Benefit

In Arizona, an electronic vehicle recognition (EVR) system has an estimated benefit-to-cost ratio of 2.03 due to improved vehicle registration and insurance compliance.

Estimated outcomes from the deployment of an electronic license plate system in the Phoenix, Arizona metropolitan area.


June 2008
Phoenix,Arizona,United States


Summary Information

An analysis conducted for the Arizona DOT (AzDOT ) estimated the potential of an electronic license plate system for improving compliance with vehicle registration and insurance regulations. The research estimated the costs of an electronic license plate system whose deployment is limited to the metropolitan area of Phoenix, and the system's benefits in terms of revenue generated to the AzDOT though increased registration and insurance compliance.

Methodology

This research estimated the benefits and costs of a theoretical electronic vehicle recognition (EVR) system in terms of its impact on registration and insurance compliance in Arizona. The methodology estimated the number of vehicles, the number of compliant and non-compliant vehicles identifiable by the EVR from traffic counts and EVR accuracy rates, and demographic data to determine the potential revenue generated from increased registration fees as well as non-compliant ticketing (fines).

The EVR case study found that a possible EVR system using radio frequency identification (RFID) has the potential to improve registration and insurance compliance and thereby provide direct benefits for Arizona. Variables involved in compliance benefits include the number of vehicles captured by the EVR, the rate of EVR accuracy, proportion of unregistered or uninsured vehicles, and average fines for the non-compliant.

The theoretical EVR configuration consisted of 110 RFID sites installed on the segments of Arizona highways having the largest amount of traffic in the Phoenix metropolitan area. The configuration was designed to read the maximum number of vehicles with the minimal number of RFID readers and locations.


Findings

Up to 65.21 percent of Arizona vehicles are captured by the case study EVR system, as follows:
4,039,182
Total number of Arizonans in Phoenix metropolitan area (2006)
/ 6,166,318
Total number of AZ residents (2006)
65.60%
Potential number of AZ vehicles captured
X 9.55%
Equipment rate of accuracy
65.21%
% AZ vehicles captured


Potentially $35.65 million is generated from improved registration compliance and through ticketing the noncompliant. Potentially $65 million is generated from improved insurance compliance.
  • Benefits from Improved Registration Compliance. Approximately 200,000 vehicles are either not registered or have expired registration in Arizona, resulting in a cost of $25 million a year. Assuming the EVR would identify and ticket 65.21 percent of the non-registered vehicles in Arizona, the result is $16,302,500 recovered in registration fees and $19,343,894 in fines, a direct benefit to AzDOT of $35,646,394 during the first year.
  • Benefits from Improved Insurance Compliance. Approximately 11 percent of registered vehicles in Arizona are uninsured. Thus, the EVR would identify and ticket 65.21 percent of the 11 percent of Arizona's uninsured vehicles at a fine of $199.63 (the 2006 rate) per vehicle, resulting in $65.2 million in direct benefits to the AzDOT.
  • EVR System Cost. The total cost of the EVR trial is $49.6 million, with the government absorbing both the costs for the RFID tag in the license plates and RFID readers. Equipping all registered cars with RFID tags would cost $41 million ($9 per tag X 4.556 million registered vehicles). The cost of installing the RFID sites is $330,000 (110 RFID sites X $3,000 per site, plus set up costs (estimated as 20 percent of the total hardware cost ($8.27 million))).
  • Benefits to Cost Ratio. With direct benefits of $35.6 million in registration compliance and $65.2 million from insurance compliance (totalling $100.8 million) and a $49.6 million system cost, the benefit to cost ratio is 2.03 ($100.8 million:$49.6 million).


It is important to note that the EVR system has a high initial set-up cost for equipping the registered vehicles with RFID tags, but that further expansion of the system is low due to the low costs of purchasing additional RFID readers and equipping additional cars with RFID tags. This option was compared to the possibility of implementing automatic license plate recognition (APLR) technology over the same geography in this study.

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Source

Cost/Benefit Analysis of Electronic License Plates

Author: Eberline, A.

Published By: USDOT FHWA

Source Date: June 2008

URL: http://www.azdot.gov/TPD/ATRC/publications/project_reports/PDF/AZ637.pdf

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Goal Areas

Productivity

Related Metropolitan Integration Links

Link 28: Electronic Toll Collection intra-component

Typical Deployment Locations

Metropolitan Areas

Keywords

None defined

Benefit ID: 2012-00779