Battling Gridlock: Congestion Fees Are Working in Europe and Asia, but It's Questionable If They Will Succeed in Car-Crazy North America

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WITH TRAFFIC gridlock causing enormous monetary losses, cities around the world are choosing to use economic instruments to ease congestion. Congestion fees, as they have come to be known, involve assigning a price to a road based on the demand for using that road. The fees are generally set to discourage use rather than raise revenue, though they do the latter as well.


Congestion fees are not a new phenomenon. Singapore implemented its effective congestion charge over 30 years ago, but the success of different schemes has been mixed and what works in one jurisdiction may not succeed in another.

In 2003, London, England, introduced a straight-forward congestion fee that only applied to weekday drivers. The pricing structure did not vary depending on vehicle type, distance travelled or time of day. When it was first implemented, proponents cheered as London's fee caused an impressive 30-per-cent drop in vehicular traffic in the city centre, which had levelled out at 21 per cent by 2006. Despite fewer automobiles, however, congestion continues to be a reality. It seems that the extra road capacity has been largely filled with buses, bicycles and pedestrians, which leads the city to maintain that its scheme is a success. It is credited with a significant increase in cycling; London's public transportation system has been improved and ridership is up; the number of accidents is down, and air quality is improving (nitrous oxide emissions are down by 18 per cent, particulates by 22 per cent and carbon dioxide by 20 per cent).

Critics often claim that congestion fees will hurt business within the congestion zone. London tells a different story. Retail in the restricted area remains unaffected according to Impacts Monitoring, Transport for London's fifth annual report. Moreover, a cost-benefit analysis suggests that the identified benefits exceed the costs of operating the scheme by a factor of around 1.5 with a $9.70 charge, and by a factor of 1.7 with a $13.90 charge.

Despite their proliferation in Europe and Asia, congestion fees have a limited foothold in North America. San Diego's high-occupancy toll lanes helped reduce congestion on targeted roads and are credited with reducing pollution since the revenue raised is invested in public transportation. San Francisco and New York have both considered implementing congestion fees in their city centres, but in the latter, at least, progress has been difficult.

A reccurring criticism of congestion fees is that they prevent those with low incomes from driving in the city. London, where transit ridership is up, deals with this complication by ploughing all the net revenue it derives from its charge back into public transportation. In 2006-2007 alone, London was able to direct $241-million to public transit from this source. Stockholm took an approach that was similar but even more forward thinking. This Scandinavian country made massive improvements to its transit system in advance of introducing its congestion fee, thereby deflecting much of the criticism that might have shelved the project. Stockholm's fee is credited with reducing traffic and pollution, and the improvements made to its public transportation system led to an increase in ridership. …