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What Is Known About The Theme?Evidence on equity impacts comes in the main from three sources: predictive modelling, attitudinal research and empirical evidence from implemented schemes. In this section, model and survey results are listed first, followed by empirical evidence from different cities and countries. Much of the evidence concerns vertical equity, which is considered in Section 10.3.1. The remaining evidence covers rather less thoroughly the three aspects of demographic, geographical and transport status, and is collated in Section 10.3.2 under the general heading of horizontal equity.
Evidence on vertical equity
EVIDENCE FROM MODELS AND SURVEYS
The importance of the equity aspect of urban road user charging lies in the fact that the “winners” and “losers” as a result of a scheme might come from different socio-economic groups. Proposals for introducing such a charge become especially sensitive when there is a perception that it is poorer households who might be disadvantaged. The issue of whether revenues from an urban road user charging scheme are re-invested in public transport is also very important. If revenues are not redistributed in improvements to public transport, cycling and walking infrastructure etc, research has suggested that urban road user charging will generally result in gains for higher-income groups – who are more likely to be car drivers - and losses for lower-income car users (Else, 1986; Cohen, 1987).
In San Francisco, in 2007, a survey of 600 residents found that support for the idea of urban road user charging was actually slightly higher among low-income and very low-income residents. It is thought that this might have been because of expectations for improved public transport travel times and increased public transport investment. Another theory is that lower-income drivers are more interested in reliability of travel time, because it is more likely to incur a financial penalty for arriving late.
Research has been undertaken in Washington, DC comparing High Occupancy and Toll (HOT) Lanes with alternative policy options, including comprehensive urban road user charging which does not give road users the choice of whether to use priced lanes (Safirova et al, 2003). The conclusion of this research was that HOT lanes are “much more equitable than other urban road user charging schemes, with all income groups benefiting, even before the toll revenue is recycled”. Clearly, the main advantages of HOT lanes in general are that they involve no imperative for drivers to change their behaviour, and they result in a broad coalition of winners and losers. This research also concludes that, in the specific case of Washington, DC, social welfare gains from HOT Lanes can achieve around three-quarters of the welfare gains from substantially more comprehensive urban road user charging.
In New York City, the debate surrounding urban road user charging has focused on apparent racial, as well as income, inequalities in commuting times, since 64% of earners of $35,000 per year or less have a daily commute in excess of one hour each way, whilst this figure is only 6% for earners of $75,000 or more p.a. Afro-American residents are over-represented among those with a commute of more than 50 minutes. It was argued that urban road user charging might alleviate such inequalities. Attention was also drawn to geographical inequities, since New Jersey residents were shown to pay disproportionately more for tolls on routes into New York’s Central Business District. New York’s answer was to design a scheme which aimed to allocate transit subsidies among drivers largely in proportion to the percentage of CBD-bound drivers in each geographical area. Another mechanism for achieving greater equity was the channelling of revenue into public transport, since poorer New York residents are much less likely to use a car – only 5% of commuters in poorer districts such as Brooklyn, Queens, Staten Island and the Bronx drive to work, and car commuters earn 30% more than public transport commuters. In this instance it appears to be people from higher-income groups who bear the brunt of the urban road user charging; only a very small percentage of poorer people need to be affected by the charge, more especially as there are alternative means of transport available for travelling to the CBD.
Bureau and Glachant (2008) examined the distributional effects of nine urban road user charging scenarios on different income groups in Paris. They did this by means of a desk exercise, using a random utility model to represent the mode choices made by individuals, calculating individual compensating variations in response to the introduction of tolling. They used the concept of generalised cost of mode alternatives, which was a function of the cost of travel (measured by either toll level or the cost of public transport), income level and the value of time saved. For the purposes of the exercise, it was assumed that each individual had a straightforward choice between making a tolled journey by car, and making the same trip by public transport. This eliminated the possibility that the individual might react to the imposition of a toll by taking a slightly different route, travelling at a different time or simply not making the trip.
Analyses were carried out in order to ascertain the average welfare change over all individuals, and then to consider distributional effects between different income groups, for each of the nine scenarios. The findings showed that motorists, as a whole, all experienced net disbenefits after the introduction of tolling, because the value of time saved does not compensate for the cost of the toll. Equity and distributional considerations are therefore focused on differences between income groups in the level of disbenefits that they experience. The analysis showed that high income motorists, who generally have a higher value of time than lower income motorists, are less inclined to be deterred from driving as a result of the imposition of a toll. The result of this is that they are subject to greater disbenefits than lower income drivers, because they continue with tolled motoring when lower income drivers have already switched to using public transport. When impacts were considered in terms of generalised cost as a percentage of individuals’ income, it was found that all nine scenarios were regressive, since lower income drivers were invariably disproportionately affected.
One slightly surprising outcome of Bureau and Glachant’s analysis was that there was no difference in the distribution of impacts whether toll revenues were used to reduce public transport fares, or whether they were given as a lump sum to all commuters.
Research undertaken by San Jose State University and the University of California, Berkeley, has examined equity in the context of selected urban road user charging schemes in the USA (USDOT, 2008). In California, researchers studied the frequency with which drivers from different income groups used the tolled Express Lanes provided on highway SR-91. They found that behaviour was less related to income, and more related to the amount of flexibility that drivers had in their personal schedule, and to the availability of alternative routes. Low-income drivers do use the Express Lanes, and are as likely to approve of the lanes as higher-income groups; over half of those with a household income of €25,000 or less said that they approved of toll lanes.
Similar research featuring San Diego’s I-15 HOT Lanes concluded that higher-income drivers were more likely to use the priced lanes than other lanes, but that lower-income drivers did use these lanes. Approval for the HOT lane scheme was also reported to be broadly based. An important finding was that travellers appreciated the fact that they had a choice of whether to use the lanes. People in San Diego, particularly those on a low income, also benefit from some of the revenue generated being dedicated to improvements to bus services.
In Miami, research conducted using focus groups (USDOT, 2008) found that price sensitivity, and attitudes in general, in relation to urban road user charging did not correlate with income or ethnic variables. In Minneapolis / St Paul researchers found high usage by all income groups of I-394’s HOT Lanes; the lanes were used by 79% of high-income drivers, 70% of middle-income drivers and 55% of low-income drivers. Similarly, qualitative research showed that there was support for the scheme among drivers in all income groups, i.e. 71% of high-income drivers, 61% of middle-income drivers and 64% of low-income drivers. There was, however, a significant correlation between the amount of use made of priced lanes, and both income and residential location. Higher-income drivers paid most in terms of average toll paid and total toll paid, so that it can be said that wealthier drivers paid most, and derived most benefit, from the scheme.
In Trondheim, Norway, the toll ring attracted much equity-related criticism on the grounds that high-income motorists and commercial traffic predominantly constitute the “winners”, with those likely to lose out being people who are on a low income and car-dependent families. The solution in Trondheim was to use revenues to improve public transport, and to allocate revenue, not only to public transport improvements, but also to walking and cycling. Of the investment in these transport facilities, 60% has been funded from road user charges, with the remaining 40% being provided by the Norwegian Government.
Evidence on horizontal equity
EVIDENCE FROM MODELS AND SURVEYS
Addressing the issue of equity in urban road user charging, Small(1992) developed a package that was both equitable and politically acceptable. His approach was to try to balance the impact of urban road user charging on seven defined groups of people, allocating funds equally between monetary subsidies to travellers, substitutions of general taxes used for transport services and the creation of new transport services. Benefits were calculated in terms of time savings, financial benefits and improvements to transport services, with the seven stakeholder groups being defined as: commuters, road tax payers, transport sales-tax payers, property owners, car drivers, public transport users and local businesses. Benefits for local property owners included property tax rebates. Small suggested that incentives for car drivers should include the provision of funding for additional road space, whilst funding for business centre transport facilities would benefit businesses.
Fridstrøm et al (2000) analysed the spatial impact of urban road user charging cordons using the concept of the spatial accessibility by mode for each zone as the indicator. Their work suggests that the main adverse impact of a charging cordon is the inequities on either side of its boundary, and that a small cordon would have the most significant effect on residents living inside the cordon. Of course, any cordon will have some impact on people residing, and having commercial interests, within it, particularly if they own a car, unless they are entirely exempt from charges.
Bonsall and Kelly (2005) use the “Popgen-T methodology” to predict the extent of the impact of a road user charging scheme on people who are at risk of social exclusion, both in terms of the severity of the impacts and the spatial distribution of those that are affected. The method is based upon the creation of a “synthetic” population, from the probability of characteristics relating to variables such as age, sex, employment status, occupation, income, car availability, disability, lone parenthood and ethnicity. The technique uses the joint probabilities of occurrence of combinations of these variables (and others, depending on data availability), and data on trips within the urban area, to identify the number of travellers between pairs of zones who might be affected by a given charging policy. Characteristics are assigned to individuals within this synthetic population, on the basis of the known characteristics of their zone of origin; similarly, a trip purpose is assigned to each trip on the basis of the characteristics of the zones of origin and destination, and data on the spatial distribution of trip purposes. Whilst Popgen-T does not seek to predict how individuals react to different schemes and policy options, it does provide indications of how many people might be affected by such options, their characteristics and their geographical distribution with in the study area. The analysis might be varied according to the detail of different options or to different definitions of the population groups in question.
For the proposed congestion charging scheme for Edinburgh, there was specific consideration of potential impacts on social exclusion. The Public Inquiry for the scheme (Scottish Executive Development Department, 2004) published conclusions from the point of view of three specific groups of people: people without access to a car, people on a low income on the margins of being able to afford to have a car, and disabled people.
The inquiry concluded that people who do not have a car cannot be adversely affected by the charging scheme, except from the point of view of a slightly reduced likelihood of being given a lift by car drivers. This conclusion failed to consider negative impacts identified elsewhere, such as the possibility for consequent over-crowding on public transport services (at least in the short term), and the potential for the spatial redistribution of traffic, causing increased flows through less affluent areas.
The Inquiry Report identified people who are on the margins of being able to afford to run a car, who are most likely to be in low-paid employment, as the group of people likely to be most adversely affected by the proposed congestion charge. As the report pointed out, people in this category who are less mobile in terms of their choice of alternative employment, would be less able to make life changes in order to cope with the increase cost of travelling by car, and some, such as shift workers, would have few, if any, alternative options for travelling to work. The report’s conclusion, however, was that such problems would be alleviated in the longer term, due to planned improvements in the transport system.
The report distinguished two categories of disabled people: those registered for the Disabled Persons Parking Scheme (i.e. Blue Badge holders), and people who consider themselves to be disabled, but who are not eligible for a Blue Badge. Whilst it was acknowledged that Blue Badge holders would suffer no additional cost or inconvenience as a result of the introduction of the charge, and would derive all the benefits of reduced journey times and more comfortable driving conditions, non-Badge holders would not be exempt from any negative impacts. People not eligible for a Blue Badge, but who nevertheless have some form of impairment that restricts their mobility, are more likely to have fewer alternatives to travelling by car. Again, however, they would be likely to benefit in the longer term, from the provision of better, more accessible public transport.
These equity issues were a major factor in the subsequent referendum in Edinburgh. Whilst it was demonstrated, during the planning phase, that no group of residents would actually lose out as a result of the introduction of the scheme, a city-wide referendum resulted in the plans being rejected by almost 75% of the residents who voted, and neighbouring authorities, who were not included in the referendum, were also against the proposed scheme, on the grounds that they perceived the charging regime to be unfair. The latter perception was based upon a belief that the double-cordon system of charging would impact more upon residents commuting into the centre of Edinburgh than upon the city’s residents. Furthermore, since the national legal framework dictated that a single statutory authority (i.e. the City of Edinburgh Council) should be responsible for the collection and distribution of revenues, adjacent authorities were uncertain as to whether they could guarantee receiving the funds necessary to make the investment in public transport improvements that their residents would expect.
When the Area Licensing Scheme (ALS) was introduced in Singapore, there was considerable speculation that the restrictions would accelerate the trend towards decentralisation from the city. In practice, this did not happen, because Singapore is too compact in size for companies to decentralise. Furthermore, labour mobility into the city did not diminish with urban road user charging, since many commuters were already using public transport, and the pricing scheme improved public transport services because of reduced congestion. Furthermore, top management employees either paid the charges for road use or had them reimbursed by their company, which also had implications for vertical equity considerations. The cordon gave a greater advantage to commercial firms located just outside the cordon, with all the implications for the development of land, but this problem might be addressed by the introduction of time-based, distance-based, or delay-based urban road user charging regimes (Jones, 2003). Related to this, the experience of Singapore has also showed that, for an initial period, some companies and commercial establishments advertised that they were attractive due to the fact that they were located just outside the charged area, close to firms who were located inside. This led to agglomeration effects, with increased development on the periphery of the congestion charge area. Therefore, on two occasions since 1975, the Singapore authorities have enlarged the charged area, as a response to some previously residential areas on the periphery becoming developed commercially.
With the introduction of electronic road pricing in Singapore in 1998 (Olszewski and Xie, 2003) it was demonstrated that car drivers showed less elasticity to changes in road user charges, than riders of motorcycles; the conclusion from this observation is that motorcyclists, who in Singapore tend to be less affluent members of society, are more likely to be forced to change their travel behaviour as a result of charging, and so suffer the greater impact.
In London, the impact of the city’s Central Area Congestion Charge is monitored on an annual basis. TfL (2008) considers the more significant social impacts, (i.e. the effects of urban road user charging on “how people and communities live, work, travel and relate to one another”), and aims to “assess the balance between those who may have ‘benefited’ or ‘lost out’” as a result of the scheme. The survey focuses particularly on impacts on people’s access to services, which is related to the risk of some people becoming socially excluded, and on any cost of living or financial hardship implications. The survey seeks to understand how people have changed their travel behaviour in response to the introduction of Urban Road User Charging, and the resulting impacts on quality of life, and on people’s perception of the “amenity” of the Congestion Charge Zone and its surrounding areas. The survey also seeks to monitor the wider impacts of the scheme on the quality of life of all Londoners.
The London survey is in two parts: a “Londoners Survey”, and a survey of “users” (i.e. people who pay the congestion charge). The Users Survey is a longitudinal panel survey, and has consisted of a “Before” survey, an “After” survey and three supplementary surveys carried out after the implementation of the scheme. The main survey sample was augmented with an additional sample of “hard to reach” people who might be difficult to survey using conventional techniques, consisting of older and disabled people, and also people from religious minorities who attend a place of worship during the day. The Londoners Survey has consisted of three “waves” before, and three waves after, the implementation of the congestion charge, with a seventh survey planned for the Autumn of 2008.
One of the main findings from London has, unsurprisingly, been a reduction in car trips into the Congestion Zone, particularly for leisure and social purposes. Whilst some respondents have reacted by making fewer trips of this nature, others have switched to making these trips using another mode of transport. The most substantial impact of congestion charging on travel behaviour is reported to have been on shopping and entertainment car trips among infrequent travellers. From the point of view of monitoring evidence for social exclusion as a result of the charging policy, there appears to be little overall evidence of a lack of access to goods and services, mainly due to the level of availability and use of alternative modes of transport. Another area in which a substantial decrease in trips has been observed has been in parents driving children to school and day care; it might be argued that, in this context, it has been more affluent Londoners that have been forced to change their travel behaviour.
The annual Central London Congestion Charge Impacts Monitoring Report (TfL, various years) has so far come up with no evidence of traffic volumes increasing in areas just outside the charging zone, which is a phenomenon that was widely expected prior to the scheme’s implementation. These findings confirm that predicted impacts, such as increased congestion occurring in particular spatial locations, have sometimes not been observed empirically.
In the overall context of “winners & losers”, there were 16% of Londoners who said they thought they had benefited, and roughly 16% who said they had lost out overall. Generally, there has been a consensus that improvements have been made to air quality, the environment in general, the provision of bus services, bus journey times, traffic congestion and car journey times – and this might be viewed as evidence that there have been benefits across the board.
There has also been little evidence of the scheme having an adverse impact on disabled people, although some disabled people have reported that visits from carers, friends and family have reduced in frequency during the day, since the advent of the congestion charge, with some stating that this has led to an increased sense of loneliness.
The experience in Stockholm (see Transek (2006b)) has been that, overall, a large proportion of congestion tax payments are paid by a relatively small number of drivers. This is a scheme that was adopted after a successful referendum vote, during which it was presented as a “congestion tax” or “environmental charge”.
In terms of the relative impact of the scheme on different groups of people, substantial variations have been found within groups, but generally,
• residents of the inner city and the Lidingö district pay nearly twice as much per person as residents of other areas, suggesting some geographical inequities
• households with a high income per household member pay nearly three times as much as low income households
• employed people pay about three times as much as others
• men pay 50% more than women.
There were, however, some anomalies in the research results from Stockholm; for example, although inner city residents paid most congestion tax and derived less benefit through savings in travel time, so deriving less net benefit than others, opinion surveys showed that they had the most positive attitude towards the charge. This highlights the possible gap that might exist between perceived and measured costs and benefits, and suggests that residents of the central area of Stockholm may have derived benefits that were not considered by the research (CURACAO,2008).
Transek (2006b) also went a stage further, and examined the impact on equity according to whether different strategies were used for the redistribution of the income from the congestion charge. Three hypothetical scenarios were used – the income being distributed equally among all members of society, being used to fund a reduction in income tax, or being used to fund a reduction in public transport fares. This exercise found that these different strategies for redistributing revenues actually had a greater impact on the extent to which people from different groups were affected by the charging scheme than variations in how much congestion tax people actually paid. For example, if revenue were used to fund reductions in public transport fares, it is people who are young, single, female, on a low income and resident in the city’s suburbs who would benefit the most overall, since they use public transport more and drive less, and so pay the least in terms of congestion tax. On the other hand, it is people who are employed, who have children, who are on a high income, and who reside in the inner city, who would derive less net benefit. Similar calculations were made of the “winners” and “losers” in a situation where revenues were used to fund a reduction in income tax; in this scenario, high-income individuals, older people, single parents and residents of Northern suburbs were identified as being the main beneficiaries.
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