Mobility Pricing: How to Harness Mobility Pricing to Reduce Congestion, Promote Fairness, and Support Investment in Transportation
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Acting as a technical analysis lead for the Metro Vancouver Mobility Pricing Independent Commission, WSP experts studied the use of congestion charging and mobility pricing for the Metro Vancouver Regional District. An eight-month study ensued and resulted in a crucial set of data categorized by geography, time of day, and pricing level. The goals of the study remained: reducing congestion, generating additional revenue for the governing body, and promoting fairness. Once you view the presentation, see WSP.com for additional information, including the Metro Vancouver Mobility Study and full Congestion Charging Report: https://www.wsp.com/en-CA/insights/ca-four-reasons-why-cities-should-consider-congestion-charging
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Mobility Pricing: How to Harness Mobility Pricing to Reduce Congestion, Promote Fairness, and Support Investment in Transportation
- 1. Mobility Pricing: How to Harness Mobility Pricing to Reduce Congestion, Promote Fairness, and Support Investment in Transportation Adrian Lightstone, Principal Consultant Preeya Shah, Consultant WSP Canada Inc.
- 2. What? • 23 municipalities in Metro Vancouver, British Columbia • Independent Commission established to evaluate regional mobility pricing • Final Commission report published on May 24, 2018
- 3. Why? • Metro Vancouver population is growing rapidly • Traffic congestion is threatening growth and productivity • Traffic hot spots are occurring throughout the region • Technological change is occurring
- 4. How? • Project included modelling and analysis of pricing scenarios as well as a series of public engagement activities to understand public concerns • Focus has been on the following principles…
- 5. How does mobility pricing work? 5 Why not solve congestion by adding capacity? “Congestion? Build more roads!” — Costs for new road infrastructure capacity increases non- linearly in high-density areas — Growing cities need to accommodate for travel growth, but cars are not the most efficient mechanism — Induced demand means we can’t build our way out!
- 6. Travel time: We cannot make capacity match demand… … so let’s make demand match capacity through efficient pricing 10 minutes 16 minutes 46 minutes All vehicles are charged in de-congestion charging, but the objective is that the only the last 3 (green) cars choose not to drive. How does mobility pricing work? 6
- 7. 7 How do you incentivize people out of their cars? Economic theory
- 8. 8 - Drivers only consider their Marginal Private Cost – fuel, vehicle operating, insurance, travel time - Marginal Social Cost accounts for the burden each driver imposes on society in terms of congestion delay and other externalities - A socially optimal Congestion Charge is priced as the difference between the Marginal Private Cost and Marginal Social Cost Marginal social cost pricing Economic theory
- 9. 9 Mobility pricing typologies — Point Charges: where vehicles are charged when passing a specific location or using a facility such as a bridge or tunnel — Corridor Charges: charging for the use of a specific section of road or link in a road network — Cordon Pricing (Toll Rings): charge points established at entries/exits to an area. These charges may vary by vehicle size, pollution, or time of day. — Area Licensing: charging a fee for using all roads within a specific area. Fees can be charged daily or on a longer basis and may be stricter by only allowing residents’ vehicles or vehicles with a given environmental performance. — Network Charging Systems: charging vehicles for using roads within a specific area. The charge can be based on distance travelled, time of the trip, or duration of the trip. — (Also: Parking charges can be used as a policy instrument that may have similar effects to Area licensing) Design options
- 10. Design options
- 11. 11 Design options Distance-based charges used to approximate Marginal Social Cost pricing System of point charges used to approximate Marginal Social Cost pricing
- 12. 12 Design options System of point charges used to approximate Marginal Social Cost pricing
- 14. Equity and fairness 14 Equity and fairness concepts Equity: How evenly are costs and/or benefits distributed? Vertical equity: Distribution between various income groups Horizontal equity: Distribution in other dimensions: gender, geography, modes of transport Fairness: Perceptions of fairness are individual, and not everyone agrees on which properties of a policy make it fair (or unfair)…but transfers can help make things fairer
- 15. Equity and fairness 15 Vertical equity comparisons Charge distribution as a % of annual income…
- 17. Acceptance issues 17 — Low political and public acceptance before introduction — Acceptance increases after implementation — Partly because they see the direct benefits (less congestion) — But mostly because they see less disbenefits than they feared Public acceptance Place Before After Stockholm 21% 67% Bergen 19% 58% Oslo 30% 41% Trondheim 9% 47% London 39% 54%
- 18. Acceptance issues 18 Public acceptance Metro Vancouver is on this part of the curve
- 20. Final thoughts 20 What did we learn? — Every city is different and there is no one-size fits all solution — Detailed analysis can be done quickly with some basic tools and iterative process — It’s not possible to maximize all design objectives — However, it’s possible to develop solutions which generate large net economic benefits and can be used to correct equity imbalances Singapore ERP Central London Congestion Charge Stockholm Congestion Tax Gothenburg Congestion Tax
- 22. Cases Singapore ERP Location Singapore Policy Congestion Charge Pricing framework Point charges, varied by time of day and location Technology RFID Implementation year 1998 Effectontraffic& environment Traffic volume -44% after ALS, -10% to -15% after ERP compared to ALS, -20% to -30% for other extensions of the system Travel times Speed criteria charge levels between 20-30 kph and 45-65 kph Environment n.a. Economicimpact Investment cost 250 million CAD (including 68,000 tags) Operating cost 16 million CAD/year (20%-30% of revenues) Revenue 200 million CAD/year CBA 63 million CAD/ year
- 23. Cases Central London Congestion Charge Location London, United Kingdom Policy Congestion Charge Pricing framework Point charges with variable pricing Technology ANPR Implementation year 2003 Effectontraffic& environment Traffic volume -16% (all vehicles entering the zone), -30% chargeable vehicles, +25% busses, +13% taxis, +49% bicycle -21% (2002-2008) Travel times - 30 % delays Environment CO2 -16,4%, NOx -13,4 %, PM10 -15.5% within the zone Economicimpact Investment cost 300 million CAD Operating cost 170 million CAD/year, in recent years 85 million CAD/year Revenue 440 million CAD/year (in 2014) CBA 140-190 million CAD/year
- 24. Cases Stockholm Congestion tax Location Stockholm, Sweden Policy Congestion Charge Pricing framework Point charges with variable pricing Technology ANPR Implementation year 2007 (following a trial) Effecton traffic& environment Traffic volume -20% (across the cordon) Travel times -33 % delays Environment CO2 -13%, NOx -8 %, PM10 -13% within the zone Economicimpact Investment cost 270 million CAD Operating cost 25 million CAD/year (in 2016) Revenue 150 million CAD/year (in 2016) CBA 100 million CAD/year
Editor's Notes
- WSP is the technical analysis lead for the Metro Vancouver Mobility Pricing Independent Commission and has been conducting research into the use of congestion charging in large metropolitan areas. Over the course of this eight month study, insights were gained into the use of congestion charging to regulate traffic demand and reduce congestion in large cities around the world.
- One million more residents by 2040 Multiple urban centres are shaping the region
- WSP is the technical analysis lead for the Metro Vancouver Mobility Pricing Independent Commission and has been conducting research into the use of congestion charging in large metropolitan areas. Over the course of this eight month study, insights were gained into the use of congestion charging to regulate traffic demand and reduce congestion in large cities around the world.
- Growing cities need to accommodate for travel growth while understanding that cars are not the most efficient mechanism As cities grow, they will typically require large investments in new/improved Transport Infrastructure. However, the current price for travel does not match the real costs. Therefore, current transport volumes represent a “demand on steroids”, which does not give a relevant indication how much infrastructure is “required” to meet the “demands” As long as prices are too low, only capacity constraints will hold back growth in traffic numbers . Induced demand In large cities, travel impedance, rather than supply of attractive travel destinations, will set constraints for intra-regional travel demand When demand is supressed by capacity constraints, there is typically a hidden, large, “dam” of potential demand (steep demand curve) Therefore, if capacity constraints are relieved, most often a new, almost equally congested equilibrium will be established “Building new road capacity to alleviate congestion is like loosening your belt to cure obesity” The effects of improved transit is similar: It will attract some car drivers off the road, and relieve some of the pressure on road capacity. However, induced demand is likely to fill that gap. (NB: Improving transit will improve overall accessibility, even if congestion does not decrease!)
- The principle of marginal social cost pricing is displayed graphically on the right. The vertical axis represents the travel costs (CAD) while the horizontal axis represents the traffic volume (vehicles/hour). The demand for traffic increases when costs decrease and vice versa. This relation is shown by the demand curve. For individual travellers the travel costs can be interpreted as the sum of all costs, such as travel time, fuel costs, parking, etc. As more travellers enter the system and increase the traffic volumes, the travel costs will increase, since travel time increases. Therefore the cost for a traveller (marginal private cost) is also depending on the overall traffic volume. Where the demand and the cost curves intersect, the untolled equilibrium is reached. That equilibrium is to some degree a stable traffic situation that is normally planned for, yet with day to day and seasonal variation. However, marginal private costs faced by travellers do not give a true figure of the real costs for the society, as it does not take into account, that drivers impose costs on others. When taking the external costs into account, the experienced travel costs will be higher and increase more rapidly as traffic volumes increase. The marginal social cost curve includes these external costs and indicates the cost that each extra vehicle will impose on itself and on the system. Therefore the curve intersects with the demand curve already at a lower traffic volume. The new equilibrium where people would take all costs into account in their travel choices, would result in a lower overall demand and can be achieved by introducing a charge equal to the difference in travel costs from the untolled equilibrium and the societal optimal equilibrium (objective). The objective of congestion charging in its purest economic form is to increase the travel costs from the level of un-tolled equilibrium to the point of optimal equilibrium by impose a charge. Principle of marginal social cost pricing is displayed graphically Demand for traffic increases when costs decrease and vice versa For individual travellers, the travel costs can be interpreted as the sum of all costs, such as travel time, fuel costs, parking, etc The demand and the cost curves intersect at the un-tolled equilibrium Marginal private costs faced by travellers do not give a true figure of the real costs for the society, as it does not take into account, that drivers impose costs on others. The marginal social cost curve includes these external costs and indicates the cost each extra vehicle will impose on itself and on the system. The new equilibrium, where people would take all costs into account in their travel choices, would result in a lower overall demand and can be achieved by introducing a charge equal to the difference in travel costs from the un-tolled equilibrium and the societal optimal equilibrium (objective).
- Mobility pricing has multiple components, but our study has focused on congestion charging options.