Road pricing, costs and benefits homework

Road pricing is a policy that makes you pay for using a road. There are a lot of different types of road pricing, the best known in England is the London congestion charge. The aim of the road pricing is to make the price of using the road equal to the cost of using the road, including the negative externalities like pollution.

Advantages and disadvantages of road pricing.

Advantages of road pricing:

- There are less cars on the road, therefore there are less traffic jams.
- Less cars on the road so there will be less pollution.
- Positive effects for the economy because people will spend less time in traffic jams and more time working.
- Extra income for government which can be used to improve the public transport.
- Less waste of petrol because of less traffic jams.
- Because of less pollution the air is healthier and people will not have to go to the doctor that often which decreases the money that has to be spent on healthcare.
- This is also better for employers because employee will be sick less often.

Disadvantages of road pricing:

- People will get an ‘unfair’ feeling because something that once was free will now be charged.
- Regressive system, everyone will pay the same which will make poor people pay a relatively bigger part of their income.
- ‘Big brother’ idea.
- Lower sales, especially in shops in the middle between bus stops.
- Overcrowded public transport.

So road pricing wants to equal the cost of using the road to the price. But what has to be the price of pollution?

There are several ways to measure pollution, the most common way is by measuring the amount of CO2 is exhausted by the car you are driving. So in my opinion the most logical outcome will be: registering what type of car everyone drives (so we know what they pollute per mile) and let those who pollute most pay most to get in the charged area.
But how much do you want people entering the charged area make to pay?
I think we should think of what the PED is for the charged area and then make the price that high that the congestions will stop.

There are several options named in the article about how to reduce the pollution.

Option 1: Encouraging people to use public transport by improving quantity and quality of the public transport.

I think you can’t just make more people get on a bus by improving public transport. People will keep choosing for the easiest choice: going by car.

Option 2: Placing tolls on roads.

I think this may be a very valuable option because people will avoid paying for using a road. However, people will probably choose for other roads instead of going by public transport. So you will only solve the traffic-jam problem.

Option 3: Raising the age at which people can drive.

This is very inequitable in my opinion.

Option 4: Increasing the price of fuel.

I like the idea of making people pay for the miles they drive in their cars. I think this is one of the best options, you make the polluter pay.

Option 5: ERP.

I think this is the best option there is, it’s easy to implement because of the Galileo structure and it is a pay-as-you-drive system which I think is very good.

Cost-benefit analysis for Park&Ride.

Park&Ride is a project in oxford which tries to keep the cars out of the city centre. You can park your car for free just outside of the city centre, and busses will take you to the centre. Is this a good thing or are there more costs than benefits?

Advantages of the park&ride system:

- Reduces traffic jams.
- Reduces traffic accidents because of way less cars in the city centre.
- Reduces the negative externalities of driving a car, such as the pollution.
- It saves a lot of time because of fewer traffic jams.
- Less polluted old buildings in the city centre.

There are also a lot of disadvantages of the park&ride system:

- Because of less cars there will have to be more busses, the old college buildings may suffer more because of more and stronger vibrations caused by the busses.
- Overcrowded public transport.
- Extra land needed for parking spots.
- Shops in the city might lose trade.

Nevertheless I am in favor of the park&ride system because I think that the advantages outweigh the disadvantages. That´s because I think the pollution is very bad for the old buildings and because traffic jams are very expensive.