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Road Pricing and Public Transport

  • Author(s): Small, Kenneth A.
  • et al.
Abstract

Substantial benefits may arise from road pricing through its effects on the speed and service frequency of public transport. These effects are examined using a stylized model of local bus transport in a city center, a model requiring only a few parameters to obtain quantitative estimates. The model highlights four considerations: the cost savings to users and operators due to reduced road congestion; the service improvements made feasible by increased ridership; the potential passthrough of operator cost savings (even after paying for service improvements) as fare reductions; and the resulting multiplier effects on ridership and service offerings. The model is applied to central London using data from the first few months of the congestion charging program implemented in February 2003. Simulation results suggest significant effects, even if the pricing revenues had not been used to augment the public transport budget as they were in London: a ridership increase of 11 percent, a service increase of 7 percent, and user cost savings equivalent to 38 percent of the fare. Net benefits from these effects are equal to 39 percent of initial operator costs, suggesting the importance of fully accounting for these effects when evaluating congestion pricing proposals. These effects (but not the net benefits) are even larger in cities with more typical values for bus subsidies and initial modal share.

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