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BITRE | Working paper 74

charging also has the potential to reduce by around two-thirds exceedences of PM10

(particulate matter 10 microns and smaller in dimension) near urban roads by 2020.

Ensuring a return on investment and as a signal for infrastructure

expansion

Another, less used, justification for congestion charging is as an efficient way to

recoup the capital cost of a road investment. Whether this is expressed as ‘to give

a private toll road operator the tools it needs to best run the toll road’ (Guinane

2006), or as ‘a less-distorting way to achieve a given revenue flow’, the intention is

similar. If a road is to be subject to tolls to recoup some or all of the capital cost then,

from an economic perspective, appropriately structured congestion charging has the

potential to significantly reduce the economic loss generated by a flat-toll funding

option. 4 3

A useful attribute of congestion charging is that it can signal when it is more efficient

to allow the roads to become more congested and when it is appropriate to expand

capacity. In theory, when the marginal cost of congestion becomes greater than the

marginal cost of infrastructure expansion, then expansion is warranted. While, in

reality, the application of this principle

An added feature of congestion charging

is that it can signal when to expand

capacity.

is more complex, it still provides the

essential link between the phenomena

of congestion and infrastructure

investment. 44

Improving the environment

Increasingly, both existing and planned congestion charging projects specify

environmental benefits as one of the objectives. Indeed, it can be difficult to

distinguish between charges introduced in city centres for environmental reasons

from those introduced for traffic management reasons, as with the Milan trials that

started in January 2008. The Milan system is variously labelled as a ‘congestion charge’

and as an ‘environmental charge’.

There are two sources of environmental benefits from congestion charging schemes:

• by reducing congestion, vehicle emissions decline; and

• once a charging system is in place, the charges can be differentiated to encourage

the use of lower-emission vehicles.

Exhaust emissions represent the main source of pollution from motor vehicles. 45

When engine conditions are optimal, (fuel/air ratio, temperature and running engine)

emissions are minimised. There are two causes of the higher emissions associated

with congestion: slower speeds and stop -start travel. Both lead to suboptimal engine

operations, higher fuel usage, incomplete combustion and, ultimately, higher

emissions.

43. ‘Potential’, because the final contribution depends critically on the cost of the implementing the technology.

44. See Hau (1992) for an excellent exposition of this point.

45. Other sources are evaporation from heated engines and fuel tank source evaporation during refuelling.

58

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