Transport strategy
Policy Instruments

Urban road pricing
SummaryTaxonomy and descriptionFirst principles assesmentEvidence on performancePolicy contributionComplementary instrumentsReferences


Urban road charging (also called congestion charging or road pricing) is charging vehicles for the use of roads they drive on. The charges are designed to reduce traffic congestion (and its associated problems), so an ‘ideal’ charging scheme would vary charges according to location (more expensive in the city centre), time of day (more expensive at peak) and type of vehicle (more expensive for large and polluting vehicles). Road charging also raises revenue, which may or may not be ploughed back into transport (typically public transport) improvements. Urban road charging can take the following three basic forms: variations, from simple to complex, are possible on all of them:
Area licensing schemes (ALS): vehicles using the roads within a designated area (and designated time) pay a licence fee, usually related to vehicle type. The licence (day, month or year) is bought at or before entering the area, then displayed on the vehicle. The Singapore ALS (from 1975 to the late 1990s) is the only example of this so far, but it is proposed for central London from 2004.
Cordon pricing (or ‘toll ring’): charging points are located at all entries to a given area (often a city centre), usually with higher charges for large or polluting vehicles and at more congested times of day. Payment, as for any road tolls, may range from manual to fully electronic. Oslo has been operating a toll ring since 19???.
Continuous charging systems: these charge vehicles for all travel within a defined area (such as a city). The ultimate is to have a charging point on every road link. The complexity means that fully automatic electronic charging (‘electronic road pricing’ or ERP) must be used. The advantage of such systems is that the charge made at every charging point can most precisely be related to the degree of congestion at that specific time and place (the efficiency ‘holy grail’ of transport economists). Singapore is using an ERP system, which is not yet a truly continuous system, but may become one in the future. Currently, much attention is currently being given to systems of this type, as potentially the key urban traffic demand management method of the longer-term future.
Key issues with road charging are its acceptability to drivers (and to others who may be affected by it, e.g. businesses within the charged area), the type and complexity of the chosen technology (manual, video-based, fully electronic), and enforcement. These three issues are inter-related.