We refer here to the Canada’s Ecofiscal Commission report on congestion pricing, which received very large coverage in the medias, but also on Pricetags and the Stephen Rees blog.

We did a post series in 2011 on congestion pricing applied to Vancouver:

Frankly, I have failed to see a more comprehensive study since our 2011 series, putting hard number, and making “hard choice”. I am afraid the Ecofiscal report misses the mark too, however it is getting lot of media air, what can’t be a bad thing for advancing the congestion pricing case. We are going in a detailed analysis below:

The good

The report recommends a cordon pricing (in the form of a tolling of all water crossing in the region), something we have also recommended:

    Considering the Vancouver topography and the choke points responsible for most of the lower mainland congestion, the equivalent of a “cordon pricing” on the bridges seems the natural way to go.

Such scheme seems to raise many opposition we had already noticed in 2011. The mood is to not oppose frontally to the road pricing idea, but it is to rationalize the inaction toward it:

    Anything other that the “ideal” road pricing is not “fair” to the motorists

Those critics could be right, assuming the generalized economic gain largely offset the implementation and operating cost of the proposed model. Considering the overwhelming complexity of implementation of such a model, and the limited amount of congestion in the lower mainland, which limit the potential revenues, it is probably wrong headed:

    The model could be fair to the individual motorists, but could be unfair to the general interest: It could cost more to operate than the general economic gain it allows.
Some people are against road pricing, inferring it is unfair on the poor. - same could be said of pay parking, transit fare...

Some people are against road pricing, inferring it is unfair on the poor. – same could be said of pay parking, transit fare…

Of course, a cordon pricing is a cost/benefit trade off which is not perfect- driving from Langley to Ladner could be exempt of toll, when short haul using the Pattullo bridge could be… but the “choke point” are on the bridge not on the Highway 10… Of course the very idea of road pricing involve that poor people could also pay…but all the argument raised against also apply to:

  • Pay parking or gas tax
  • Transit fare, especially the zone system with its arbitrary boundary making the trip across the Fraser twice more expensive that the long trip from Langley to Ladner…

…and like the transit fare structure, the type of congestion pricing structure has not to be seen as permanent, but is a trade-off which can be reviewed in function of the technology progress.

The inescapable reality is that the road space is a scare resource, and so far the best known way to manage a scare resource is to put a price on it to align the demand with the offer. This can have some social and fairness implication: let’s address them, instead to use them as an excuse to do nothing.

The bad

The Ecofiscal report seems essentially geared for media consumption. Beside giving some air to the idea, what is already a lot, the report doesn’t seem as well researched as one could have expected, and it doesn’t bring any new element to the discussion. Data from [1] are mainly used afterward to make our points.

What is congestion?

Some, in their hostility to road pricing, don’t hesitate to argue, that road congestion is a good thing: doesn’t are vibrant and economically prosperous cities, crowded places? assuming that crowding is another word for congestion

It is not. here we take the pedestrian paradigm to illustrate the difference, since usually crowded pedestrian places are considered as a positive quality

pedestrian congestion in New York (left): people can't move freely and smoothly, traffic is typically stop and go and unpredictable: that is Level of Service F- heavy pedestrian crowding in Istanbul (right): it is dense traffic imposing slow speed, but still smooth and predictable moving: that is Level of Service E. Credit photos (2) and (3)

In the above examples: one could consider that the Istanbul picture is a desirable outcome for a place, the case is more difficult to be made with the New York picture. Transposing the above paradigm to the road traffic:

  • Busy roads are a desirable outcome, since it is a sign that the urban land space use is maximized
  • roads congested to a level where the traffic become not smooth and predictable is undesirable

Finding the desirable sweet spot is an exercise in itself, but generally speaking, people will agree that the congestion at the approach of the tunnel or the Pattullo bridge has well past its point of desirability. However we could have wished from the report a relatively clear definition of the researched “desirable” level of traffic.

Toll and Congestion Pricing

To clarify the conversation, it is critical to characterize what discriminate congestion pricing of other road tolling types. the report is at best fuzzy, and seems to mention the Port Mann and Golden Ears bridges toll as examples of congestion pricing. They are not, they are here to finance an infrastructure. A typical Congestion toll varies according to the level of congestion -and eventually become free on low level of traffic (night and week-end). below are the 3 main types of road pricing.

tolling type Main objective toll structure classification typology
financing finance an infrastrcuture vehicle size | weight classification
environemental reduce pollution vehile emission classification
congestion reduce congestion time of day/day of week

It is also good to feature the different congestion pricing coverage types:

tolling type tolling method example
infrastructure vehicle using the infrastructure Sydney harbour bridge/tunnel, HOT
cordon vehicle crossing the cordon Stockolm, Milan
zone vehicle moving inside a zone London

Some other more comprehensive or “ideal” coverage, mainly relying on GPS, to price the exact trip could be under study, however, so far we are unaware of a deployed one: let’s keep down on earth and rely on proven collection methods

Congestion pricing scheme around the globe

it is good to come with a general overview of what is existing today, to identify some possible trend, category, all this to identify more successful model, but also to get a better understanding of some failures (the failed experiment of Hong Kong, modeled after the successful one of Singapore should deserve a explanation):

urban toll overview, graph/classification from (1)

urban toll overview, graph/classification from (1)

the graph above purposely excludes most of the american city using HOT, or the Toronto ETR407 (at considering its purpose is to relieve congestion, what is open to discussion), under the rational they are usually located in a suburban context

Congestion toll Effectiveness

Cordon or zone tolling tend to significantly reduce the congestion by 15 to 85% [1], the case is more moot for infrastructure tolling.

In short: The Toronto ETR407 could have lot of merit and purpose, but general experience shown such type of infrastructure doesn’t reduce existing congestion

A recurrent and unfounded critic is that congestion toll revenue doesn’t cover the toll collection operation. In that instance the Eco-fiscal report would have misreported some numbers on the Copenhagen congestion pricing operation (see [5] for more detail on it). However the trend is toward lower operating cost.

Case studies

In the context of Vancouver, Stockholm is an interesting case study since it seems to share many characteristics with Vancouver, and its congestion pricing model can be transposed to Vancouver. However, it could have been interesting to study the difference, such as in term of transit ridership, urban form, and tolling area.

toll area surface and ratio tolled area/urban area

toll area surface and ratio tolled area/urban area

For reference Vancouver alone is already 115km2: a cordon pricing using the Fraser crossing could make the Vancouver area the greater area subject to congestion pricing.
The implication of this could deserve further investigation. Notice that, in theory the bridges surrounding the downtown peninsula doesn’t support enough traffic to justify a congestion toll [6]
.

Acceptability

Beyond the technicalities of road pricing, the acceptability need to be studied: Stockholm having passed the test of the referendum after experimentation is a good starting point: [7] gives some pointer toward acceptability.

  • Benefits may turn out to be larger than anticipated. Several authors have noted that a major reason for the resistance to congestion charges is that they assume they will not work.
  • The downsides of charges – increased travel costs and/or changes in travel behaviour – may prove to be not as bad as expected. Once the charges are in place, many people may discover that the charges do not in fact affect them as much as they had thought
  • Once the charges are decided, resistance may decrease due to the psychological effect known as cognitive dissonance. A phenomenon that can be simply summarized as “accept the unavoidable”. In other words, once the charges are in place, it is less worthwhile spending energy on opposing them.
  • Familiarity with road user charging may reduce the general reluctance towards pricing a previously unpriced good. There is evidence that “people in many cases do not like prices as an allocation mechanism”, but once familiar with the concept that road space is in principle a scarce good that can be priced – much like parking space – this reluctance may tend to decrease.

One will notice that the above paradigm would apply to bike lane too!

[7] mentions also the “environmental card”. It should also be noticed that the transit offer has been increased in the experimental phase, however most of the added transit is “self financed” by increased transit revenue from higher ridership according to [5].

Milan and its referendum

The “environmental card” should bring us to Milan, Italy, where road pricing has originally been introduced in the objective to reduce the pollution. However in 2011, Milan got a referendum. the question was

Would you like to extend the toll zone to the whole city and to all vehicles categories to fund transit and other sustainable alternative to the car?

The answer has been a resounding yes: 80%!

Needless to say, Vancouver has one thing or 2 to learn from Milan, …and we could have expected some element of response from the Ecofiscal report.

Conclusion

The Ecofiscal report is short on the technicality and specific of the proposed congestion pricing sheme. It could have been good to past the generality and get some hard and substantiated numbers to help the conversation.
While the Ecofiscal report apropos suggests experimentation, it doesn’t substantiate the rational for it (more especially its importance for public acceptability). More generally, the report falls short on recommendations enabling the acceptability of road pricing by the public. It doesn’t bring a new narrative making the whole congestion pricing concept more “sellable” to the “commons”. However, its main merit has been its ability to gather tremendous media coverage triggering conversation on road pricing: so it is probably good enough


[1] “Etat de l’art sur le péages urbains” (in french), Ademe, June 20142014

[2] Flikr user “Howard Brier

[3] “The Pedestrianization of Historic Istanbul

[4] Road Congestion Pricing In Europe: Implications for the United States H. W. Richardson and C. H. C. Bae , Edward Elgar Publishing, 2008.

[5] see the Cost-benefit analysis of the Stockholm congestion charging system, Jonas Eliasson, Transek AB, 2009. for more detail. This is inline with the used reference [4] in our 2011 post on the toll economics.

[6] see our previous post

[7] The Stockholm congestion charges – four years on. Effects, acceptability and lessons learnt, Maria Börjesson and al.

Some toll economics

March 22, 2011

…in the context of a congestion charge…

Toll Revenues

They are mostly driven by the price elasticity of demand (PED). In a nutshell, it is about how the demand for a service (here road access) is affected by a price change.
The greater the decrease in demand for a given price increase, the greater the elasticity will be.

It is an important concept since it can allow to estimate what should be the price of a toll to reduce the congestion to a certain level or what could be the revenue of a tolled infrastructure at a given price.

It is a common occurrence to see the PED under estimated: it has been under estimated in London, in Stockholm, on the Golden Ears Bridge as well as on most of the tolled urban road infrastructure around the world.

According to [5], the elasticity to a congestion charge has been notoriously under estimated by the MOT in the case of Port Mann bridge study. One reason here like elsewhere is that the lower the elasticity is, the easier it is to justify a new infrastructure…while the greater the elasticity is, the lower the congestion charge need to be to address the congestion (or the more difficult it will be to charge high price on a new tolled infrastructure).

That is, the common denominator is that usually a congestion charge scheme is successful at achieving its main goal of reducing the congestion, but that also means it yield usually to less revenue than expected. Here after are some elasticity numbers. the bigger (in absolute), the easier it is to reduce congestion

Study Estimate Comment
Vancouver 2008 study [5] -0.25 Public transit as in 2008
Vancouver 2006 study [3] -0.32 from survey (variance -0.23 to -0.41)
Seattle [4] -0.9 to -1.6 from a pilot project (2003-2005)
Toronto 407 ETR [5] -0.7
Spain [5] -0.2 Congested bridge
France Expressway -0.3 Government recommendation
New York bridge [5] -0.1 Average parking price in Manhattan is $431/month
Singapore cordon [5] -0.19 to -0.58 average tax on car purchase is S$45,000 (~$37,000)
London Congestion area [4] -0.53 to -0.96 computed on the initial £5

Operation cost

A toll system incurs some operating, maintenance and capital cost. Usually it is a reason advanced to not implement it:
the most part of the revenue could be absorbed by the operating cos of the system”, and skeptic people will advance the case of London [9][10]. figures hereafter show that doesn’t necessarily need to be the case, like Stockholm or Singapore examples show

City Capital cost (M) Operating&maintenance cost (M) Revenue (M) Gantries Transponders
London [4] $180 $150 $280
Stockholm [4] $150 $26 $120 18 unknown
Singapore [6] $116 $10 $90 45 700,000
Golden Ears Bridge [1] $60 (8 years) 1 5,000
Port Mann Bridge [2] $18 (5 years) NA 1 200,000

But if we talk more of road pricing today than yesterday, it is not because there is more congestion today than yesterday but because it is dramatically much more cheaper to implement it nowadays.

Below are the answers to a recent procurement to equip a HOT lanes on the I85 by the Georgia DOT the terms of the contract being [7]

  • 410,000 sticker tag transponders ( 350,000 regular interior windshield tags + 60,000 external readers at 37 gantry locations
  • 37 readers at 37 gantrries location
Bidders TransCore neology SIRIT Kapsch
Transponders 1,005,300 1,076,500 1,697,500 8,680,000
RFID Reader Subsystems Equipment 134,665 175,299 297,66 1,600,975
Support Service 22,400 28,000 34,000 22,086
Total Bid Pric 1,165,235 1,279,799 2,019,163 10,303,061

Detail of the Transcore winning bid shows that the contract is based on

  • $1.59 per sticker tag transponders [8]
  • $3000 per RFID reader and matching antenna

What seems costly is the video identification (not included in the procurment above), but when a sticker (transponder) can cost as low as $1.59, one has to consider the alternative to outfit the whole vehicle park of its jurisdiction with it

That is what has been done in Singapore. Metro Vancouver is not a city state, but 65% of the BC vehicles are registered in Metro Vancouver and Vancouver could be considered isolated enough of out of Province road access, to make this option certainly worth of consideration for the whole province park.

Effect of the Congestion charge

By virtue of the PED, it reduces the congestion and make trip more predictable, for the remainding users, so those get some value (in time) for the toll.

That applies on Transit as well. bus speed has increased by 6% in London congestion charge area, and 3% in the surrounding (notice that is including an increasing dwelling time due to significant higher patronage, and previously existing bus lanes) [4], but more important is the very significant increase in reliability allowing the agency to reduce lay over and realize significant operating saving.

The shift on public transit can be very significant (numbers from [4])

  • In London, the bus service got a 37% patronage increase in the congestion charge area (notice that people also shift from subway to bus, eventually due to more attractive bus ride which became more predictable and faster after the CG came in service).
  • In Stockholm, patronage has increased 5% network wide, in a city already having a high modal split in favor of transit (30% trip on transit region wide [11])

Thought that could be the goal of the policy maker, the shift on the public transit system could be a cause of headache if he is not designed to absorb the increased patronage. In Stockholm, the introduction of the congestion charge has been coupled with a significant increase in the public transit offer.

The congestion charge in addition to reduce traffic, has also allowed to increase the road safety wherever applied, and obviously reduced the pollution and inherent health hazard due to it [4]

All in one, though initially not necessarily well received by the opinion, the congestion charge, wherever applied long enough, has sustained the test of time, and greater acceptance by the public [4], that eventually in recognition of the social benefits it is able to deliver.


[1] Open road tolling for BC Golden Ears Bridge – $60m contract TOLLROADSnews, feb 05, 2007.

[2] CS signs $18m toll system contract with BC gov toiler for Mt Mann Hwy 1 AET TOLLROADSnews May 11, 2010.

[3]Estimating commuter mode choice: A discrete choice analysis of the impact of road pricing and parking charges“, K. Wasbrook, W. Haider and M. Jaccard, Transportation (2006) 33:621–639.

[4] Road Congestion Pricing In Europe: Implications for the United States H. W. Richardson and C. H. C. Bae , Edward Elgar Publishing, 2008.

[5] From Freeway to feeway: Congestion pricing policies for BC’s Fraser River crossing, Peter Wightman, Simon Fraser University, 2008.

[6] Road Pricing Volume 9, Theory and Evidence, Georgina Santos, Elsevier 2004.

[7] TransCore win GA/I-85 HOT lanes tag-reader contract with $1.59/tag 6C GEN2 TOLLROADSnews, Sep 16, 2009.

[8] For matter of comparison, Translink leases Golden Ears bridge transponder at $1 per month

[9]Without denying the efficiency improvement, in direct economic term as well as in more indirect term (pollution…), some experts consider that those efficiency gains or social benefit, are not enough to offset the operating cost of the system [10]

[10] The London congestion charge: a tentative economic appraisal, R. Prud’homme and J.P. Bocarejo, Transport Policy Volume 12, Issue 3, May 2005, Pages 279-287.

[11] Transport planning in the Stockholm Region, Hans Hede, METREX International workshop, Moscow, June 2006