Abstract
This paper analyses the application of road user charging for the reduction of local pollution in environmentally sensitive areas. The key question is to investigate the interdependencies between the price setting strategies of neighbouring institutions with conflicting objectives and what the optimal strategy would be if environmental considerations are included. The analysis is carried out using a large network case study with two transport sensitive areas of different type in the Trans-Pennine corridor: the Peak District National Park, as a sensitive ecosystem and area of high recreational value, and the Sheffield Air Quality Management Area (AQMA), as an area with very high population density. Different combinations of user charging between both areas and the surrounding motorways have been analysed. For each combination, cordon charges and distance based motorway tolls have been determined that optimise the welfare gains under the objectives given in that scenario. The overall welfare of the region would be maximised under a global co-operative regulation scenario including all players. However, left to their own devices, the authorities might be tempted to play a Nash game and set the tolls at a level that results in a positive outcome for the local area but reduces the net welfare for the entire network compared to a co-ordinated introduction of charges. If motorways are not tolled, overall welfare can even be reduced due to wide diversion of traffic in the area. Regarding environmental impacts, substantial improvements within the sensitive areas and on the motorways for which charges have been applied can be achieved, although the reductions in environmental costs over the case study region are small. In conclusion, a charging instrument can be successful in reducing local environmental problems but implementation in isolation of surrounding areas needs to be avoided.
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