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What Are The Research Gaps?

The limitations in our understanding of appraisal methods can be considered in two groups: those which relate to the specific requirements for the appraisal of road pricing schemes (Section 11.3.3) and those which relate more generally to gaps in appraisal methodology, but which are relevant to road pricing.
The specific requirements for appraising road pricing schemes

Section 11.3.3 identified five ways in which appraisal of road pricing differs from that of other policy instruments.

The first related to the complexity of responses. The prediction process needs to estimate the scale of change in journey frequency, destination, timing, mode and route, and the second order impacts on the transport network. Some of the changes, for example in flows and modal shares, will be substantial, and appraisal methods designed to reflect marginal changes will not be appropriate. Guidance is needed on the assumptions which it is appropriate to make, and their implications for the appraisal process.

The second concerned wider economic benefits which, as Chapter 9 indicates, is an area in which appraisal methodology is still being developed. There is emerging evidence on economic impacts (Quddus et al, 2007) but that still leaves open the question of the period of adjustment required and whether any economic changes could be attributed exogenously.

The third addressed changes in accessibility, which are reflected in changes in travel time and cost, but which may need to be presented in a disaggregate form as input to a distributional appraisal. While generalised cost may be an appropriate metric for accessibility, it raises the question of how road pricing charges themselves are perceived and valued.

The fourth covered the wider issues of equity and distributional impacts. The appraisal of distributional impacts generally is an area of weakness in appraisal methodology. To be informative to decision-makers the output needs to be kept disaggregate, and based on the estimated impacts on each of a number of predefined impact groups. Guidance is needed on how to select those impact groups, which may differ from one scheme to another, for example depending on the policy on exemptions. Care is also needed in deciding on how to present the disaggregate information on impacts, given that some (for example on low income groups) may be readily obtained from models, whereas others (e.g. on disabled travellers) will need to be more judgmental and qualitative.

The final issue was that of treatment of revenues generated, and their inclusion in benefit/cost ratios and estimates of value for money. Revenues may be treated as being a contribution to general public funds, in which case they can be treated at face value or assigned a shadow cost to reflect the value of their use in an optimal investment package. Alternatively they can be treated as hypothecated to a particular purpose (e.g.: the enhancement of public transport services), in which case it is preferable to appraise the package as a whole (Section 11.2.3). Guidance is needed on good practice in this area. 

General limitations in appraisal of particular relevance to road pricing

Road pricing can be expected to have significant impacts on the reliability of journey times and, for public transport, on overcrowding. The valuation of improvements in reliability has been the subject of considerable discussion (Bates et al 2001, Small et al 2005,). Levels of overcrowding will depend on the response of operators. This will depend on regulatory and infrastructure limitations and, with them, the application of the Mohring effect. Once again, the values to be assigned to time spent in overcrowded conditions are the subject of debate (Wardman, 2001).

Environmental benefits will include reductions in pollution and noise, for which resource values are increasingly available, and other more qualitative attributes such as enhancements in streetscape. These in turn might arise as a direct result of traffic reduction or through a policy of reallocation of the road capacity released. Methods such as hedonic pricing are available for valuing such benefits, but have not been widely applied.

Finally, road pricing can be expected to have a significant impact on tax revenues, particularly through the reduction in fuel consumption. The principles adopted for deducting tax revenue losses from net benefits differ between countries, and can significantly affect the resulting benefits (Minken et al, 2003)

No information on this theme is currently available from the case studies