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Chapter 1 | Introduction

The other impetus driving widespread

consideration of congestion charging

is that advances in technology have

made direct charging more feasible

and reduced the burden on road users

of the actual payment process. Major

There is a view that economists will

always advocate congestion charging.

This is not the case.

technical and political developments have moved congestion charging from an

interesting academic issue, operational only in limited and unique conditions, to a

policy option that is currently being seriously considered by dozens of cities and

urban areas around the world.

The political sea-change that has led many cities to at least consider congestion

charging is due, in particular, to London’s introduction of a congestion charging

scheme. Typical of this view are the following:

The most practical and promising approach to reduce congestion that is gaining interest

is charging fees on road users, i.e. congestion pricing (World Highways 2006a).

From a users’ viewpoint, congestion pricing would provide an opportunity for them

to avoid the high costs of recurrent delays and unreliable travel conditions which they

currently pay for with their time—by paying with money instead of time—for faster,

more reliable and more predictable travel (ECMT 2007, p. 212).

The concept of setting differential prices according to the level of demand is not

unique to roads. Other areas of transport, such as airlines, public transport and car

rentals, routinely charge more during periods of high demand, whether over the

day, week or the year. Similarly, parking spaces generally cost more during business

hours. Higher charges are also used as a rationing device in the energy market and

in the service sector, such as for holiday accommodation, restaurants and theatre

tickets.

1.1 Defining ‘congestion’

The success or otherwise of strategies such as congestion charging depend critically

on how congestion is defined. There are a variety of definitions of congestion ranging

from the inability to travel at the posted speed to the more abstract economic burden

resulting from the ‘congestion externality’.

The definition adopted is important as it will strongly influence both the estimate

of congestion costs and the ranking of policy options to deal with congestion (see

Appendix B). If congestion is defined as not being able to travel at the posted speed,

then a reduction in the posted speed could make congestion disappear even though

there has been no actual change in traffic flows or travel time.

Alternatively, when the focus is on total congestion costs estimated by multiplying

average delay due to congestion by the number of road users, then the congestion

costs will increase as population grows and the number of road users grows even if

the average delay facing each road user is unchanged. With this definition, the only

way to avoid an increase in congestion costs would be to reduce the average delay

facing each road user.

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