CALCULATION OF WELFARE EFFECTS OF ROAD PRICING ON A LARGE SCALE ROAD NETWORK

Tampère, Chris; Stada, Jim; Immers, Ben · 2009 · Crossref

DOI: 10.3846/1392-8619.2009.15.102-121

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Summary

This paper investigates the social welfare effects of implementing road pricing on a large-scale road network, specifically focusing on the corridor between Brussels and Ghent in Belgium. The primary objective is to determine tolling schemes that maximize social welfare by increasing infrastructure efficiency, rather than merely generating revenue or alleviating congestion. The study addresses the theoretical challenge of moving from a first-best optimum, which is practically unfeasible, to a second-best optimum using realistic parameters for resource costs, taxes, and external environmental costs. The researchers employed the OmniTrans software to conduct simulations using an elastic static traffic assignment method. This approach accounts for changes in trip demand (whether to make a trip) and route choice in response to tolls, while excluding other behavioral changes such as mode switching or departure time adjustments. The model utilized an average value of time of 20 euro/hour per passenger car unit and a price elasticity of –1.0 with respect to generalized price. External costs, including environmental damage and accidents, were derived from recent Belgian data. The analysis compared three tolling strategies: a single-point corridor toll, a multi-point corridor toll along the E40 motorway, and a cordon toll around Brussels, as well as combined schemes. The results indicate that road pricing generates significant social welfare gains by reducing traffic volumes and shifting flows to less congested routes. A single toll point on the E40 motorway just before Brussels yielded an optimal welfare gain of approximately 4,122 euro/hour at a toll level of 2 euro. However, this scheme induced undesirable "rat-run" traffic on minor roads. Extending the toll along the entire length of the E40 motorway increased the welfare gain to 6,724 euro/hour (a 65% increase) by charging users proportionally to the distance traveled, thereby reducing average traffic flow on the motorway by 23%. Sensitivity analysis revealed that welfare gains are more sensitive to the value of time than to price elasticity. Ultimately, the study found that a combination of corridor and cordon tolling schemes produced the best results, maximizing welfare gains while mitigating adverse effects on traffic streams and minimizing rat-running. The findings suggest that while drivers experience a loss in welfare due to toll payments, this is more than compensated by gains for the government and reductions in environmental and congestion costs.

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