Congestion ChargingCongestion ChargingGroup no. 10

Team members:Eshita Batta (2010136)

Jatin Varshney (2010141)Praveen Trivedi (2010156)Santanu Kundu (2010165)

Road User ChargesRoad User Charges Roads are common resources –Roads are common resources –

Everyone has free accessEveryone has free access Likely to be over-utilizedLikely to be over-utilized

In a congested road an additional motor vehicle causes In a congested road an additional motor vehicle causes negative externalitiesnegative externalities as it results in lost time to other as it results in lost time to other vehicles on the road.vehicles on the road.

Different type of Charges that can be applied –Different type of Charges that can be applied – Fuel TaxesFuel Taxes – Taxes on gasoline, diesel etc.; easy to – Taxes on gasoline, diesel etc.; easy to

collect; constant charge per mile same for motorists on collect; constant charge per mile same for motorists on congested / free flowing roads – congested / free flowing roads – externality remains.externality remains.

Facility tollsFacility tolls - Collect fee from beneficiaries; shd have - Collect fee from beneficiaries; shd have limited access points; the tolls not vary with congestion limited access points; the tolls not vary with congestion – – externality remains.externality remains.

Congestion chargesCongestion charges – (network effect - benefit/cost – (network effect - benefit/cost depends on total number of users.) To depends on total number of users.) To resolve the resolve the externalityexternality charges are based on no. of visits. charges are based on no. of visits.

Road User ChargesRoad User Charges (In Different Countries)(In Different Countries)

SINGAPORESINGAPORE

Paper licensePaper license: : The first city to adopt congestion pricing. The first city to adopt congestion pricing. Color coded licenses were purchased by the motorists and Color coded licenses were purchased by the motorists and

gantries with flashlights used to indicate the restricted hours.gantries with flashlights used to indicate the restricted hours.

Congestion increased in the surrounding ring road that led to the Congestion increased in the surrounding ring road that led to the modification of the fee levels and the boundaries of the restraint modification of the fee levels and the boundaries of the restraint area but could not issue too many different types of paper area but could not issue too many different types of paper licenses.licenses.

Electronic toll Electronic toll collection:collection: It use in-vehicle unites or special tags that communicates with It use in-vehicle unites or special tags that communicates with

roadside beacons and receivers. roadside beacons and receivers.

It helped in varying the toll by time of the day and location.It helped in varying the toll by time of the day and location.

Eventually erected new gantries in congestion spill over areas Eventually erected new gantries in congestion spill over areas and applied charges there too, although at lower levels than and applied charges there too, although at lower levels than original restraint zone.original restraint zone.

NORWAYNORWAY

Toll rings:Toll rings:

Used as a means to raise revenues for public transit Used as a means to raise revenues for public transit improvementsimprovements

The rings were poorly located and the toll charges The rings were poorly located and the toll charges were too low to affect congestion. were too low to affect congestion.

Norway pioneered automated license plate recognition Norway pioneered automated license plate recognition system. system.

Norway not physically isolated thus had to offer non Norway not physically isolated thus had to offer non electronic method of payments for occasional visitors.electronic method of payments for occasional visitors.

Digital video cameras captured the license plate of Digital video cameras captured the license plate of defaulters and read the number from the plate. defaulters and read the number from the plate.

Subsequently, this was successfully applied to Subsequently, this was successfully applied to collection of tolls in Australia and North America collection of tolls in Australia and North America

Review of Charging Options for Review of Charging Options for LondonLondon

(ROCOL) 1997 Study(ROCOL) 1997 Study Most practical area for congestion charging was Most practical area for congestion charging was 8 sq. mile 8 sq. mile

area of Central Londonarea of Central London Had to Had to cope withcope with traffic that diverted awaytraffic that diverted away from the from the

charging area and to the public transport - charging area and to the public transport - this leads to an this leads to an increased externality of diverted traffic on parallel routes increased externality of diverted traffic on parallel routes

Congestion charges were Congestion charges were more popularmore popular than workplace fee. than workplace fee. ROCOL assumed ROCOL assumed daily consumption chargesdaily consumption charges for cars at £5 for cars at £5

and £15 for trucks and the charges will be in effect from 7.00 and £15 for trucks and the charges will be in effect from 7.00 AM to 7.00 PM.AM to 7.00 PM.

Working parking alternativeWorking parking alternative of £3,000 per space per year. of £3,000 per space per year. Parking for customers not charged.Parking for customers not charged.

ROCOL ROCOL estimatedestimated 20% decrease in number of cars entering 20% decrease in number of cars entering the Central London area (load public transport) AND 10% the Central London area (load public transport) AND 10% decrease in overall traffic and travel time to reduce to 3.5 decrease in overall traffic and travel time to reduce to 3.5 minutes from 4 minutes per kilometer.minutes from 4 minutes per kilometer.

ROCOL’s Study Contd.ROCOL’s Study Contd. Net economic benefits - both financial & non-financial Net economic benefits - both financial & non-financial benefits:benefits:

Net financial gain of £230million to £270 million per Net financial gain of £230million to £270 million per year was estimated.year was estimated.

Improvement in travel time & increased reliabilityImprovement in travel time & increased reliability Non-fin cost – Increased crowding of London Non-fin cost – Increased crowding of London

Underground usersUnderground users Net economic benefit to the society was estimated to Net economic benefit to the society was estimated to

be £129 million to £223 million per year.be £129 million to £223 million per year.

ROCOL came out with three options to collect the toll ROCOL came out with three options to collect the toll i.e.i.e.

(a)(a) Paper licenses Paper licenses

(b)(b) Video enforcements – licenses for a day Video enforcements – licenses for a day

(c)(c) Electronic systems (as in Singapore)Electronic systems (as in Singapore)

The Original SchemeThe Original Scheme

Toll collection was to be done through Toll collection was to be done through video video enforcementsenforcements as other alternatives were -- as other alternatives were -- Paper licenses - quick & less risks; cumbersomePaper licenses - quick & less risks; cumbersome Electronic tolling – most flexible; hard to implementElectronic tolling – most flexible; hard to implement GPS enabled – no hardware on streets; not accurate & GPS enabled – no hardware on streets; not accurate &

low signal receptionlow signal reception

Revised proposal of ROCOL by Revised proposal of ROCOL by TfLTfL Toll on trucksToll on trucks reduced to reduced to

£5.£5. Charging hoursCharging hours from 7.00 from 7.00

AM to 6.30 PM - protect AM to 6.30 PM - protect theatre & restaurant businesstheatre & restaurant business

ViolatorsViolators - to be fined - to be fined heavily (£80 for a trip with heavily (£80 for a trip with prompt rebates & late fees) prompt rebates & late fees) but Extended the grace period but Extended the grace period within which the penalty can within which the penalty can be paid.be paid.

Revised proposalRevised proposal Who were exempted:Who were exempted:

Exempted emergency Exempted emergency vehicles, vehicles driven vehicles, vehicles driven by disabled, taxis and by disabled, taxis and public buses.public buses.

90% discount to the 90% discount to the residents of Central residents of Central London.London.

The Original SchemeThe Original Scheme TfL spent £100 million for the improvements on and around TfL spent £100 million for the improvements on and around

inner ring road to deal with the diverted traffic. inner ring road to deal with the diverted traffic. The proceeds were proposed to be used to develop the public The proceeds were proposed to be used to develop the public

transport system to cope with the increased traffic.transport system to cope with the increased traffic. Increased number of sales points & information centersIncreased number of sales points & information centers

Results:Results: The original scheme caused 30% reduction in congestion The original scheme caused 30% reduction in congestion

delays in Central London. (33% private vehicles, 11% trucks)delays in Central London. (33% private vehicles, 11% trucks) In the inner ring road surrounding Central London though In the inner ring road surrounding Central London though

traffic was up by 4%, congestion was down by 11 to 21 %.traffic was up by 4%, congestion was down by 11 to 21 %. Realized net economic benefits were £50 million whereas it Realized net economic benefits were £50 million whereas it

was estimated to be £129 million to £223 million per year.was estimated to be £129 million to £223 million per year. Disadvantages - Unhappy retailers.Disadvantages - Unhappy retailers.

Original scheme – A Success Story

User benefits based on the scheme:User benefits based on the scheme: Time savings : £155 Million Time savings : £155 Million Reliability : £20 MillionReliability : £20 Million Accidents savings : £15 MillionAccidents savings : £15 Million Net annual benefit is positive & about £50 MillionNet annual benefit is positive & about £50 Million

Time saving due to increased avg speed(km/min) and Time saving due to increased avg speed(km/min) and decreased congestion delays(30%)(min/km)decreased congestion delays(30%)(min/km)

Change in figures of speed after charging:Change in figures of speed after charging: Measured in Measured in mins/kmmins/km

Before Before chargingcharging

After After chargingcharging

Average speedAverage speed 4.34.3 3.63.6

Free flow speedFree flow speed 1.91.9 1.91.9

Congestion Congestion delaydelay

2.42.4 1.71.7

Original scheme A Success Story (Contd.)

Urban planners supported the scheme: would increase the quality of life – reduce noise, air pollution Increased traffic absorbs large spaces for parking displacing

trees, cafes and sidewalks

Change in traffic entering central London can be observed as per Exhibit 4, % change in Cars is -33% & there is +23% increase in buses. (Subtotal chargeable vehicles decreased by 26%; subtotal exempt vehicles increased by 12%; total vehicles reduced by 14%)

Research is on to replicate it in Western zone

Public - Private PartnershipsPublic - Private Partnerships (In Indian infrastructure)(In Indian infrastructure)

Learnings from the case:Learnings from the case: Political will & strong project management Political will & strong project management Overhauling of the whole transport system wrt Overhauling of the whole transport system wrt

the congestion chargesthe congestion charges Additional network of public transport and Additional network of public transport and

routes to bear the diverted loadroutes to bear the diverted load Technology - context related – which of the Technology - context related – which of the

three viablethree viable Effects on local residents and occasional users Effects on local residents and occasional users

to be kept in mindto be kept in mind Stringent penalties for violators & defaultersStringent penalties for violators & defaulters

Steps to follow:Steps to follow: Articulate systems objectives: Committee to Articulate systems objectives: Committee to

weigh options weigh options Affirm legal authority: who implements? Under Affirm legal authority: who implements? Under

what conditions? On which facilities?what conditions? On which facilities? Determine implementation framework: Area Determine implementation framework: Area

license fee? Cordon charge? Corridor time-of-license fee? Cordon charge? Corridor time-of-day? Use of the toll revenues?day? Use of the toll revenues?

Design & evaluate road pricing planDesign & evaluate road pricing plan Adopt system plan, financing schemeAdopt system plan, financing scheme Procure management & technology services: Procure management & technology services:

system development, integration, operation, system development, integration, operation, enforcement, evaluation, marketingenforcement, evaluation, marketing

What else could have been added or kept in What else could have been added or kept in mind:mind: Can not be implemented anywhere and everywhere – Can not be implemented anywhere and everywhere –

factors: population of the area, fuel effective, time factors: population of the area, fuel effective, time saving benefits, physically demarcated from other saving benefits, physically demarcated from other regions regions

How to calculate net benefits (esp. non financial How to calculate net benefits (esp. non financial benefits) in Indian scenario – taxi, auto etc. not less benefits) in Indian scenario – taxi, auto etc. not less expensive, travel by own vehicle – a status symbolexpensive, travel by own vehicle – a status symbol

Contingency planningContingency planning The allotment of PPPs should be fair and transparentThe allotment of PPPs should be fair and transparent

ROCOL study could have been outsourced for ROCOL study could have been outsourced for increased economic benefits but:increased economic benefits but: Private study could have lead to a biased study, for own Private study could have lead to a biased study, for own

or collaborator’s good.or collaborator’s good. Private study would lead to a conception of profit Private study would lead to a conception of profit

making firms looking for benefits rather than social making firms looking for benefits rather than social good.good.

Steps followed in India for PPP

The DEA highlighted that ‘The GOI is committed to raising the investment in infrastructure from its existing level of 4.7% of gross domestic product (GDP) to around 8%.’

GOI has established IIFCL - A wholly government-owned company to provide long-term finance to infrastructure projects, either directly or through refinance.

Viability Gap Funding (VGF) scheme - The government has established the VGF scheme as a special facility to support the financial viability of those infrastructure projects which are economically justifiable but not viable commercially in the immediate future.

Capacity building at the state and central level.

Thank you!Thank you!