Congestion charging refers to variable road tolls that are intended to reduce peak-period traffic volumes to optimal levels (i.e. higher prices are applied under congested conditions and lower prices are applied at less congested times and locations). Tolls can vary based on a fixed schedule, or they can be dynamic, changing depending on real-time levels of congestion. Tolls may also provide exemptions for zero-emission vehicles to help to drive e-mobility as a key mitigation strategy. Congestion charging can be implemented to raise revenue or as a demand management strategy to avoid the need to add roadway capacity.
- Action impacts both passenger and freight transport relatively equally, though specific policy formulation can target particular vehicle types for higher (or lower) congestion charges.
- Action is focused primarily on cars and trucks, though ideally a portion of revenue generated from congestion charging will be reinvested in public and non-motorized transport improvements.
- A small reduction in urban-peak traffic volumes can provide a large reduction in congestion delays. A study modeling the effects of congestion pricing found that a fee averaging USD 19¢ per mile in congested conditions would reduce total vehicle trips by about 3.3%, but congestion delay would decline by 32%. An experiment involving time- and mileage-based pricing found that motorists reduced peak-period trips by 22%, peak mileage by 25% and total mileage by 12%.
- By reducing total vehicle travel and traffic congestion, road pricing can provide significant energy conservation and emissions reductions, and therefore improved urban air quality. Congestion pricing benefits are potentially very large, because the policy is usually applied on the most congested urban roadways where socio-economic costs (e.g. driver stress, freight delays) are particularly high.
Status of deployment:
- Congestion charging generally occurs on a city-by-city basis; thus there are no overarching policy initiatives to expand charging on a global basis. Implementation is currently limited to a handful of cities, with Singapore one of the few representatives from the global South.
- In many large cities, congestion costs are estimated to be 1-5% of national GDP. Average congestion costs in cities like Rio de Janeiro and São Paulo amounted to roughly USD $43 billion in 2013 (or about 2% of Brazil’s entire GDP). Considering high economic costs and externalities caused by traffic congestion, congestion charging aims to reduce congestion within a specified area and derive economic and social benefits.
- Congestion charging could reduce national transport sector emissions 1-3% by 2030. For example, the London congestion charge, which was implemented in 2003 and costs about £45m to operate annually. Over its 10 years of operation, the scheme has generated over £1bn in net revenues. Furthermore, it has reduced the number of traffic accidents in London by 40% since 2003.In addition to these co-benefits, this scheme has aided transport investments, with annual funding at about £194.2 million in 2013.
- The Stockholm Congestion Pricing program has reduced traffic volumes by about 25%, removing 100,000 vehicles from the roads during peak business hours and increasing public transit ridership by 40,000 users per day. Due to the implementation of this scheme, retail sales in central Stockholm shops have increased significantly since 2005, reflecting increased purchases by residents who are more likely to shop locally than drive to the shops.