Cars & traffic

Nov 13, 2012

Would road pricing lead to more driving?

Putting a price on road space seems like a good idea but some analysts argue it could actually increase the amount of driving. In fact there's a point of view that says it would be better to promote traffic congestion.

Alan Davies — Editor of The Urbanist

Alan Davies

Editor of The Urbanist

Is this the world's Most Swimmable City? (source: Mail Online)

There’s a consensus among urban policy analysts that road pricing should be introduced into our large cities as soon as possible, particularly at peak times. Yet some groups, like the Greens and the Public Transport Users Association, aren’t convinced it’s all good news.

Road pricing involves charging motorists for the use of road space. It’s usually thought of as a means of addressing traffic congestion, but in principle it can be applied at all times.

Although it depends on how it’s implemented (e.g. cordon or per km charge), the key areas where road pricing promises benefits are well established. It could potentially:

  • Reduce the pollution, emissions, fuel use and disamenity associated with congested driving conditions
  • Lower the economic cost of congestion – principally delays – which BITRE estimates will reach $20 billion p.a. nationally by 2020
  • Give priority when roads are congested to high-value trips over those of marginal value
  • Moderate popular demands to “build our way out of congestion”
  • Lower the total level of off-peak car use by making drivers more conscious of the marginal cost of driving e.g. shifting some costs from standing charges to per km charges
  • Generate surplus revenue that can be applied to other purposes e.g. public transport improvements
  • Increase the demand for public transport by raising the relative cost of driving
  • Enhance horizontal equity by requiring those who drive more to pay more.

But like everything in public policy, road pricing also has its downsides. One that looms large is it’s a hard sell politically.

The key criticism in policy terms is it’s vertically inequitable – those with fewer resources would pay a higher proportion of their income in charges.

That’s true, but it’s true for public transport and other basic services like electricity, gas and water too. In fact in these cases the marginal charge increases with consumption.

It’s not good policy to encourage excess consumption of a scarce resource in the name of a single objective. A better approach would be to compensate at-risk populations adversely affected by road pricing.

However there’s another objection that hasn’t gotten much attention. It’s most clearly articulated by Dr Paul Mees in his influential book, Transport for suburbia, and in this submission he made to Infrastructure Australia.

Dr Mees argues that congestion charging makes driving more attractive because it offers higher speeds. The inevitable consequence is that on average drivers will use the extra speed to make longer trips, using more fuel and generating more pollution and emissions in the process.

Rather than seeking to manage congestion, the alternative is to see it as a way of deterring driving and encouraging higher public transport use. In his book (p47), Dr Mees cites the experience of Vancouver, which “reduced journey times by promoting congestion.”

In its 1993 regional plan, Vancouver positively embraced congestion as “part of a package designed to promote self-containment and mode shift away from the car.” The pay-off was that despite rapid population growth over the same period:

Vancouver was the only Canadian urban region where the average time taken for the journey to work….declined, from 70 minutes in 1992 to 67 in 2005. By contrast times in Montreal jumped from 62 to 76 minutes.

I think it’s a plausible argument. Motorists would indeed be likely to drive further on average if speeds increased. That’s likely to happen whether the speed increase results from congestion pricing, road works, or some other change.

I’m not sure that it’s such a big problem, though. All the pricing proposals I’ve seen are aimed at increasing speeds enough to clear out logjams and get traffic moving at a modest speed that’s still well below the speed limit.

Moreover any increase in speeds needs to be interpreted in context. The extra travel might be offset in whole or in part by those marginal drivers discouraged by pricing.

And longer trips might also be offset by a fall in low value trips in the off-peak if the pricing regime extends beyond peak hours. Further, if levied on a per kilometre basis it could encourage shorter average trip lengths.

In any event, the benefits of longer trips have to be taken into account along with the costs. Having the choice to drive further could mean, for example, that a worker has the choice of a better job (more efficient labour and job matching).

The key benefit of road pricing relative to “promoting congestion” is it sorts the traffic according to value. Someone with an urgent business or personal meeting to get to, or a load of goods to deliver, will welcome the greater certainty provided by less congested conditions.

I don’t put a lot of store by the Vancouver numbers. Dr Mees elaborates on them further in this paper, but he doesn’t show a causal relationship. There might be other factors that explain the observed reduction in travel times.

I am in any event wary of relying on the experience of just one or two other cities to draw general conclusions, let alone ones that are applicable elsewhere. There’s immense variability between cities.

For example, this writer claims that the introduction of road pricing in Stockholm in 2006 had a similar outcome to that attributed to congestion in Vancouver. Commute times dropped and public transport use increased.

Yet even if it’s accepted that road pricing is as costly in terms of induced travel as Dr Mees implies, it’s not a “policy stopper”. Of course road pricing has negatives as well as positives – all policy initiatives do.

What matters is how those costs and benefits compare. On balance, I think it makes more sense to charge for road space than tolerate congestion, although it will depend ultimately on what sort of implementation is politically feasible.

It’s true congestion pricing won’t produce a wholesale reduction in car use – that’s not what it’s intended to do. It’s very likely that in some form or other cars will be with us for a long time yet so we need to find ways to manage them better. Road pricing should be one of those ways (more on road pricing here, here, here and here).

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32 thoughts on “Would road pricing lead to more driving?

  1. Dylan Nicholson

    Well I’ve answer that before – Australian cities are nowhere near at high enough density that such a serious overcrowding problem on trains should ever be a problem. Even on the most crowded train I’ve been on it’s pretty easy to read a book.
    FWIW, I’ve travelled on various trains at peak hours in both Tokyo and Osaka and never saw any really excessive overcrowding either.

  2. Steve777

    I dislike traffic but I dislike crowded trains and buses even more, even though Sydney is rarely as bad as the photographs in Alan’s link. If it is too crowded, time on public transport is also dead time. Given the choice (not a realistic option if you work in the Sydney CBD), I’d much rather be in my car with Radio National or ABC News Radio. Plus, in winter, a bus or train carriage is a mobile microbiological incubator.

    Whether driving or travelling by Public Transport, my working hours have normally been flexible enough for me to leave early to miss the worst of peak hour, but that is not an option for those with fixed working hours or those who need to drop off and pick up children.

  3. Alan Davies

    Dylan Nicholson #29:

    Not always as productive at peak hour though.

  4. Dylan Nicholson

    That much is obvious enough. And as I’ve said before, even if PT or bicycling or car sharing is slightly slower, it’s productive time vs dead time. I dunno, maybe some people need ‘dead time’, or get some perverse sense of relaxation from sitting in traffic – I just know it drives me nuts.

    Further, I can’t help wonder if we’d reduce traffic considerably if more people were to make use of technology to predict the least congested route. But it’s clear to me most people who make up peak hour traffic are creatures of habit.

  5. Alan Davies

    Dylan Nicholson #27:

    It suggests to me that other factors, not just travel time, might have a larger influence on the decision to drive (rather than take other modes), than is usually assumed.

  6. Dylan Nicholson

    And I would be entirely unconvinced that even as many as 25% of them had really weighed up all the alternatives sensibly and decided that sitting in freeway traffic was the best option for them!

  7. CarlH

    @Dylan – i agree its a silly analogy. My point is that i would be very surprised that 50% of people on a freeway have any option not to be on the freeway. Charging people to use roads is fine if 50% don’t need to be there; if 99% of people on the freeway have to be there then charging people for it will have no effect.

  8. Alan Davies

    IkaInk #8:

    As I discuss here towards the end, drivers don’t see a $2.50 toll in the same way as the “equivalent” $2.50 worth of time. Cash is a stronger deterrent. Maybe it’s a form of optimism bias or loss aversion or something else entirely.

    It does make me wonder though if the time savings attributed to road projects are over-valued.

  9. Dylan Nicholson

    Well good luck finding any government willing to take on imposing car bans on any shopping strip not in the CBD! Hell, just getting retailers to agree to user-pays parking is hard enough.

  10. Tom the first and best


    Banning is certainly not overkill.

    Many cycling accidents happen in clearly marked bike lanes.

    Many of these shopping strips are only 4 lanes width roads and so parking plus a traffic lane, in each direction, means that there is not space for segregated bus/tram lanes.

    I am against “free” parking(really paid for by everyone, whether or not they use it)but the cost of parking, I think you will find, has no relation to the accident rate. Clearways put car traffic next to the footpath (with or without cafe/restaurant tables) and that is not so nice for those on the foot path and is almost entirely about getting more cars through.

    Banning cars allows more space for a wider footpath, tram/bus only lanes and bike lanes not troubled by cars.

  11. Dylan Nicholson

    Banning is overkill, but certainly strictly enforced 30 or 40 km/h speed limits, clearly marked bike lanes, and more importantly, removal of free parking spots, would help reduce congestion and accidents in such areas, and make them much more friendly for shoppers.

  12. Tom the first and best

    Cars should be banned from most inner-suburban shopping strips, particularly those with trams. These sections of road have lots of pedestrians in them, many who are not driving, and so many accidents would be avoided by banning cars from them. In many of these it would also speed up the trams and buses. Air pollution would also be avoided in areas where there are lots of people around to breath it in. More space would be freed up for pedestrians and street commerce.

  13. Alan Davies

    Dylan Nicholson #19:

    And in fact there only needs to be a fall of around 5% in traffic to get a big reduction in congestion costs

  14. Dylan Nicholson

    CarlH, that’s a silly analogy: there are no realistic alternatives to using the sewerage system, and further there’s no case to be made that costs of having everyone use the sewerage system whenever they want/need to have built up to a point that we have a serious problem. Even if you really could find, say, 50% of drivers for which the only alternatives to driving through peak hour traffic are obviously so problematic as to be unfeasible, encouraging the other 50% off the roads (either partly or fully) would easily solve most of the congestion problems we have currently.

  15. Burke John

    How the revenue collected from such a tax were spent might have an effect. If they were spent on public transport expansion or bicycle infrastructure and not motoring infrastructure that is likely to negate “congestive stockholm syndrome”. Naturally Australia is a different case and for example those potential receipts if gathered in NSW would be poured directly into one of Mr O’Farrells congestion promoting freeways.

  16. IkaInk

    @Dylan – That’s about the best explanation I’ve heard and I suppose it is true at least in the margins.

    @Krammer – That explains that users will be paying for their costs, it does not however explain why a financial cost will be more effective at ‘sorting trips by value’ than congestion. My point being that anyone with lots of money to burn will not think twice about driving into a congestion zone for low value trips, and in fact will be more likely to do so because the roads will be rid of all the pesky poorer people who decided its too expensive to enter the area during congestion charging times.

  17. Krammer56

    Inka Ink – the key reason why pricing, if effective (and that is a whole other bag of fruit related to who pays, how much, how immediate, etc), is better than congestion is that the cost of travel is directed at the person making the extra trip.
    If congestion is the determinant of my trip behaviour, then I make my trip based on my costs, including congestion. However, I impose a whole lot of extra congestion costs on everyone else that I don’t pay for.
    If pricing works as intended, I would pay a higher price to travel when I would be imposing extra costs on others, encouraging me to travel at another time/make a different trip/take PT/not travel at all and reducing the overall burden of travel costs.
    The key phrase though is “works as intended”. If this is to happen, pricing needs some key features, including:
    * the cost needs to be high enough to affect behaviour
    * they need to be variable and related to levels of congestion (i.e. high congestion = high price) but predictable
    * the charges need to be paid for by the user (not their company/parents/etc)
    * it needs to be paid NOW when I am making my travel choices – not at the end of the month via automatic bank debit.
    As you can see, a perfect system would therefore require you to carry around a bag of dollar coins and have to drop them in a meter at a rate determined by the level of congestion, and at an average cost higher than a public transport fares.
    Polically I think this might be too hard!! The trick would be to get as close as possible.

  18. Dylan Nicholson

    And Steve, I’d also suggest that congestion pricing isn’t really aimed at the sort of journeys you’re talking about. The fact is most congestion still occurs at peak hour as people drive towards or away from the CBD – even though plenty of alternatives do exist (as an example: the inbound lane of the Eastern Freeway is virtually a car park from at least Box Hill into the city, even at 6:45am in the morning. I know because I’ve been riding over it fairly frequently recently! I’d best at least half of those drivers could easily find a suitable bus to take instead, and many would if there was a toll for use of that route).

  19. Dylan Nicholson

    IkaInk/Steve, actually I think Alan isn’t entirely misguided, because there IS something weird at play with people’s minds…bad traffic is something that doesn’t ALWAYS happen, and every time people have to go out (and I’ve done it many times myself) it’s easy think “hopefully the traffic won’t be too bad, so I’ll just take the car”. Whereas if you know *for a fact* that it will definitely cost you $5 to drive from point A to point B when you know there’s an alternative method that will cost you less (or even the same), I’d suggest you’re far more likely to consider the latter option. Plus, frankly, it’s much better way for governments to collect revenue than many of the current methods.

  20. Steve777

    People will continue to use cars because, for most journeys, there is simply no viable alternative. Road pricing is not going to change this. Try taking public transport for a 5 or 10km journey across suburbs (i.e. not on the direct route to the CBD). Between the need to change modes, infrequent and often late-running services, circuitous routes and a likely long walk at the start and/or end of the journey, it can be barely faster than walking. Cycling is an option for some but I can’t see that being taken up by more than a tiny minority in the foreseeable future. And most suburbs built in the last few decades are designed around car use, with most people having very little in the way of shops and other community facilities within walking distance.

    If road pricing is introduced, apart from possible a charge to drive into the CDB, people will grumble about ‘a great big new tax’ on driving, then get into their cars.

  21. suburbanite

    Further to this is that we will soon be approaching a generation of elderly that have never lived without a car in suburbs designed around cars. Even people at there peak health can’t drive cars safely, what’s road safety going to be like with a cohort of baby boomers aging in their cars?

    And driverless cars aren’t just around the corner…

  22. suburbanite

    I couldn’t watch that video to the end either…

    This kind of thing is happening somewhere everyday, or at least near misses. The real injustice is creating cities where people have no real choice but to drive.

  23. CarlH

    Completely agree with IkaInk, i never understood the argument that charging people reduces congestion.

    I don’t get up and think hmmm, its peak hour I might go for a leisurely drive down the freeway. If I am on a road, it is to drop kids off at school, drive to work etc. I have very little leeway in the times or route I travel and I suspect that most road users are in this same circumstance. I also can’t use public transport.

    Jeremy Clarkson put it pretty well, if the sewers were not able to cope with demand would the government advertise and ask people not to use toilets during peak times. Driving for many people is not an option it is a necessity.

  24. [email protected]

    Actually IkaInk I think surveys would find that people do that all the time.

  25. IkaInk

    One argument that you’ve made in virtually every article on congestion charging Alan, that I still have a major problem with is this absurd idea that congestion charging will sort trips out by “value” better than congestion would. How do you arrive at this logic?

    We both agree that time and money are both “costs” associated with driving. Why are people less likely to make a trip that is of low value when the roads are uncongested but where they will have to pay extra, compared to a road that is congested where they won’t have to pay? The only difference I see is that one will hurt people that are time poor and the other will hurt people that are cash poor.

    I’ll a simple example to make my point. Who chooses peak hour to drive to the shops for non-urgent groceries?

  26. Dylan Nicholson

    Just found out that apparently in Japan they make everyone watch videos like this as part of their license renewal. Given the way the Japanese drive generally, I’d say it works pretty well…might even be more effective at keeping unnecessary cars off the roads than congestion pricing.

  27. Dylan Nicholson

    Wow…I couldn’t even watch that to the end…I’d already vowed to myself never to use a car except when I absolutely had to, now I’m tempted to vow to never go near anywhere cars are being driven unless there’s really no alternative. Human beings (at least not without vastly more training than is currently required) are just not suitable controllers of huge chunks of metal travelling at 50+km/h.

  28. MarkD

    …and I forgot to mention that there’s also some emotional externalities involved:
    which are not apportioned evenly.

  29. Zen Zen

    Road pricing will not reduce any congestion. All it means is yet another account and yet another way for the government to raise the cost of living.

  30. Dylan Nicholson

    Well I’d certainly argue it’s surely better to have fewer people making faster/longer/higher-value car journeys than what we have now, so even if it this was the likely upshot of road pricing (questionable unless road pricing was applied to considerably more of the road network than most people seem to envisage), it sounds like a good thing to me.

  31. MarkD

    Yes Robert, we all pay the costs for car use. Perhaps we would pay fewer costs–health, congestion, pollution, emissions–if people thought about how else they might transport themselves around and use cars more sparingly. transformative change won’t happen by continuing to make private car travel the first choice for most people.

  32. Robert Merkel

    Would I be fair in saying that Paul Mees sees cars as The Problem?

    Personally, it’s not a view I support. Cars and cities have their problems, but the “problem” is the costs of car use, which can be tackled in a whole range of ways.

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