A city-wide trial in Melbourne shows how road use charges can reduce traffic jams

Traffic in Melbourne. Image: Getty.

Road congestion in large Australian cities is estimated to cost more than A$16bn a year. Economists have long argued the best way to improve traffic flow is to charge drivers for their contribution to road congestion. We have now analysed data collected from 1,400 drivers across Melbourne to see whether road user charging can change their behaviour in ways that ease congestion.

And the answer is yes.

Because the obstacle to adopting this approach has been concern about its fairness, we also looked at driver incomes. Would congestion-based charges price the poor off the road for the benefit of those who can pay? We calculated how different systems of road use charges affected households on different incomes, and how driving patterns changed under different prices.

The evidence does not support other common policy responses to traffic congestion. Building new roads does little to relieve congestion. Placing tolls on roads can push traffic onto others.

However, even small reductions in congestion can produce large benefits. On congested roads, reducing traffic by 5 per cent can increase traffic speeds by up to 50 per cent.

The question is: what would the optimal charges be? Drivers often plan their travel ahead of time, so Uber-like surge pricing is not necessarily the best way to go. Could simpler fixed charges, based perhaps on time of day or location, be effective?

In 2015-16, Transurban Group implemented the Melbourne Road Usage Study (MRUS) to answer these questions. More than 1,400 drivers across greater Melbourne installed GPS devices in their vehicles for eight to ten months. After a period to establish baseline use, a randomly selected subset faced a series of road use charges via a system of virtual accounts. Every month participants accumulated real money from reduced charges as a result of their decisions about driving.

Well-targeted charges ease congestion

The Melbourne Road Usage Study tested three simple charges:

  • a flat distance-based charge of 10 cents per kilometre
  • a time-of-day charge of 15 cents per kilometre at peak times and 8 cents at other times
  • a distance-plus-cordon charge where drivers were charged 8 cents per kilometre at all times plus A$8 if they entered the inner city.

Our working paper, Can Road Charges Alleviate Congestion?, evaluates the raw data.

Charges that vary by time of day were most effective at reducing driving at congested times. Drivers subjected to a higher cost of driving in the weekday peak hours of 7am to 9am and 3pm to 6pm reduced travel by 10 per cent during these periods.

While a simple 10 cent charge on distance travelled did reduce driving, this was mainly outside the congested inner city and at off-peak times – mostly in the middle of the day and on weekday evenings. Most freeway congestion occurs around morning and late afternoon commutes.

London and Singapore have charges to enter the congested city centre. Further research is needed to assess the effects on inner-city traffic in Australian cities.

The evidence points towards most drivers who enter the central business district (CBD) being willing to pay higher weekday charges. But few drivers entered the cordon zone during the study. Less than 5 per cent of the drivers made over half of the trips into the area.

Access to reliable public transport matters

Public transit has a key role in getting cars off the road. Our data showed households located far from the CBD and from public transport drive more. Living 500m closer to a tram or train station has the same effect on kilometres driven each day as living 5km closer to the CBD.

Households within a 10-minute walk from public transport drive least. The largest reductions in driving from time-of-day and cordon charges come from households living 10 to 20 minutes’ walk away.

Road use charges could be fairer

Congestion-based charges can be a more progressive way to fund roads than the existing system of registration fees and fuel taxes.

The fuel excise makes up almost half of the average annual road bill in Australia. It’s essentially a distance-based fee, but more fuel-efficient vehicles pay less per kilometre travelled. Hybrid vehicle drivers, for example, contribute much less to fuel tax revenue.

Yet, although hybrids contribute less to air pollution, they increase congestion just as much as their petrol-guzzling counterparts. And congestion is a much greater shared economic cost than vehicle air pollution.

Annual vehicle registration fees make up most of the remaining road bill. These provide no incentive to reduce congestion.

Fuel taxes and registration fees put a disproportionate burden on low-income households in the outer suburbs. Our research shows these households would be better off if roads were funded more by congestion charges.

Field experiments help get the settings right

So what is the optimal congestion charge? Economic theory (Pigou 1920) tells us to price at the cost that each extra user imposes on the system.

With road use, though, the calculation is difficult. To fix rates in advance, we would need to know exactly how much longer everyone’s trip is when each extra driver joins each system. And we’d need to cost that slowdown for each individual on the road at that time (i.e. value their time and, potentially, the cost to them of being late). New research has been using clever experimental designs to identify these values.

That said, maybe it is not too important to get the price just right. For electricity, we are starting to see that households respond to there being a price, not its specific level.

Before widespread road use charges are implemented, we would like to see more field experiments like the MRUS to find answers to other questions. Would it be better to combine a time-of-day charge with targeted locations? How effective would it be to charge more for using highly congested arterial roads at peak times? Would this simply push congestion onto nearby local roads? How large a gap between peak and off-peak prices is needed to produce a strong response?

Another interesting option is the i10 model outside Los Angeles. Two lanes are for traffic willing to pay more to get to their destination faster.

Dynamic pricing ensures traffic in these lanes flows freely – if too many use these lanes and traffic slows, the price increases. Drivers can decide every few kilometres if they want to pay more to stay in the express lanes. Those who must get somewhere on time are able to, and the fee revenue can be used to reduce road costs for others.

The Melbourne Road Usage Study (MRUS) shows field experiments can help us design better road use charges. By all appearances, households took it seriously and were positive about their involvement.

The ConversationThe MRUS provides evidence that well-designed road use charges could help reduce congestion by encouraging people to drive at different times, take other routes or use other transport. This could lead to better use of existing infrastructure, thereby reducing costs, while generating revenue for infrastructure investments. Under such a system, drivers who contribute little to congestion could see substantial gains.

Leslie A. Martin, Lecturer (Assistant Professor) in economics and Sam Thornton, Master of Economics candidate, University of Melbourne.

This article was originally published on The Conversation. Read the original article.


Here are eight thoughts on TfL’s proposed cuts to London’s bus network

A number 12 bus crosses Westminster Bridge. Image: Getty.

In 2016, the urbanism blog City Observatory had a modest proposal for how American cities could sort out their transport systems: “Londonize”.

Its theory, the name of which referenced another popular urbanism blog, Copenhagenize, was that the key plank of Transport for London’s success was something that even transport nerds did not consider very sexy: its buses.

Though the Tube might get more glamorous press, London’s bus service really is impressively massive: It carries roughly 2.3bn passengers per year—much more than the Tube (1.3bn), close to the New York City subway (2.8bn), and nearly half as much as every bus service in America combined (5.1bn), while serving a population roughly 1/35 as large.

How has TfL done this? By making its bus network high frequency, reliable, relatively easy to understand and comprehensive. We rarely talk about this, because the tube map is far more fun – but the reason it’s so difficult to fall off the transport network in Greater London is because you’re never that far from a bus.

Given all that, we should probably talk about TfL’s plans to rethink – and in most cases, cut – as many as 36 different central London bus services over the next few months.

I’m not going to rehash details of the changes on which TfL is consulting from next month: there are just too many of them, and anyway it’s someone else’s scoop. The story was originally broken by Darryl Chamberlain over on 853 London; there’s also some fascinating analysis on Diamond Geezer’s blog. You should read both of those stories, though preferably not before you’ve finished reading this one.

Before offering my own analysis of the proposed changes, though, I should offer a few examples. More than a dozen routes are facing a trim: the 59 from King’s Cross back to Euston, the 113 from Oxford Circle to Marble Arch, the 171 from Holborn all the way down to Elephant & Castle and so on. A couple – the 10, the 48, the C2, and at most times the special routemaster version of the 15 – are being withdrawn altogether.

On, and one new route is planned – the 311, from Fulham Broadway to Oxford Circus. This will help plug some of the cuts to the 11, 19 and 22.

So, what does all this mean? Some thoughts:

1) This might not quite be as awful as it initially sounds

TfL says that demand for buses has fallen by around 10 per cent in London in recent years. It predicts it’ll fall further when Crossrail opens, as passengers switch to the new line, or to the tube routes relieved by the new line. So: the idea of taking some unwanted capacity out of the system is not, in itself, terrible.

Striping out unnecessary buses should also improve air quality in some of London’s worst pollution hot spots, and improve traffic flow, hopefully speeding up journeys on those buses that remain. 

A map from the presentation in which TfL explained its plans, showing the reduction in bus numbers on key arteries. Hilariously, notes Darryl Chamberlain, “It no longer produces its own maps, so has had to use one prepared by a bus enthusiast”.

The plans might even free up buses and staff to increase frequencies in outer London where demand hasn’t fallen – though these plans won’t be unveiled until next year and, for reasons I’ll come to below, I’ll believe it when we see it.

2) For many bus users, a lot of these changes will pass almost unnoticed

By my count, I use nine of the affected routes with any regularity – but only three of the changes are things that I’m likely to be at all inconvenienced by. Most of the changes either affect a part of the route I don’t take, or one where there are easy, and pain free, alternatives.

This is anecdotal, obviously – perhaps I’m just lucky. But my suspicion is that a lot of these changes will go unnoticed by most passengers. It’s only the sheer number of them happening at once that makes this look like a big deal.

3) The Hopper fare makes this easier...

Once upon a time, if you had to switch buses, you had to pay a second fare. This isn’t true of journeys on the tube or railways – and since bus passengers have, on average, less money than tube passengers, it amounted to a pretty unfair tax on poorer Londoners.

But in January, in what is probably his most notable policy achievement of his two years in office so far, London’s mayor Sadiq Khan changed the rules. Now you can take as many buses as you want within an hour, for a single fare: that means you can switch buses without paying a penalty.

That will have made it easier for TfL to cut routes back: replacing a direct bus journey with one that requires a change no longer means imposing a financial penalty on passengers.

4) ...but not that easy

That’s about where the good news stops, though – because there are reasons other than cost why people prefer direct bus routes. Needing to change buses will be difficult for anyone with any form of mobility impairment, for example. Even for those of us lucky enough not to fall into that category, it’ll be annoying: it’s just easier to stay in one seat for 40 minutes than to get turfed off and have to fight for a new one halfway through.

More than that, from the passengers’ point of view, excess capacity feels quite good a lot of the time: it means your bus may well be nice and empty. Reducing the number of buses along those key corridors will also make those that remain more crowded.

5) The motive is almost certainly financial

Another of Sadiq Khan’s big policy promises was to freeze fares. He made this promise at a time when central government is massively reducing the financial support it gives TfL (the work, Chamberlain notes, of Evening Standard editor George Osborne, back when he was chancellor). And the Hopper fare, while a great idea in many ways, means a further reduction in income.

So: TfL is scrambling for cash: this is why I remain cynical about those new outer London bus routes. I would be amazed if money wasn’t a motivation here, not least because...

6) TfL thinks no one will notice

Any attempt to reduce tube frequencies, let alone close a station, would result in uproar. Hashtag campaigners! Angry people pointing at things in local newspapers! Damning reports on the front of the Evening Standard from the bloke who made it happen!

Buses, though? Their routes change, slightly, all the time. And do you really notice whether your local route comes every 10 minutes or every 12? That’s not to mention the fact that bus passengers, as previously noted, tend to be poorer – and so, less vocal – than tube passengers.

So cuts, and the savings they bring, are much easier to sneak through. TfL probably would have gotten away with it, too, if it hadn’t been for those meddling bloggers.


7) Scrapping the C2 might be a mistake

The C2 runs from Parliament Hill, through Kentish Town and Camden to Oxford Circus. In other words, it links north London, where a lot of journalists live, to the offices of the BBC and Buzzfeed.

As occasional New Statesman writer James Ball notes, this is probably not the easiest route to quietly shelve.

8) None of this is set in stone

The consultation doesn’t even begin until next month and then will run for six weeks – so all these plans may yet be forgotten. We shall see.

Anyway – here’s Darryl Chamberlain’s original scoop, and here’s some detailed analysis on Diamond Geezer. Please support your local bloggers by reading them.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.

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