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9.11.3 The specific scheme chosen was the 1 985 ERP Study Scheme B proposal. The mapin Figure 9.3 shows the locations of the pricing cordons where road user chargeswould be imposed. Generally, they control private cars entering and leaving the mainurban areas of Hong Kong island North and the Kowloon Peninsula with subsidiarycordons further controlling movements within these areas. Only private cars wouldbe charged. Prices were set at the levels described for Scheme B as shown on themap. One variation on the ERP Study scheme was to extend the scheme to operateon Saturdays as well as weekdays. This was because Saturday traffic volumes aresimilar to those on a weekday and restraint would clearly be beneficial. The resultsare set out in Table 9.5.9.11.4 At the charge levels tested, the overall traffic performance of area pricing was similarto those of 50% increase in car ownership taxation; while the latter policy gave morerelief in the inter-peak period, area pricing gave more relief in the peak period whereit is more necessary. Economic benefits from improved operating costs of transport,savings in travel time and savings in public transport operations were also similar tothose of car ownership taxation, but area pricing has the advantage of comparativelySow disbenefits associated with restrained traffic. There is none of the massive dropin car ownership although there are some disbenefits from suppressed traffic.Moreover, with area pricing, it is possible to return a large proportion of the revenuescollected from the scheme which was estimated at about $400 million per year,averaging $120 per month per vehicle, to the motorists in the form of reduced annuallicence fees.9.11.5 Area pricing is very effective, reducing usage directly and only at the times andplaces which require restraint. It is also flexible as coverage and level of chargescould be adjusted to suit changes in circumstances. However, the actual impact isuncertain as the option has not been tested before or tried elsewhere.9.11.6 Unlike any of the other policy options examined, area pricing would require asubstantial initial investment to install vehicle detection equipment at the pricingcordons, set up a central billing and monitoring organisation and to fit all vehicleswith electronic identification tags. Costs would be incurred thereafter to operate andmaintain the scheme. Annuaiised costs were estimated in 1 985 at about $50 millionper year, consisting of $30 million capital costs and $20 million recurrent costs.These are well covered by the expected economic benefits over no restraint policy,Thus the costs of installing and running an area pricing scheme should not oneconomic grounds be considered a deterrent.9.11.7 There are also other problems with area pricing which need to be resolved. Thesecan be summarised as follows:(1) Some control of taxis, which the ERP Study considered would be exempt fromthe scheme, would be required to prevent a switch from cars to taxis as a resultof area pricing. Unless this is prevented, many of the traffic advantages of areapricing would be lost.(2) Similarly controls on light goods vans would need to be tightened to ensurethat private vans registered as goods vehicles were-not used to avoid the areapricing charges. Again, goods vehicles were exempted from the area pricingschemes in the ERP study.(3)' Area pricing may shift congestion to areas outside the pricing areas and thisneeds to be examined in detail.(4) Political acceptability is clearly vital, this being where the 1985 recommendationsfoundered. Two particular objections were made at the time. The first wasto the 'big brother' connotations of automatic vehicle detection. The secondwas to the cost; it simply was not accepted that costs would be less than thealternative of car ownership taxation restraint or that the introduction of ERPwould lead on to lower annual licence fees.188