Road Network Operations
& Intelligent Transport Systems
A guide for practitioners!

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Road Pricing

The technical development of electronic payment has made it possible to apply the concept of a road toll beyond the recovery of operational and infrastructure costs. Road pricing is a tool for traffic management, especially in urban areas that experience heavy traffic.  The objective is to spread traffic throughout time in order to avoid saturation in a controlled area or on a toll motorway, bridge or tunnel. More efficient use of the transport system is achieved if people are persuaded either to change their time of travel away from peak periods, or shift from travelling by car to using an alternative travel mode. Often the money raised from road pricing is applied to the improvement of public transport. (See Congestion Charge)

Where there is an imbalance between supply and demand, the standard economic solution for any scarce resource is to let the market decide. The market would bid the price of that product up or down until the demand matches the supply and the market clears. Traffic congestion is evidence of an imbalance between the supply and demand for roadspace, and so controlling it through pricing is an obvious solution. Economists will assert that road pricing is an extremely sensible and rational measure for dealing with an excess of traffic demand. For toll roads, this would seem to be a textbook solution.

A road pricing system needs a tolling and payment system with back-office arrangements that have the capability to charge by distance, by type of vehicle and so that charge can be varied, up or down, to reflect conditions of time and place.This was impractical until the development of electronic payment systems and Electronic Toll Collection (ETC) in particular, since with a manual system it is difficult to implement a different price (toll) for a given time period. Electronic payment systems allow flexible charging, which can be on the basis of time, place and distance. (See Electronic Payment)

With ETC variable pricing is technically more straightforward but it is not adopted as widely as it could be. Generally there is hostility from road users whenever a road pricing scheme is proposed. The main argument against it concerns fairness and equity - a perception that road pricing only allows more wealthy people to use the road. It can achieve the goal of easing congestion by limiting the demand, but the impact on poor people is disproportionate. There are counter-arguments but the perceived inequlaity is an obstacle that is difficult to overcome politically. With some notable exceptions, politicians have been unwilling to take on this issue. Consequently, this method as a demand management measure is implemented in relatively few places around the world.

Whatever the aims of a road pricing policy, from an operational perspective it is necessary to minimise user inconvenience when using the payment system. Electronic payment methods can limit the discomfort and improve road safety and efficiency. (See Payment Technologies and Process)

Variable Tolling

Variable tolling is an example of road pricing that operates to spread traffic over time in order to avoid gridlock at times of peak demand or during heavy seasonal travel. Alternatively it can be used to generate more traffic by giving a discount on the usual toll when the volume of traffic is low.

The principle of variable tolling is to raise tolls during peak periods (“red” periods) and lower them during periods of lighter traffic (“green” periods). Implementation is based on publicity and information dissemination:

  • an information campaign prior to launch of the operation
  • reminders before each activation
  • information signing on the scale of charges and when they apply along the network

In the case of free-flow toll facilities, the toll level can be changed throughout the day, which requires real-time information to road users, informing them of the current toll rate through VMS.

Some precautions are required to:

  • prevent illegal stopping immediately before the toll booth area by users determined to wait until tolls are lowered (this needs police patrols, and installation of signs)
  • make provision for having to halt the operation unexpectedly if a serious event occurs (accident, weather disturbance) that will delay users and result in them reaching the toll station after tolls have increased

Variable tolling can be cumbersome to manage (for example adaptation of toll equipment and the need for user information). Higher peak-period tolls are unpopular and are viewed as a hidden attempt to increase total revenue. Success is as dependent on user acceptance as on the technical relevance of the measures introduced. It essentially depends on three factors:

  • sound analysis of the problem to be addressed (the form of the traffic distribution curve over time defines the times when tolls should be raised or lowered)
  • sound knowledge of user concerns
  • solid assessment of the impact of tolls; the reduction in tolls during the “green” period must be large enough to be attractive; the increase during the “red” period must also be large enough to dissuade users while remaining acceptable for users unable to return earlier or later, to avoid image problems for the operating company

The application of this measure on toll-roads in France, showed a decrease in peak period traffic (average reduction of 10 percent) with no reduction in total demand or lasting diversion of traffic to parallel roads.

Variable tolling has become more common with the use of  smartcards and electronic tags. As ETC is adopted more widely the integration of new ETC systems with older systems becomes a problem. As ETC systems are improved or upgraded, compatibility with the old units becomes an issue. This can be handled through good equipment standardisation, agreements between operators on evenue sharing and agreement on a consitent interface, for example on the classification of different vehicle types.


Reference sources

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