ECV 5603

Advanced Transportation Engineering

PART1: TRANSPORT ECONOMICS

PART 2: TRANSPORT OPERATIONS
PART 3: TRAFFIC RESTRAINTS
 ECV 5603
Advanced Transportation Engineering

Traffic Restraint
Demand Measures
(Transportation economics)
Traffic restraint’s aim

to modify travel habits so that travel demand is

considerably reduced or switch to other modes, other
times or other locations that have more capacity to
accommodate it.
 Demand measures include:

i. Parking supply & pricing

ii. Restrictions on vehicle ownership & use
iii. Road pricing
i. Parking supply & pricing discourages use of
private vehicles to specific areas.
• Capable of implementation at any level determined
by authorities.

• Provided that all on-street & off-street sites are

controlled

• Practical restraint is a combination of supply of

spaces & their price related to duration of demands.
ii. Restriction on vehicle ownerships & use includes:

• heavy import duties,

• separate licensing requirement,
• heavy annual fees,
• expensive fuel prices,
• strict periodic inspections, etc.
iii. Road pricing is a transport policy for charging
motorists a fee for using their vehicles within
specific areas or on specific roads
Other names:
• Road user charging
• Congestion charging
• Congestion pricing
• Other specific terms e.g. road tolling, variable
pricing & peak period pricing
Parking control
versus
Road pricing
Parking control only restrain journeys ending at a
particular destination, & generally do not directly
discourage the use of roads.
Meanwhile:

Road pricing affects the proportion of

through journeys in an area.
Why road pricing is interesting?
• New sources of revenue for transport projects

• Failure of alternative policies to cope with the growth

of traffic congestion
THEREFORE:

 Road pricing is widely accepted as an effective tool for:

 alleviating traffic congestion,

 reducing environmental impacts,

 generating revenue to finance transport improvements

 BUT

 there are a number of barriers in implementation,

 e.g. questions on public acceptability & practicability.
Economic background of road pricing?
Demand Curve
 Demand Curve

It is characterized by its level and shape

• Income level rises – willingness to pay increases

• Time of day

• Qualities – comfort and convenience

Supply Curve
Speed-Volume Curve

Congestion
Delay
 Generalized user costs and
traffic volume

Rise
(Demand rise and
Constant congested)
• When resources are allocated to their highest valued
use in the economy
– Economically efficient

• The key to achieve economically efficient

– Prices must reflect the opportunity cost to society
of producing and consuming a particular good or
service
Cost borne by user of roads should reflect the sum of
the marginal social costs they impose on:
• infrastructure provider
– cost for operation and road damage
• other road users
– cost for congestion, risk of accidents
• outside transport system
– cost for accident externalities and environmental
damage

Marginal social costs = the cost added by producing

one additional unit of a product or service
 • One person’s consumption gives negative impact on
others
– Negative externalities

• If the market price does not reflect these external

effects, then the opportunity cost to society will be
greater than the price that consumer face
– Economy inefficiency

A negative externality is a cost that is suffered by a third party as a consequence of an

economic transaction. Some externalities, like waste, arise from consumption while
other externalities, like carbon emissions from factories, arise from production 
• Externalities are the key problem of congested
highways

• Each successive vehicle enters the traffic stream

imposes on all the others
– Travel speed reduced and congested
Economic efficiency loss due
to excessive traffic volumes

Negative
Externalities
Road pricing adds these marginal social costs onto
marginal personal cost of driving so that:

- drivers take more economically rational travel

decisions, thus traffic volumes reduce
 Efficient Pricing

• Identify and discourage low valued trips

• Imposing a toll during congested periods

• Shifted them to other routes or time periods

Inefficiently high congestion price
 Forms of Congestion Pricing
• Priced Lanes
– Applied on a limited number of lanes of a roadway

• Priced Roadways
– Applied on all lanes of a road facility

• Zonal-based or System(Area)-wide Pricing

– Applied on all roadways within a specific zone
– Vehicles are charged as they cross a cordon line
into the priced zone
Types of road pricing
Past experience in road pricing?
• Cases of Implementation?

– Singapore
 Road pricing

– Norway
 Cordon system

– London
 Congestion charging
• Interested countries?

– Hong Kong, Netherlands, Sweden, USA, Australia,

and other cities in Britain e.g. Leeds, Bristol,
Edinburgh, Derby, Durham, Leicester, etc.
 Social impact of road pricing
• Perceived distributive impacts are a significant factor in public attitudes to
road pricing. Cordon charges are often unpopular because they are seen as
discriminating against commuters living outside the city centre and against
shops located just inside the cordon.
• Overall distributive impacts of road pricing are small but that some
vulnerable populations can be adversely affected, particularly by cordon
charges.
– Cordons can be designed to minimise the numbers of vulnerable households
adversely affected but differentiating charges to incentivise peak spreading is
effective in minimising distributional impacts with all types of charging scheme.
• Area-wide electronic vehicle-kilometre charges, differentiated in time and by
location, are the most efficient form of congestion charge and have the
lowest distributional impacts. Differentiation across peak times provides
opportunities modifying departure times rather than being priced off the
system and allows for lower average charges than would otherwise apply.
Singapore’s road pricing
• Singapore was the first country to introduce urban
road user charging.

• Objective was to restrict traffic at peak periods into

Central Business District in order to alleviate
congestion.

• Initially, system applied was Area-Licensing Scheme

(ALS). – a special supplementary licence.
• In 1998, ALS was replaced by Electronic Road Pricing (ERP).

• Tolls vary according to average speed on the network.

• Prices applied under ERP are subject to maintain traffic speeds of

45-65 km/h on expressways and 20-30 km/h on arterial roads.

• In Singapore, road pricing enjoys general support from the

population. The key factor here is that charges are calculated to
maintain target speeds, an approach that is understood and
accepted. This has both made the policy apolitical and provided
reassurance that tolls are not adjusted to increase revenues.
 Rule-based pricing in
Singapore
• Singapore’s electronic road pricing system uses prices determined
by optimisation of traffic flow.
• Prices are set to ensure traffic speeds are maintained at agreed
levels: 20-30 km/h on arterial city roads, 45-65 km/h on
expressways.
• Electronic Road Pricing rates are determined by a quarterly review of
traffic speeds of priced roads and during the June and December
school holidays.
• The pricing formula was developed using a traffic flow model
developed by the Land Transport Authority.
• When speeds fall below the target levels prices are increased. When
speeds rise above the target range, prices are reduced.
• The benefit of this rule-based methodology is transparency.
Singapore’s road pricing
Norwegian’s Cordon System
• Cordon pricing schemes
– Bergen in 1986
– Oslo in 1990
– Trondheim in 1991

• Main objective of toll rings was to raise revenue to

finance road projects and, to a lesser extent,
public transport.
• Scheme was not designed to reduce traffic.

• Nevertheless, some impacts on travel behaviour and

traffic volume were found.

• Lesson from Oslo shows that acceptance has

increased over time after implementation.
London congestion charging
Started on 17 February 2003

Objectives:

 reduce traffic congestion

 increase journey time reliability
 decrease of air pollution
 London Congestion Charging

 Bounded by the Inner Ring

Road
 7am-6:30pm, Mon.-Fri.
excluding Public Holidays
 £5 per vehicle per day (£8
from 4 June 2005)
 Discount for e.g. residents
who live in the zone,
disabled people, taxis,
coaches and minibuses
 Exempt for e.g. emergency
services on behalf of the
See Transport for London Web site NHS, police, fire,
(www.tfl.gov.uk)
ambulance
 Impacts of
London congestion charging
 London’s experience in road
pricing
• Experience from London suggests that the
public generally accepts road pricing once
the system is introduced. Public opinion is
certainly more favourable after
implementation than before road pricing is
introduced.
– This is partly because it is very difficult for
people to judge the impact of something they
have never experienced.
 15 % traffic reduction

 30% congestion reduction

 12% pollution reduction (NOx, PM10)

 Journeys had become more reliable

 Buses significantly gain in reliability

 Substantial reductions in road traffic accidents

 No evidence that increased average traffic speeds

have had any noticeable effect on the severity of
casualties

 No evidence of any significant adverse traffic impacts

from the scheme outside the zone
 Neutral impact on the economy of central London

 Small Impacts on individual business sectors,

including retail

 Around £50 million of net transport benefit for the first

year, mainly through quicker and more reliable
journeys for road and bus users.
 Net revenue for the first year is about £68 million and
over £90 million in 2004/5, which have been spent
largely on improved bus services

 68 percent of respondents said that they had gained

overall from the scheme
Factors that helped success of
London congestion charging ?
 built and maintained public support

 integrated with other policies (e.g. public information,

bus lane, revised traffic signal, banned turn, access
control, and improvement on bus service)

 delivered the scheme quickly so that benefits can be

seen as soon as possible
Learning from the experiences?

“barrier to implementation”
 Public acceptability
 Charge for something which is free before

 Unfair and favour the rich

 Possible economic and land use impact

 No alternative

 Political leadership and acceptability

 Legislation and institutional framework
~ inappropriate legislation & organisation
structures & contradictory policies elsewhere
Learning from the experiences?

“making road pricing work”

• Existing circumstance
~ Congestion & pollution must be bad enough.

• Benefits and objectives

• Revenue allocation
• Equity issues

• Alternative means of travel

• Technology

• Communication & marketing strategy

 Conclusion
on
Congestion charging
• Congestion charging is efficient &
environmentally beneficial available tool for
congested cities.

• However, congestion charging cannot by itself

deal with the transport problems
• It must be seen as a part of comprehensive policy
package, which includes:
o substantial improvements to public transport & other
alternative modes,
o environmental enhancements,
o new approaches to land use planning,
o more usages of intelligent transport systems.
• Moreover, objectives & benefits of charging need to
be clear to the public.

• On the other hand, they should be convinced that

society as a whole will be better off.
END