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World Bank Document Policy Research WORKING PAPERS Transport Infrastructureand Urban Development Public Disclosure Authorized Department The WorldBank December1992 WPS1071 CongestionCharging Mechanismsfor Roads Public Disclosure Authorized An Evaluationof CurrentPractice Public Disclosure Authorized TimothyD. Hau Of the manydirect and indirectmethods of charging Public Disclosure Authorized forroad use, the key alternativesfor reducingroad congestionare (1) cordon pricing using manual tollbooths, (2) supplementary vehicle licensing, (3) automatic vehicle identification,and (4) smart card technology. Policy Res hWorling Papen; dwnina t cte findings of work in progrss and encourage the exchange of ides among Bank staff and all others interested in development issues. Thesepapers cany the names ofthe authors, reflect only their views, and shoald be used and cited accordingly. te fudings, interpretations, and conclusions are the authors' ownLThey should not be attributed to the World Bank, its Board of Directors, its management, or any of its member countries. Pclloy Research Transport WPS 1071 This paper- a productof the TransportDivision, Infrastructure and UrbanDevelopment Department- is part of a larger effort in the departmentto evaluateoptions to charge for the use of roads. Copiesof the paper are availablefree from the WorldBank, 1818H StreetNW, Washington,DC 20433.Please contact JenniferFrancis, room S 10-063,extension 31005or 35205 (December1992, 99 pages). Hau explores 20 criteria for a "good" road electronicroad pricing scheme can now be pricingsystem and presentscase studiesillustrat- overcomeby giving road users access to confi- ing the costs, revenues,and benefitsof altema- dential"numbered accountarrangements" with a tive congestioncharging mechanisms. prepaid cash deposit. Hau finds that manual tollboothsare not The capitalcost of electronicroad pricing suitablefor congestioncharging because they are with smart card technology(an on-vehicle land-, labor-, and time-intensive.Cordon pricing charging system)is higher than the cost for (as in the Bergen toll ring) can be an effective automaticvehicle identificationtechnology instrumentfor chargingfor congestionif half the alone, but benefits still outweighcosts (as in the toll lanes are reservedfor seasonalpass holders Dutch proposal).Together, the benefit-costratio traveling throughthe pricing points at regular and the cost per transactionare acceptablebut highwayspeed. Enforcementof those driving in this technologyis still not widely used commer- reservedlanes can be carried out by periodic cially. videographsof vehicle licenseplates. Hau argues that electronicapproaches to Area licensingschemes require that vehicles direct road use charging are superiorto manual enteringthe central businessdistrict during peak approachesfor road users, road authorities,and hours prominentlydisplay a monthlyor daily society as a whole. And rapid progress in micro- license.Enforcement is undertakenat gantry electronics,cryptology, and microwavetech- points by traffic wardens who perfonn visual nologies will continueto yield large-scale checks on the nonstop traffic. The enforcement economiesin the manufacturingof automatic costs of area licensingschemes are prohibitiveat vehicle identificationequipment, read-write motorwayspeeds but relativelylow-cost in a transponders,smart cards, and the hardwareand standard congestedurbai. fetting with limited softwarethat go with them. gateways.Area licensingschemes, also known Hau ranks electronicroad pricing with as supp;ementarylicensing, carry the lowest cost automaticvehicle identificationalone higher per transaction. than electronicroad pricing with smart card-type Electronic roadpricing with automatic AVI based on an unweightedindex of all crite- vehicle identification(an off-vehiclerecording ria. And generally,the area licensing scheme is system)is electronictoll collectionby time of superiorto cordon pricing.If budgets allow, day writ large and made obligatoryon vehicle authoritiesshould investigatethe feasibilityof owners in a jurisdiction.The cost of the elec- electronicroad pricing. If the budget is tight, tronic equipmentis not trivial, but is outweighed they should look into the area licensingscheme by the benefits. Sensitivityanalysis perfonmed with its low cost and high benefit-costratio (the on the Hong Kong electronicroad pricing latter being the most importantof the 20 criteria scheme in 1983-85shows that even after exclud- Hau uses). ing time savings,the savings in operatingcosts Both conceptuallyand practically,Hau finds produce benefit figuresthat are greaterthan that it is importantto earmarkthe proceedsof system costs. The invasion-of-privacyissue that road pricingto implementmarginal cost pricing led to the politicalfailure of the Hong Kong in the road sector. Workinge PolicyPaperSeriesdissemnates PhResearch thermdings of workunderway in theBank.AnCobjectiveof the series is to get these findings out quickly, even if presentationsare less than fully polished.The Fndings, interpretations,and conclusionsin thesepapers do not necessarilyrepresent of ficial Bank policy. Producedby the Policy ResearchDisscmination Center CongestionCharging Mechnisms for Roads: An Evaluation of Current Practice by TimothyD. Hau TransportDIvision lnfrastructre and Urban DevelopmentDepartment The WorldBank Congestn CharwingMechanism for Roads: An EvaLuationof Current Ph cice by lmoihy D. Hau CONTENTIS ACxNOWLEDEMENTS.............. ..........................iv SYNOPSIS . .................................................. v X. CONCETUALPRAm,4EwToRK ........................ ... 2 Criteriaf a 'Good'Road PricingSystem . ....................... 5 A. From Usen'Pont of w (1-4) ....... .... S (1) User-friedlines (SimpLcity) ....... ................. 5 (2) Tansparency (via ex an pdicng) ................... 5 (3) Anonymity tctonfrm InvaonsofPiy)onofPrivacy....... .... 5 (4) Prepaymen/PostpaymentOpdon for Charging .............6 B. Fm RoadAutbouity'sPo intof fVw(S-ll)iew(.... .............. 6 (5) EnhancedBfiency via Diect Chrging . .............. 6 (6) FlPilty(ReoqxnsivenesstoDemand) ...... ...... 6 (7) RdebbH4 ............................................ 7 (9) Proviion for OccasionalV-istors ......... .......... 7 (10) 'Marlkt'PriceasanInvestmentSignal .................. 8 (11) PaLsge of Reenu-Cstest ...................... 8 C. FromSociety's Poit of V.ww(12-20) ............................ 8 (12) Passage of Boefit-CostTest .. .. ............. 8 (13) MinimumofRoadWokand EnvhionmentalInusdon ........ 9 (14) Proviion forJud Tuffc . ...................... 9 (15) HIadlin of 'nsitional Phase .......... ........... 9 (16) Com bt with Oder Systms ................. ..... 10 (17) Moduarity to Add-on Options................... ........ 10 (18) Tolaceto C.iturofNon-compliace, ..... ............ 10 (19) Tolwance to Varied Gogrphy ..................... 11 (20) Pim sanddoAvailab ofAlumiveslityofAltna ..... ......... 11 I. TCAFR RanAO R MADsu- ......................................... 12 m. cWARom oR RoAm - Ie.SEcrMBoDs ...............................1S A. Indirect Charging via Vehicle Ownership Purchase Tax and Annual License Fees ...................................... 15 B. Indirect Charging via Vehicle Usage ........................ 15 1) By Amount of Use: Fuel Tax and Tax on Tires and Vehicle Parts ................................................ 1S 2) By Both Amount of Use and Place: Differential Fuel Tax ... ... 16 3) By Place and Time: Parkng Charge ... : ...... ......... 16 4) By Place and Time: SupplementaryLicensing ......... .... 18 IV. CHARGINGFORROADS--DIRCTMETHODS ....................... 20 A. Off-VehicleRecording . .... 20 1) ManualCharging va Tollgates .. 21 2) AutomaticScanning via Automatic Vehicle Identification... 24 AVI Technology ... 24 Optical and infra-red systems .. 25 Inductiveloopsystems .. 25 Radio frequencyand microwavesystems (including surface acoustic wave technology) .. 25 Smart card systems . .25 Examples of AVI systems . 33 3) Combinationof Manualand Electronic TollCollection ... 37 i) The Oslo and Trondheim Toll Rings . .37 ii) Road Pricing on a Cordon Basis in Stockholm and Gothenburg .............................. 4 iii) The Hong Kong Electronic Road Pricing and Area LicensingSchemes ...... ... ................ iv) CongestionPricing in New Toll Roads of Orange County, California.......... ..................... 50 B. On-VehicleMetering ................................. 50 i) The ComprehensiveElectronic Road Pricing Schemeof the Netherlands based on Smart Card Technology ... S1...... ii) CongestionMetering in Cambridge, England .... 5..... iii) The SingaporeElectronic Road Pricing System . ....... 57 V. SUMMARY ANDCONCLUsIONS ................................ 59 Recommendations of Congestion Charging Mechanisms for Developing Counies ............ 62 Table 1: Methods of Road Use Charging ............................. 65 Table 2: Criteria for a 'Good' Road Picing System ........ .. i6. Table 3: Benefits, Costs and Revenues of Various Cordon Toll Schemes in Oslo, by Time Period, per year (in millions of 1990 Norwegian kroner) ... 67 Table 4: Benefits,Costs and Revenuesof Car OwnershipFiscal Restraint Measure, Area Licensingand ElectronicRoad PricingSchemes, by VehicleClass per year compared to 1991 Reference (in millions of 1985 Hong Kong dollars) .... 69 TableS: A Comparisonof Road Use ChargingMechanisms ... 70 Annex1: The SingaporeArea LicensingScheme, 1975 to present ............ .. 77 A. BackgroundInformation .77 B. Analysisof Results(1975-89) .78 C.
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