Tolls gather speed

In almost every country on earth, road networks have been bastions of government control, operating outside the rules of supply and demand, resistant to technological improvements that would lower cost and boost efficiency, and all but impervious to market forces.

No longer. Roads – once the stereotype of pork-barrel politics for favoured constituents – now lead the way in bringing market forces to bear on government waste and inefficiency. The change is occurring at breakneck speed, and almost everywhere.

Most of the market-oriented reforms involve user fees for the use of roads, designed to open road systems to the laws of supply and demand and ration roads by price, rather than by congestion. Such reforms came to Jakarta earlier this week, when the Indonesian capital’s city council endorsed a government plan to build 85 kilometres of inner city toll roads. The roads, modelled on Singapore’s successful electronic road-charging system, would relieve traffic congestion and encourage foreign investment, the Jakarta government explained, adding that taxpayers wouldn’t be at risk because the private sector would wholly finance the project.

This reform also came to Stockholm this week, where the government decided to test a road congestion charge for six months, starting in January, 2006, followed by a referendum to decide if the charge should be made permanent. Modelled on London’s popular congestion charge system, which charges drivers a (ps)5 ($11.45) fee to enter or leave downtown during business hours, the Stockholm plan would charge drivers between 10 and 20 kronor each time they passed a toll portal, depending on the time of day, to a maximum of 60 kronor ($10.30) per day.

The London approach also has recent converts in Tel Aviv, where the Israeli government decided to put out tenders to charge vehicles entering the city, and in dozens of other cities around the globe, which are likewise planning to use markets and technology to end the waste that comes of free roads.

Metropolitan regions, too, are adopting market reforms. The State of Virginia signed a $900-million deal with two private companies a month ago to build, maintain and operate two toll lanes for the Washington, D.C., area’s chronically congested Capital Beltway. Taxpayers won’t have to put up a dime – the companies will recover the costs of the project from the toll fees, which will be negligible during off-peak hours and hefty at peak times. Regional planners in Virginia – and in neighbouring Maryland, too – see this as the first of several new toll roads in the region. Denver-area motorists, meanwhile, will begin paying peak-time tolls of up to $3.25 later this year to travel the I-25.

The Greater London area is also preparing to toll highways. Under satellite-driven schemes proposed by the government’s Commission for Integrated Transport, drivers will be paying up to (ps)1.30 per mile at peak times on the busiest roads, with revenues used to finance roads and public transit, and to lower tax bills. The U.K.’s opposition Tories have a counter-proposal that would see private companies build roads in order to relieve congestion and increase driving speeds to 80 miles per hour, from the current 70 mph. It, too, would vary tolls by time of day and congestion. Earlier this month, commuters in the greater Minneapolis area began paying fares that range from 25 cents in off-peak periods to $8 at the peak.

Some U.S. states are moving to state-wide tolling. In Oregon, road tests begin this fall for a system that would have satellites track the distances that vehicles travel, charging them by the mile to add discipline to automobile driving. If the tests go according to plan, all Oregon drivers will be paying by the mile by 2007. In California, legislation was tabled this month to allow public or private entities to build toll roads. Californians need roads because they “can’t get from place to place on little fairy wings,” stated Governor Arnold Schwarzenegger.

The drive for toll roads has also reached national governments. The United Kingdom is the most advanced, with plans to toll all roads – urban and rural – by time of day, type of road, and level of congestion. Satellites will not only track vehicles, they will offer alternate routes and other services, both to eliminate traffic congestion and to improve the environment.

European Union countries aren’t far behind, with plans to toll private passenger automobiles. These countries are state of the art in tolling commercial vehicles – European trucks are now tolled by the mile and soon they will also be tolled by environmental criteria and the type of road they use.

In one place, however, toll roads have stalled: Canada. Although our Highway 407 just north of Toronto is touted around the world as a financial and technological success – it’s the world’s first all-electronic open-access toll highway – Canada is now on a detour. Planned toll roads have been cancelled; new ones are nowhere to be seen. The world, meanwhile, speeds by.

Lawrence Solomon, Executive Director of Urban Renaissance Institute and Enery Probe,  May 28, 2005


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