- Do you think a road-pricing system by charging the use of road space is a good policy to reduce traffic congestion in Australia? Why or why not? Use appropriate diagrams to support your answer. [Hint: Please do literature review to find out the pros and cons of the road-pricing system in terms of economic efficiency and social equity, etc.]
- Find two other cities that are among the most congested cities in the world. Give a brief description about the congestion-easing policies in these cities. [Hint: If possible present concrete facts and figures]. Provide your views or suggestions on the best measure/policy to reduce road congestion in Australia.
Answer
Pros and Cons of Road Pricing System
It is stated in this Economics assignment that traffic congestion has become a major problem throughout the world, especially in the countries of Australia, India, USA and others. One of the most important causes of traffic congestion is the rapid rise in the number of vehicles caused by rising population as well as development of the particular economy. This is why several countries throughout the world have taken the initiative to introduce the mechanism of road pricing in their respective economies. Through road pricing mechanism, the government can directly charge the consumers for using up the road space. The revenue earned by the government through these charges is generally used to build more roads and maintain the existing roads.
As per the views of Agarwal and Koo (2016), deadweight cost is imposed on the society due to traffic congestion. Thus, some measures such as road pricing as well as traffic regulation are considered within this study of Economics assignment to reduce the huge volumes of traffic congestion. The journal by Agarwal and Koo (2016), explains the effect of road pricing mechanism on Singapore. Agarwal and Koo (2016) determine that road pricing mechanism reduced nearly 20-30% of traffic throughout Singapore. The passengers can avoid the congestion tax by paying ERP charges, changing journey route or time to pay less or using public transport. The journal also determines that through road pricing, transportation costs can be managed properly, commuting time can be reduced and public transport quality can be enhanced (Agarwal and Koo, 2016).
Figure 1: Pros as well as Cons of Road Pricing
(Source: As influenced by Daganzo and Lehe, 2016)
As per the views of Daganzo and Lehe (2016), the strategy of zone-pricing first sparked in the countries of USA and UK in the period of 1950s to 1960s. The Scheme of Area License has been applied in Singapore through which a driver going to a restricted area needs to provide some form of license to the guard (Daganzo and Lehe, 2016). However, some electronic booths were established in Norwegian cities only to earn profits for road projects. These forms of road pricing mechanisms did nothing to reduce congestion on the roads of Norwegian cities (Daganzo and Lehe, 2016). Moreover, London used LCC or Congestion Charge of London to implement road-pricing mechanism on its roads. A driver will have to pay online, by phone or in-store after entering the zone before midnight. The revenues earned from LCC have provided with more bus services and car lanes are converted into bike or bus lanes (Daganzo and Lehe, 2016).
Rationale for road pricing system
Though congestion pricing has been a popular idea, few developed countries are able to implement such road pricing mechanisms. As per the views of Rahman et al. (2015), several forms of road pricing mechanisms can be used such as Toll System, HOT lanes, Dynamic pricing volume, fees for vehicle usage, Cordon pricing, Congestion pricing as well as Rationing of road space. Congestion pricing is implemented usually to reduce traffic congestion on the road. Vehicles such as private cars, luxury vehicles, motorcycles as well as taxis must pay a congestion price to enter the charged zone. Through road tolls, congestion in highway roads can reduce considerably (Rahman et al. 2015).
Figure 2: Market Condition of Road Space if pricing mechanism is included
(Source: As influenced by Blandin and Boeuf, 2015)
Through the introduction of road pricing mechanism, road space is considered as a good consumed by drivers, vehicle owners and motorcyclists. Thus, the price of road space used is considered as the price paid by buyers of road space. As per Figure 2 provided in this Economics assignment, the vertical line denotes the price of road space used while the horizontal line denotes the amount of road space consumed. The demand curve for road space is downward sloping because as price for road space rises, demand will fall considerably. However, the supply curve is horizontal since the supply of road space available in the short run is fixed (Blandin and Boeuf, 2015). Thus, the equilibrium price and equilibrium quantity are determined at the point where demand curve meets the supply curve. Thus, as per Figure 2, the equilibrium quantity is Q1 and the equilibrium price is P1.
Answer
Most Congested Cities in world
Several cities have the most congested roads in the world such as Moscow in Russia, Istanbul in Turkey as well as Bogota in Colombia. Moscow has become the worst traffic congested city throughout the world (Matousek, 2019). It is mentioned in this Economics assignment that in the year 2018, the drivers of Moscow wasted nearly 210 hours in traffic queues reaching the average speed of nearly 18 km/h (INRIX, 2019). In the annual report of INRIX analytics automotive company, Moscow had been named the topmost city in the list of having the worst traffic jams. However, the government of Moscow rejected these findings blaming the methodology of the annual report (The Moscow Times, 2019). The traffic jams in the city of Moscow have reached the level of 483 while the total length of congested roads has reached the level of 418km. The average congestion in the year 2018 has become nearly 56% since 2017 while the live congestion is considered nearly 44% (Tomtom, 2019). The congestion levels in non-highway roads and highway roads are 54% as well as 65% in Moscow. 86% traffic congestion has been attained in morning workdays while 102% traffic congestion has been attained in evening workdays (Tomtom, 2019).
The huge problem of traffic congestion in the city of Moscow rose from a rapid rise in the production of cars. The number of cars in Moscow rose from 850 thousand in 1991 to nearly 2.7 million in the year 2001 (Facts and Details, 2019). The number of cars in Moscow rose by nearly 300 thousand each year from 1991 to 2001. Moreover, the New York Times interviewed a man who said that to travel 20 miles, he had to travel for more than 16 hours. Being present in a gridlock traffic jams, the man travelled only 50 meters in two hours (Facts and Details, 2019).
Another city that suffers from the worst traffic jams in the world is Istanbul in Turkey. It is the city with the second worst traffic jams throughout the world. In Istanbul, drivers are losing nearly 157 hours in rush period in the year 2018. As per the report of INRIX analytics automotive company, traffic jam has risen by nearly 6% in the year 2018 compared to 2017 (Daily News, 2019).
The major factor of huge traffic jams in Istanbul is the rapid rise in the population of Istanbul. Istanbul consists of nearly 15 million citizens that influences traffic jams in Istanbul. Istanbul consists of the largest number of motorbikes at over nearly 4.1 million (Daily Sabah, 2018). Istanbul inhabitants are frustrated by the overcrowded buses so they prefer to use private cars. Thus, a private car for each individual will lead to a disastrous traffic jams in Istanbul in Turkey. Moreover, the city of Istanbul observes a rapid rise in the population at 1.65% each year. The city of Istanbul has suffered from huge traffic problems due to such an accelerated growth of population in Istanbul (Daily Sabah, 2018).
Congestion-easing policies
Figure 3: Congestion-easing policies implemented in Moscow and Istanbul
(Source: As influenced by Facts and Details, 2019)
The government of Moscow is putting tremendous efforts for the reduction in congestion on roads. The trucks are banned in the city center of Moscow, are rerouted through traffic as well as the streets are made one way to regulate the flow of traffic through Moscow. The planners of Moscow had estimated that over 300 streets were required in early 2000s to fit the vehicles present at that time (Facts and Details, 2019). Thus, the scarcity of highways, bridges as well as flyovers led the government to build them to reduce traffic congestion in the city of Moscow. Moreover, the planners of Moscow have built roads that are 10 lanes wide while 69 miles long costing nearly 1 billion dollars to the government. These roads are usually called 'Death Road' since huge fatalities have occurred in the city of Moscow (Facts and Details, 2019). Mayor Luzhkov fired traffic department head since he was unable to reduce the traffic congestion in the city of Moscow. The government is bringing the public transport into focus such that people stop using private cars as well as motorcycles. If public transport is introduced properly and at the exact amount, people will be using public transportation instead of private cars. This would lead to the reduction in road congestion (Facts and Details, 2019).
The city of Istanbul has observed efforts for the expansion of transit network by the government. The government is introducing new roads, new streets, new bridges as well as new flyovers to reduce the congestion level on the roads of Istanbul (Daily Sabah, 2018). Thus, Istanbul has observed some relief in traffic congestion due to tremendous government efforts. It is mentioned within this Economics assignment that Eurasia Tunnel as well as Selim Bridge at Yavuz Sultan is the two major projects of the government that will help to reduce traffic congestion in Istanbul. Eurasia tunnel reduces the travel time from 100 minutes to just 15 minutes in Istanbul (Daily Sabah, 2018).
Reference List
Agarwal, S. and Koo, K.M., (2016). Impact of electronic road pricing (ERP) changes on transport modal choice. Regional Science and Urban Economics, 60, pp.1-11.
Blandin, S. and Boeuf, V., International Business Machines Corp, (2015). Global positioning system based toll road pricing. U.S. Patent Application 14/181,495.
Daganzo, C.F. and Lehe, L., (2016). Zone Pricing in Theory and Practice. Rahman, S.M.R., Kabir, E. and Mannan, M.R., (2015). A SCOPING REVIEW OF CONGESTION PRICING: PAST WORK AND ITS IMPLEMENTATION BENEFITS. Port City International University Journal, 1851120791(01773225500), p.74.
Facts and Details, (2019). Moscow Traffic. Available from http://factsanddetails.com/russia/Education_Health_Transportation_Energy/sub9_6d/entry-5159.html [Accessed on 15/08/2019]
The Moscow Times, (2019). Moscow Has the Worst Traffic Jams in the World, Study Says. Economics assignment Available from https://www.themoscowtimes.com/2019/02/13/moscow-has-worst-traffic-jams-in-world-study-says-a64477 [Accessed on 25/08/2019]
Tomtom, (2019). Moscow region (oblast). Available from https://www.tomtom.com/en_gb/traffic-index/moscow-traffic [Accessed on 20/08/2019] Daily Sabah, (2018). Once one of the world's worst, traffic congestion drops in Istanbul. Available from https://www.dailysabah.com/istanbul/2018/09/25/once-one-of-the-worlds-worst-traffic-congestion-drops-in-istanbul [Accessed on 18/08/2019]
Daily News, (2019). Istanbul second most congested city in the world. Available from http://www.hurriyetdailynews.com/istanbu-second-most-congested-city-in-the-world-141205 [Accessed on 24/08/2019]
INRIX, (2019). INRIX 2018 Global Traffic Scorecard. Available from http://inrix.com/scorecard/ [Accessed on 21/08/2019]
Matousek, M., (2019). These are the 20 most congested cities in the world. Business Insider. Available from https://www.businessinsider.in/a-futures-market-is-finally-opening-for-the-726-billion-trucking-industry/articleshow/67965741.cms [Accessed on 10/08/2019]