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Executive summary

and ambiguous results. Hence, sensitivity analysis—that is, determining how

sensitive the economic outcome is to the underlying assumptions—is critical for

sound governance.

Misallocation of the congestion charging revenue can

undermine scheme benefits

There are many pitfalls for implementers of congestion charging schemes.

Even a scheme that can be justified at the evaluation stage as being in the community

interest can be undermined if the revenue is regarded as a windfall gain and its

allocation is not informed by considered judgements.

It is difficult to generalise about how the congestion charge revenues are best spent.

A necessary (but not sufficient) condition for ensuring that a scheme benefits the

community is that traffic is reduced relative to what would have otherwise occurred.

This requires a behavioural change—something that is more likely to occur when the

motorist has practical alternative routes, modes or travel times.

Erroneously, this link between scheme benefits and behavioural change is often used

as a blanket justification for funding alternative travel choices, notably, for public

transport. There is no intellectual rigour behind this—standard project evaluation

processes should still be applied.

The policy relevance of congestion costs depend on

how they are measured

‘Top-down’ congestion cost estimates can alert authorities to general trends in travel

flows. However, the magnitude of these costs depends on the bench marks adopted.

Many cost estimates use unrealistic ‘free flow’ speeds as a benchmark. However, as

noted by the European Conference of Ministers for Transport (ECMT), free flow is an

unaffordable goal for peak-hour traffic. Thus, congestion costs based on this measure

have little, if any, policy relevance. A similarly unrealistic benchmark is where actual

speed is compared to posted speed limits.

The ideal benchmark is actually speed against theoretically ‘optimal speed’, reflecting

not only traffic levels and value of time but also the cost of implementing a congestion

charging scheme necessary to achieve the optimal level of congestion.

Hence, while top-down estimates assist by focussing policy attention, they provide

little in the way of policy guidance. Robust and reliable congestion measures

require a ‘bottom-up’ approach. This approach has significant data and resource

requirements as it involves aggregating the cost of congestion for each road link.

Advances in modelling and computer technology may reduce some of the resource

requirements: the data issues would then become paramount.

xvii

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