| Congestion Charging
The theory of Congestion Charging has a long and distinguished
history starting with the late Professor Smeed in the 1960s.
The advantage of charging is illustrated by the following
example.
Consider a journey to work of 5 miles.
The COBA manual, used by the Government to evaluate road
schemes, sets the value of time associated with the average
car at £6.73 per hour at 1994 prices. In this illustration
a value of £6 will be used to simplify the arithmetic.
If, under "unpriced" conditions, the flow is 1000
vehicles per hour and the journey speed averages 10 mph then
a 5-mile journey will take 30 minutes. The time cost per vehicle
is then £3, providing a total time cost for all 1,000
vehicles of £3,000.
If a toll of £1 would persuade 20% of the vehicles
to go at some other time and if that increased speed to 20
mph then the journey time saving would be 15 minutes. That
would yield a time saving of 15 minutes, representing £1.50
for each of the remaining 800 vehicles. Subtracting the toll
of £1 leaves each of them with 50 pence providing a
total of £400. We then need to subtract the loss suffered
by those not prepared to pay the toll. Some will have lost
nothing since even a fractional charge would have diverted
them. Others will have lost up to £1 for the £1
charge was only just sufficient to divert them. Hence, on
average the loss to those diverted may be set to 50p providing
a total of £100. So, the net benefit to the original
1000 road users is £300 made up of the £400 enjoyed
by those remaining less the £100 for those diverted.
However, the toll of £1 is a benefit enjoyed by the
people collecting it. Hence, overall, the total community
benefit is not the £300 enjoyed by motorists but £300
plus the tolls collected, £800, a total of £1,100.
That illustrates the tremendous economic benefit to be had
from a system of charging designed to eliminate congestion.
Of course the numbers may work out differently from the example
but, regardless of that, what other method is there for allocating
scarce road space but charging, except the Soviet one of queuing.
So, perhaps we can look forward to the day when cars will
carry smart cards enabling pay as you go to replace fixed
license fees and insurance. That, coupled with an in-vehicle
display of the money being spent, would be a powerful incentive
to take a passenger or to consider the full costs of the journey
instead of, as at present, the fuel cost alone.
Certainly it is a dereliction of duty on behalf of successive
governments to allow congestion to grow unfettered.
References:
Road Pricing: The Economic and Technical Possibilities”
HMSO June 1964 (Otherwise known as the Smeed Report
Paying for Roads The Economics of Traffic Congestion: Gabriel
Roth Penguin Special S256
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