Tolls, Congestion Charge, or
Usage Charge?
Sundar Damodaran, Ph.D. P.Eng.
CITE May 2007, Toronto
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Outline
• Introduction
• Three forms of road pricing
– Tolls
– Congestion Charge
– Usage Charge
• Conclusion
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Introduction
• Objective of road pricing
– To recover the cost of providing the public good, and
– To ensure optimal use of resources during when demand
exceeds capacity so that the costs associated with congestion
may be avoided
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Economist’s Definition
“..when marginal social cost exceeds marginal private costs of
an activity, then it is efficient to impose a marginal tax on that
activity equal to the divergence between the marginal private
and marginal social costs..”
http://www.eclectecon.com/posts/1161765244.shtml
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Tolls
• Means of financing road building, e.g. a new facility
– may lead to sub-optimal use of capacity, if the new facility were
to relieve congestion
•
Introducing tolls on existing road may be a form of road
pricing, e.g. converting HOV lanes to HOT lanes.
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Case of ETR 407
• Originally planned to relieve congestion on Highway 401,
turned into a private toll road, mainly to accelerate
implementation
• Carried some 300,000 veh/day during he early “free
days”, later reduced to 200,000 with tolls
– Relief to 401 traffic must have reduced
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Tolling
• Alternatives to tolling 407:
– Shadow toll?
– Charging 401 and using the proceeds to build 407?
• Other considerations
– Arterial congestion likely to worsen
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Congestion Charging
• Pricing as a demand management mechanism
– Impose charges on roads where and when demand exceeds
capacity
• Objective is to effect changes in road user behaviour, not
only in route choice but others
– modal shift, time shift,
– switch destination, and forego trip
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Congestion Charging
• London’s example
– Demonstrated the viability of a scheme
– Public acceptance
• Others
• Singapore
• Sweden
• Norway
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Singapore’s Case
• 197