Potential distributional impacts of road pricing: A case study

Abstract

Using data on number of car commuting trips, routes and speeds, we estimate the initial generalised cost changes, traffic reductions and likely distributional impacts of a £2 congestion charge on inbound car commuting traffic in the city of Cardiff, UK. We find that the initial potential reductions in the number of commuting trips by car finishing in Cardiff are likely to be 3.7% and 11.1%, for elasticities of number of trips with respect to generalised costs of −1 and −3, respectively. We also find that higher percentage reductions of up to 14.6% to 43.7% could be achieved by also charging trips with origin and destination in Cardiff. Not charging commuting trips by car that start and finish in Cardiff, which represent over half of the car commuting traffic with destination in Cardiff, will result in the share of charge revenues contributed by car commuters coming to Cardiff from other local authorities being roughly twice as high as the share of car commuting traffic they generate in Cardiff. We also find that the charge would be regressive but the number and percentage of commuting trips by car from different local authorities are quite different, and so the number and percentage of households from these local authorities that would be negatively affected, would also be different. The regressive impacts from the charge, however, have the potential of being reverted as long as the public transport improvements planned by Cardiff Council are in place before the congestion charge is implemented. Ideally, these should be combined with a reallocation of road space to public transport, pedestrians, and cyclists. Although this is a case study, there are valuable lessons for other cities considering the introduction of a congestion charge.