for “green modes,” policy makers are divided, perhaps aware of strong public egalitarian sentiment about road use as a right for all.
The public survey in Link’s work revealed skepticism about reducing congestion through pricing, support for pricing of trucks and discounts for “green modes,” and support for revenues spent on transport. On equity, the public gave little support for user pay principles. There also is suspicion of government motives in proposing user charges, belief the real purpose may simply be money raising and concern government is not transparent in decision making. Regular car users are reluctant to support the use of revenues outside transport (roads and transit), except to reduce income taxes. In two countries, acceptability of pricing was largely determined by use of revenues. Support for pricing varied strongly by country, with only 10% support in France to 55% support in Sweden where pricing was tied to environmental rationales and where workplace parking charges are especially supported. Forty one percent of the Dutch and 56% of the Austrian respondents supported road pricing. Generally, road pricing was less preferred than workplace parking charges or charges aimed at environmental and air quality improvements. Other findings include less than a majority of respondents believe pricing would lead to reduced pollution; while public transit is supported, it is considered too expensive or infrequent to compete with the auto; privacy was not a concern in pricing.
Surveys Related to Implemented Programs
Tretvik et.al. (2003) examine growing acceptance of pricing after implementation. In Bergen, Tretvik speculates the shift in support may have resulted in absence of queues at the tollgates, the clear link between revenues and improvements and availability of seasonal passes. In Oslo, increasing public support after implementation dropped markedly 2001 after an increase in tolls, but the overall upward trend remains. The Oslo results are based on an annual stratified random telephone survey of residents conducted since 1989. The most important reason for support (except in the first year) was “generates funds for road construction” followed by “environmental considerations.” Oslo funded several road projects financed with toll funds. The most important reason against the Oslo scheme was “unfair economic burden on motorists.” Since 1995, another prominent objection is “already pay enough tax/duty.” In Trondheim, the pricing system is the closest to pure congestion pricing with a time of day charge, fully electronic charging and only a pay per trip option, though here too a major aim was to finance transportation improvements. Again, opposition dropped after implementation (70% before, down to about 50% two months after implementation, 32% by 1993, then rising some to 43% in 1994). Absent detailed surveys as in Oslo, the author speculates respondent reactions are due to funds going to transportation improvements and the ease of non-stop pricing points.
Harsman (2003) reviews experience in Oslo, Rotterdam and Stockholm to draw conclusions about political processes important to acceptance among policy makers and eventual implementation. After summarizing public acceptance in Oslo, he suggests financial support from the national government was vital to acceptance among local politicians. The national government supplemented toll revenues to support transportation improvements. In Rotterdam, Harsman says the city reached an agreement with the national government in 2000 to manage traffic and finance new infrastructure. He indicates a “key factor” in the agreement was an agreement that toll revenues would be matched (within limits) by state funds. While the planned program was not implemented, the author concludes local, state and national government agreements may be an important necessary but not sufficient step toward successful implementation. Reviewing initial agreement among political parties in Stockholm leading to a withdrawn proposal in 1997 and reemergence in 2002, the author portrays the importance of specific infrastructure improvements to various political parities at least in a setting where such improvements are a driving force behind pricing plans. In order to get the pricing proposal toward serious consideration, each party (Conservatives, Liberals and Social Democrats) required assurances their favored road projects would be funded. Again, the conclusion appears to be active actors and agreements struck across local, regional and national governments are important to political acceptance and eventual passage of pricing proposals.
Overview & Synthesis Reports
Peter Jones (2002) reviews “typical UK findings” and finds highest public support for public transportation and park and ride; medium support for access restrictions (car bans) and parking enforcement; and lower support for road pricing. However, “charging for driving and parking” in a London study is supported over increased income tax, car tax, fuel tax, transit fares when the question put is how should money be raised for better public transport in London. Jones concludes support is best where road pricing revenue is devoted or “hypothecated” for road and public transit improvements and is additional to existing support revenues. In reviewing acceptability findings from Oslo, Jones finds acceptance increases after implementation. Other conclusions offered by Jones include acceptance depends on:
Jones also points up some typical public perceptions about traffic and pricing which can be barriers to acceptance:
Jones concludes acceptance hinges on a good investment package with revenues; selective exceptions and concessions (e.g. reduced off peak charges, “free” shopping periods, improved on-street loading, reduced one-way streets); targeting of pricing to groups and trips least likely to equate to “hardship;” up-front improvements in alternative modes and traffic management; attention to boundary effects; campaigns with good information on congestion, air quality and related problems; strong consultation with stakeholders and affected parties in collaborative planning rather than take it or leave it style.
The importance of decision makers to devising acceptable schemes also is stressed by Jones (2003) in a review of Oslo and Trondheim ring road pricing. He observes “support was greatly enhanced by the inducement of matched funding from the central government.” In both cities, Jones indicates city politicians formed a cross-party alliance and were willing to go forward in spite of opinion polls of the electorate showing opposition. Jones also emphasizes the importance of returning revenues to transportation. He indicates successful Norway programs emphasized revenue for improving transportation versus traffic reduction, though Trondheim differential pricing by time of day recognizes travelers may switch travel times due to pricing.
Jones also stresses the importance of problem perception in the acceptance of pricing. He suggests pollution may be a more compelling problem for motivating the public toward acceptance of pricing than congestion. He claims the public is more likely to view congestion as caused by others, a kind of victim mentality, whereas pollution is regarded more as the personal responsibility of all. He also asserts the public may be fatalistic about congestion, believing drivers “must have” their cars and large if not impossible reductions in traffic volumes are needed to reduce congestion.
Finally, Jones suggests program design is vital to acceptance. He points to Norway where the concern about nobody paying a disproportionate amount were met by defining a period in which only one charge is made irrespective of the number of cordon crossings (Trondheim); limiting the number of charged crossings per month (Trondheim); providing “season tickets,” allowing unlimited used in a given period (Bergen, Oslo). He also suggests attention to discounts for residents inside priced zones, exemptions for disabled or exemptions for high priority workers, such as hospital employees.
Several conclusions can be derived from the review of acceptability research in Europe and the UK. Clearly not all the influences on acceptability are within the control of planners and policy makers. The retirement of an important political champion may slow or sink a planned program, as Ison notes. Demographic variables such as residential location or interest group affiliation may be important determinants of acceptability among the public, as Vrtic finds. However, planners and decision makers working on pricing plans have little control over such variables. Most important are conclusions with implications where planning and decision making around pricing can be better informed. In particular, the review suggests public and/or stakeholder acceptability may be enhanced where:
Pricing Is Convincingly Effective: Acceptability studies suggest the public or decision makers may be skeptical about the effectiveness of pricing in reducing congestion or pollution. Schade for OECD finds acceptance is dependent on effectiveness perceptions, and such perceptions vary considerably. Vrtic finds acceptance strongly correlated with increasing effectiveness of proposed plans, in this case increased speeds. Bamberg calls perceived effectiveness “central” to acceptability. Jaensirisak finds the same reviewing experience in the Netherlands and Link in his stakeholder interviews.
Program Design Meets Program Concerns: Acceptability of pricing is enhanced where pricing program parameters are in line with public and decision maker concerns. Top concerns will vary by area, but planners increase the odds of acceptance by determining the concerns and structuring the program accordingly. Ittner finds in one German city strong sensitivity to compliance and fear of “free riders” with implications for emphasis on enforcement strategies. Ison in interviews with decision makers around a proposed Cambridge scheme finds simplicity in technology preferred to the more complex. Likewise, Jaensirisak et. al. in London and Leeds assessments found acceptability hinges on limited rather than expansive areawide schemes; fixed rather than dynamic pricing; and fees under certain limits. Holzer in the survey of German residents finds the importance of pricing designed as a means to investment not an end in itself. Jones emphasizes selective exceptions, targeted pricing to groups and trips least likely to raise hardship concerns, up front improvements in alternative modes, and attention to boundary effects (traffic and parking diversion).
Revenue Distribution Follows Preferences: Gearing revenues toward most favored purposes is important to acceptability. Research shows revenues directed toward transit and/or road improvements may garner support in some locations, but may compete with other preferences elsewhere. Planners need to understand and pay heed to such preferences. Tretvik et.al. find support in Oslo explained mostly by revenues devoted to road construction and observe the same support in Trondheim largely is due to funds for transportation improvements. Jones for MC-ICAM shows support for road pricing in early London surveys hinges on support for better public transport. He echoes Tretvik in concluding emphasis on revenue for improved transportation versus traffic reduction was vital in Norway. However, Vrtic et.al. find a return of revenues to all Swiss residents competes with transit investment for high preference. Link’s work across European countries shows policy makers preferring revenues for general tax reductions, and car users preferring revenues to roads and transit, but closely followed by reductions in income taxes. Confirming the importance of revenue distribution, Link finds acceptability “largely determined” by use of revenues in two countries among his sample.
Fairness Is Broadly Addressed: Equity across income groups subject to pricing often leads equity discussions among analysts of road pricing. However, research shows acceptability does not vary greatly across income groups and equity defined more broadly may dominate and deserve more attention. Schade for OECD reviews several European studies to find income is not strongly related to acceptance. With Schlag in his four city review, Schade finds acceptance of potential pricing schemes varied but not by income. Reviewing findings from the Netherlands, Jaensirisak, finds no relation between acceptance and income. Vrtic likewise found variation in acceptability of pricing options varied by rural versus city residence and by city size, but not income. Most important are more general concepts of “fairness.” Already mentioned is Ittner’s finding related to fairness of outcomes, i.e. assurance some are not evading the pricing scheme who should be paying. “Procedural” fairness is highlighted by Schade in OECD, meaning whether or not people feel full opportunity to participate in developing pricing plans. He notes some efficiency and optimality may be sacrificed in devising plans with full public participation and resulting compromise, but this outcome is better than plan rejection. As mentioned, Jones for MC-ICAM suggests the importance of targeting groups and trips least likely to create perceptions of “hardship.” Exempting the handicapped or emergency workers are examples he cites to combat this sense of unfairness. He also urges attention to “use inequity” where occasional payers reap the same benefit from new roads and transit as frequent users; and “spatial inequity” depending on travel within or to/from a cordon scheme. He points up several design considerations to meet these equity concerns: Norway policies defining a period in which only one charge is made irrespective of the crossings; limits on the number of charged crossing per month; season tickets and allowances for unlimited use in certain periods.
Pricing Schemes Operate Over Time: A consistent finding is acceptance tends to grow the longer pricing programs are in existence. Tretvik et.al. points to growing acceptance over time in the early Norway programs. Most recently, experience in Stockholm and London suggests the same finding. The exact reasons for growing acceptance are not well explored. London surveys suggest proven effectiveness may be central and in the case of business support in London, one can only surmise businesses perceive no harm to commerce. Tretvik speculates not only effectiveness is at work in growing acceptance of Norway programs, but absence of queues at tollgates and the visible, proven link between revenues and transportation improvements. Schade finds acceptance and preference for well known versus new pricing measures, and Ison notes the “snowball effect” of growing program experience is important to decision makers. Thus, growing familiarity may be another reason for increased acceptance over time.
Bamberg, Sebastian and Daniel Rolle (2003), “Determinations of People’s Acceptability of Pricing Measures – Replication and Extension of a Causal Model, in Acceptability of Transport Pricing Strategies, Jens Schade, Bernhard Schlag editors, Elsevier, U.K., 2003.
Bruno, Frey (2003), “Why Are Efficient Transport Policy Instruments So Seldom Used,” in Acceptability of Transport Pricing Strategies, Jens Schade, Bernhard Schlag editors, Elsevier, U.K., 2003.
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.
Harsman, Bjorn (2003), “Success and Failure: Experience From Cities,” in Acceptability of Transport Pricing Strategies, Jens Schade, Bernhard Schlag eds., Elsevier, U.K., 2003.
Ison Stephen (1993), “Congestion Metering in the city of Cambridge: A case of so near and yet so far?” Anglia Business School, Cambridge, United Kingdom, 1997.
Ittner, Heidi, Ralf Becker and Elisabeth Kals (2003), “Willingness to Support Traffic Policy Measures; The Role of Justice,” in Acceptability of Transport Pricing Strategies, Jens Schade, Bernhard Schlag editors, Elsevier, U.K., 2003.
Jaensirisak, S., Wardman, M, and May, A.D. (2005), “Explaining Variations in Public Acceptability of Road Pricing Schemes,” Journal of Transport Economics and Policy, Volume 39, Number 2, May 2005.
Jen Schade (2004), “Communicating Environmentally Sustainable Transport: The Role of Soft Measures,” OECD, Paris, 2004.
Jens Schade and Bernhard Schlag (2002), “Acceptability of Marginal Cost Road Pricing,” Technische Universitat, Dresden, 2002.
Jones, Peter (2002), “Acceptability of Transport Pricing Strategies: Meeting the Challenge,” by, MC-ICAM, 2002.
Jones, Peter (2003), “Acceptability of Road User Charging: Meeting the Challenge?” in Acceptability of Transport Pricing Strategies, Jens Schade, Bernhard Schlag editors, Elsevier, U.K., 2003.
Link, Heike (2003a), “The Acceptability of Transport Pricing Measures Amongst Public and Professionals in Europe,” TRB 2003.
Link, Heike (2003b), “Public and Political Acceptability of Transport Pricing: Are There Differences?” in Acceptability of Transport Pricing Strategies, Jens Schade, Bernhard Schlag editors, Elsevier, U.K., 2003.
Milenko Vrtic et.al. (2007), “Design elements of road pricing schemes and their acceptability,” paper before the 86th TRB Annual Meeting, Washington D.C., 2007.
Olof Holzer (2003), “Which Role Does the Objective Play – Empirical Findings From Germany,” in Acceptability of Transport Pricing Strategies, Jens Schade, Bernhard Schlag editors, Elsevier, U.K., 2003.
Tretvik, Terje, Echos Jaensirisak, S et. al.(2003), “Urban Road Pricing in Norway: Public Acceptability and Travel Behavior,” in Acceptability of Transport Pricing Strategies, Jens Schade, Bernhard Schlag editors, Elsevier, U.K., 2003.
There is much agreement that areawide congestion pricing is likely to have significant impact on economic activities within the affected zone(s) as well as in surrounding areas. Pricing changes affect costs of travel for cars, competing modes and freight traffic. All of these changes could be expected to influence the costs of doing business and, with time, influence land uses and development patterns in profound ways. Pricing could be expected to have impacts on business costs as well as on land values, rents, availability of labor and locational decisions.
The uncertain economic impacts are frequently cited as one of the main reasons for cities’ reluctance to introduce road pricing. Unfortunately, there is paucity of data about impacts of areawide congestion pricing on economic activities. Apart from Singapore, other areawide programs are either too recent (London and Stockholm) to pick up long term effects, or represent unique local program dimensions and conditions (Norwegian toll rings). Broad economic impacts of Singapore pricing programs have not been studied carefully, despite their longevity. The impacts on economy of London and Stockholm programs are expected to surface over a long period of time, though some preliminary results suggest neutral or small impacts on at least business trade, and likely no significant negative impacts. Much analytical effort will be needed over time before definitive conclusions can be drawn for London and Stockholm.
The purpose of this sub-section is to provide a brief summary of the current state-of-knowledge on this topic. Much of the material below is taken from the discussion on the subject included in the EC’s CURACAO (2007) report:
The economic and relocation impacts of transportation are difficult to identify and measure. These impacts often take long time to materialize and it is difficult to separate out the effects of pricing from other influences. The lack of empirical evidence makes the impact estimation problem worse. After the Singapore ALS pricing was introduced in 1975, the businesses were asked for their assessment of the pricing scheme. Their response was largely positive. However, as Curacao points out, “this may well have reflected a general view in Singapore at the time that government was making the right decisions. Ten years later an attempt was made to assess the impacts retrospectively. It was concluded that there was no evidence of adverse impacts on economic activity in the city centre (Armstrong-Wright, 1988). However, this assessment was made difficult, both because parking restrictions had been introduced at the same time, about which businesses were much more critical, and because the Singapore economy had expanded rapidly in the intervening period, masking any impact of road pricing.”
A study in three U.K. cities - Cambridge, Norwich and York – asked businesses what they expected to be the impacts of a road pricing scheme which charged £3 per day to enter the city centre in the morning peak (Gerrard, 2000). “The majority anticipated positive impacts on the environment and congestion, but negative ones on the economy and tourism, and on their own staffing and profitability. When asked whether road pricing would influence their next location decision, 53% said it would, and 26% that it might.”
Forecasts based on models suggest smaller impacts. A 1996 analysis of the impacts of congestion charging in London by May et. al., (1996) using the MEPLAN model, which reflects the effects of changes in accessibility on location, predicted that a £4 charge to enter central London would result in an increase of 1.0% in Central London employment while Inner and outer London employment would fall by 0.5%. The model also suggested that the number of households would fall by 0.2% in central London and 0.1% in outer London, and rise slightly in inner London. Higher income households in central London were also predicted to increase.
Curacao also cites a subsequent study in Edinburgh that, “using the START/DELTA model, which includes responses to both accessibility and environment (Bristow et al., 1999), indicated that a £1.50 charge to enter or leave the city centre would increase city centre population by 2.2%; an earlier study with a similar model, but with different parameters, (Still et al., 1999) had suggested a 1.8% reduction in city centre population, and a 3.1% reduction in city centre employment. Both studies suggested that the impacts of changes in accessibility were larger than, but opposite in sign to those of changes in environmental quality.”
Transport for London (TfL) has looked at the impacts of congestion charging in London. It found that congestion charging did not have a significant impact on several different indicators of economic performance, including measures of business population and turnover and shops within the inner core of the charging zone had their rental values increased. TfL’s business surveys conducted in 2004 showed a continued recognition of the transport benefits associated with congestion charging. It should be mentioned, however, that the introduction of charging in February 2003 coincided with a temporary economic slowdown, as well as a wider set of local, national and international conditions that were not favourable to general economic performance.
“Other work conducted in London during 2005 found that trends in business registrations for VAT remained strong and that within the charging zone, the retail sector has increased its share of enterprises and employment since 2003. A majority of businesses in the congestion charging zone recognised that decongestion has created a more pleasant working environment and easier journeys for employees using public transport for work. Ernst and Young were commissioned to undertake an independent review of the monitoring of the business impacts. Their work reasonably concluded that the (then) £5 charge has had a broadly neutral impact of the central London economy. However, as charging had only been in place for 2½ years (the date of the review), this had made it difficult to draw definitive conclusions on the long term impact.”
The London Mayor’s original business case for the charging scheme suggested that congestion costs the London economy around £2 - £4 million per week in lost time. TfL has also predicted that the range of public transport services available is saving Londoners in the region of £3.5 million per week.
However, TfL’s view about ‘concerns over the detrimental impact of congestion charging on economic activity appear to be misplaced’ is not shared by all business organizations. London Chamber of Commerce and Industry’s two surveys found that 85% of the retailers who took part considered the charge had ‘failed to improve their productivity’. One department store conducted its own research and concluded that charging had led to an estimated sales reduction of 7.3% at their Oxford Street store.
“Work undertaken by Ernst and Young suggests that all TfL’s work and conclusions are broadly in line with their own but that further quantification of all the benefits and costs arising from the scheme should be explored further to support the view that the charge delivers overall economic benefit even when all costs have been taken into account.”
In London, early claims were made that retail sales had dropped by 10% due to congestion charging. However, “Transport for London’s early assessment was that retail firms were reporting reductions in turnover of around 2% in the first half of 2003, with food shops reporting reductions of 6%. However, much of this appeared to be due to other factors such as the decline in international tourism (TfL, 2004). The most recent assessment suggests that the impact of the ₤5 charge on the London economy has been broadly neutral (TfL, 2006).”
Evaluation work completed in Trondheim by the Chamber of Commerce between 1991 and 1992 indicated that there was some evidence that businesses located within the toll ring had lost trade during the early part of 1992. However, based on data from the summer of 1992, no significant negative impact on business trade could be found. The Chamber of Commerce concluded that there was no significant effect of the toll ring on trade.
“Tretvik (1999) reports an analysis of the impacts on turnover within, and outside the Trondheim toll ring. Before implementation, a shopping survey concluded that 25% of shoppers were likely to change the location or timing of their shopping activity in response to the toll ring. A second survey in 1992, a year after implementation, recorded that 10% had in fact changed destination or timing of their shopping trips. However, the impact on retail turnover did not reflect this downturn in activity. In 1992 the Chamber of Commerce concluded that there had been hardly any effect on trade as a result of the toll ring. Longer term time series data from 1987 to 1997 on Trondheim’s share of county retail sales and on annual turnover in different parts of Trondheim showed that Trondheim as a whole, and the CBD in particular, had been losing market share between 1987 and 1990, but that the city’s market share within the county grew in most years from 1991 to 1997, and that the toll ring’s share was maintained throughout that period. While turnover will be affected by a wide range of factors, there is thus no evidence to suggest that the toll ring adversely affected trade within the ring.”
In Stockholm, the congestion tax likely has had two opposite and opposing effects on companies’ transport costs. Clearly the congestion tax has led to increased out-of-pocket costs for transportation. On the other hand, the introduction of the congestion tax has resulted in a reduction in traffic, implying that all traffic is moving faster. The reduction in congestion is likely to have produced benefits like quicker loading / unloading times for delivery vehicles. The effect of the charge on local consumer purchasing power will depend to a large degree on whether consumers continue to drive after the charging system begins or whether they either begin or continue to use public transport.
In terms of the congestion tax and its impact upon consumer purchasing is thought to be very slight as the revenue from the tax represents no more than approximately 1% of the total GDP for the whole of Stockholm County.
CURACAO (2007) goes on to say, “At an aggregated level it seems that the congestion tax had little effect on the companies total transport cost and the households disposable income and purchasing power. However the situation vary for individual households and companies. The total production of goods and services in the county (the gross regional product) amounted to an estimated SEK 750 billion in 2005. Compared to this the contribution made by the Stockholm Trial (SEK 1 billion) is minimal.”
A model based analysis of a permanent congestion tax in Stockholm shows that there will be an effect on the appeal of certain areas effect measured by falling housing prices. However, the effect on housing prices were extremely modest compared to the changes that normally occur on the property market. The model also assumed the effects on traffic and accessibility to be worse than what was actually measured during the trial. Most likely it will be other factors than congestion tax that determine housing price trends in the various part of the county.Model calculations of the effect on the location of residential premises and places of work also show that over the long term the inner city area and the surrounding area would fall by 1 % as a result of the change in accessibility with a permanent congestion tax. However, over the 20-30 year prediction period this is not a great change. Therefore the conclusion is that congestion charging most likely will not have any great effects on the future expansion of residential or commercial areas.”
The generally low level of measured economic and business impacts appears to refute the perception that road pricing will lead to substantial out-migration of residents and business.
Available evidence suggests small, neutral or no significant negative impacts on business activity:
Continued evaluation is much needed and will tell more:
Economic and business impacts can also have substantial impacts on equity; poorer households are more likely to have to move if residential areas become more attractive, and are more vulnerable if they become less attractive; those without good public transport access are more vulnerable if shops and facilities close or leave an area.
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.
Armstrong-Wright, A.T., 1986. Road pricing and user restraint: Opportunities and constraints in developing countries. Transportation Research Part A: General, 20(2): 123-127.
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City of Stockholm, 2006, Facts and Results from the Stockholm Trials. First version - June 2006. Congestion Charge Secretariat, Stockholm, Sweden.
Ernst and Young, 2005, Review of Transport for London’s Assessment of the Business and Economic Impacts of the Congestion Charge in Chapter 6 of “Impacts Monitoring – Third Annual Report 2005”.
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Transport for London, 2006. Central London congestion charging: impacts monitoring. London, TfL.Tretvik, T, 1999. The EUROPRICE project: the Trondheim toll ring and the effects on retailing. Trondheim, SINTEF.
Congestion pricing will differentially affect different population segments. The benefits received and costs borne might differ significantly by population subgroups. Real or perceived concerns about inequitable incidence of impacts of pricing can influence the success or failure in moving forward with implementation.
The definitions and perceptions of equity or fairness differ across locations and population segments within a city making for challenging equity assessments. Nevertheless, analysts have attempted to assess equity impacts variously defined and derived findings accordingly in some of the cities subject to this review as well as in more general literature on the subject.
The purpose of this sub-section is to provide a brief summary of the current state-of-knowledge on this topic. Much of the material below is taken from the discussion on the subject included in the EC’s CURACAO (2007) Report.
Definitions and Concepts
Equity assessment involves identification of winners and losers of pricing policies and estimating the differential incidence of benefits and costs (Langmyhr, 1997). The two principal dimensions are vertical and horizontal equity. The vertical equity looks at distribution of impacts by income and socio-economic characteristics and is concerned with perceptions of “fairness” and “affordability” across these dimensions. The horizontal equity looks at the impact on people living in different areas or making differing types of trips with the premise that those who occasion costs and/or receive benefits should pay accordingly. There are also issues of equity between firms, but these are covered under economic impacts in the previous sub-section.
To quote CURACAO (2007), “Road pricing will change the costs of travel by car and by competing modes. These will differ by type and location of journey. Vertical equity impacts are, as a result, complex. Lower income car users in the charged area will be adversely affected, but lower income residents are more likely to use buses, which will benefit, and walk and cycle. Horizontal equity impacts depend on the location and nature of charges. With a charge to cross a cordon, differences are marked, with those making short journeys across the cordon experiencing the greatest proportional cost increase, and those within the cordon benefiting from reduced congestion and a better environment. With multiple cordons or distance-based charges, the differences are less acute, but more complex. There is also a set of horizontal equity considerations which concern the nature of the user or journey. Disabled drivers are an obvious category of concern. So, to a lesser extent, are those travelling when public transport is less available and those carrying bulky loads.”
CURACAO (2007) also points out: “Economic impacts can have substantial secondary impacts on equity; poorer households are more likely to have to move if residential areas become more attractive, and are more vulnerable if they become less attractive; those without good public transport access are more vulnerable if shops and facilities close or leave an area; conversely, inequities are less likely to have serious impacts on the economy, since those who are likely to be adversely affected are typically less economically active.”
An assessment of the distributive effects of road pricing must take into account how revenues are spent. Road pricing attracts much equity based opposition on the basis that high-income motorists and commercial traffic constitute the “winners” predominately. Those likely to lose out on the grounds of equity are predominately those who are low income and car-dependent families. The most commonly used solution here is to use pricing revenues to improve public transport. Trondheim’s experience has been to earmark revenue not only into public transport improvements but also to walking and cycling.
Exemptions from pricing and the use of pricing revenues to provide rebates and fund expansion of alternative modes of transportation can and have been adopted in London and Stockholm to mitigate some of the real or perceived inequities resulting from congestion pricing. The allocation of revenues is a particularly important issue affecting perceived or real equity/fairness. The allocation of revenues plays a key role in enhancing acceptability, mainly via fairness considerations, which may influence the distributional impacts in the desired direction.
Concern over equity has been frequently cited as one of the main reasons for rejecting many early road pricing proposals. More recently these concerns appear to have been less frequently mentioned as successful pricing projects come on board and as equity concerns are addressed carefully.
General Research on Equity Issues
Referring to May and Sumalee’s 2003 paper and, with some selective updating of literature on the London Congestion Charging Scheme, CURACAO (2007) states, “Early attempts in dealing with the equity issue mainly involved analysing the impact of road pricing on vertical equity (See Anderson and Mohring, 1995; Fridstrom et al., 2000; Giuliano, 1994; Gomez-Ibanez, 1992; Langmyhr, 1997). A general conclusion from various studies was that low-income car users or less-flexible car users (e.g. based on gender or flexibility of working schedule) are likely to be the worst-off groups as a result of road pricing. If revenues are not redistributed in any way, road pricing generally results in gains for higher-income groups and losses for lower-income groups (Else, 1986; Cohen, 1987). However, as noted above, where lower income users are more likely to use bus services than drive, they may be better off (May, 1975). The way the revenues are distributed has a significant impact on the equity issue.”
Other recent research has been looking at the ways to address the equity aspects in the design of road pricing systems. “Mayeres and Proost (2001) have proposed a weighted welfare indicator giving more weight to the benefit/cost ratio occurring to less advantaged groups. The test results showed that road pricing is an important element of the tax reform even when there is a greater emphasis on equity. Meng and Yang (2002) have proposed a framework for calculating the optimal road toll (to maximise social welfare) with constraints on the spatial equity impact. Sumalee (2003) has proposed an analytical method to identify the optimal location for a charging cordon with spatial equity constraints. The results for Edinburgh are shown in Sumalee et al, 2005. Jones (2002) proposed a simple approach to address equity concerns through scheme design, exemptions, and discounts.
Research by Jose Viegas of Instituto Superior Técnico; and TIS.pt, Transport, Innovation and Systems (Lisbon, Portugal) found that road pricing can lead to financial success in cities and towards the reduction of congestion and better quality of surface public transport in cities like London and Stockholm. The improved quality of surface based public transport presumably would reduce inequities from a position ex-post whereby non-car owners would have experienced lower quality public transport before pricing.
Analysts have also assessed the equity consequences of pricing in comparison with the current practices of transport revenue usage for Oslo, Warsaw and Edinburgh (EC “DG-TREN” and “REVENUE” projects).
A case study conducted in Edinburgh looked at both the economic impacts and cross-boundary impacts and acceptability issues for the proposed scheme. A two-cordon scheme was proposed, including one inside the outer ring road, and one outside of the historic city centre. Those living outside the outer cordon would have been exempt from the charge. This was of considerable concern to the residents of neighbouring authorities, who would not have been exempt from the charge and hence there was a concern over whether all residents would be receiving “fair” treatment. Public transport improvements had been promised, however they were not planned before the start date of charging, hence no real benefit from the improvements would have been experienced prior to charging. Bus service improvements should have been planned earlier in order to demonstrate the degree to which all communities would benefit. The Edinburgh’s neighbouring authorities opposed the concept of road pricing as proposed.
Three of the neighbouring authorities outside Edinburgh opposed the charge because the plans were perceived to be not equitable. Plans for revenue ownership by the city were viewed as unfair to non-city residents who would have been expected to pay the charge, yet not receive any benefit through the revenues. The neighbouring authorities had no legal grounds on which to secure any of the public transport improvements they needed. The scheme was contested on the premise that city residents would receive huge exemptions but would be the main benefactors. City residents would also have benefited disproportionately more from the public transport improvements. The issue of the exemption given to outer city residents of Edinburgh was a critical acceptability problem, controversial in terms of the specific outer cordon exemptions.
Norwegian Toll Ring experience also underscores the importance of modifications to the “optimal” boundary design and crossing policies aimed at reducing opposition. The following “sub-optimal” attributes were included in the Edinburgh toll ring: a “one-hour rule” whereby one would only get charged once per hour regardless of the number of crossings of the cordon made; free crossings of the toll ring for disabled drivers; and a system allowing free passage after 5:00pm and all day at the weekends. There was an equity argument here, which was to avoid charging for “social travel.” Similarly, London changed the charge period end from 6:30 PM to 6:00 PM to respond to objections from the entertainment industry and their patrons.In Norway, formal equality issues attracted less importance in Kristiansand where the choice of toll stations on two sides of the city was considered to be a ‘fair’ solution.
Equity concerns have surfaced at nearly all pricing projects at the time of proposal development and pre-implementation phases. Some proposals could not move to implementation because of opposition based on the perception of “unfairness”. Once the pricing projects are operational, however, public opposition based on equity concerns has diminished significantly and the issue has taken a back seat. Unfairness of pricing appears to have become a less dominant concern than it once was. At the same time it could be expected to continue to affect decisions about adoption of pricing. It therefore remains important to understand the scale of both vertical and horizontal inequities, and this will require a disaggregated analysis by person type, income level, journey type and specific person and journey characteristics.
The solutions to equity problems lie in many factors including: the design dimensions (location, time of day and level of charge); the use of exemptions and rebates; the packaging of complementary policies, particularly to provide alternatives; and the use of surplus revenues to provide direct or indirect support. Based on research findings and empirical evidence, key findings are:
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.
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Cohen, Y., 1987. Commuter welfare under peak period congestion tolls: Who gains and who loses? International Journal of Transport Economics, 14(3): 239-266.
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United States Department of Transportation - Federal Highway Administration