Urban Road Pricing and Mobility Credits: Two Policies for the Same Objective – Comparison of Impacts and Redistribution Effects



Urban Road Pricing and Mobility Credits: Two Policies for the Same Objective – Comparison of Impacts and Redistribution Effects

Authors

Sylvie Gayda, STRATEC, Tanguy Isaac, Université Catholique De Louvain

Description

The object of the study is to compare, by means of simulations with a transport model, the impacts of two policies which aim both to regulate the car travel demand: urban road pricing and tradable mobility credits.

Abstract

Object
The object of the study is to compare, by means of simulations with a transport model, the impacts in terms of mode choice and the redistribution effects of two policies which aim both to regulate the car travel demand: namely urban road pricing and tradable mobility credits.
Context
Urban road pricing constitutes one possible solution to go towards a more sustainable urban mobility, either as a congestion pricing (the fare level is set up to alleviate congestion) or as an internalisation pricing (the fare level is set up to cover the marginal social cost). Indeed from the point of view of economics, the optimal user charge is the marginal social cost, i.e. the “price-signal” is such that each user will adopt the behaviour (destination choice, time choice, mode choice, route choice, …) which will maximise the community welfare. Practically, the advantages of urban pricing are twofold: the users who keep on driving their car will save travel time and the revenue from the urban pricing will enable the authorities to make investments in the public transport system (or the revenue can be redistributed under any other form: investment, policy, reduction of taxes, …). However one issue is that, because of the low acceptability of urban pricing, the political decision-makers are reluctant to implement it.
In fact, there are overall three types of instruments to regulate demand: regulations, pricing (charging or taxation) and credits. Pricing fixes the price, while a system of tradable credits fixes the quantity, but they both lie on the idea of an economic incentive, i.e. a price-signal to orientate efficiently the user behaviour. Similarly to the European Union Emission Trading System for the CO2 emissions produced by the industries, one could imagine a regional mobility trading system. The principle would be the following: the authorities emit credits and distribute them to the users according to certain rules to be defined. The users may either use their credits to travel or exchange their credits (users who shift to public transport, walk or bicycle, or cancel some trips, may sell credits to users who want to travel more by car than the amount of vehicle-km which they have right to). A priori, a mobility trading system may seem more acceptable than urban road pricing.
As a first approximation, theoretically the two approaches are equivalent with regard to their impacts on car demand: they give the same price-signal so that they orientate in the same way the user behaviour and lead to the same vehicle-km reductions. The main difference is that in the case of urban pricing, there is a financial transfer from the users to the public authorities, while in the case of tradable credits, there is a financial transfer from the users to the users, i.e. an immediate redistribution (but differences in the redistribution effects may also result from the ways the policies are implemented). Hence the question is: who (government or individuals) will make the most efficient use of this resource?
Case study on Brussels
The study will simulate a tradable mobility credit policy in the Brussels metropolitan area ( 3 million inhabitants). The objective of the study is twofold: first, evaluate the impacts in terms of modal shift and compare them to the impacts of an urban pricing (also assessed by simulation), secondly evaluate the redistribution effects between the different user segments and compare them to those of the urban pricing. To simulate the mobility credit policy, we will use a Brussels multimodal transport model. This model includes different user segments, characterised by different values of time, so that the redistribution effects should be identified and compared with those of an urban pricing. In the analysis we will also pay attention to the equity issues which may arise in the two policies.

Publisher

Association for European Transport