Lesson

Develop a statutory and legal framework for as a foundational step for levying road pricing fees and utilizing revenues.

Experience from road pricing programs in Europe and Asia

12/01/2010
Sweden; Germany

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Background (Show)

Lesson Learned

Congestion pricing programs face political, institutional, and public acceptance challenges and concerns everywhere in the world. Over a 12-day period, from December 7 to 18, 2009, a multidisciplinary scan team from the United States interacted with the experts in Europe and Asia to develop an understanding of factors that contributed to the successful implementation of road pricing. Based on their international experience, the scan team offered the following lessons learned on addressing legal and institutional issues.

Develop the statutory and legal authority early on as an essential foundation for road pricing programs.
  • Stockholm Experience: Road user fees first became possible in Sweden in 1988 through a change in law, which allowed tolls on the bridges to Norway and Denmark. Stockholm defines its road pricing as a national tax, since the city of Stockholm has no power to tax nonresidents. As a consequence, changes to the fee schedule require parliamentary action. In London and Singapore, the congestion charge is considered a fee, which allows the rates to be adjusted by the managing authority and fines to be resolved through administrative actions. Stockholm officials report that the benefit of treating congestion charges as a tax is higher collections because taxes are paid with higher frequency than other fees.
Forge interagency agreements and relationships for effective operations and enforcement.
  • Stockholm Experience. All pricing programs reviewed during the scan-tour have procedures and relationships in place to share vehicle registry data for operations and enforcement among agencies. Some agencies, such as the new Swedish Transport Agency, operate the priced facility and manage vehicle registration, further streamlining data sharing, billing processes, and associated costs.
Formulate legal framework governing the use of road-pricing revenues for multi-modal transportation investments.
  • German Experience. In Germany, the revenue generated from the truck tolling program is legally required to be allocated to projects for roads (50 percent), rail (38 percent), and waterways (12 percent). This preserves the majority of the revenue benefit for road users, but helps meet a national goal of multimodal transportation solutions to address mobility and future capacity needs.
  • Swedish Experience. In Sweden, the national government has established a long-term 2010–2030 investment plan for infrastructure investment, with the equivalent of US$14.5 billion programmed from a variety of revenue sources, including the Stockholm congestion tax and plans for congestion taxing in Göteborg. The investment plan allocates 53 percent of the funding to road projects and 47 percent to rail projects. The Swedish policy of “advancement” is incorporated in the Road Act to allow municipalities to augment national funding, making more investment possible and creating higher design and operating standards.
Beware that laws that limit the price-setting power may be required but such limits may also constrain the ability to use price signals most effectively.
  • European Union Experience. A European Union directive dictates that the differential between the highest and lowest toll rate cannot be more than two times the lower value. Some European officials claim that this differential is not significant enough to manage traffic effectively in urban areas. The argument is that the limited price differential is insufficient to allow efficiencies to be realized through substantial temporal or mode shifts or avoided road trips. European Union Directives 1999/62/EC and 2006/38/ EC cover vehicle taxes, tolls, and user charges imposed on vehicles intended for the carriage of goods by road and having a maximum permissible gross laden weight of not less than 12 metric tons. The directives establish total revenue thresholds that must not exceed infrastructure costs, which some officials view as limiting for network investment purposes.
Road pricing programs implemented in Europe and Asia offer important lessons on exploring the use of market-based approaches to address traffic congestion and improve mobility. For successful implementation, the program managers should be prepared to resolve legal challenges, which may require the government at various levels (e.g., city, state, country, or union of countries) establish the statutory and legal authority for levying the pricing fee as well as for utilizing the revenue generated.

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Source

Reducing Congestion and Funding Transportation Using Road Pricing In Europe and Singapore

Author: Robert Arnold, Vance C. Smith, John Q. Doan, Rodney N. Barry, Jayme L. Blakesley, Patrick T. DeCorla-Souza, Mark F. Muriello, Gummada N. Murthy, Patty K. Rubstello, Nick A. Thompson

Published By: Federal Highway Administration, U.S. DOT

Source Date: 12/01/2010

URL: http://international.fhwa.dot.gov/pubs/pl10030/pl10030.pdf

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Benefits From This Source

After implementation of the congestion charge in London, the number of vehicles entering the charging zone decreased by 25 percent, travel speeds increased by 30 percent, trip times decreased by 14 percent, and traffic delays plummeted by 25 percent.

In Germany, vehicle-miles traveled using cleaner trucks (Euro 4 and 5) rose 60 percent from 2 percent in 2005 to over 62 percent in 2009 because of the nationwide heavy-goods-vehicle tolling program.

In Singapore, the Electronic Road Pricing program has enabled maintaining target speeds of 45 to 65 kilometers per hour on expressways and 20 to 30 kilometers per hour on arterials.

The Stockholm congestion tax project reduced traffic congestion by 20 percent and vehicle emissions by 10 to 14 percent in the Central Business District.

Lessons From This Source

Be prepared to face the opportunities and challenges posed by political timetables, project deadlines, as well as pricing-equity issues for road pricing procurement and implementation.

Beware that schedule and costs of road pricing projects are affected by various factors including legislative outcomes, clarity and specificity of scope, and contracting methods.

Consider advantages of open-source designs and beware of legal challenges in road pricing systems procurement.

Consider stakeholder outreach and education, transport modes that offer an alternative to driving, performance measurement, and area geography with high importance in the planning phase for road pricing programs.

Create performance standards for operational effectiveness of a pricing program, define business rules for back-office operations, and refine operations practices based on needs.

Define clear goals and pay attention to key institutional and technical factors for successful implementation of road pricing programs.

Develop a statutory and legal framework for as a foundational step for levying road pricing fees and utilizing revenues.

Develop public outreach programs based on the cultural and political context of the project location and provide clear, salient, and timely messages about the purpose and benefits of congestion pricing.

Enforce congestion toll collection and create integration linkages between pricing system and motor vehicle registries to process violations.

For successful implementation of a road pricing program, strive for simplicity in policy goals and strong championing of the program by the executive and legislative leaders.

Understand that while the viability of pricing programs is impacted by political actions, pricing signal is a potential tool for developing a sustainable transportation system.

Use business and functional requirements to guide technology selection for a road pricing program and understand that the technology selected initially evolves over time.

Lesson Categories

Legal Issues > Rules & Regulations

Application Areas

Intelligent Transportation Systems > Electronic Payment & Pricing > Pricing

States

None defined

Countries

Sweden
Germany

Systems Engineering

Show the V

Feasibility Study / Concept Exploration

Focus Areas

None defined

Goal Areas

Mobility

Keywords

None defined

Lesson ID: 2011-00567