When Time Is Money: Impacts of the Congestion Charge

December 19, 2019 |
5 min
When Time Is Money: Impacts of the Congestion Charge

The congestion charge is a controversial move by city governments—taxing drivers for using private cars in congested urban areas. 

Nobody likes taxes, and the congestion charge might have unintended consequences like increasing social inequality and overburdening aging public transport systems. However, initial results from major cities like London, Singapore, and Gothenburg show that congestion charges can have a huge positive impact on traffic, public transport, air quality, and even public health. 

Read on to discover how the congestion charge works, the pros and cons of applying it in more cities, and the surprisingly positive results achieved by cities that have taken the plunge.

In this article:

  • What is the congestion charge and how does it work? 
  • Congestion charge pros and cons
  • Impacts of a congestion charge
  • Changing how we will move in the future

What Is the Congestion Charge and How Does It Work?

Congestion charges are taxes imposed on drivers depending on their vehicles aimed at reducing traffic and discouraging the use of certain cars. This is typically in the form of a daily fee applied to those who drive in certain areas, usually imposed during the workweek when traffic is most problematic. Congestion charges have been introduced into various major cities, such as London, Singapore, and Gothenburg.

Each city has adopted a slightly different pricing scheme, but they largely follow the same logic. Using London as an example, drivers can pay the £11.5 charge in advance, or £2 more if they pay on the same day. 

Once the payment is made, the license plate of the driver is added to a list. Cameras across the congestion charge area compare the license plates of drivers with those listed. If a driver does not pay the charge, they will be subject to a Penalty Charge Notice (PCN) ranging from £80-£240. There are exceptions for certain groups of drivers, such as NHS workers, those residing within the congestion charge zone, and disabled drivers.

Congestion Charge Pros and Cons

Arguments in favor of the congestion charge include:

  • Encouraging the use of public transportation: More commuters using public transportation means more revenue will be generated to be invested in the public transportation system. Additionally, the funds collected from the congestion charge can also be contributed to public transportation initiatives.
  • Reducing travel time and improving productivity: Traffic is expensive since workers lose valuable time commuting.
  • Reducing pollution: Fewer cars means less pollution. Polluted air poses serious health concerns, increasing death rates as well as healthcare costs. For cities tackling air pollution, congestion charges can hold the key to improved air quality.
  • Encouraging transport innovation: Solutions such as micro-mobility and self-driving electric cars, will become more appealing as driving traditional cars becomes more expensive.
  • Reducing public spending on road infrastructure: Fewer drivers on the road will lower the demand for road funding, as there will be less wear and tear. It will also reduce the need for new roads and highways, opening up funding for other programs.
  • Lowering road-related deaths: Road accidents are naturally reduced with fewer drivers on the road.
  • Increasing quality of life: Less traffic, less pollution, and better public transportation all help to increase the quality of life for the residents of the charging zone.

Arguments against the congestion charge include:

  • Increasing social inequality: A flat fee congestion charge disproportionately affects poorer people who cannot afford to pay the charge. Those who can afford the charges will benefit from emptier roads and faster travel times.
  • Inadequate public transportation: The public transportation system may not be able to handle a drastic increase in the volume of passengers. Moreover, many cities do not have a sufficiently developed public transportation system. Cities may need to build additional infrastructure to avoid overcrowding and ensure public transportation provides a suitable alternative to cars.
  • Implementing and maintaining the infrastructure: A congestion charge scheme requires funding and advanced technology to operate effectively.
  • Evasion: The public may be reluctant to pay additional taxes, leading to evasion of the congestion charge and criminal or illicit activity.

Impacts of a Congestion Charge

Evidence from cities that have already introduced a congestion charge shows that this measure has largely been successful and has a widespread impact. 

The use of public transportation increased substantially across cities. In London, 37% more commuters used public transportation in the charge zone. In Gothenburg, ticket sales increased by 7.5% after the congestion charge was introduced. It is estimated that at least two thirds of this growth was directly attributed to the charge. 

Discouraging the use of cars has also resulted in the flourishing of micro-mobility. In Portland, survey results indicated that 34% of micro-mobility riders opted to use electric scooters instead of driving or using a ride service. 

Potential innovation in transportation extends beyond electric scooters. From self-driving electric cars to high-speed underground pods, to eventually flying taxis, moving away from traditional cars will open up creative high tech transportation solutions. 

Congestion charges have significantly reduced traffic and improved emergency services. 

In London, traffic was reduced by 15% and journey times improved by 30%. In Gothenburg, the congestion charge has reduced traffic by 12%. 

Moreover, since the introduction of congestion charges in London, victims of cardiac arrests are three times more likely to survive. A major contributor to this improvement is reduced traffic time.

Air pollution has also decreased substantially. Air quality in Gothenburg improved by 5% in the inner city following the implementation of the congestion charge. Other cities with congestion charges experience similar results. 

In London, researchers found that levels of nitrous oxide (exposure to which has health implications) have decreased in the charge zone. The researchers concluded that expanding the charging zone could potentially have widespread health benefits

Is it Time for the Congestion Charge in Your City?

The congestion charge is a controversial policy change, but one that can have a dramatic and measurable impact on cities. To evaluate if now is the time to promote a congestion charge in your city, consider these questions:

  • Which parts of the city are congested? A congestion charge may be most effective in the city center, on main roads within the city, or on roads connecting the city with other urban areas. 
  • Do you have adequate public transport? Inadequate transport options will effectively force many residents and visitors to pay the congestion charge, and will increase social inequality.
  • Is the local culture supportive of regulation? Populations in Germany, Brazil, or India may react very differently to the imposition of a congestion charge. Consider if local residents would be in favor of the charge, and test your hypothesis with surveys.
  • What is your technological maturity? A smart city with an extensive IoT sensor infrastructure may be able to easily implement a congestion charge, while a city lacking basic traffic management systems would have to build a technology foundation from scratch.
  • What would be the ongoing administration cost? Given the city’s technological capabilities, how much would it cost to manage the congestion charge, and would the projected earnings cover the cost?

Whatever your final decision, every major city should seriously consider a congestion charge or similar measures, as a powerful means to reduce congestion, improve air quality and achieve the overarching goal of sustainable urban transportation. 

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