The Royal Society of Edinburgh The Challenges of Road Pricing Professor Frank Kelly, FRS, Master, Christs College

Cambridge 1 September 2008

Report by Maggie Stanfield Forecasts using the UK National Transport Model suggest that a well-targeted national road pricing scheme could achieve 10 billion-worth of time savings a year in Great Britain alone. Road pricing has had strong theoretical support over many decades. So what is the problem with implementing road pricing? Professor Kelly set out to explain some of the challenges, the technological background, the economic and social framework, and the network modelling issues. First and foremost a mathematician, Professor Kelly began by setting out the correlation between his own academic discipline and the challenges of road networks for the next twenty to thirty years. There is, he postulates, a common underlying abstract theory concerning mathematical models of networks, whether they be communication, power or transport networks, although the technology, economics and social issues will differ between application areas. Professor Kelly set out the standardised traffic modelling graphs that measure the degree of congestion on a road in terms of the amount of traffic. The increasing delays on road networks have moved the issue of congestion up the political agenda in the face of a perhaps naive assumption that somehow the traffic flow will find its own benign equilibrium; that people wont drive if they expect a route to be congested and will instead take alternative times or routes, thus creating a self-limiting mechanism. To indicate the counter-intuitive nature of road traffic equilibria, Professor Kelly described Braess Paradox: in a congested network where each driver selects a route to minimise that drivers individual delay, it is quite possible that adding a road to a network will increase the delay for every user of the network. An example of Braess Paradox was described where the delay for everyone increased from 83 to 92 when a road was added to the network. Behind these models lie basic mathematical theories that collate sources, routes, linkages and destinations and allow for choice of routes. The Wardrop Equilibrium describes the pattern of flows that emerges when each driver makes a self-interested choice of route. A Wardrop Equilibrium captures the phenomenon that drivers will choose the routes that work best to meet their specific needs ignoring, or not being aware of, the consequences for other drivers. According to Professor Kelly, our intuition misleads because we are prone to assuming that the addition of capacity must improve delay. It may not. The system is efficiently minimised, an objective, but the wrong objective. In fact, the objective we would prefer to minimise is a different one (Beckmann, McGuire and Winsten 1956). To put it a different way, the system self-regulates, but it does not self-regulate to the equilibrium we want it to. At this point, Professor Kelly filled in some of the historical detail so as to explain the progression of theories and their impact. There were, he explained, economists between the 1920s and the 1960s who examined the theories, leading to Barbara Castles Transport White Paper of 1966 which began to look at road pricing as a solution to the problems of congestion. As early as 1959, the Columbia University economist William Vickrey was a leading advocate for electronic road tolling. His influence has been extensive. While we learn to live with congestion, its impact on our behaviour is difficult to measure. The amount of travelling we do is influenced by fundamental aspects of human behaviour as well as by technology or advertising techniques. Interestingly, across the world the time spent travelling, averaged amongst a countrys population, comes out at a fairly steady level. The differences between an African tribal village and a modern industrial society are surprisingly minimal, nor does the percentage of income spent on travel show much variance (Schafer and Victor, 2000). We are, argues Professor Kelly, constrained by time and money when we choose where to work, our leisure activities, schools and so on. Even the shifts in technologies - from horses to air travel, roads to trains - do not reveal the kinds of dramatic shifts one might expect. The average distance travelled per individual increases at around a fairly steady 2.7 per cent a year.

As we make our travel choices, are we mindful of the impact upon the infrastructure? Although disposable income has more than doubled since 1974, the cost to a driver of driving a car has not increased at anything like the same rate. The UK remains one of the worst two or three countries in Europe in terms of the amount of time spent in congested travelling situations. The contribution of road traffic to congestion costs us as a society, according to fairly robust cost/benefit analyses, far more than its contribution to accidents, air pollution, noise or climate change. A feasibility study of road pricing in the UK came out in 2004. The Department for Transport suggested then that a well-targeted national road pricing scheme had the potential to achieve some 20 billion worth of time savings a year at 2010 traffic levels in Great Britain alone - but there is a price. The introduction of the congestion charge in London used a fairly unsophisticated tolling mechanism, but was a good choice in a democracy where the benefits would need to be apparent before the Mayor sought re-election. The scale of the political and social experiment resulted in worldwide interest in what would happen in London. The variety of technologies available worldwide ranges from tariffs based on registration plates to those that use sophisticated technologies based on transponders and GPS. Technology is undoubtedly raising issues around privacy and trust but it should not deflect us from the central reasoning around road charging. We need to be aware of the trade-offs between privacy, convenience and personalisation implicit in our use of emerging technologies. A topic also touched upon was who should set the rates and position of cordons and with what constraints? In conclusion, Professor Kelly expressed his belief that road pricing looks inevitable for those cities which hope to position themselves as global centres. It is, he feels, a matter of when rather than if. Audience questions: Q Has any work been done on non-cash forms of incentivising motorists, in order not to penalise the less well-off? R The benefit for those on a lower income were, in general, greater in London. The very young, elderly and poor do not drie into the centre of London. Q How far can the idea of paying for road use actually go? R Future developments in road vehicles, such as rechargeable electric or hybrid cars, may prompt a rethink of fuel duty. There is a substantial charge at present through fuel duty for the use of roads. It overcharges a lot of people for a lot of the time if they happen to be driving on uncongested roads but greatly undercharges those within congested areas of cities. Q Why dont we amke buses and trains cheaper? R We could, but there is a limit to how effective that would be in persuading people not to use cars.. Even if public transport is free, too many people may still use their cars in some congested areas. Q While Londons systems is an all or nothing one, would it not be a good idea to examine the idea of GPS to create a dynamic charging structure that could be manipulated to fit demand? R Quite a lot of the benefits of road pricing come with fairly simple schemes. Experiments have been undertaken, in California for example, where the toll charges vary according to the level of traffic and you can see about half a mile before you reach a charging point what the charge will be. Interestingly, people are quite accepting of this approach, since it becomes clear that the charge is directly related to levels of congestion. Q Policy is made without the benefit of science to monitor its impact. How do you decide how to analyse the ost of roads? R Transport for London produces impact studies each year that try to assess the impact of the charge.

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