Congestion Charge in London - Term Paper Example

 Congestion Charge in London Introduction Transport congestion is an urgent problem in many urban settlements that include even the city of London. This challenge is growing by the day and the situation only worsens. Transport congestion contributes to costly delays, which are frustrating, for drivers. Congestion is also responsible for regional and urban air pollution, global climate change and national energy and security concerns in the UK (Bull, 2003). To address this problem, a policy known as congestion charging was formed. Pricing strategy in a charging system manages congestion without increasing supply through regulating demand (Downs, 2004). The concept is a development of market economics theory which proposes that users will be held accountable for the negative externalities created by them (Gómez-Ibáñez, 1994). This makes each user conscious of all costs they impose upon others when travelling during the peak demand times and sensitive of the impacts their actions have on the environment. The policy was introduced in central London on 17 February 2003 (Leape, 2006). The policy addresses the congestion menace by imposing charges on drivers who operate their vehicles in locations of high congestion or during highly congested times. The congestion charging policy is aimed at reducing traffic congestion to improve the quality of air and reduce the emission of greenhouse gasses (White and Labatt, 2013). In addition, this policy is aimed at easing travel in congested areas and times through reducing the travel times. Since the inception of the policy in London, a number of changes have been recorded on the overall levels of congestion in central London and high congestion areas within the city (Mason et al., 2006). Various objectives of the policy have been achieved, which have not only affected the transport sector within the city but also other sectors such as the environmental preservation. The implementation of the policy has, however, not been a bed of roses as various challenges have been encountered throughout the various stages of implementation (Docherty and Shaw, 2008). An evaluation of the policy, implementation, challenges, impact and analysis of the policy effectiveness will be done with a focus on the success of achievement of the various objectives. The Policy Ken Livingstone, who was the Mayor of London, introduced the Congestion Charging Policy, which was in line with his transport priorities at the time. The policy was successfully introduced in 2003 after previous groundwork, research and surveys on the congestion situation. In the early 1990s, the average speed of trips across the city was lower than that at the time cars were introduced in the early twentieth century (Thornley, 1992). According to the Department of the Environment, Transport and the Regions (1998), the average traffic speed in the city had fallen by around 20 percent from 12.7 mph in 1960 to 10 mph in 1998 during the morning peak periods. A majority of drivers within the city spent approximately 30 percent of their time stationary and more than 50 percent of the time travelling at speeds lower than 10mph (Downs, 2004). The scenario got worse in 2002, when the average travelling speed in central London had dropped to 8.3mph (Downs, 2004). The uncongested average travelling speed at that time was around 20mph (Downs, 2004). Congestion accounted for a lot of delay in transportation (Gómez-Ibáñez, 1994). According to a public survey conducted by ROCOL (2000), public transport and congestion were highlighted as the most important problem facing the city that required immediate action. This was affirmed by 46 percent of London citizens who believed that the matter required prompt resolution, while 90% of individuals who participated in the independent survey claimed that there was too much traffic in London. The mayor introduced the congestion charge to solve the aforementioned challenges and problems in London. The policy was aligned with the mayor’s transport objectives and priorities. The transport priorities were to achieve a reduction in congestion, improve the bus services, improve journey reliability for car users, and finally ensure efficiency in the transportation of goods and services within the city (Geerken and Borup, 2009). Those were the explicit objectives of the policy; however, other implicit objectives were realised and achieved in due course. The policy, for instance, led to reduced air pollution within the city (Nicolopoulou-Stamati, Hens and Howard, 2005). Reduction of congestion and conversely the amount of traffic in central London led to a reduction in the number of vehicles entering such congested areas (Gullberg and Isaksson, 2009). This meant that the emission of greenhouse gases was reduced dramatically, and city inhabitants could enjoy fresh air (White and Labatt, 2013). The policy also led to the collection of revenues, which were used to support the mayor’s transport strategy. Policy Implementation The success of the policy was a result of major milestones which were necessary in making the foundations of the policy. During the implementation, the first step was the commissioning of a report by the Road Charging Options for London (ROCOL). This report entailed various possible schemes and options for the policy including information about the geographical area, proposed technology to be used and timeframes of each option in consideration. Before implementation of the policy, however, certain factors in place were responsible for the successful implementation of the policy. For instance, in 1999, the passing of the GLA Act, which was amended by the Transport Act 2000, gave the Mayor of London powers to act in autonomy. Such powers enabled the mayor at the time to introduce the congestion-charging scheme. Subsequently, the election of a mayor whose manifesto was committed to the introduction of a congestion charging scheme ensured ease of transition to congestion charging in the city. The mayor then set up a project team that was dedicated to implementing the election promise of the mayor. The charging scheme in London was adopted and covered an area of 21 square kilometres (Leape, 2006). This area comprises the heart of London. The implementation of the policy introduced charges for vehicles operating within the charging zone. In charging, four major types of system are used. These include; area with congestion pricing, a cordon area within the city, city venter toll ring and facility congestion pricing. With these systems, drivers are charged accordingly for travelling at charging areas or during charging times. There was, however, an exception of vehicles using the Inner Ring Road. With the policy in place, drivers within the charging zone were required to pay £5 per day for their vehicles (Leape, 2006). These rates were applicable from Monday to Friday. The charging hours were between 7:00 to 18:30 (Leape, 2006). The policy, however, exempted charging during weekends, bank and public holidays. The charges were to be paid by drivers for driving or parking within the central zone during the stipulated hours of operation. To ensure success of the policy, the municipality encouraged individuals to plan early for all trips. In line with this objective, payments made before 1000 hrs on the day of travel were charged a fee of £5 (Leape, 2006). Payments made after 1000 hrs but before midnight of the travel day were charged £10 (Leape, 2006). The prepayment of the charges was aimed at encouraging improved planning of journeys and aiding in enforcement of the policy. The charge was applicable to all vehicles except mopeds and motorcycles, buses and coaches with more than 9 seats, licensed taxis, vehicles carrying disabled individuals, and emergency vehicles such as ambulances. Preregistration of such vehicles was, therefore, necessary to determine the validity of the vehicles to exemption. To enforce the policy, traffic video cameras were installed at all entry points. In addition, mobile units within the zones of charging were responsible for capturing images of vehicles parking, leaving, entering or driving within the zones. Through application of technology, automatic number plate recognition systems were installed, which were responsible for identifying the vehicle registration numbers. The success rate of such systems during the initial installation was around 70–80 percent for a single pass (Leape, 2006). The overall success rate was, however, determined to be 85–90 percent as vehicles in the charging zones would drive past multiple cameras (Leape, 2006). With this technology in place and the prepay system in place, the congestion charge policy was successfully implemented in London. Congestion charging borrows greatly from market economics. The concept regards pricing for the use of public goods as a result of the negative externalities created by the users of the good or service. The economic rationale is that at price zero, the level of demand exceeds the level of supply. The resultant effect is a shortage of the good or service. Correction of the shortage is done by imposing a charge on the equilibrium price as opposed to shifting demand by increasing supply of the commodity. This is usually done by increasing prices during certain specific times and areas that are affected greatly by the congestion problem. One such effective system in use is the cordon charging scheme. In this, areas that attract charges are marked with cordons (ring-like boundaries). A driver crossing the cordon pays a specific charge as stipulated by the policy. The cordon in London is based around the central business district. The two major aspects of transport economics and traffic engineering are the driving forces behind charging. This concept of transport charge is further illustrated in the appendix section with relevant diagrams. Elasticity measures the percentage change in a particular variable in regards to the change in another variable (Evans, 2008). Elasticity, in this case, measures the change in demand for car trips to cordon areas in London in response to the change in cost of the car trips. With this note, the elasticity values calculated are known as arc elasticities. Arc elasticity measure is responsible for the calculation of the percentage changes in demand and cost as averages of before and after values (Evans, 2008). This measure uses the midpoint formula (Evans, 2008). For example, the values below showing the original cost, final cost, original demand and final demand can be used to calculate and ilustrate arc elasticity on usage of a particular road. C1 = original cost = 100 C2 = final cost = 120 D1 = original demand = 100 D2 = final demand = 90 The arc elasticity calculation is [(D2 – D1)/(0.5*(D1 + D2))] / [(C2 – C1)/(0.5*(C1 + C2))] = (-10/95)/(20/110) = -10.5/18.2 = -0.58 The average fall in demand on the demand curve between 100 and 90 is slightly greater than 10percent (Evans, 2008). The average increase in the cost across the cost curve between 100 and 120 is slightly lower than 20 percent (Evans, 2008). The resultant arc elasticity value of -0.58 is greater than the value of point elasticity derived from the same data and measured as a percentage change from the original cost and demand (Evans, 2008). Therefore, the resultant value from the calculation shall be an elasticity of -0.50 from a 10 percent change in the demand and a 20 percent charge in the cost (Evans, 2008). Through measuring the levels of elasticity in regards to the transport charge, the municipality can establish the road usage (demand) and price the transport charges for car trips into the cordon areas. This elasticity in demand and price subsequently affects the use of the roads. It is observed that there is a reduced access of cordon/charge areas by private cars due to the charges imposed. This reduction in access of the charge areas due to charges causes a fall in demand (road usage) thereby easing congestion within the heart of the city. Impact of the Policy The policy impacted the city of London in various ways. For example, the general level of congestion within the charging zone has reduced by 30 percent while the volume of traffic in the same area has dropped by 15 percent (Leape, 2006). The policy has accounted for an increase of bus rides by 6 percent, a 12 percent increase in cycling within the western zone and 66 percent within the charging zones (Leape, 2006). The drop in congestion has led the dedication of some of the roads to be used for transit. According to the Sixth Annual Report, the levels of carbon (IV) oxide emissions dropped by 15–20 percent after implementation of the policy (Transport for London, 2006). Fine particulates and nitrogen dioxide emission decreased by 10 percent. This impact was of much importance to the country as London currently exceeds the limit of European standards for the emission of the aforementioned gases. Transportation of individuals and goods accounts for the greatest emission of both gases (White and Labatt, 2013). The implementation of the policy impacted the patterns of public transport. The reducing numbers of individuals accessing the regions of charge in their own vehicles were a boost to the public transport. These individuals started using public means of transport to ease the congestion of the central areas in London. With the policy in place, the travelling patterns of individuals also changed significantly and the city inhabitants adopted new modes of transport. Traffic patterns were adjusted rapidly and smoothly because of the charging policy. Bus services improved significantly. The overall bus speeds within the areas of charge increased by about 6 percent due to less traffic on the roads (Transport for London, 2004). The reliability of bus services was achieved with a drop of 30 percent in time passengers wait for services, and 60 percent in disruptions resulting from delays in traffic (Transport for London, 2004). The consumption of energy also went down as the number of vehicles accessing central London reduced. This further led to a reduction in the levels of pollution to the environment. In travelling by rail in the underground, the system experienced a decline in the numbers of individuals exiting the station around the areas considered as charging zones. This trend was recorded in the morning peak time since the introduction of the charge. The records indicated an 8 percent reduction in the average cases of exits in the charging zones (Transport for London, 2004). Travel to central London by train, however, did not record any significant change. The numbers remained at a static position between 2002 and 2003 as a result of charges masked in the use of rail to access central London (Transport for London, 2004). The Transport for London (TfL) has no recorded evidence of any systematic increase in parking of vehicles at railway stations of inner and outer London that may be linked to congestion charging. Implementation of the transport charge in London affected public use of road and transport systems. The long term effect of the policy was an improved public transport infrastructure, reduced levels of congestion and reduced pollution to the environment. The city inhabitants eventually appreciated the policy as it led to an improvement in transport within the city. Policy analysis From the policy, a number of lessons are learnt on the success and impact of the policy in transport. The policy’s success was greatly dependent on its inception and initial implementation stages. The congestion charge policy had a direct impact on the transport sector in London and an indirect impact on other areas. The policy, for instance, was responsible for resulting in a number of social and behavioural changes among the inhabitants of the city. The shift of individuals to adopting public transport was responsible for 50–60 percent of the transport cut in access of the city by individual cars (Transport for London, 2004). With the policy in place, close to 30 percent of individuals accessing the city divert around the areas of the charge zone. 15 to 25 percent of individuals have over time adapted to other changes in travelling patterns such as changing the time of trips (Transport for London, 2004). With introduction of the policy, the London transport sector has witnessed a continued reduction in the number of accidents. Increased access to public transport, which operates under strict regulations and monitoring, is responsible for this reduction of accidents. Within the central London areas, surveys of individuals indicated that inhabitants appreciated the positive effects of the congestion charge policy. Through implementation of the policy, all the objectives of the congestion charge in London have been achieved. The observed reduction of traffic congestion in charging zones over the years serves as evidence of the success of the policy. With the policy in place, individuals who previously accessed the heart of London with their vehicles are adopting new transport avenues. These new avenues of transport have additional benefits aside from easing congestion of traffic. Cycling, for instance, provides an individual with an opportunity to exercise muscles of the body. Some individuals opt to park their vehicles outside the charge areas and walk to their areas of destination if those areas are not very far from the parking point. This brisk walking develops into a habit and keeps the body of the individual in good shape. The general reduction of traffic congestion results in a reduction in the levels of air pollution and ultimately in the cases of respiratory ailments of city inhabitants. With reduced congestion of traffic in the centre of London, efficiency is realised in the public transport. Individuals using buses and other forms of public transport to access the charging zones pay for such services. The public transport collects extra revenue from the increased use of public transport. This revenue is channeled into various areas of development in the public transport sector. In addition, the municipality collects a considerable amount of revenue from the charging of congestion fees to vehicles accessing the heart of London. The plans by the municipality to ensure prior planning of journeys were responsible for ensuring the improvement of efficiency in transport within London. With good planning of travelling and monitoring of traffic, traffic control officers and software could control the traffic within the charge zones efficiently. The resultant overall impact of the policy on the city was the increase in overall efficiency of transportation of both individuals and goods and services. Reduction of time wasted in traffic congestion resulted in the satisfaction of city inhabitants. Future transport policy planning of the same kind can be adopted in other areas of the city to improve the general congestion of traffic in the city. The UN’s report on population stated that 50 percent of the world’s total population lives in cities. This report, therefore, prompts good management of transportation systems to ensure cohesion. Future transport policies may, however, incorporate other supporting policies as this field is greatly dynamic and evolves by the day (Richardson and Bae, 2008). Conclusion The congestion charge policy in London ensured successful attainment of its objectives. With the policy in place, the city has recorded significant levels of reduction in congestion within the heart of London (Pooley, Turnbull and Adams, 2005). The policy is also responsible for the achievement of other implicit objectives such as a reduction in the levels of air pollution. Coming at a time when the levels of pollution by nitrogen compounds in London exceed the limit by European regulation (White and Labatt, 2013), the congestion charge policy can save the city with progress improvement and efficiency. The municipality of the city collects revenues that are used to achieve various priorities of the transport industry. With the policy in effect, efficiency of the public transport through the use of buses has been achieved with records of rising use of buses by city inhabitants. The impacts of the policy in the city have been felt since its implementations. I, however, believe that with increased efficiency, for instance in the monitoring of cars accessing the charging zones, the success of the policy can double in the near future. The policy, however, needs to be supplemented with other policies that will complement its course and ensure a reduction of more than 60 percent of traffic congestion. If such rates of reduction in congestion are achieved, then London will set a global example of how effective planning and policy regulation can reduce traffic congestion in cities. References Broderick, B. (2009). Congestion Charge. Retrieved from: http://www.tcd.ie/civileng/Staff/Brian.Caulfield/4A8/Lecture%204%20-%20Congestion%20Charging.pdf Bull, A. (2003). Traffic congestion: the problem and how to deal with it. Santiago, Chile, United Nations, Economic Commission for Latin America and the Caribbean. Department of the Environment, Transport and the Regions. (1998). ‘Traffic Speeds in Inner London: 1998’. DETR Statistics Bulletin. 98: 22. Transport Statistics Division. Retrieved from: http://www.dft.gov.uk/stellent/groups/dft_transstats/documents/downloadable/dft_transstats_021875.pdf. Docherty, I. and Shaw, J. (2008). Traffic jam: ten years of 'sustainable' transport in the UK. Bristol, Policy. Downs, A. (2004). Still stuck in traffic: coping with peak-hour traffic congestion. Washington, D.C., Brookings Institution Press. Evans, R. (2008). Demand Elasticities’ for Car Trips to Central London as revealed by the Central London Congestion Charge. Transport for London.Policy Analysis Division. Retrieved from: http://www.tfl.gov.uk/assets/downloads/demand-elasticities-for-car- trips-to-central-london.pdf Geerken, T. and Borup, M. (2009). Case studies in sustainable consumption and production mobility. Sheffield, Greenleaf. Retrieved from: http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=525553. Gómez-Ibáñez, J. A. (1994). Road pricing for congestion management: A survey of international practice. Washington, D.C., National Academy Press. Gullberg, A. and Isaksson, K. (2009). Congestion taxes in city traffic: Lessons learnt from the Stockholm trial. Lund, Nordic Academic Press. Leape, J. (2006). The London Congestion Charge. Journal of Economic Perspectives. Volume 20, Number 4. Mason, P., Bowden, R. and Cooper, A. (2006). London. London, Evans. Nicolopoulou-Stamati, P., Hens, L. and Howard, V. (2005). Environmental health impacts of transport and mobility. Dordrecht, Springer. http://public.eblib.com/EBLPublic/PublicView.do?ptiID=303522. Pooley, C. G., Turnbull, J. and Adams, M. (2005). A mobile century?: Changes in everyday mobility in Britain in the twentieth century. Aldershot , Ashgate. Richardson, H. W. and Bae, C.H.C. (2008). Road congestion pricing in Europe implications for the United States. Cheltenham, UK, Edward Elgar. Retrieved from: http://public.eblib.com/EBLPublic/PublicView.do?ptiID=338821. ROCOL [Review of Charging Options for London] Working Group. (2000). Road Charging Options for London: A Technical Assessment. London: HMSO. Retrieved from: http://www.gos.gov.uk/gol/transport/161558/228862/228869/?view_Standard. Transport for London. ( 2006). Impacts Monitoring Programme: Fourth Annual Report. London, June. Retrieved from: http://www.tfl.gov.uk/tfl/cclondon/pdfs/FourthAnnualReportFinal.pdf . Transport for London. (2004). Impacts monitoring Second Annual Report. Impacts monitoring – Second Annual Report Thornley, A. (1992). The Crisis of London. London, Routledge. White, R. R. and Labatt, S. (2013). Carbon finance the financial implications of climate change. Hoboken, N.J., Wiley. Retrieved from: http://rbdigital.oneclickdigital.com. Appendix The speed flow diagram shows how increase in capacity of traffic on a particular road causes the speed of vehicles to fall. In the diagram, an increase of flow towards Y causes the speed to fall from W (Broderick, 2009). Figure 1: A speed-flow diagram showing how increase in capacity of traffic on a particular road causes the speed of vehicles to fall; retrieved from: http://www.tcd.ie/civileng/Staff/Brian.Caulfield/4A8/Lecture%204%20-%20Congestion%20Charging.pdf Additional traffic by cars entering the road will incur both marginal costs and average cost. The marginal cost to the driver is the cost incurred by the reduction in speed when using a congested road while the average cost is the cost of using the road (Broderick, 2009). In the diagram below, when demand equals supply at J, the cost of using the road is said to benefit the users (Broderick, 2009). Figure 2: average user cost against traffic flow diagram. Retrieved from: http://www.tcd.ie/civileng/Staff/Brian.Caulfield/4A8/Lecture%204%20-%20Congestion%20Charging.pdf The marginal cost of congestion is the difference between the average cost and the marginal cost. In the diagram below, the road has a capacity of Va, the equilibrium point is A and C is the cost (Broderick, 2009). Taking the marginal cost into account, the cost increases to C1 causing the demand to fall. The flow of traffic drops to Vb causing movement of the equilibrium to C and cost to C2 (Broderick, 2009). Figure 3: cost against flow diagram showing the relationship between cost and traffic flow on a road. Retrieved from: http://www.tcd.ie/civileng/Staff/Brian.Caulfield/4A8/Lecture%204%20-%20Congestion%20Charging.pdf The diagram below shows the net benefit of the road to the society at the original flow level. Figure 4: cost against flow diagram showing benefit of the road to the users. Retrieved from: http://www.tcd.ie/civileng/Staff/Brian.Caulfield/4A8/Lecture%204%20-%20Congestion%20Charging.pdf The area ABC in the diagram below represents the externality. Figure 5: cost against flow diagram with area ABC representing the externality. Retrieved from: http://www.tcd.ie/civileng/Staff/Brian.Caulfield/4A8/Lecture%204%20-%20Congestion%20Charging.pdf A congestion charge is therefore applied to capture the marginal cost. The diagram below shows the application of an initial congestion charge of €5. This cost however does not meet the total cost as the total cost of congestion to the society is €8. Figure 6: cost against flow diagram showing how applying a €5 affects traffic flow and average cost on road usage. Retrieved from: http://www.tcd.ie/civileng/Staff/Brian.Caulfield/4A8/Lecture%204%20-%20Congestion%20Charging.pdf The marginal cost is captured by applying a toll charge. The optimal toll is decided after finding a point at which marginal cost (MC) intersects demand at C. Figure 7: cost against flow diagram showing how applying a charge of €8 to users creates equilibrium of the marginal cost and average cost. Retrieved from: http://www.tcd.ie/civileng/Staff/Brian.Caulfield/4A8/Lecture%204%20-%20Congestion%20Charging.pdf At this point C, the total driving cost is covered since the average cost is equal to the marginal cost. Assuming the revenue generated from congestion charge is redisrubed to the society, then the foremention approach is an equitable method of charging road users (Broderick, 2009). Read More