The technical side of Road pricing
Russell Degnan

Jason Soon at Catallaxy links to a series of economic papers on road pricing (Dec 2004 edition). The first, 'Road Pricing in Practse and Theory' is a useful summary. It concludes with a statement all planners should be aware of:

"Progress in this field is rapid, so do not be surprised if some day you find that you are paying a congestion toll (or altering your behavior to avoid one)."

For thos who don't like economics much I recommend the first link.

The big change in resource management policy in the past 20 years is the acceptance of the idea that one of the best ways to get people to use less of a resource is to charge them for it. Roads are one of the last holdouts to this idea, in part, because of the enormous complexity involved. However, sicne the success of the congestion charge in London, the idea of a comprehensive road pricing scheme is not far away. Take the Transport 2050 report by the Royal Academy of Engineers in the UK for example (hat tip: View from Benambra).

An important point to note: congestion tolls are not paying for the roads themselves. They are already paid for by petrol taxes - albeit in way that doesn't direct funds to places that people want more roads - or by specific tolls on those roads, ala CityLink. A congestion charge is a payment to remove other drivers off the road by pricing them out of the market. This leads to two problems.

Firstly, people may have other alternatives, that leads to congestion of secondary roads that don't carry tolls:

"The message of the basic model is that an efficient congestion toll must be imposed on all routes at all times of day, which is likely a practical impossibility."

Secondly, where there are no alternatives, one must be given. The money for the London congestion charge went into improvements in the bus network, meaning, essentially, that drivers into the centre of London are paying people to take the bus so they can use the roads without congestion.

Congestion charging is only one aspect of transport planning however. It still leaves out many other users - bicycles and pedestrians - as well as considerations of the best use for road-space - cafes and seating for example. But it is a start, in an interesting and growing area.

Sterner Matters 20th March, 2005 14:15:47   [#] 

Comments

Equity
The main problem I have with such a congestion charge is that it only locks certain people out of the market - i.e. those who cannot afford to pay.

I would argue that solving the problem of congestion (in the CBD and elsewhere) is a little more complicated than just slapping up a financial barrier. Encouraging people to choose more sustainable forms of transport involves making major changes to the public transport system - making it safer, faster and more convenient for one. Secondly, the mindset around car use needs to be changed - and this is possibly more of a cultural mindset than an economic one.

I would argue that Melbourne CBD has far too many places to park - be it the parking space your company gives you as part of your employment package, or the vaste numbers of pay-parking spots (on-street and in multi-storey car parks). People simply won't drive into the city if they don't have any place to park.

This is something we planners can work towards anyway - since car parking requirements are part of each Council's planning scheme.

I also haven't been convinced yet that my idea of capping car registrations is without merit.
Aaron Hewett  20th March, 2005 17:28:51  

Roads are not a right!
Aaron, roads are a classic tragedy of the commons. More people ruin it for everyone else. Because it is a scarce resource though, if prices aren't used to restrict use of the resource then something else must - in this case, speed of travel. If you want to restrict it in another way - such as car registrations, or parking spaces - you will end up in a political fight with people who see the restriction as nothing more than an attempt to hurt their business.

Equity doesn't come into it. Driving is not a right - what about the households who don't drive? In addition, as I explained in this article, pursuing equity to the city is basically a giant subsidy for the inner city at the expense of the outer suburbs.

Also, as noted in my article, the congestion charge can be used to improve transport. It therefore helps the poorest members of the community at the expense of those rich enough to drive! Meanwhile, demand for parking, which is currently subsidised by free roads, will be dampened by less traffic. Parking is market driven like anything else. I should also note that - contrary to what everybody seems to write - the CBD does not have a congestion problem, except briefly each day during peak hour. It is nothing compared with Springvale Rd. or Stud Rd. or Warrigal Rd. or several others.

Regarding car registrations, how do you propose to cap them? How will that be equitable? Regardless of how you do it someone deserving and needing will miss out, and it won't necessarily reduce traffic. The first thing I'd do if I had a car registration under a restricted system would be to rent my car out to others who didn't on a daily basis. Nice little profit of course, but probably not what you intended?
Russ  20th March, 2005 23:06:48  

Link rot
Russ, they've just changed the link to the March 2005 issue of the journal, so you might want to fix it.
Rob  22nd March, 2005 10:08:09  

thanks Rob
I knew that would happen, but I couldn't a perma-link at the time. Fixed now.
Russ  22nd March, 2005 12:43:48