More on supply and demand relationships

Characteristics of congestion  Unlike the production of other goods, in transportation consumers provide their own inputs. Time Operating costs Crash exposure  Individuals done experience congestion, they create congestion

SRAC SRMC Very High Demand Congested demand Toll

Applying Toll  First tolling experiment – Singapore’s Area Licensing Scheme Cordon around Singapore’s CBD  Buy license or have three or more in vehicle  Initially trucks were exempt – later trucks were included.  Started with AM Peak, then added PM peak, and then all day Started in 1975, $1 per day or $20 per month Initially manual inspection for license on windshield, later camera based, now electronic (1998) Pre 1975 congestion

Map of Singapore Malaysia

ALS area Initial ALS area Added points to expressways and ring roads

Result  Planners had expected a 25% reduction in AM peak  They achieved 75% reduction in AM peak 50% reduction of all vehicles in CBD

Technology License sales Enforcement First offence was an $18 ticket in the mail

Technology continued

Toll collection system Detection

Tool Collection Systems Confirming antenna and locator for camera enforcement

Toll Collection System Enforcement Picture

Pros and Cons of ALS  One charge for crossing a cordon One charge regardless of use once crossed cordon Insensitive to time of use once cordon is crossed  Simple system and easy to understand  Sensitive to time of day and day of the week

Other road pricing experiments  Hong Kong in 1983 – 1985 In pavement detectors with in-vehicle read only tags Pilot but never fully deployed – Privacy concerns  Norwegian Toll Ringe – 1980 – present Largely developed as a finance tool  All have a sunset clause Congestion management was a secondary purposes and has tended to come unnecessary due to investment. Tolls also provide environment/esthetic improvements. Small Tolls discouraged only off peak or discretionary trip makers.

Norwegian Experience

Oslo toll ring Minor roadway toll

Norwegian Toll Collection Technology Oslo Results Overall reduction in traffic 3 – 5% Growth in public transportation 6-9% Off peak drivers are most sensitive to price Initially unpopular but as improvements came on-line

Roadway improvement Hall Street before esthetic improvements and construction of parallel tunnel Hall Street after esthetic improvements and construction of parallel tunnel

Tunnel under port area Tunnel entrance

Other ALS Schemes in Europe  London  Rome  Proposed for Dutch and German cities (Rotterdam and Frankfort on Mann)  Stockholm - failure  Objectives Economic Efficiency Environmental Protection Safety Accessibility Sustainability Equity Finance

Lessons learn  Benefits are long-term and costs are immediate  Most user experience a reduction in welfare. User groups include: Those who stay and pay – on the average they loose because the average value of time saved will be less than the toll. Those who leave and select an alternative mode, time, or do not travel – they clearly loose Those who stay on public transit will be worse off because of crowding.

Lessons Learned  Criteria for an acceptable toll More than half of those affected should be better off with than without the toll. Aggregate welfare should increase for those involved Benefits Highest benefiting group Least benefiting group Percent of the population Toll Percentage of the population that gains more than they pay Percentage of the population that pays more than they gain

USA experience Old project list circa 1999

Transportation and Development  Transportation is a necessary but not sufficient ingredient for development  Direct links Lower shipping and travel costs Access to larger markets allow specialization  Indirect links Economic development from building and operating transportation facility Land value increases

Linkage between transportation and economic development  In a developed society, economic development is often just a transfer from one location to another. Is Iowa better off if John Deere moves its plant from Ottumwa to Ankeny because of better linkages to the Interstate system? Does it make sense from the perspective of the City of Ankeny’s perspective to give John Deere tax abatement if it locates a new plant in Ankeny?

Transportation and Development in less developed countries  The establishment of roads is much more important for developing countries  Impacts in developing countries Allows more efficient production  Transport of agricultural goods allows the development of urban centers Allow production to take place at locations where production can take place more effectively Mobility can move labor to locations where it can be utilized most productively Improves social welfare by expanding the range of services available to individuals, improves social cohesion, and improves national defense.

Transportation improvements in developed economics  Transportation is not likely to have a great impact on developed economies and may even have even a detrimental impact on development a from A where A will be cheaper.  Assume there are two production center for the same good (A and B). The cost of transportation is the same for good transported from A and B and is T per miles. The distance between A and B is M. The cost of production at A is C a and at B is C b. M a from A where A will be cheaper.

Competition between regions A B M MAMA MbMb In reality Regions do not produce only one good and some industries will be loosers and some winners. Transportation costs tend not to increase linearly with distance

Transportation Investment for Economic Development Purposes  How do you determine which project is deserving of investment and which one is not? Equity based distribution? Geographic based distribution? Distribution based revenue generation? What are the opportunity costs associated with an investment? What likelihood of success as a result of investment?