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How Might Adverse Equity Effects Be Reduced?

Equity impacts can be reduced in one or more of three ways:
• modifying the design to overcome localised adverse impacts
• reducing charge levels and introducing subsides and exemptions
• adopting complementary measures, often using hypothecated revenues.

Addressing inequity through modified scheme design

The limited evidence from predictive and empirical studies suggests that inequities are more likely to arise from geographic status or transport use than from other causes. This suggests that changing aspects of design can potentially reduce inequities. The most obvious examples are changing the location of a cordon to avoid areas where people have fewer alternative travel options, and limiting the operating hours to times when alternatives are readily available and users have more freedom to choose how they travel. The choice between a cordon scheme and an area scheme can also affect the distribution of impacts.
Addressing inequity by means of charge levels, subsidies and exemptions

Inequities arising from economic or demographic status are more likely to be influenced by the level and incidence of charges. The simplest approach is the reduce the level of charge for all users, but beyond a certain point this will reduce the effectiveness of the scheme. Moreover, reduced charges will benefit all users.

An alternative is to reduce the level of charge for certain users. This can be done by vehicle type or for certain readily identifiable groups of user, such as residents in the London scheme. More complex subsidies are also possible. The Stockholm and Norwegian schemes have a maximum level of charge per day, thus reducing the impact on intensive users of road space. Other options considered in the literature include allocations of free permits, which allow all users a limited basic level of raod use at charged times. Such subsidies will add to the complexity and costs of operating the scheme, and thus need to be carefully justified.

A third approach is to exempt certain users. This has been done in most schemes for disabled drivers, and for essential services such as emergency vehicles. A more complex scheme in Stockholm provided an exemption for vehicles from an island provided that they passed through the city centre within a given time. Once again, such exemptions add to the cost of operating the scheme, and need to be carefully justified.

Providing compensation through the use of complementary measures
In addition to reducing inequities through scheme design, they can be addressed by providing alternatives or complementary measures. The most obvious alternative is the improvement of public transport, and this has been provided in all the schemes implemented. As in London and Stockholm, bus service improvements can be targeted to the corridors on which car users are most likely to seek alternatives, or where more low income residents live. Improvements to walking and cycling can also assist. In the case of London, any surplus from revenues raised from London’s Congestion Charge was required, by law, to be invested in the capital’s public transport system, and the aim was to raise £1.3 billion for such re-investment on all forms of transport, including roads, local streets and railways, during the first ten years of operation.

Complementary measures are more appropriate for overcoming adverse side effects of a scheme, which themselves may lead to inequities. These include improvements to the diversionary routes, closure of rat runs and restrictions on fringe parking. Reallocation of road space within the charged area to environmental and public realm improvements may also improve conditions for those who opt to switch from car use to walking and cycling.

This issue of compensation through complementary measures is very much linked to the important concept of hypothecation. Thus inequities can be reduced by judicious reallocation of the surplus revenues. At the same time, levels of public acceptance of road user charging are likely to be higher when it is clear that such revenues are channelled into improvements that improve conditions for those who might otherwise have been adversely affected. In Shanghai, for example, a qualitative analysis (Ma et al, 2005) of an Electronic Road Pricing Proposal concluded that there would be limited adverse implications in terms of equity, provided that the revenues raised were reinvested in public transport. Equally, analysis in Stockholm found that the use of hypothecated revenues had a greater beneficial impact on equity than reducing the overall level of charge (Transek, 2006b).

However, the experience of Manchester sounds a note of caution. The strategy there also emphasised the substantial planned investment in public transport services, whilst putting less emphasis on the congestion charge that would follow later, from 2013. The considerable incentive for the people of Manchester to vote in favour of the URUC scheme at a referendum in December 2008 was a £2.7 billion package of public transport improvement measures, financed 60% by the UK government and 40% by loans to be repaid from congestion charging revenues. Nevertheless, in spite of extensive consultation, referenda in all ten of Greater Manchester’s boroughs returned a “No” vote, with approximately 79% of the total vote going against the planned scheme, and 21% being in favour.