Congestion pricing sets a charge for the use of (certain) urban roads. By imposing a cost on driving on a road, it aims to reduce congestion, lower adverse environmental impacts of traffic and cut the time lost in traffic. Congestion pricing can be variable, with charges depending on the time of day or length of use. It can also be dynamic, when charges are set depending on traffic levels as monitored in real time. Charges can also be levied for specific city zones, as in London; on certain roads, as on Stockholm’s ring road; or on segments of urban highways, as for tolled express lanes in some states in the United States.
Pricing levels and systems should be adjusted over time to account for changes in road use and demand within the charging zone.
Congestion pricing can reduce transport CO2 emissions by triggering a shift towards the use of less-emitting transport modes, such as public transport or more fuel-efficient vehicles, where these are charged less for road use.
London’s road pricing scheme reduced road traffic’s CO2 emissions by 16% within the congestion-charging zone and by around 1% for all of London.
In Italy, Milan’s road pricing scheme reduced traffic by 12% within the specified zone and by 3.6% outside it. Traffic shifted to public transport (48%), to surrounding areas (35%) and to cars exempt from the scheme (17%).
CO2 reductions from road pricing schemes can be maximised by enlarging the zones and by optimal pricing for internal combustion engine (ICE) vehicles.
The costs of implementing pricing schemes include upfront fixed costs to establish tolling infrastructure for monitoring and payment. Variable costs include operation, enforcement costs, and maintenance of infrastructure and payment systems.
Congestion pricing schemes generally generate net revenues, depending on the pricing levels that are set – per day, by vehicle type or by distance travelled. Revenues are frequently earmarked for investing in roads or public transport infrastructure or for covering operational costs.
Singapore’s road pricing scheme, for example, generates EUR 40 million (euros) to EUR 50 million annually, against operating costs of around EUR 8 million. The implementation costs for the first phase of London’s road pricing scheme were around GBP 160 million (British pounds), with operating costs of around GBP 43 million per year. In 2005‑06, the scheme generated a surplus of GBP 122 million.
Less congestion means less air pollution and a reduced loss of time, leading to increased productivity and prosperity.
Less traffic thanks to congestion charging also means safer roads. Estimates for London suggest 40 to 70 fewer road fatalities per year due to congestion charging.
Congestion pricing can:
• increase traffic around the congestion charging zone
• increase inequality between different income groups, unless better public transport (or alternative means of transport) are funded by congestion charging revenues
• have adverse effects on land-use patterns.
OECD/ITF (2019), “Tax revenue implications of decarbonising road transport: Scenarios for Slovenia”, OECD Publishing, Paris, https://doi.org/10.1787/87b39a2f-en
Bowerman, A (2007) The Costs and Benefits of Road Pricing: Comparing Nationwide Charging with Project-Based Schemes. https://iea.org.uk/wp-content/uploads/2016/07/upldbook427pdf.pdf
C40 (2011) London's Congestion Charge Cuts CO2 Emissions by 16%. http://www.c40.org/case_studies/londons-congestion-charge-cuts-co2-emissions-by-16
Eliasson, J (2008) Lessons from the Stockholm congestion charging trial. https://www.sciencedirect.com/science/article/pii/S0967070X0800053X
Jarl, V (2009) Congestion pricing in urban areas - theory and case studies. Thesis http://www.tft.lth.se/fileadmin/tft/dok/publ/5000/Thesis183_VJ_scr.pdf
Ministerie van Infrastructuur en Waterstaat Kennisinstituut voor Mobiliteitsbeleid (KiM) (2018) Effecten van prijsprikkels in de mobiliteit: een literatuurscan. http://web.minienm.nl/kim/prijsprikkels/3_0.html
Rotaris, L. et al. (2010) The urban road pricing scheme to curb pollution in Milan, Italy: Description, impacts and preliminary cost–benefit analysis assessment. https://www.sciencedirect.com/science/article/pii/S0965856410000479
Santos, G. and G. Fraser (2006) Road pricing: lessons from London. https://academic.oup.com/economicpolicy/article/21/46/264/2918729
Links
[1] https://www.itf-oecd.org/policy/congestion-pricing
[2] https://www.itf-oecd.org/node/25113
[3] https://www.itf-oecd.org/node/25170
[4] https://www.itf-oecd.org/node/25161