Congestion Charge: key or curb to mobility?

Congestion charging, in the transport context, is the practice of charging people driving in certain areas or stretches of road with high demand. It is also well known as electronic road pricing (ERP), especially in Asian countries since it is the name used by the Singaporean government. Transport economists view congestion charging as the obvious solution to road congestion because of the marginal social cost concept. Despite the strong support from the economic standpoint, its implementation is often met with strong public opposition. In fact, there exist only a handful success stories of congestion charging with Singapore, London, and Stockholm often coined as the epitome of elegance in the implementation of congestion charging. Even in these three places, the fight towards road pricing is not without problems.

How is it that a scheme with such strong concept could gain so much public opposition? What is this phenomenal thing? Is it a key or a curb to our mobility? Read on to find out.

Signpost in London congestion charging zone
Image source: standard.co.uk

I grew up in Bekasi, Indonesia, a satellite city next to the national capital, Jakarta. We have many toll roads going across and around Jakarta and when I first learn about congestion charge, I thought, "what's the difference between toll roads and congestion charging?" 

Well, they are similar in practice that drivers must pay to use the roads, but the underlying concepts are different. In toll roads, we pay to get a certain benefit in the form of shorter travel time. Theoretically, we can go at higher speeds in toll roads as there are less obstacles in the roads (junctions, traffic lights, and such). Now in practice, we know all too well this benefit can be elusive as toll roads get jammed anyways in Jakarta but let's keep that discussion for another blog post. The main thing is, drivers pay to get extra benefit in toll roads.

With congestion charge, drivers should expect no extra benefits from their purchase other than being able to use the roads. The underlying concept is the Marginal Social Cost Pricing where society will be the receiver of the benefits, not driver. To understand more about the marginal social cost pricing concept, please visit my previous blog entry. Of course, when implemented carefully, drivers would in fact receive some sort of benefits from congestion charge, after all drivers are part of society as well. We'll look into how congestion charge affect drivers and society in this blog entry.

Congestion charge as traffic demand management

Aside from the marginal social cost concept, another economic concept in play in the implementation of congestion charging is the elasticity concept. Let us now consider three products: rendang dish in a restaurant (an Indonesian spicy beef dish with caramelised coconut milk), a brand of cat food, and a Harry Potter official scarf (I'm a Ravenclaw through and through, but you can imagine any Hogwarts' house you like).

Let's begin with rendang (if you're not from Indonesia, it is the most delicious dish in the world, by the way, look it up)! As much as I like rendang, if a restaurant increases the price for one piece of rendang, I definitely won't buy it. Why? Because, in any Indonesian cities there must be hundreds of other restaurants selling rendang at a normal price. Or, if there is not, there are other food I can eat. Therefore, my demand for a rendang in a particular restaurant will decrease dramatically when its price is increased. In other words, my demand is very elastic to price.

Our next product is cat food. We adopted a kitten named Kirara. We adore her and we'd buy her this brand of cat food that she likes and is good for her fur. There are several other brands of cat food, but we like this one brand because she seems to shed less when we give her this brand. If the price for this brand increases, we'll consider switching to other brand as she has no health conditions that oblige her to eat any particular brand of cat food. What we might actually do, however, is to buy some combination of this brand and other brands so we can save money without completely changing brand. Therefore, our demand is somewhat less elastic than rendang as we cannot switch to alternative products as freely.

Finally, if you have come across any Harry Potter product, you'll probably know how commercialised the Harry Potter brand is. If you want to buy a ticket for the Harry Potter and the Cursed Child play, you'll have to buy 1 year in advance and even that is not that easy. I respect J.K. Rowling but it's just crazy how commercialised the brand is. The official scarf is sold at a price on a par with some big brands like Ted Baker. There are other choices in Amazon, but their quality is quite low. Therefore, despite the high price, there are still high level of demand for the original scarves. In other words, Harry Potter's fans' demand of the original scarf is inelastic to price because there are no other attractive alternative.

Image source: noshon.it ; my wife's capture; harrypotterplatform934.com

Of course, this illustration may be different at individual levels. For example, if you don't like Harry Potter then your demand to the scarf would be very elastic, if you are not living in Indonesia then rendang would be rare and your demand for it will be less elastic, if your cat is sick and can only eat one brand of cat food then your demand for the cat food would be inelastic. The main thing to take away here is:

when there are attractive alternatives to a product, the demand for it would be more elastic.

Now let's apply this understanding to our congestion charging scheme.

Congestion charging without attractive public transport services

Let's first consider a situation where congestion charging is applied but the public transport services are not attractive because it is overcrowded and do not reach certain areas of the city. The lack of attractive alternative to mobility makes demand for driving quite inelastic. Which means, only a small number of drivers will stop driving and move to public transport. 

note: number of driver is approximated as the intersection between the demand curve and the pricing (supply) curve. There are two pricing curves considered in the graph, one without congestion charging (red) and a higher pricing curve with congestion charging (green). These pricing curves are explained more in my previous blog entry.

People who still drive would now need to pay but still have to endure congestion. Meanwhile, public transport will become even more overcrowded because of the additional people using it. In this case, implementation of congestion charging will curb everyone's mobility.

Congestion charging with attractive public transport services

Let's now consider an alternative condition where public transport services are attractive. It is cheap, it goes everywhere in the city, and it is not overcrowded. In this case the demand for driving will be more elastic. Our graph will look more like this.

We will have more people switching from driving to public transport, as it is easy to use public transport, freeing the roads from congestion. Therefore people still driving will be able to travel much more quickly. Society will also greatly benefit as there will be far less pollution. In this case, implementation of congestion charging will be a key to efficient mobility.

Congestion charge NOT as traffic demand management

One of my colleagues who has an impressive experience in transport consultancy raised an interesting point of view about congestion charging: that it should not be viewed as a traffic demand management measure. The basic of this argument is that land has a value. Houses and offices consume land, so households and businesses pay to be able to use those land. Roads consume land too, then why shouldn't road users pay to be able to use it?

An interesting work of art by a Chilean artist, Fabian Todorovic perfectly illustrates how unfair the distribution of urban space is. Individual car user consumes much more space than individual public transport user, cyclist, or pedestrian. In fact, large amount of land are dedicated to facilitate car uses, thus limit the availability of land for other people using different modes of transport. If we hadn't dedicated that much space for cars, our pedestrians would have wider sidewalks, our cyclists would have safer cycling lanes, our buses would run faster. Congestion charge is therefore the price that car users are entitled to pay to be able to use this large amount of land.

Another illustration by a Swedish artist Karl Jilg shows just how much space we dedicate to cars.

It's just ridiculous!

So, is it a key or a curb?

If we view congestion charging not as a traffic demand management measure, it is easier to answer the question. Regardless of whether congestion charge is a key or curb to efficient mobility, it is a key to equitable mobility. While agreeing with the sentiment of equitable mobility, I believe that congestion charging is a tool to manage demand for driving. Intentionally or not, implementation of congestion charge will cause some changes in the demand of different transport modes. The question becomes how much of a change can we expect? And the answer depends on how attractive other alternatives to driving are.

Having said that, I will advocate that congestion charge is a key to mobility. It is our right as citizen of a democratic system to demand for equitable and efficient mobility. Moreover, it is our responsibility to ensure that what we do today will not harm other people and other species tomorrow. I know some people who are so accustomed to living in Jakarta that they no longer notice the congestion, they would just shrug and say "that's just how Jakarta is" or "it's normal, it's like this everyday." Then they will just keep on driving their cars. Even though it is how Jakarta is, it is not how it should be. If we keep it the way it is, then there will be more pollution in the future, more global warming, more inequality. And no, it is not normal, and it is not sustainable. Car-centric lifestyle just does not make sense in a dense urban environment. Congestion charging is a key to take us away from such lifestyle.

It's just that mobility is a door with two locks, each opened by congestion charging and by good public transport. So, let's start asking for better public transport rather than more roads. Let's start feeling uncomfortable with the way we arrange our cities around cars. In a dense urban area, it's not "we should have congestion charging if we have good public transport," but rather "we should have congestion charging and we should have good public transport."

Thank you for reading! That is my thought about congestion charge. I'd love to hear your transport thoughts in the comments!

Tafta