The equity and efficiency impacts of congestion charging measures: the case of Seoul, Korea

Abstract

Congestion charging has been floated as an efficient way of managing travel demand in urban areas, reducing traffic congestion and externalities as well as raising revenues to fund transportation improvements. Moreover, the policy maker who faces heavy traffic congestion now considers it as a promising policy alternative. This situation has led to an encouraging evaluation methodology that analyses the impact of the congestion charging scenarios. However, in contrast with substantial studies on evaluation of congestion charging, comprehensive assessment, namely, trade-off between equity and efficiency, has attracted little attention so far. In addition, although studies have argued about the generated revenue for managing equity, little attention has been paid to assess the impact of revenue return as a compensating policy. The main objective of this study is to investigate and identify the impact of congestion charging measures in terms of equity and efficiency based on full implementation scenarios for Seoul in Korea. In order to achieve the objectives, the evaluation criteria has been explored in terms of equity and efficiency with the theoretical background of congestion charging, and the impacts of congestion charging have been analyzed through case studies such that charging on CBD, 2nd CBD and both. The equity is analyzed on the basis of the compensating variation measure for three income groups which can provide an index of political acceptability. The efficiency is analyzed in terms of net social welfare and traffic improvement that can be used to assess the practicability of congestion charging implementation. Finally, the revenue return which is substantially related to acceptability is examined. It is noteworthy that estimating the compensating variation by income group and expanding it to social-welfare change in a whole system in conjunction with cost-benefit analysis is a substantial advance in measuring the equity impact within the efficiency outline.
Through this study, some empirical findings can be drawn; Congestion charging provides an efficiency improvement as congestion relief, increases net social welfare, but there are equity impacts as user benefit varies by toll level across the income groups. Determination of congestion charging scheme is heavily relied on not only the characteristics of charging area such as mode share, parking facilities, road network and public transport but also the traffic pattern such as traffic volume of inner, inbound, outbound, and go through in duo-centric city. It is also found that the optimal toll that is deemed to maximize social welfare is much higher than the existing toll level, so an applicable toll level has to be determined by policy objectives that maximise either social welfare or revenue. Furthermore, reduced fare of public transport as a compensating policy makes an improvement of equity as a fairer distribution whereas the economic efficiency does not make an additional improvement as a social welfare change. However, considering the limitations of the model, including use of fixed demand O/D and static short run analysis, further study would lead to an analysis of a dynamic model, variable demand and longer-term view, with more realistic assumptions

More information

Identifiers

ORCID for J.M. Preston: orcid.org/0000-0002-6866-049X

Catalogue record

Export record