London Congestion Pricing – Implications for Other Cities (5 page pdf, Todd Litman, CESifo DICE Report 3/2005, Mar. 2005)
Today we review a paper that assessed the performance of the London Congestion Charge after it had operated for 2 years. The winners include bus and taxi users, pedestrians and cyclists and motorists with high value trips and most city centre businesses with congestion delays reduced reduced by 50% and net annual revenue of 97 million UK pounds to support transit/pedestrian and cycling infrastructure. Losers include motorists with marginal value trips and riders and motorists in border areas who a 10% increase in spillover traffic (but no more delay because of proactive action to adjust traffic signals). The London congestion charging system was a first for Europe and probably stimulated similar initiatives in Stockholm, Sweden Trondheim, Norway and Singapore in Asia.
“A basic economic principle is that consumers should pay directly for the costs they impose as an incentive to use resources efficiently. Urban traffic congestion is often cited as an example: if road space is unpriced traffic volumes will increase until congestion limits further growth”
“Since 17 February 2003 motorists driving in central London ..on weekdays between 7:00a.m.and 6:30 p.m.are required to pay £5,increasingto £8 in July 2005.”
“Approximately 110,000 motorists a day pay the charge (98,000 individual drivers and 12,000 fleet vehicles),increasingly by mobile phone text message.”
“The2004/05 budget year is projected to earn £190 (instead of £160) million in total revenues (£118 million in fees and £72 million in fines), with £92 million in overhead expenses, resulting in £97 million in net revenues.”
“Prior to the congestion pricing program about12 percent of peak-period trips were by private automobile. During the programs first few months automobile traffic declined about 20 percent (a reduction of about 20,000 vehicles per day), resulting in a 10 percent automobile mode share”
"Peak period congestion delays declined about 30 percent, and bus congestion delays declined 50 percent. Bus ridership increased 14 per-cent and subway ridership about 1 percent.”
“Although there is 10 percent more traffic on the peripheral roads, journey times on them have not increased, in part because traffic signal systems on these roads were adjusted in anticipation of these traffic shifts"
“This pricing program indicates that private automobile travel is more price sensitive than most experts believed. This is good news for congestion reduction but bad news for revenue generation.”