4 Case Study II: Congestion Charging in London: The Western Expansion

Chapter overview

This chapter introduces and elaborates on congestion charging as a policy response to the ever-growing mobility problems of cities, specifically in the Global North. This chapter is divided into three sections. The first section introduces the reader to the congestion pricing concept and the transportation and land use planning policies needed for effective implementation. Drawing on the experiences of London and Stockholm, the second part elaborates on the benefits of congestion charging in terms of air pollution and traffic congestion reduction. The third part presents some of the expected benefits and challenges of congestion pricing in U.S. cities, reflecting on the case of New York City. The chapter concludes with an examination of equity implications associated with congestion pricing.

What is Congestion Pricing?

Economists, including Adam Smith and transportation scholars, have examined the concept of congestion pricing as a strategy for reducing the negative externalities of cars (Lindsey, 2006). Congestion pricing seeks to shift a fraction of car travel, especially during rush hours, to other modes of travel, such as transit and non-motorized transportation. Eliminating a fraction of car travel from the transportation network can reduce congestion and thus create a more efficient flow of vehicles on roads. Transportation economics researchers concur that congestion pricing, combined with other policies that support public transit, is the most viable, progressive, and sustainable pricing approach to curb driving and traffic congestion (Paul et al. 2017). Congestion pricing requires car drivers to pay a fee for driving in urban areas, typically in downtown and central city locations, which are usually the most congested. This fee will induce some drivers to drive less or switch to alternative transportation modes.

Congestion pricing overall affects travel behavior with economic, social, and environmental benefits. In Western cities, congestion pricing has reduced car driving and congestion while increasing the transportation network level of service (LOS) for those who still use the road. Another benefit of congestion pricing is the generation of revenue from drivers. Although there is a debate about how revenue from congestion pricing should be used, scholars concur that the revenues should support the commutes of vulnerable social groups, including low-income commuters, people with disabilities, and those who do not have cars and must rely on public transit. In congestion charging, drivers compensate for the negative externalities by paying a congestion pricing fee (Givoni, 2012; Whitehead et al., 2014). Congestion pricing can be a strategy that promotes equity and transportation justice (Small, 1992). Small (1992) argues that congestion pricing may enable a (1) monetary reimbursement to low-income travelers, (2) substitution for general taxes used to pay for transportation services, and (3) the creation of new transportation services. Congestion pricing may be coupled with other transportation policies and strategies to reduce congestion, including fuel taxes and vehicle registration fees. The congestion pricing revenues may reduce the operating costs of toll collection and traffic management facilities while supporting sustainable transportation infrastructure, especially public and non-motorized transportation (Small, 1992).

Governments implement congestion pricing in two ways: toll-based and non-toll strategies. Toll-based congestion pricing can restrict High Occupancy Toll (HOT) lanes or express toll lanes and the entire roadway or create zone-based or regionwide pricing. Examples of non-toll-based methods include parking pricing, priced vehicle sharing, dynamic ridesharing, and pay-as-you-drive. In this chapter, we focus on zone-based pricing and explore the implementation of congestion charging in several case studies.

Singapore was the first city to implement congestion pricing successfully. In 1975, the congestion pricing policy mandated all vehicles entering a 5 square kilometer area in the city center during rush hours to pay a fee (Figure 4.1). Although frequent adjustments were applied to the program, it produced benefits, significantly reducing traffic congestion. Adjustments have included extended times of congestion pricing and enforcement mechanisms (Santos, 2005). In addition, alternative routes divert drivers from the congestion charging zone. After a few years, interest in congestion pricing began to extend to other parts of the world. Several cities in the Global North have implemented the same scheme, such as Bergen, Oslo, Trondheim, Gothenburg, and Stockholm (Norway and Sweden). Paris, London, Hong Kong, and Seoul also use similar schemes to reduce traffic congestion.

Some cities in the U.S. have shown interest in using congestion charging. However, the implementation of congestion charging is particularly challenging here because the urban form of most U.S. cities with low-density areas induces car dependence. Nevertheless, Orange County (California), San Diego, and Houston have implemented designated high-occupancy toll (HOT) lanes to discourage driving  (Harrington, Krupnick, and Alberini 2001). These schemes differ from congestion charging but seek to prevent driving by collecting fees from those that congest certain roads. Implementing congestion charging in the U.S. seems challenging except for in New York, whose urban form may bear a stronger resemblance to its European counterparts.

The Implications of Congestion Charging in London

This section examines the implications of congestion charging for the mobility of cities in the Global North, including London and Stockholm. These case studies reveal the implementation challenges and the policy’s benefits and drawbacks. Importantly, these cities use the revenues collected from congestion charging to improve the quality of public transit, buses, and non-motorized transportation.

London

The city of London has tried to implement congestion pricing since the 1970s. Between 1991 and 1994, London’s Department of Transportation supported studies that examined the implications of congestion pricing through the London Congestion Charging Research Programme (LCCRP). The studies concluded that technological tools at the time did not allow the proper implementation and monitoring of the program. Also, in the 1990s, researchers evaluated the acceptance of congestion charging with a referendum and the political capacity of city governments to implement it. Based on research outcomes, Mayor Livingstone launched congestion charging using Automatic Number Plate Recognition (ANPR) cameras in 2000. The London Congestion Charge (LCC) was enforced as a daily supplementary license policy for car travel within the London Inner Ring Road (Lehe, 2019). The Congestion Charging (CC) program requires drivers to pay £5 weekly from 7:00 AM to 6:30 PM. In addition to this policy, a comprehensive range of supplementary transport-related policies became effective, such as improved bus network service, introducing the “Oyster” smart card, and robust investments in public transportation. Congestion charging faced opposition in its first stages of implementation, especially from business owners in the city core area concerned about their businesses. However, Noland et. al (2008) found that congestion charging does not affect overall retail sales in central London. On the contrary, the policy increases walkability and access to businesses. This comprehensive transportation policy package has worked to alleviate congestion and supports alternative transportation modes.

Evaluating the relationship between congestion charging (CC) and traffic congestion requires carefully understanding the congestion before and after CC implementation. An analysis of casualties in London conducted by (Noland, Quddus, and Ochieng 2008) found a significant reduction of private cars in the congestion charging area. The pre-congestion charging traffic statistics for the central London area showed that private vehicle users accounted for 12% of all trips during morning rush hours. The implementation of congestion pricing resulted in a slowly declining trend of private car traffic in central London. Between 2000 and 2002, traffic levels within the congestion charging zone fell by 7%, while traffic for the unrestricted Greater London area traffic increased by 7% between 1989 and 2001. While it was expected that implementing the CC program would result in fewer vehicles during restricted hours, a 12% reduction of vehicle kilometers traveled after one year was an added benefit. However, these numbers leveled off and increased slightly in 2006, two years after program initiation(Noland, Quddus, and Ochieng 2008).

The evaluation of traffic congestion considers the average excess delay (minute/km), which is an indicator that compares congestion and the free flow of vehicles. Before the implementation of congestion pricing, the ratio between congestion and free flow was 2.3 min/km. This indicator dropped to 1.6 in 2003, then remained unchanged in 2004 but increased to 2.1 afterward (almost the same as pre-congestion pricing). The London case shows changes in congestion over time and the challenges of successfully maintaining reduced driving. Scholars have used other variables, including travel behavior, to comprehensively understand the implications of congestion pricing in London (Givoni, 2012).

Scholars found that congestion charging influences travel behavior and the use of alternative modes of transportation, especially during rush hours. In its first stages, CC significantly reduced the number of car drivers and increased the use of buses and public transportation in London. This change, in turn, suggests a positive effect on the use of public transit. From 2002 to 2003, the number of buses entering the congestion charging zone increased (around 20%), as well as increasing their mileage (about 10%). Also, bus waiting times fell by 24% in the Greater London Area and 30% for the area around and inside the zone. The decrease in excess waiting time was also observed even when congestion remained unchanged. Thus, it is possible that factors other than CC were responsible for the reduced excess waiting time. According to Givoni (2012) states that, while only 6% is associated with the introduction of the CC, increases in bus ridership may also be responsible because of lower fares and a better quality of transportation and service. The Transport for London (TFL) organization 2003 recorded around 70,000 reductions in cars entering the zone, 40% of which switched to buses, 50% to underground, and 10-20% to walking, biking, motorcycle, and taxis (Givoni 2012).

The environmental implications of congestion charging remain mixed. Scholars argue that air pollution mitigation was not the primary concern for congestion charging. Instead the primary concern was congestion and traffic. Nevertheless, some scholars found reduced air pollution associated with congestion charging. While the NOx concentration trends over time for different city zones showed no significant change from 1999 to 2005, the analysis conducted by Beevers and Carslaw (2005) showed a 10% decrease in NOx and PM10 between 2002 and 2003 at the start of the CC program. Another study conducted by Ho and Maddison (2008) also showed a reduction of 10.5% in PM10 due to CC implementation. Yet, Atkinson (2009) found no relationship between CC and air pollution concentration levels (Givoni 2012).

Scholars also examined the implications of the revenues generated by congestion charging. Previous studies found that congestion charging generated £200 million between 2004 and 2006; the net revenue was £110 million (Givoni 2012). Approximately 80% of this revenue served to improve buses in central London (Givoni 2012) as part of the comprehensive package.

To sum up, congestion charging in London is one of the most successful congestion pricing programs worldwide. One of the main lessons from London is the implementation of a comprehensive package of transportation policies that include restricted access to private cars, improved public transit, and increased ridership over time. However, more research is needed to understand the implications of congestion charging alone in traffic, revenue, and air pollution mitigation. Some scholars believe that the perceived reduction in congestion can incentivize some commuters to drive to the congestion zone. This rebound effect may undermine the policy for driving reduction. Research suggests that the early implementation of congestion charging was more successful as it reduced traffic significantly in the early 2000s. However, the effects of congestion pricing leveled off, partly because drivers use strategies to avoid the policy (Givoni 2012). For example, they drive alternative routes to avoid the congestion charging zone. These have led policymakers to expand the congestion pricing zone from central locations to intermediate urban areas in London.

Stockholm

The government of Stockholm enacted restrictions to reduce car driving in the 1980s. Drivers were required to buy and place a transit pass on their windshields (Eliasson, 2009). Later, the Dennis Agreement enacted a toll to collect fees from drivers’ use of highways and tunnels. In 2005, the government implemented a trial program of congestion charging in the city (Kottenhoff and Brundell Freij, 2009) to alleviate and further incentivize traffic reduction and improve accessibility and the environment. In addition, the city of Stockholm monitored traffic and collected data to understand the effectiveness of congestion pricing (Gudmundsson et al., 2009). Studies suggest that congestion pricing in Stockholm successfully reduced congestion and improved air quality. Traffic volumes on its busiest roads were reduced by 10–15% and improved traffic flow on streets and highways. Environmentally, air pollution and greenhouse gas emissions from transportation were reduced. Finally, the program increased the resources available for public transport enhancements (Gudmundsson et al., 2009). The trial’s success motivated 53% of participants to approve a referendum making this scheme a permanent program. Finally, the Stockholm Congestion Tax (SCT) was approved with a 10 billion euro investment in infrastructure for its implementation and monitoring (Lehe, 2019). Figure 4.3 shows the infrastructure of this congestion charging scheme in Stockholm.

In Stockholm, congestion pricing reduced traffic by 22% and reduced the concentration of air pollutants by 14%. Availability and dissemination of data to the public played an essential part in gaining support from the citizens. However, based on empirical studies, public support for these programs does not necessarily rise or remain constant over time. For instance, in Copenhagen, studies did not observe differences in accepting a toll charge before and after implementing a road pricing experiment (Gehlert & Nielsen, 2007). What seems to be crucial is to develop proper measures and steps for the program and a robust public information program.

Like London, congestion pricing in Stockholm is part of a comprehensive transportation policy that supports other interventions. For instance, the government added 1,500 parking spaces on the edge of the zone. In addition, they extended bus services (16 new lines and 14 new express bus lines) as complementary interventions to support sustainable mobility (Schuitema, Steg, & Forward, 2010).

More importantly, the culture and positive perceptions and attitudes toward public transportation increase the support and acceptance of commuters to congestion charging (Schuitema, Steg, & Forward, 2010). Another important component of the success in the implementation of transportation policies is the creation of data that helps examine the factors contributing to or undermining sustainable transportation policy. In Stockholm, residents perceive that congestion and air pollution are two problems that the city needs to address. Thus congestion pricing is seen as a solution that contributes to the improvements in air quality (Schuitema, Steg, & Forward, 2010).

Congestion charging reduced 20-25% of car travel and helped reduce commuting times, with around a one-third reduction for the morning peak and a one-half reduction for the evening peak. Origin destination surveys revealed that around half of the drivers switched to public transit. However, some drivers were incentivized to drive when they perceived a notable reduction in inner-city congestion.

Congestion charging in Stockholm reduced drivers’ contribution in central locations by 14% and 2-3% in metropolitan areas. Similarly, congestion charging reduced the concentration of air-borne pollutants by around 10-14%. Likewise, studies found a reduction of around 8.5% in NOx associated with increased bus usage and reduced driving. Residents of Stockholm perceived an improvement in the environmental quality of the urban environment as a result of an increase in the use of non-motorized transit. Notably, congestion charging had an indirect effect of increasing 6% in public transit use in 2006. However, it is possible that drivers switched to transit because of an increase in the cost of fossil fuels. Also, significant investments in public transit helped increase the number of new bus lines in 2006 (Eliasson et al. 2009). More recently, Stockholm’s congestion incentivizes the use of fuel-efficient cars, such as electric vehicles, due to exemptions associated with these vehicles. This exemption has increased the number of drivers that use cleaner vehicles by 1.8% (Whitehead, Franklin, and Washington, 2014).

The U.S. Case: New York City’s Congestion Pricing

Some cities in the U.S. have shown interest in using congestion charging. However, the implementation of congestion charging is particularly challenging in the U.S. because the urban form of most U.S. cities with low-density areas induces car dependence. Nevertheless, Orange County (California), San Diego, and Houston have implemented designated high-occupancy toll (HOT) lanes to discourage driving (Harrington, Krupnick, and Alberini, 2001). These schemes could be considered a different form of congestion charging. Implementing congestion charging in the U.S. seems challenging except in New York City, where the urban form is more similar to its European counterparts.

In this section, we examine the potential obstacles and benefits of congestion pricing in the context of U.S. cities by drawing on the case of New York City as an illuminating example. In 2008, New York City tried implementing a daily license program to restrict driving in Lower Manhattan. However, despite the support of the city government and mayor, the New York State Senate and legislators from New York State that do not represent the citizens of NYC suppressed the scheme in the State Assembly (Lehe, 2019). Recently, the city has been reconsidering the implementation of congestion charging. This new program may restrict on-demand car trips, including Uber and Lyft, and taxi trips within a large swath of Lower Manhattan, as well as ordinary traffic, with cars paying $11.52 per day and trucks $25.34. Since then, the daily license has been rejected and postponed, but the taxi/ridesharing surcharge started in 2019. Taxi and ride-sharing restrictions may raise nearly $400 million annually, while the congestion pricing for daily traffic would raise $1 billion (Fix NYC, 2018).

The implementation of congestion pricing will depend on how individuals evaluate the societal benefits and the individual-level impacts on transit riders and motorists (Schaller, 2010). Supporters of congestion pricing argue for the societal benefits, while detractors evaluate the program from an individual perspective. The collective benefits for society associated with the program include the mitigation of congestion and the generation of revenues to support public transit and non-motorized transportation. Also, individual commuters may benefit from congestion pricing through improvements in the quality of public transit, a reduction in commuting times, and the reliability of transportation. Opponents argue that congestion pricing may have a minor influence because traffic is mainly exacerbated by trucks and taxis, not ordinary drivers. They also say that congestion pricing and a potential increase in transit riders will exacerbate overcrowding in public transportation. Detractors believe congestion charging may not reduce driving as transit may be overcrowded. In addition, they do not trust that the Metropolitan Transportation Authority (MTA) will use the revenues to improve transit. This, in turn, suggests a lower trust of U.S. residents in transportation authorities than in other European cities where the public supports transportation policies and innovations. Contrary to their European counterparts, city governments in the U.S. have little authority to implement transportation policy and thus need state and public approval. Even when the general public supports transportation innovations, a small group of citizens (primarily private car commuters to the zone) can halt the process of transportation policies. A successful approval and implementation of the program requires the active support of low-income commuters and users of non-motorized transportation. These commuters may benefit from implementing congestion pricing in New York, and thus their perspectives should also be considered in transportation policies (Schaller 2010).

Baghestani (2020) simulated travel demand using activity-based modeling under different scenarios of congestion-pricing implementation. The research found that congestion pricing in NYC may reduce 6.8% of vehicle miles traveled (VMT) and reduce 30% of travel time. Their research found that travel demand with different modes and vehicle occupancy levels is sensitive to the toll price, and trip attraction to the congestion pricing is sensitive to price. Moreover, at a network level, trips outside the CBD area may experience a slight increase for single occupancy vehicles (SOV), taxis, and public transit. Also, a decrease of around 33% could be observed for vehicle hours of delay and lane-mile congestion in the highest toll scenario ($20). Congestion charging may also improve air quality since models show a 7-18% reduction in PM2.5 under different toll-pricing scenarios (Baghestani, 2020). Despite the potential benefits of congestion pricing in NYC, previous research has disregarded the implications of congestion pricing for low-income workers who need to drive to central locations in NYC.

Conclusion

This chapter introduces and elaborates on the concept of congestion pricing as a progressive and sustainable policy to reduce negative impacts of the transportation sector, such as air and noise pollution or congestion. The chapter further overviews various congestion pricing programs and strategies and discusses the case of the cities of London and Stockholm as successful congestion pricing case studies in Europe. Finally, the chapter brings the discussions to the context of the US by examining the potential obstacles and benefits of congestion pricing in New York. Overall, while congestion charging is not a one-size-fits-all solution, it offers a promising strategy for cities seeking to alleviate congestion and foster sustainable urban mobility. The experiences of London and Stockholm provide valuable lessons for other cities considering similar measures, underscoring the need for comprehensive planning, public engagement, and continuous evaluation to achieve lasting success.

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