Monday, July 02, 2007

London road pricing

Ken Livingston, Mayor of London, argues that congested cities should mimic the successful London congestion pricing scheme.

Of course I agree - all the major east coast cities of Australia for a start. In London it reduced congestion, didn't damage retail sales (the city has just become more livable and convenient), increased use of public transport and bicycles and now receives broad public support. Yes they had to expand and improve the public transport system but they did that with revenue from the congestion charges.

Interesting things I was not aware of:
  • The priced congestion zone has doubled in size and traffic volumes within the larger zone are falling.
  • The pricing will be adjusted to reflect carbon emissions.

When will Australia get politicians with the guts and foresight to take the sorts of initiatives Ken Livingston has fostered and which are being pursued in Stockholm? Most of us live in large cities and current policies that avoid comprehensive pricing are failing.

My previous posts on congestion pricing include attempts to account for the Victorian Governments unwillingness to consider it, partial pricing and income distribution and comparisons between Melbourne and London.


Mike said...

I have to admit that ages ago when I read a post on your blog about congestion pricing the bleeding heart in me wasn't comfortable with it.

I had ambiguously defined concerns about poorer families who want to travel into the city, how it might affect them, etc etc.

Your blog and work by others has slowly been persuading me, however. Particularly if its implemented with specific mechanisms in place to make sure, as you say, that public transport is boosted to compensate.

Do you know whether London's public transport system has gone the way of Melbourne's in terms of privatisation? Were they just investing in transport infrastructure while the service was provided by others? Or did they continue to run it as literally public transport? If so, perhaps congestion pricing revenue should be directed towards a buy-back of Melbourne's public transport!

alister said...

You write, "When will Australia get politicians with the guts and foresight to take the sorts of initiatives Ken Livingston has fostered?" We have them. They're called The Greens.

hc said...

Alister, Is that true? I can't see them endorsing congestion pricing. Took a quick look here:

The Greens have many good policies but until they recognise that economics is their friend they won't get my vote. I am a greenie myself but not a muddlehead!

Anonymous said...

Absolutely first rate idea old chap. let's get all these poor people out of the way. I'm sick of poor peoples cars like Commodores and Corolla's in the way of my Bentley when I'm on the way to the club to do a bit of business. The only problem with the London charges is they'e not high enough - still a bit of riff-raff on the streets.

hc said...

Anonymous, If you are concerned about pricing effects on the distribution of income - a legitimate complaint - read the paper I wrote addressing such issues cited above.

It is true that wealthy people with a high value of time do well out of congestion pricing. But the income generated from them can be used to compensate poorer commuters.

These pricing moves are Paretop efficient - with appropriate compensations every road user can be made better-off. That is why economists dislike congestion - its a pure loss or inefficiency that impacts on all.

Anonymous said...

Thanks HC. I might have been to Grammar with you. The only problem with high value people such as myself providing 'compensation' as you put it, to poor people is that we jolly well don't like paying taxes. They are, it seems like congestion, something only the poor have to put up with. How about we cram a few more of 'em onto the trains back to the outer suburbs where they belong eh? An hours trip on a crowded train, maybe followed by a 20 minute bus ride on a cold dark night might show them the error of their ways. Teach 'em only the inner areas can be priveleged to own a car what !

conrad said...

I'm with HC on the Greens. Alistair, I think you are confusing a socialist party that uses the name Green, which clearly puts socialist concerns ahead of green credentials (e.g., Telstra sale). I think it must be part of being an Australian political party -- the Liberals are the conservatives, the socialists are the greens, and I'm not sure Labor is really for the median worker anymore.

Mike said...

Anonymous, I hear where you're coming from. I wasn't being sarcastic when I mentioned bleeding heart above - for quite some time I've been standoffish about congestion pricing. Toll roads and the like irritate me on principle.

When it came to congestion pricing, I asked myself what principle in particular it threatened. My concern was for equity - that it would be a pricing mechanism that would fall more heavily on the poor than the rich, and that it would be another in a long line of neoliberal policies that allow people to say 'well, I don't use that partiuclar service, so why should I have to pay for it'.

However, as Harry points out, a lot of the research suggests that the consequences and costs of congestion pricing fall more heavily on the poor who live outside the inner city, whilst the wealthier who live in a lot closer bear far fewer of the costs. An equitable congestion system would arguable penalise the wealthier, inner city types more than the poorer, outer-suburban types.

In fact, if the wealthy are happy to fork out for the ability to drive on the roads, then we could argue we'll be able to extract even more from the wealthy than we can through taxes.

This is particularly likely if (and it's a big if) the revenue from congestion pricing is allocated directly to improving public transport so that trains and buses are in better condition, more reliable, comfortable, etc.

Mike said...

Oops - typo - "...the consequences and costs of congestion pricing fall more heavily on the poor..." should not have the word pricing in it all.

Should read "...the consequences and costs of congestion fall more heavily on the poor..."

tmac said...

No politician in this country has the guts to make a radical forward thinking decision. If they won't put a blanket congestion charge on the Sydney CBD then they should put a $20 charge on anyone driving in between 7.30-10.00am. The amount of traffic clogging the city is a joke. It takes a bus 20 mins to go from Bridge st to the QVB in the evenings, when you can walk it in about 5-10. The roads are clogged with single occupant cars who 'need' to drive in and park under their buildings. These selfish clots need to be forced onto public transport.

Yobbo said...

It's pretty easy to make congestion charges work well in a city that has probably the second best public transportation system in the world (After Tokyo).

How well do you think a congestion charge would work in Los Angeles ?

Congestion charges won't help much if you need a $200 billion rail system in place first.

hc said...

Sam, A congestion charge always works. If there is no congestion the charge is zero. If there is a lot of congestion because a train service does not exist the charge will be high. By the way if you collect enough revenue this can be used for public transport reforms.

If you do wish to upgrade a city's public transport buses are generally a better deal than train.

Sam Ward said...

"If there is a lot of congestion because a train service does not exist the charge will be high."

Meanwhile, how do people get to work in the meantime?

You can't just shut down the CBD. If there is no public transportation system in place already, all a congestion charge does is raise revenue, since people will have no option but to pay it. In that case it's not a congestion charge, it's a simple tax hike targetted at white collar workers.

"If you do wish to upgrade a city's public transport buses are generally a better deal than train."

Do you have any figures or case studies to back that up? And how do you define "Better"? Busses will be cheaper for sure, but better is pushing it. I'd rather slit my wrists than catch a bus in most cities in the world.

Sam Ward said...

You've lived in Bangkok, did you take the bus there very often?

You actually forgot one very important public transportation option: Taxis.

And by Taxis I mean "taxis that aren't regulated so heavily as to be uneconimcal for everyone, even to the point of being more expensive than limousines" like Australia's taxis are. I mean taxis in sensible countries like the USA, Hong Kong and Thailand.

hc said...


I regularly took the company supplied bus to work and air-conditioned bus number 4 from the Superhighway to Silom/British Club and Patpong. The non-airconditioned buses were fairly awful not so much because of the lack of air but because they were incredibly overcrowded - at 3 baht a journey they were overly subsidised.

If you are now in Bangkok and travelling about the place try to get a timetable for the air conditioned buses - you might use them rather than a car when traffic is bad. They are very good - comfortable and reasonably priced.

But yes I mostly caught taxis which were cheap and unregulated. The bus fare from Silom to my home was then 15 baht and the taxi fare then about 80 baht or $3-50 Australian.

I agree that unregulated taxis are part of the solution but unregulated buses, minibuses and motorcycle transport as well. These were all part of the Bangkok scene then and offered lessons for Australia.

I recall I could even get a lift on the back of a motorscooter along a Soi to my friend's home for a few baht if I was too lazy to walk.

BTW you wouldn't shut down the CBD with tolls that were hefty. Traffic would fall off enough before that happened and there would be a move to public transport.

The costs of trains are prohibitive relative to buses even in moderately large cities. The evidence is set out in any book on transport economics - my ideas came from Clifford Winston.

Yobbo said...

Bangkok also has a shitload of traffic, and a large system of motorways to handle it.

I know trains are expensive. My point is that you can't move people to public transport if there is no public transport system.

I'm not sure about the situation in Melbourne, but if it wasn't for Perth's trains then 80% of the population wouldn't be able to reach the CBD.

Perth is a long stretch of suburbia along the coast, the outer reaches are about 2 hours away by bus and 30 minutes by train. Pretty much everyone drives to the train station and gets to the CBD that way.