Slow Expansion of Road Infrastructure - Essay Example

Introduction Due to ever-increasing levels of car ownership and car usage in most countries, and a relatively slow expansion of road infrastructure, congestion has become one of the most urgent problems in metropolitan areas. The social costs due to congestion have been estimated to be in the order of 2.0 per cent of GDP in the EU (EC, 1995). A comment on a website surveying for a solution to this problem appeared as, "In many countries (but especially Britain) the entire philosophy concerning public transport is flawed. First, it should be more convenient and, second, it should be cheaper, than the alternative single-person, single-car option. It is not difficult to propose ten key changes to help alleviate congestion, including the obvious three - the school bus run, multiple-person lanes, and double-decker trains. The entire transport system requires modernising - bus stations must be located adjacent to train stations, and separate bus and cycle lanes should be the norm, not the exception." (Ralph Shiell, March 20, 2006) "Of these policies, congestion pricing is the one that probably has the greatest potential for reducing congestion." (B. Starr Mcmullen, 1993) Road pricing has been given attention since the early works of Pigou (1920) and Knight (1924). In the 1920s, the spiritual fathers of road pricing, Pigou (1920) and Knight (1924) used the example of a congested road to make their points on externalities and optimal congestion charges. They argued that road users should be charged their marginal external congestion costs. This has remained the leading principle in the transport economic literature on road traffic congestion. Given the growth in road traffic and its adverse side effects, road pricing has become an important contemporary policy issue. Pigou's innovative work, a large variety of possible approaches to studying the economics of road traffic congestion and road pricing has been developed. Various proposed schemes have been advocated for spending the funds raised so that as many actors as possible benefit (Goodwin, 1989; Jones, 1991; Small, 1992). A questioning of road users in the Randstad, Netherlands (Verhoef et al., 1997) also pointed to the importance road users attach to the allocation of tax revenues. Sheldon et al. (1993) from an interview study of London residents, conclude that road pricing is more likely to be accepted if the system is simple, enforcement is guaranteed, and the revenues used in a transparent and equitable manner. May (1992) asserts, however, that 'it has to be expected that any form of road pricing will introduce some inequities: The key is to keep these to a minimum.' Daganzo (1995) approaches the issue from the other side, by proposing a combination of rationing and pricing that reduces the size of money transfers. Else (1986) mentions the possibility of leaving the road users with a choice of paying a toll and queuing. Economists have long advocated marginal cost pricing to allocate scarce highway capacity, especially under congested road conditions (Morrison, 1986; Borins, 1988; Hau, 1990). Road pricing involves charging higher road prices during peak hours when traffic volume exceeds road capacity. If road users were made to pay the full marginal social cost of using the highways, urban geography and commuting patterns would be different from what they are today (Newberry, 1990) Types of Road-Pricing Despite problems of social and political feasibility, road pricing in various forms has been, or soon will be introduced in a number of cities. Various types of road pricing exist, and furthermore, road charging in its strict form is only one possible fiscal instrument to deal with road traffic congestion. The Singapore area licensing system offers one example of a well-established system, and the toll rings in Norwegian and Swedish cities offer evidence that the political opposition to charging for the use of urban streets, can be overcome. Other fiscal instruments offering a quasi road pricing approach are also in use. Parking fees, for example, can approximate to a road price in terms of deterring traffic using city streets, but are second-best in that they poorly differentiate according to trip length or vehicle used. Road pricing is perhaps the clearest and has the greatest potential for precision since it can be applied specifically to selected sections of road. Road pricing is the charging of vehicles for use of selected roads or sections of road. Except in the case of tolled motorways, it is usually applied within a defined zone rather than to several roads physically separate from each other. When deciding to employ road pricing, three main methods of charging are possible. 1. Toll booths erected on entry or exit to the zone. In 1986 a cordon of toll booths was installed around the centre of Bergen. It was necessary to toll only six routes and one of these, being a bridge, was already tolled and so had introduced the idea of tolling to motorists. 2. Supplementary licensing whereby an additional license is needed to use roads in a defined zone. Such a system was started in Singapore in 1975. Licenses may be purchased monthly or daily, the license being displayed in the window of the vehicle. Charges have varied according to the type of vehicle. At first there was free entry for cars with more than three occupants but this has been withdrawn due to abuse. Inspectors were located at the 25 entry points to the restricted zone. Supplementary licensing needs extra staff but has coincided with, and probably caused, a substantial shift in the modal split towards public transport. A permit system was introduced in central Milan in 1985. Permits were issued free to residents and in limited numbers to employers. There has been a reduction in the number of vehicles entering the zone from about 130 000 to 50 000 per day and some transfer to public transport, but there has also been an increase in parking demand just outside the zone. 3. Electronic tagging devices on vehicles and at entry points to a defined zone so that the presence of vehicles is detected and a bill sent to the owner periodically. An automatic debit system was introduced in Hong Kong in 1983. Vehicles carried an electronic number plate on the underside of the chassis, which was detectable by roadside electronic loops positioned at entry points to the area defined for pricing. An argument raised against the system was that it was an invasion of privacy as movements were recorded. Countries incorporating Road-Pricing Singapore was the first place in which road pricing was successfully implemented. Entry into the central business district was restricted during peak hours to vehicles that had stickers. Peak hours during which entry was restricted were 7:30-9:30 a.m. Cars paid a daily fee of about $2.50, company cars paid $4.50, and taxis paid $.90 (Borins, 1988). Commercial trucks, busses, and automobiles with four or more occupants were exempt from fees. This sticker pricing scheme is a flat-rate pricing scheme and does not allow for refined discrimination between vehicles according to vehicle type of different times within the peak time period. Singapore plans to change to a more sophisticated electronic road pricing system in the mid-1990's to allow for a more discriminating scheme that better approximates the theoretically optimal fees discussed in the previous section (Smith, 1992). When the Singapore pricing was first implemented in 1975, the goal was to reduce peak hour traffic by 25-30%. The actual response was a 65% decrease in the number of cars entering the restricted area and a decrease in overall traffic of 40%. Further, the percent of all commuters riding the bus rose from 35.9% to 43.9%, auto drivers decreased from 32.8% to 28.8% of all commuters, and commuters riding in carpools of four or more rose from 12.7% to 30.2% of all auto commuters (Wilson, 1988). On the negative side, increases in travel time were reported by 44% of peak hour commuters. This can be explained by the fact that non-auto transportation alternatives are usually slower than auto travel. Although roads are clearer to allow more rapid bus transit speeds, greater bus rider ship means more people and thus more stops which increase travel time for existing bus riders. The net effect appears to be longer travel times (Wilson, 1988). To the extent that low-income individuals use the public transit system, the Singapore experience shows the poor may be inconvenienced. On the other hand, improved bus rider ship may allow lower fares. Finally, an immediate surge in off-peak traffic congestion was noted in the Singapore case where people apparently deferred travel until after 9:30 a.m. to avoid the toll. People rescheduled their travel, creating a congestion peak between 10:15 and 10:45 (Williams, 1988). It should be noted that the success of the Singapore case in reducing congestion was undoubtedly influenced by the presence of a very efficient and well-developed public transit system. A refinement of the principle, the Q-FREE AVI-System (Automatic Vehicle Identification System) has been developed by a Norwegian company, Micro Design AS. An AVI tag is attached to the vehicle windscreen, which transmits information about the presence of the vehicle to an overhead toll plaza frame. A computer in each toll plaza records information about time and the vehicle and transmits it to a central computer. Manual barriers cater for foreigners and others who are not registered with the system. Parking charges can be combined with road tolls. Once transactions are completed, only information relating to the number of passages is stored, in accordance with Norwegian law. The system was introduced in Oslo in 1990 offering a choice of either manual or electronic collection, to cater for vehicles not fitted with the necessary equipment. A similar system was set up in Trondheim in 1991, where there have been several refinements. Within one hour motorists pay only once and within one month, users are charged only up to a maximum of 75 trips. Discounts are given between 10 a.m. and 5 p.m. A system with some similarities, developed by the European Community, is PAMELA (Pricing and Monitoring Electronically of Automobiles). Road pricing has been proposed in Cambridge, modified to charge vehicles only when they are in congested roads, a refinement to direct charges more accurately to the relief of traffic congestion. Road pricing is conceptually a very attractive way of addressing excess of demand over the supply of road space and has had a great deal of discussion since the problem arose. The only reason for the very limited application of pricing to date has been the political obstacles of gaining public acceptance. As pressures for more car travel become greater and greater so too will the pressures to introduce road pricing. There will come a time when the need for road pricing will become so great as to outweigh the political reasons against it, and it will be used as a means of limiting travel and transferring travel to public transport. Advantages of Road-Pricing Road pricing has several potential advantages. Because it manages travel demand, it is both less costly and more likely to succeed than are supply expansions that might later be swamped by latent demand. Congestion costs can readily be calculated (e.g., Keeler and Small, 1977), and once the proper tolls have been charged, congestion levels will drop to a socially optimal amount. With electronic toll collection technology, it is now possible to detect passing vehicles and deduct the proper toll from a prepaid or credit account (Sullivan and El Harake, 1998). Because road pricing can lead to more efficient use of the existing highway infrastructure, there is some evidence that it can produce modest gains in economic output and productivity in urban areas as well (Boarnet, 1997). Last but not least, because the price can be adjusted to manage changing levels of congestion, pricing is one of the few policies that can potentially provide more than short-term congestion relief. Conclusion According to a report in Daily Post, 2005, the London Congestion Charge scheme has been quite successful. The traffic delay has reduced by 30% and bus disruption is down by 60%. Experiencing such an improvement, road pricing has been intended to introduce in the North Wales. Where 72% of Welsh public expected an improvement in the transport system, only 5% agreed for the road-pricing scheme. Therefore although road pricing is with all its benefits, it may have to face few controversies. 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