Wednesday, August 17, 2011

Deciding on When and How to Toll Roads

Big Numbers Win Prizes (Robert Bain, Apr. 8, 2009)

Also discussed here: Toll Road Traffic & Revenue Forecasts: An Interpreter's Guide (R. Bain, 2009)

And here: The Credit Dynamics of Congestion Charging (Bain R and Plantagie JW, Standards & Poor’s, Nov. 2003)

Making the decision to begin tolling and then choosing which way to toll is a challenge that many municipalities and countries face today. Today’s review article looks at 21 ways that toll revenue and traffic are exaggerated or incorrectly estimated- and suggests ways to approach the topic in more objective and rationale ways, in order to decide on the optimum choice.

Key Quotes:

“market readiness to be seduced by hopelessly optimistic traffic and revenue projections.. The evaluation criteria used to award many of today's toll road concessions focus on maximising income – or minimising expenditure – for promoters.. the procurement process in .. reward high traffic and revenue forecasts, not accurate ones”

“The list of 21 ways in which toll road traffic and revenue forecasts can be inflated is not exhaustive. It is purely indicative“

“Traffic modellers commonly employ assumptions about how the capacity of a toll facility will increase in future years despite its geometry and configuration remaining unchanged”

“Some toll road forecasts are made against a backdrop of strong historical traffic growth trends. Why should such trends continue unabated for the next 25–30 years or beyond?”

“Traffic surveys should be conducted on neutral days and during neutral months of the year“

“The value of travel time savings (VTTS) is a central concept in toll road demand studies.. The underlying theory suggests that disposable income will grow – in real terms – in the future and hence the value attributed to time savings should also grow”

“the driver who values a time saving of one hour at US$20 automatically values a saving of three minutes at US$1.. Researchers suggest that small amounts of saved time are inherently less useful than large amounts – particularly if you cannot do anything with the time saved”

“By using electronic toll collection (ETC) technologies, drivers do not have to pay the toll at the time/point of use. The charge is made to their credit card account and they are billed, in arrears, on a monthly basis. It is suggested that this encourages toll road usage above and beyond what would be expected from a cash-only operation”
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