1. DRiVE: a Distance-based Road user charge Voluntary Experiment
At Stellenbosch University we are investigating alternative road cost recovery methods
At current we are focusing on DBRUC which are receiving a lot of attention internationally, especially in America
The focus of this paper was to provide a proposed design for voluntary participation of a DBRUC experiment for South Africa based on the experiences of international program roll-outs, especially looking at the fee (charge) structure.
J van Rensburg
S Krygsman

2. Background…
Funding for roads has and continues to be faced with a multitude of challenges.
Fuel levy has been the mainstay of road funding in South Africa. Collect around 70% of all road generated revenue from road users. Fuel levy proper 48%. 5% of the tax collected by government. Only government collects fuel levies (provinces starting to investigate if they can levy additional taxes on fuels as done in America)
Looking at the micro level, a lot more entities or areas could generate additional revenue from the fuel levy
BUT…
Fuel levy currently at R3.37 p/l petrol

3. Background… Generating less income per vehicle per annum
due to improved vehicle fuel efficiency
introduction of electric and hybrid vehicles
alternative fuels and less travel
Period: 2000 – 2014
Registered vehicle population grew by 68% (6 million vehicles to 10,2 million vehicles)
Vehicle kilometre travelled grew by 45% (111,9 billion kms to 162,4 billion kms)
Fuel sales grew by 40% (14,4 million litres to 20,4 million litres)
The fuel levy has a problem and its starting to slowly pickup speed

5. SA isolated case?
New road user charging recovery methods are being piloted
Other countries have embraced and adopted technology
South Africa lags these trends for various reasons ...
Technology is not one of them …
Full implementation in some countries on heavy goods vehicles
Countries now looking to incorporate all road users
USA – in several states (Oregon doing groundbreaking work)
Austria
Belgium
Czech republic
Hungary
Which political party really wants to introduce new taxes?

6. What is Distance-based road user charging?
The concept is really very simple …
Use new technology (GPS and smartphones)
to track different vehicle types
in order to charge for actual road use
based on distance travelled, vehicle type, weight of vehicle,
time of day, location of travel, cities or rural areas
But also to provide feedback
Create road user invoices:
Supplementing the fuel levy
Use variable fares
per vehicle / route / road / time of day
Tell people to optimise their trip
Known as RUC, mileage-based road user charging, mileage charging, vehicle miles travelled charging

7. What is Distance-based road user charging?
Other sectors / businesses already show you your use and costs…
Why not roads?
Get a bill for the use of a (public) utility
But a policy issue that needs to be addressed for DBRUC implementation is the fee structure. What do we charge road users per kilometer of travel?
Its not a simple exercise, and not all parties involved agree on a set fee as a charge at a certain level influences different policy objectives: Congestion, travel behavior change, increase in revenue

8. Alternative pricing regimes…
Current SA fuel tax: general fuel levy (2017)
Current SA fuel tax: combined fuel levies (2017)
OReGo model*
Freeman model**
Petrol
Diesel
(c/l)
(c/km)
Motorcars
315
300
492.33
467.01
33.9
32.1 58
LDV’s – Bakkies
Minibuses
Buses
125
Trucks
146
Motorcycles 50
Other & Unknown
113
How could the fee structure look in South Africa
OReGO model based on equity
Freeman model based on average cost per vehicle category (damage to road and kms travelled)
*Based on an average vehicle fuel efficiency of 6.9l/100km
-- Based on South Africa’s road expenditure of R117 billion (2017)

9. Short-run marginal cost pricing structure
Maintenance cost
Congestion cost
Accident cost
Environmental cost
Region
Road type
Free flow
Near capacity
Over capacity
(c/km)
Car
Metropolitan
Motorway
0.00
244.96
563.04
Main roads
8.55
Other roads
22.79
Urban
5.70
445.30
694.06
Rural
122.48
281.52
3.80
167.62
555.42
1.90
384.54
Rigid truck
465.43
16.24
43.30
10.82
846.07
232.72
534.88
7.22
318.47
3.61
730.62
Articulated truck
710.39
24.78
66.08
16.52
355.20
816.40
11.01
486.09
5.51
Bus
612.41
21.36
56.97
14.24
306.20
703.79
9.49
419.04
4.75
961.34
Economic theory suggests price closer to SRMSC – efficient prices
Incorporate the damage to the road + all externalities not paid by road users
We converted EU MC tables to SA values using purchasing power parity

10. Short run marginal social cost
Result…
Participant #
Kms driven 1
Fuel Levy 2
OReGO’ model 3
Short run marginal social cost 4
Freeman’s model
Participant 1
R575.93 R R R
Participant 2 R R R
Participant 3 R R R R
Participant 4 R R R R
Participant 5 R R R R
Participant 6 R R R R
Participant 7
661.55 R R R R
Participant 8
812.92 R R R
Participant 9
917.65 R R R R
Participant 10
786.71 R R R R
Participant 11 R R R R
Participant 12
423.20 R R R R
Participant 13 R R R R
Participant 14
789.11 R R R R
Participant 15 R R R R
Participant 16 R R R R
Participant 17 R R R R
Participant 18 R R R R
Total R R R R
So putting this paper into context we are undertaking small pilot experiments. Testing the system and all of its components. This study focused on the pricing regime.
In May 2017 contacted a large employer in the WC to ask if their employees would like to take part in a Voluntary DBRUC study. 18 agreed and an OBDii device was installed in their vehicles for a period of 1 month. No active user participation, just tracking.
Participant 1 is somewhat of an anomaly and as after applying the OReGO method, the driver would have paid less road user charges compared with the fuel levy. This is because the participant’s vehicle is not as fuel efficient as some of the other vehicles and above the average vehicle fuel efficiency of 6.9 l/100kms and thus benefit from the average fuel efficiency assumption. Internalising his/her externalities through the MSC charge shows a fee four times more than the current fuel levy payment for the month.
This is in contrast with participant 18 who drove more kilometres but used a more fuel efficient vehicle, compared to the average fuel efficiency, thus paying less. As a result the OReGO method would see the participant paying almost double. This indicates a possible flaw of the OReGO method which at a flat fee will secure income from fuel efficient vehicles, and less from inefficient vehicle owners but at the expense of motivating behavioural change to less environmental polluting vehicles. Participant 18 would still pay more according to Freeman’s model but in term of MSC would not see such a huge increase in cost as the other participants. This is due to the participant driving in a rural region for the month using highways where possible and mostly in the off-peak period (see Table 2).

11. System cost… Collection cost: Fuel levy Toll roads
<1%
Toll roads
30%
Vehicle license fees / fines / permits
50%
Co2 gas emissions 1%
DBRUC
5% - 13% (DRiVE 9%)

12. What is next… Public opinion survey HOW SHOULD OUR ROADS BE FUNDED?
HOW SHOULD OUR ROADS BE FUNDED?
Researchers at Stellenbosch University would like your opinion about two road funding methods. By completing a short 5 – 10 minute survey you will help us gather valuable information on respondents’ awareness, knowledge, perception, attitude, acceptance and favourability of these methods.
Having completed the survey, respondents will be eligible to be enter into a lucky draw for a cash price of R2500.
Please visit our website to complete the survey:

13. What did international opinion surveys find?
Only 24% support for DBRUC
After user experience with system
37 – 71% support
Issue with Privacy
50% of respondents
With experience this is not such a big issue
Concerns over government’s administration of system
Errors in billing
Administration cost (30% cost to revenue vs 9%)
SA and corruption?

15. User opinion and travel behaviour change…

17. Thank you
Questions?