Revision notes

Task: How can congested roads be rationed?
Congested road space can be rationed/controlled by:
1. Queuing: the resultant traffic jams waste time and generate pollution

2. Regulation: banning some motorists from driving e.g. Florence bans cars from their narrowest streets or pedestrian central shopping areas;

3. Price: allocating road space to those who value it most – ignoring income distribution and equity issues

Task: What are the consequences of road pricing?
Road pricing or congestion charging results in:
1. Government revenues generated for subsidising public transport - if hypothecated;

2. Increased transport costs - inflationary pressure and a loss of competitiveness;

3. Little impact on journeys - undertaken by car as demand for peak time road usage is price inelastic because of absence of substitutes;

4. Equity issues - congestion charges are a regressive tax and so are unfair as low income groups are excluded;

5. Implementation issues – efficient toll collection requires a robust and expensive infrastructure;
6. Road pricing encourages consumers to switch to relatively cheaper substitutes.
Task: Explain the polluter pays principle?
The polluter pays principle means polluters should be taxed the amount of their externality e.g. road charging i.e. Pigou tax.

This is done by setting: an indirect tax equal to the marginal external cost (EMC) – this means the government is forcing producers and consumers internalise the externalities – (the polluter pays principle)

However it is difficult to estimate externality and expensive to collect the tax e.g. road charging; this requires expensive extensive IT infrastructure able to read number plates of thousands of cars in all weather conditions.

Task Explain the policy options for combating/ overcoming congestion?
A. Through Increased Supply by:
1. Build more roads- new roads generate extra traffic. New roads are unsustainable;

2. Enable constant traffic speed to reduce congestion;

3. Improve existing roads e.g. variable Road humps; Improve traffic light;

4. Prevent lorries overtaking using the fast lanes.

B. Through Reduced demand by:
1. Congestion charging equals to EMC.

2. Workplace parking charge

3. More/improved park & ride schemes

4. Improve public transport capacity & quality

5. Subsidise substitutes e.g. increase subsidies or offer tax relief on train/bus season tickets

6. Use planning regulations to halt new out-of-town super stores and build houses near work

7. Encourage tele-working where employees work from home through tax incentives

8. Quotas to limit car owned by individuals.

Task: Explain the term subsidy.
A subsidy is a grant given by the government to producers to lower their cost of production by encouraging more production or consumption of a particular good or service.


Task: Why subsidise railways?
Subsidies can be justified on social equity grounds:
1. low-income groups are now more able to afford public transport and loss making but socially essential services maintained.

2. New transport infrastructure offers positive externalities encouraging new firms and jobs to commuters

Task: Is road transport sustainable?
Road transport is least sustainable because it consumes fossil fuels, creates pollution and congestion at peak times and the road network has a significant impact on land use.

However the degree of unsustainability depends on the:
1. Size of the vehicle and the amount & source of energy used.
2. Place time and distance travelled Urban travel in city centres during peak times is less sustainable
3. Occupancy of the vehicles. Well occupied cars are more sustainable than several driver only cars

To inform policy and enable evaluation, the government monitors four stated objectives of sustainable development.
Task: How is sustainability maintained?
1. Effective protection of the environment - Increased transport and associated negative externalities damage the environment;

2. Prudent use of natural resources - transport consumes natural resources;

3. Maintenance of high and stable levels of economic growth and employment - contribution to national gross domestic product (GDP)

4. Social progress that recognises the needs of everyone - cheaper transport means more people have opportunities to travel to further away places.

Task: Is congestion charging a success in London?
A successful project meets its objectives.
• 20% less traffic is entering the zone – the target was 15%.

• Projected revenue is less than half the 2001 forecast at £65m;

• Bus subsides are ahead of estimates at £500m per annum. This means less revenue is being raised to finance transport improvements.

• Bus usage is up 14%. Journey reliability has improved