Congestion pricing seems likely to become a bit of a hot topic in Auckland over the next few months, as various ways to ‘plug the gap’ between the amount of money required for the transport projects wanted and the amount of funding actually available are explored. An article at the excellent Atlantic Cities blog points out some recent research into the effectiveness of congestion pricing at reducing peak time congestion compared to other measures – most specifically rewarding those who travel during off-peak times.
Congestion pricing is generally considered to have two aims: raising revenue and discouraging car travel either to certain areas or at certain times of the day. For most transport economists, the focus is on the second of these matters, as congestion charging is a pretty inefficient revenue generator – due to its significant administration costs (especially when compared to fuel tax, which is incredibly cheap to administer). The theory goes that roads are congested at peak times because peak time road-space is a scarce resource, and by under-charging for it we are creating too much demand for the relatively limited amount of available supply. In order to use this road-space more efficiently, we should charge higher rates at times (or in locations) where demand is highest. This will encourage people to travel outside peak times or to take public transport, walk or cycle, instead of driving.
The beauty of congestion pricing is that it gets around, to an extent, the problem of induced demand. Historically, we have tried to solve congestion by simply building more and more supply – and then for some reason being surprised when that supply is taken up quickly, leading to our roads being just as congested as before the widening/new building took place. Congestion pricing means that we don’t have to go and spend a huge amount of money on additional capacity, only to see it eaten up close to immediately. Rather, it means that trips which can be taken in another way often area, as many people with options will choose to avoid paying the charge. Of course induced demand doesn’t disappear completely – freer flowing roads encourage further traffic which can mean that congestion charges need to keep on being hiked up to ensure the roads stay free-flowing: the same ‘chicken-and-egg’ spiral you get with road widening, although more helpfully this time you’re making money rather than spending increasingly eye-watering amount on roading projects.
Of course an alternative to charging people for driving at peak time is to instead offer rewards for travelling off-peak. Fundamentally, either option could have the effect of helping to ‘spread the load’ and reduce peak time congestion. In a sense we do this at the moment, through subsidising public transport services for their ‘congestion relief’ benefits: which are particularly applicable at peak times. It’s in the best interests of motorists to have a lot of people on public transport. Therefore it’s sensible for drivers to help keep PT fares lower than they would otherwise be, through contributing to subsidies. The question is, what if we extend this theory to directly encouraging people to travel outside peak times?
That’s what this study in the Netherlands looked at, and here’s its abstract:
In a 13-week field study conducted in The Netherlands, participants were provided with daily rewards – monetary and in-kind, in order to encourage them to avoid driving during the morning rush-hour. Participants could earn a reward (money or credits to keep a Smartphone handset), by driving to work earlier or later, by switching to another mode or by teleworking. The collected data, complemented with pre and post measurement surveys, were analyzed using longitudinal techniques and mixed logistic regression. The results assert that the reward is the main extrinsic motivation for discouraging rush-hour driving. The monetary reward exhibits diminishing sensitivity, whereas the Smartphone has endowment qualities. Although the reward influences the motivation to avoid the rush-hour, the choice how to change behavior is influenced by additional factors including education, scheduling, habitual behavior, attitudes, and travel information availability.
A further academic article looks at making a comparison between the effectiveness of congestion pricing schemes and the kind of reward scheme the Netherlands study trialled. The results of the study are quite interesting – starting with the differences in the changes people made when either a cost or a reward was provided to encourage them to drive outside peak times: I’m not entirely sure what’s with the bike result, but it seems that the major difference is that the reward scheme generally encouraged people to travel outside peak time or to shift to public transport at a higher rate than road pricing did. Road pricing seemed more successful at shifting people to riding bikes, other modes (presumably largely walking) or staying at home.
But this is only a part of the story. What really matters is the issue about how effective the two schemes are at achieving their primary purpose – which is to reduce peak time car travel. And the results of that are quite interesting: There are some variations in the methodologies for the different studies that went into creating these results, but the distinction seems pretty sharp at an overall level of analysis. It seems that people do respond better to rewards than to ‘punishment’ when it comes to shifting away from travelling at peak times by car.
Of course reward schemes are potentially quite challenging to fairly implement, and of course they cost money rather than generate it – as road pricing does. However, obviously they’re likely to be quite a lot more politically acceptable and if they are more effective at getting the results we want, then they might be a legitimate form of public intervention. Put in a slightly different way, spending money on reward schemes to reduce peak time congestion might be quite a lot cheaper, quicker and more effective than spending money on increasing roading capacity with the same goal.