June 12, 2008

Urban congestion charges?

Source: OXFORD ANALYTICA

After a relatively successful experience with congestion charging in London, the UK government has announced funding for a scheme in Manchester.

The city's congestion charge will differ from London's model:

Two rings will be created around the city, one at the outer motorway ring road, and one at the inner ring road. Vehicles will have tags attached to their windscreens, which will be scanned electronically as they cross each ring. In contrast, London has a single central congestion charge area.

Drivers in Manchester will pay to enter each ring only at peak traffic times; in London, vehicles pay to enter the congestion charging area between 7am and 6pm on weekdays.

Pros and cons

Manchester's prospective congestion charge, along with New York Mayor Michael Bloomberg's abortive attempt to pass a similar scheme though the New York State Assembly, highlight some of the benefits and pitfalls of congestion charging:

Reduced traffic flows: There is evidence that congestion charging reduces traffic flows in congested city centres. In London, Transport for London data suggests that car journeys in the congestion-charging zone have fallen by one-quarter. This has meant that, particularly in the aftermath of the introduction, the city's residents widely approved of the measure despite costs to motorists.
Health benefits? Reduced traffic congestion in city centres improves citizens' quality of life, and has health benefits. Studies on London suggest that nearly 2,000 years of life have been saved since the congestion charge was introduced, with residents suffering from existing heart or lung problems particularly benefiting.
Increased revenue: Congestion charging can generate revenue for investment in public transport. For example, announcement of Manchester's scheme comes with £3 billion ($5.9 billion) of investment in public transport, including new tram and urban rail lines and more buses. Some £1.8 billion of this total will come from funds the city will borrow, which will be repaid from congestion charge profits over 30 years.
On the other hand, moves to introduce congestion charges face a number of difficulties:

Cost of living increase? Residents of cities are unlikely to support moves that will increase their costs of living. While the London scheme initially received broad support because it was seen to work, moves to extend the congestion charge zone and charge high polluting vehicles more have been extremely unpopular. Promises to roll back some of these initiatives were a major factor in Conservative party candidate Boris Johnson's recent election as the city's mayor.

No public support? In Manchester, a recent opinion poll showed that 64% of the city's inhabitants opposed a congestion charge. Lack of public support acts as a significant disincentive to local politicians, as Bloomberg discovered to his cost in New York. Moves to introduce schemes in the UK's Midlands region were abandoned at early stages because of lack of public and political support.
Worth the wait? Congestion charging schemes are expensive to set up, which means that their benefits in terms of revenue generation, and thus investment in public transport, can take a long time to percolate. Critics of Manchester's initiative argue that substantial revenues will have to be paid to private companies operating the scheme.

Outlook

Increasing need, and political pressure, to reduce greenhouse gas emissions in major cities means that congestion charging is likely to become increasingly widespread globally. This means that while ambitious international targets -– be they at EU, UN or other levels -– will remain controversial, initiatives to reduce emissions at the local level may end up having a similar net effect.

However, moves to increase taxes will always be controversial. This means that initiatives to reduce pollution in city centres, which do not involve higher taxes, may well also become increasingly common. Some German cities already have banned high polluting vehicles from entering city centres at certain times. Projects in cities in large developing countries, such as Mexico City, to restrict car use on given days according to number plate, will also enjoy some success.

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