Study on Urban Aspects of the Internalisation of External Costs - MOVE/B4/310-1/2011 Final report Client: DG MOVE, in the context of the Multiple Framework Service Contract for Economic Assistance (ref TREN/R1/350-2008 lot 2) Rotterdam, November 2012 Study on Urban Aspects of the Internalisation of External Costs - MOVE/B4/310-1/2011 Final report Client: DG MOVE Ecorys: Marten van den Bossche Rutger Beekman Broos Baanders Bas Scholten CE Delft: Arno Schroten Huib van Essen Rotterdam, November 2012 The studies are subject to a disclaimer and copyright. The studies have been carried out for the European Commission and express the opinions of the organisations having undertaken them. The views have not been adopted or in any way approved by the European Commission and should not be relied upon as a statement of the European Commission's views. The European Commission does not guarantee the accuracy of the information given in the studies, nor does it accept responsibility for any use made thereof. Copyright in these studies is held by the European Union. Persons wishing to use the contents of these studies (in whole or in part) for purposes other than their personal use are invited to submit a written request to the following address: European Commission - Mobility and Transport DG - Library (DM28, 0/36) - B-1049 Brussels or by electronic form About Ecorys At Ecorys we aim to deliver real benefit to society through the work we do. We offer research, consultancy and project management, specialising in economic, social and spatial development. Focusing on complex market, policy and management issues we provide our clients in the public, private and not-for-profit sectors worldwide with a unique perspective and high-value solutions. Ecorys’ remarkable history spans more than 80 years. Our expertise covers economy and competitiveness; regions, cities and real estate; energy and water; transport and mobility; social policy, education, health and governance. We value our independence, integrity and partnerships. Our staff are dedicated experts from academia and consultancy, who share best practices both within our company and with our partners internationally. Ecorys Netherlands has an active CSR policy and is ISO14001 certified (the international standard for environmental management systems). Our sustainability goals translate into our company policy and practical measures for people, planet and profit, such as using a 100% green electricity tariff, purchasing carbon offsets for all our flights, incentivising staff to use public transport and printing on FSC or PEFC certified paper. Our actions have reduced our carbon footprint by an estimated 80% since 2007. ECORYS Nederland BV Watermanweg 44 3067 GG Rotterdam P.O. Box 4175 3006 AD Rotterdam The Netherlands T +31 (0)10 453 88 00 F +31 (0)10 453 07 68 E [email protected] Registration no. 24316726 W www.ecorys.nl Ecorys Transport & Mobility T +31 (0)10 453 87 60 F +31 (0)10 452 36 80 2 TR23901 Table of contents Summary 5 1 Introduction 9 1.1 Background of the assignment 9 1.2 Objectives of the assignment 9 1.3 Outline of the report 10 2 Scoping of the assignment 11 3 General principles and methodologies 13 3.1 Introduction 13 3.2 The objectives of internalisation 13 3.3 Theoretical foundations for the principles of internalisation 15 3.4 The methods for quantification and valuation of external costs 18 3.5 The methods of internalisation 26 4 Economic instruments and policy measures: existing applications and failed attempts 29 4.1 Introduction 29 4.2 Case study selection and methodology 29 4.3 Main findings case studies: data availability 32 4.3.1 Road charging cases 33 4.3.2 Paid parking cases 35 4.3.3 Summary 36 4.4 Main findings case studies: principles and mechanisms to set the charges 38 4.5 Main findings: failed attempts 38 Manchester 38 London Western Extension 39 General discussion on acceptance of road charging 39 4.6 Conclusions 40 5 Assessment of mobility, environmental and socio-economic impacts of economic instruments 41 5.1 Introduction 41 5.2 Urban road charging schemes 41 5.2.1 Potential impacts of road charging systems 41 5.2.2 Literature 44 5.2.3 Case studies 46 5.2.4 Synthesis 58 5.3 Parking pricing instruments 59 5.3.1 Introduction on parking policies 59 5.3.2 Potential impacts of parking charges 59 5.3.3 Literature 62 5.3.4 Case studies 66 5.3.5 Synthesis 67 6 Conclusions and recommendations 69 6.1 Impacts of pricing measures 69 3 6.2 Lessons for practical implementation of measures 70 6.3 Comparison of the results with the IMPACT study 71 6.4 Recommendations 72 References 75 Annex A: Summary of valuation methodology per cost category from IMPACT 80 Annex B: Case studies urban road charging 83 Annex C: Case studies paid parking 121 Annex D: Stakeholder consultation 141 Annex E: Questionnaires and participants 151 Annex F: Summary of questionnaire results 162 Annex G: Relevant literature and links 216 Annex H: Relevant IMPACT unit values 217 Annex I: Pricing policy leaflet 223 4 Study on Urban Aspects of the Internalisation of External Costs - MOVE/B4/310-1/2011 Summary Transport issues of urbanisation were first tackled by the European Commission (EC) in a Green Paper on Urban Mobility in 2007. In this paper, the European Commission indicated that the main problem is the increasing urban traffic which has resulted in chronic congestion issues as well as noise and health issues. Following the Green Paper, the EC developed an Action Plan, in which twenty measures were proposed “to encourage and help local, regional and national authorities in achieving their goals for sustainable urban mobility.” The internalisation of external costs (Action 12) was mentioned as a core issue of the Action Plan, defined within the “polluter pays” principle, i.e. the users should be charged with the costs of the negative impacts, in order to facilitate the transition to cleaner vehicles or transport modes, reduce congestion and reduce peak loads of infrastructure. This study aims to address Action 12, and consists of: • an analysis of the general principles and methodologies of internalisation of external costs of urban mobility. • an overview of present and failed attempts of economic instruments and policy measures, based on 12 case studies specifically on urban road charging and paid parking. • and an assessment of mobility, environmental and socio-economic impacts of the two economic instruments. The methodology builds on desk research, the afore mentioned case-studies, a questionnaire and a workshop with cities and other stakeholders who were asked to provide their input and views. The following conclusions can be drawn from the study: On the impacts of measures: • The analysis of the case studies shows that the charge levels are set in rather pragmatic way and were never explicitly based on external cost estimates. • The cases on road user charges show that the charge level differs widely. • The charging schemes do pay off, a decrease in number of vehicles occurs. The road charging cases are generally well documented, though impacts on mobility, emissions, economy and social aspects have not always been studied. • Concerning the case studies on paid parking, it is concluded that detailed evaluation studies of the impacts of paid parking are lacking, with the exception of the city of Amsterdam. The lack of evaluations is surprising since paid parking policies are substantially more often implemented than road user charges. • Despite the lack of extensive evaluation studies, the few evaluations that are available show that parking policy can be – very - effective in reducing the external costs of cars in specific areas. • Both for congestion charging schemes and parking pricing policies the general conclusions on estimated impacts are transferable to other situations and new schemes. However, the exact impacts will also depend to some extent on local circumstances and the availability of alternatives for private car transport. 5 Lessons for practical implementation of measures: • Setting an appropriate configuration of the charge scheme (level and structure) is difficult and no one-size-fits all solution seems to exists, due to local (amongst other things) geographical, historical and political circumstances. • Both urban road charging and parking policies in practice prove to be self-financing schemes, that are capable of reducing negative externalities of urban mobility. • Reasons for implementing a pricing scheme differ amongst cities, but both stakeholder organisations and cities see congestion and air pollution as the most important negative externalities of urban mobility. • It seems that introducing or adapting a parking policy creates less public resistance, and is therefore preferred by many cities over the introduction of road user charges. • A success factor that stands out is the importance of monitoring and enforcement; both are considered critical in ensuring an effective scheme and creating public acceptance. • Both types of schemes are capable of generating net revenues. Earmarking the revenues from a scheme for transport is regarded as promising as well, helping to raise the public acceptance of a scheme. • Some individual road charging and paid parking cases also show other interesting aspects, such as free on-board units (Singapore), which would increase public acceptance of the policy. • Some national legislative systems prevent autonomous adoption of a road user charge. This restriction is not found for parking policies adopted locally. Comparing the results with those of the IMPACT study: • At a more aggregated level we can conclude that the charge levels found in the case studies are within reasonable ranges when compared with the typical estimates for congestion costs in urban areas. • The case studies show that for the charging schemes that have been implemented, the levels differ widely and are decided case by case.