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The Electronic Road Prices In Singapore Economics Essay

Road costing is a carry plan where motorists are incurred for using the roads. The main process is that the price paid for the use of a street should reflect the costs of its use. (Travel coverage 2005, p373). The need for road charges has increased in the last few years. 'Given the growth in street traffic and its own adverse side-effects street pricing is becoming an important modern day policy issue. - (Kenneth & Verhoef, 1998, p4)

The congestion pressures faced by locations will intensify in the years ahead. Given that environmental and interpersonal sustainability also deteriorates if no action is taken to control growing traffic regions like Northern Ireland must dwelling address these troubles and stresses in their travel system. A recently available survey discovered that Belfast was the 7th most congested city in Europe (NI budget, p10)

There are various terms used for street pricing such as, road user charging, street tolling, congested charging, congested charges etc, all of which generally reflect the same concept which can be specific charges levied for the utilization of streets. There are different types of charges such as road tolls, congestion charges and distance or time based fees. You will discover more specific charges that concentrate on certain classes of vehicles, and environmental issues.

There a wide range of different reasons why road costing is earned, but the primary reason why these charges may be used is basically because they generate revenue which is usually for highway infrastructure funding. The revenue made can also be used as a travel demand management tool which is used to lessen peak hour travel and the associated traffic congestion. Limiting traffic congestion can have positive benefits on highway travel such as polluting of the environment, greenhouse gas emission, noise, and aesthetic intrusion and street accidents.

The most usual method of earnings regeneration is through tolls, most countries have tolls on main streets, bridges and tunnels. The income generated is generally put back into the procedure and maintenance of the tolls but they can even be used as basic tax cash.

Another method of charging is 'Highway Congestion Pricing' this method involves charging road users for entering urban areas. Other methods may include pollution charges; this may entail charging vehicles with higher tailpipe emissions. It ought to be observed that there aren't many road congestion charges because they are limited to a little number of locations and urban streets. But there are a variety of road costing schemes implemented in the world and there's a growing amount of cities are interested and willingness to look at road pricing strategies to solve their transportation problems, certain plans include:

The electronic Road costing in Singapore

The London congestion charge

The Stockholm congestion tax

The Milan Area C

And high-occupancy lanes in the United States

Other examples of pollution pricing techniques include the London low emission zone.

This report will look at current highway pricing strategies by focusing on how they are really being received by the public, do they donate to the market and do they advantage the environment. This report will look to ask 4 main questions:-

The theory of highway pricing?

What are the benefits and cons of road costs?

Road pricing case study

What is the government's role on road pricing?

The Theory of street pricing

Road costing is not a new notion, throughout history motorists have been recharged for using the road. Both main purposes for charging are to control demand, which can assist in improving congestion and improve environmental problems, and raise income, to finance tasks that benefit motorists and those afflicted by traffic- (Whittles- 2003, p1)

Economically, road end user charging is for construction procedure, maintenance costs of new highways or main streets. The theory and goals of highway pricing imply the magnitude of charges enforced on a person should reflect the expenses they impose on others and on the surroundings, thus helping to reduce negative externalities of traffic. (Saleh & Sammer, 2006 p2)

There are essentially two reasons why road providers and city authorities would consider introducing a charge for the utilization of highways: to manage congestion or even to fund the infrastructure. (Pickford & Plythe 2006 p. 1)

The execution of road rates theory into practice is intricate and extremely difficult, it is because the 'rates structure has to reflect the genuine costs the motorists impose on the system according to time, distance and place and/ or other appropriate variables'-. (Saleh & Sammer, 2006 p2), although most street pricing schemes are theoretically possible to ascertain, there may be problems with politics and or general public acceptance.

One major matter is that these road pricing can change into another enforced toll or permanent charge for travellers and a means for local authority to generate earnings. It is therefore important that these road pricing strategies are, developed, applied and monitored, this can be achieved through Travel Demand Management (TDM) costs. An integrated program of TDM prices and non pricings strategy should therefore be devised in order to aid local government bodies and places in producing appropriate schemes that meet their local aims.

There are a variety of conditions used to describe road pricing, many of them intertwine and overlap with one another such as:

Road Tolls - Tolls are the most common and oldest form of road pricing. They are mainly situated on Arterial routes such as highways, bridges and tunnels. Tolls are seen in an effort to fund and recover capital costs of the particular road, they are considered as the most equitable and economically efficient approach to funding.

In some situations toll lanes may be extra lanes put into the highway, plus some tolls are varied between maximum and off peak times, to manage demand and reduce congestion. Problems occur when users choose different routes; this may lead to other routes becoming congested.

Congestion prices/ charges- Is something to bill users mainly in urban areas where it is congested, in order to reduce peak-period traffic quantities to maximum levels. The aim of this technique is to make users more alert to the expenses that they cause during peak demand and that they should purchase the excess congestion created therefore motivating the redistribution of the demand in space or time. Tolls are occur these areas and can be set or vary in costs, depending on the level of congestion that is out there at a particular time. Costs vary with high prices in congested areas and lower prices at less congested times and location. Such goals are to move from private to open public transport also to minimise co2 emissions. London, Singapore, Milan and Stockholm are simply a few types of cities that have adopted congested rates.

Cordon Tolls- Cordon tolls are installation where vehicles are charged based on the distance they travel in the charging area. They are usually located in the location centre, these cordons can be altered are easily expanded. Rates could vary by time of day and vehicle type. In some cases they only apply during peak time periods. This system is setup to resolve the traffic problems in the location centre to be able to lessen congestion and lower co2 emissions

High Occupancy Toll (HOT Lanes)- is a road pricing scheme that provides motorists access to High- Occupancy vehicle (HOV) lanes. These lanes permit more motorists to work with HOV lanes, which reduce traffic congestion and limit co2 emissions. Also, they are an efficient approach to raising earnings trough tolls, the tolls change throughout the day according to real-time traffic conditions. HOT lanes are extremely beneficial even those who choose never to use them, due to the congestion minimised.

Vehicle use Fees- This form of road customer charging is a distance- structured charge, where mileage fees may be used to account motorways and reduce congestion, pollution and mishap risk. It is something that proposes that vehicle sign up fees and gasoline taxes be changed by a changing road user fee using GPS-based prices methods.

There are a number of questions each government/ local expert will have to ask itself once they decide to put into practice a road costs scheme.

Which system to utilize?- To be able to decide a particular scheme, the federal government, city, local specialists etc will have decide which of the above mentioned schemes to use or create an completely new one. They have to be designed to meet its technological objectives, the goals of the neighborhood area and optimise the public and politics acceptability. Different methods should be investigated to assist the local specialists and places in development of appropriate road pricing techniques that meet their local aims and solve the neighborhood carry problems and which would be publicly feasible, whether it is funding for the local transport, high congestion or those who suffer from interpersonal exclusion or limited convenience.

How to set the pricing structure?- This is essential, developing a road pricing plan that has high charging will create social exclusion and will effect public opinion for that scheme. While setting a minimal charge may cause low revenue made which may not cover working costs of the structure and therefore no money is made for the neighborhood transport.

Economically the costing structure should mirror the real costs the motorists enforced on the system compliance to time, distance and place and/ or any other appropriate parameters. It's important that the costs structure are flexible this can make it better to alter in the future presenting room for inflation and other changing costs that cannot be seen. It is important that prices set are reasonable and reflect the real costs of using the streets.

Where to invest the earnings? - Revenue generated by the road pricing scheme, by law should be invested back into the local transportation system. The allocation of revenues made should be carefully investigated to be able to optimise the techniques technical targets as well as their general population acceptability. Quite simply the earnings should be spent on measures to resolve the local carry problems. Revenue made from road charges plans should 'to be universally acceptable to the respondents, street pricing revenue must be spent on measures that solve the transfer problems or ease the environmental influences caused by road users who pay the fee. '(Whittles, 2003 p215)

What are the impacts of costing strategies?- All road pricing plans have a multidimensional problem that should look at the short and permanent effects on traffic, environment, monetary activities, communal exclusion, travel behaviour and attitudes as well as general population acceptability.

The data accumulated should give an understanding if their targets are being satisfied and whether the scheme overall is successful. Generally most road rates schemes have prevailed in restricting congestion and creating revenue. It's important that road costing plans renew their strategies through the introduction of new/updated technology, only then can they achieve their aims.

Public View on Road Pricing-Despite the strong support for street pricing from the professional move planning community, users of the public and politicians continue to be unconvinced of its potential benefits and cautious with the significant changes that street pricing could pre-empt. The idea of urban road costs and acceptability are features of our society, and various systems of street pricing will activate different options about acceptability

Public acceptance is critical to the feasibility of highway rates current perceptions are based on respondents interesting with pricing basically as an abstract theory. Attitudes change whenever a completely developed proposition is organized. If the huge benefits are good and the technology can deliver then more people would be appropriate to it.

What are the advantages and disadvantages of road costing?

It is important to assess the advantages and cons of road prices, this will allow government authorities/ local government bodies to make the decision whether to put into action road pricing schemes. The need for road rates schemes is essential 'with the growing level of traffic congestion coupled with delays to general population transport, and the failings of non-pricing options and regulations in attaining effective effects on traffic congestion and other related metropolitan problems. (Saleh & Sammer, 2006 p2) these problems will escalade without highway pricing schemes.

Figure 1 is taken from the Eddington article exhibiting the congestion on the road network in Great Britain in 2003.

(Eddington Record, 2006 p 28)

When considering road prices at a national range there are potential benefits and advantages. Release Road costing at a wider scale is vital, as there are potential great things about a well- designed, large size road pricing strategies. Based on the Eddington Survey a national street pricing design could 'reduce congestion by some 50% of what it might be in 2025. It persists to state that it might reduce the financial circumstance for additional proper highway infrastructure by 80%, and benefits could total 28 Billion per year in 2025. (2006, p 40) Although cost of such a system is not developed they might need to be extremely high to outweigh the advantages of this level.

Introducing it at a large level would also offer significant environmental benefits by reducing and reshaping infrastructure needs, as well as offering opportunities to price more appropriately for environmental costs and reduce emissions.

According to the Eddington Survey a national highway rates would provide 'some 500m of environmental benefits each year in conditions of reduced emissions' (2006, P40). Without road rates, beyond 2015 there will be a circumstance for significantly increasing the existing rate of advancement of the strategic highway network. Other benefits associated with having National and urban plans would also increase demand for, and the price effectiveness of, public transport in some of the most congested areas and routes, especially at peak times.

However there's also disadvantages with a road pricing structure at a countrywide level. The cost of such as system would be extremely high and the revenue generated must outweigh the cost. Also some motorists may be worse-off unless they can be adaptable with travel times or good alternate travel options are available.

Alternative methods must be regarded apart from street pricing, this calls for greatly increasing the street build which would significantly raise the existing rate of expansion in the inter-urban street network, or have high levels of road congestion, both of which involve having more motorists and therefore would enormously increase co2 emissions.

It is important to evaluate each particular highway pricing plan in terms of advantages and disadvantages.

In respect to congestion costing, it is very effective at reducing congestions specifically in urban areas, many imagine without congestion charges metropolitan traffic congestion is almost unsolvable. Minimizing congestion will have economical benefits and environmental benefits such as lower co2 emissions.

Implementation of congestion costing has reduced congestion in urban areas, but has also sparked criticism and general public discontent. Critics maintain that congestion pricing is not equitable, places an monetary burden on neighbouring neighborhoods, has a negative influence on retail businesses and on monetary activity generally, and is also another tax. Although some think that congestion pricing simply shifts vehicle traffic to other routes and for that reason boosts congestion on that course and in the long-term few benefits can be seen

Some road prices schemes reduce total vehicle travel and can also reduce street parking facility costs, increase highway safety, encourage better land-use and improve community liveability

In relation to Value Pricing and HOT lanes they increase transportation options. On un-priced roads motorists haven't any alternative to being postponed by congestion. Value Pricing and HOT lanes allow motorists to select from traveling in congestion or paying a toll and using the HOT lanes. Thus giving the individual motorists the decision that fits their needs for a particular trip.

The method in which payment is manufactured can have a major effect on the environment. In relation to tolls, although they are a way of generating earnings on motorway and Arterial roads, tolls collection requires motorists to stop at booths this triggers delays and congestion. This therefore leads to increased co2 emissions and energy utilization. Although new digital tolling can reduce the exchange costs.

It is a fact that road charges increases costs to motorists, but the money made from the road pricing can benefit the street users as the money can be delivered as rebates or reductions in other fees, or found in other ways to profit motorist. This depends on the road costs scheme and whether it creates enough money.

Certain road rates schemes which spend money on additional highway capacity can increase total auto travel. This may lead to many different cons such as higher congestion levels, higher car parking costs, crashes, pollution and sprawls. Growing the size of a highway can likewise have a significant negative influence on the community, as the expansion can lower through areas and reduce their liveability. Other problems can arise through highway privatization which can bring about higher costs.

Problems with sociable exclusion, the present day concept of sociable exclusion has many meanings that implies and failure to participate totally in the life span of the city, scheduled to poverty, ill-health, unemployment, physical isolation, insufficient education etc. Consumer travel can be limited or lacking and then the most vulnerable communities are at threat of social exclusion.

The launch of road end user charging offers additional choice to affluent communities but may present serious problems to the people for whom the new charges represent a substantial part with their available income- (Bonsall & Kelly, 2005 p 406)

It should be mentioned that the income generated from street consumer charging should improve the transport system and therefore provide alternative modes of transport for many who are most affected. But whether efficient revenue is made to accommodate the alternative settings is under question.

It can be argued that car owners are generally more affluent than non-car owners, and since road charges will only be imposed on private car owners then only the more affluent participants of society will be affected. Not all car owners are affluent information signifies that 38% of households in the lowest quintile income group get access to a car (an increase from 26% in 1985/86)- (NI budget, p407).

In a flawlessly free market, individuals faced with a new charge could have the option of paying or making substitute design. Whether to pay the fee and use the road which is less congested or find substitute routes. But this therefore contributes to interpersonal exclusion.

Recent road costing techniques have been criticised, many strategies in the UK and US are being terminated, delayed or scaled back, this is mainly due to the fact that there's been major opposition and protest to these techniques. The major criticises are that congestion pricing in general is not equitable, they have a negative effect on retail businesses and on economic activity generally, they place an economic burden on neighbouring areas and are believed as another form of duty.

But overall street pricing schemes are the future, but whether it should be carried out at a nationwide level is still uncertain. Road prices techniques provide huge benefits in creating revenue and limiting congestion. The major concern is how to execute they at a nationwide level, due to costs and general population acceptability.

Key road rates schemes

London Congestion pricing

The London congestion program was released in February 2003. Since then private automobiles have been recharged a fee when entering the town centre. It was devised as a way to reduce traffic congestion and increase revenues to move improvements and since then it includes achieved these goals. It had been the first congestion rates program in a significant European city and has very much success that suggested schemes in other places are being considered.

The introduction of this design was essential, as central London acquired particular has limited road capacity and heavy travel demand this led to severe congestion.

The scheme introduced costs for motorists driving in central London on weekdays between 7:00 am and 6:30 pm are required to pay 5, that was risen to 8 in July 2005. - (Pickford, 2006 p248) It should be noted that we now have exemptions for accredited taxis, motorcycles, alternate gas vehicles, vehicles employed by disabled people, buses and emergency services and residents have a 90% discount. Repayment can be made at retail outlets, payment machines found in the region, by internet, telephone or Text messaging. Motorists can buy weekly, monthly moves with 15% discount. 'Discounted and exempt users total 30% of traffic, 39, 000 vehicles every day. - (Pickford, 2006 p248) Number 1 shows the London Congested Charging Area.

(Physique 2: London Congestion Charging Area, Litman 2011, p2)

There are a network of camcorders working throughout the congestion charging area, recording the certificate plate numbers of vehicles and suits it with the paid list. If they have never paid the congestion charge they are dispatched a 80 fine. This fine is reduced to 40 if paid within 2 weeks. These procedures are brought in to ensure that everyone compensates the charges and that everyone is treated fairly.

The scheme has already established a significant effect on the quality of life and travel in Central London. Overall congestion was reduced by 30% and bus congestion delays dropped 50%. Traffic getting into the charging area has been reduced by 18% and car vacations by 35%. - (Pickford, 2006 p250)

Between 2000 and 2008 start up costs and operating costs where 500 million but the charge and charges revenue made 800 million, departing 300 million, - (Litman, 2011 p 5) which for legal reasons must be reinvested into carry advancements in London.

It should be noted there are extensive issues with the London congestion charging system, with complaints coming from the lack of system reliability with motorists being wrongly ticked. Some motorists believe that they may be being 'dual recharged' by paying sign up and fuel taxes and this results low-income motorists the most. Also some motorists assume that there is a loss of privacy with the camcorders and the machine traffic monitoring their vehicles.


When taking a look at road pricing techniques Singapore is known as to have the most successful schemes which is a standard for other cities. Road costing was introduced in Singapore in June 1975 with the highly effective Area Licensing Plan (ALS) and the street Pricing Structure (RPS) these are considered as manual road pricing strategies. Many changes have been made to the road costs scheme since that time, mainly with the launch of the Electronic Road Costing System (ERP).

Singapore created ERP in 1997 as problems where innovating with the manual highway pricing strategies.

The ERP system involved installing an ardent Short-Range Communication (DSRC) that included as In-vehicle Unite (IVU) with a good card. Everlasting IVUs are installed on all domestic vehicles, while foreign vehicles may use non permanent IVUs.

Two overhead gantries, located close to one another, are located over every entry point. They hold antennas. Whenever a vehicle passes via an entry point the antenna interrogates the IVU in the automobile, verifies it validity, and instructs it to deduct a proper entry charge from the stored value of a smart card put in the IVU.

If there may be insufficient cash in the smart credit card or should there be no smart greeting card in the IVU, the enforcement surveillance cameras will take a picture of the vehicles licence plate.

In May 1998, with 98% of listed vehicle owners having an IVU installed. The scheme launched with an administrative charge of S$10 for drivers who didn't maintain a balance on their smart card. - ((Pickford, 2006 p247)

From adding the ERP the traffic volume into the Central Business area (CBD) has reduced by about 10-15% during ERP operation hours set alongside the ALS scheme- (Keong 2002, p8). The ERP system allowed more consistent changes to be produced to the street pricing charges, so that it can better optimise road usage.

Privacy issues is a concern, with records of the transactions being stored and can trail motorist's location and travel habits.

Overall road charges in Singapore has been effective in taking care of congestion on roads in the CBD since its inception 1975. From the ALS and RPS techniques, Singapore exhibited it was possible to present a large size ERP program in a congested business district and make it happen with technology that was just emerging in the mass market. This successful program has proven that charging is a powerful demand management tool that is able to balance traffic on different routes to accomplish optimum circulation.

Current legislation in the UK

In the UK, central government has laid down a legislative construction to permit local transport authorities to undertake charging plan. The principle components of legislation are:

The Greater London Expert Act 1999

The Transport Take action 2000

The travel (Scotland) Work 2005

There is not a equivalent legislation for Northern Ireland

The main facet of this legislation permits local authorities to undertake charging in furtherance of the aims with their local transport plans, this includes earnings generated from charging to be invested into transport advancements for at least the first a decade of an charging scheme, so long as techniques are initiated within a decade to the 2000 Act, although this Function does give this ten yr deadline to be mixed by regulation.

The central administration is also responsible for legislation on privateness and data protection, although the rule legislation- the 'Individual Rights Take action 2000' and the 'Data Safeguard Take action 1998'.

The devolved administrations are in charge of the supervision of roads. Beneath the current administrative platform there is independent legislation for Scotland- (The travel Scotland Action 1999) and (The Streets NI Order 1993) - which governs the supervision of highways in North Ireland, while the Transport Act 2000 pertains to Great britain and Wales.

This division means that the obligations have been divided. Local regulators have the power to create a charging scheme so long as the program has been approved by the Sectary of Status. The goal of the charging plan is then defined, and program of revenues is defined out in the primary legislation and functions as a clear constraint in local specialist initiatives. The local authorities have the energy to make operation decisions with the purposed system and there is no obligation to allow them to adopt a standard approach or methodology for the system of for evaluating costs and benefits.

When looking at the Transport Function 2000, section 163. Part 2

It claims that charges enforced according of any motor vehicle by a charging structure under will be paid-

By the documented keeper of the motor vehicle or,

In circumstance specified in regulation made by the appropriate countrywide expert, by such person as is so specified.

Part 3- A charging design may be made-

by a non-metropolitan local traffic authority ("a local charging scheme"),

jointly by more than one non-metropolitan local traffic authority ("a joint local charging scheme"),

jointly by a number of non-metropolitan local traffic specialists and one or more London traffic authorities ("a joint local-London charging scheme"), or

By the Secretary of Condition or the Country wide Assembly for Wales ("a trunk highway charging scheme").

The UK authorities are looking to the future, in terms of your national road prices scheme. The Section for Transport declare that if there is a national road pricing scheme then your central government would act as an advocate for charging, through providing a legislative and wider construction to a functional delivery role- (2006, p36). In addition, it suggests that locally-based schemes will pave just how for a countrywide system, 'there is a dependence on the central Federal government to have power to start work by local government bodies, while recognising local needs, and to ensure that local travel objectives are not hampered' (2006, p37)

Overall to deliver a highly effective system of road charging, one that delivers real benefits to motorists and also to the environment, that has both politics and public consensus. There has to be an alteration in the way the local and central federal work together over the tiers of authorities. Until then the central government motivates and supports the need for the local authorities to develop new road costs plans, that are subject to proper appraisal and review and can be easily understood to protect the automobile user.


In conclusion highway pricing schemes are the way forwards, as other alternatives require expanding the street infrastructure, this will result in higher congestion and co2 emission. This report has looked at the concept of road costs and the different types of road pricing plans and analyzed the advantages and disadvantages of them. In conclusion advantages outweigh the negatives. Research has been seen from the case studies that reliable, proper and well put in place schemes can provide huge advantages to the local transportation system.

Northern Ireland, specifically Belfast is suffering from high congestion problems, but there may be current no legislation for Northern Ireland regarding highway pricing schemes. Northern Ireland must put into practice road pricing techniques as they'll provide earnings for the local transportation system and lower co2 emissions.

Many parts of the united kingdom also don't have road pricing techniques. There may be major congestion at peak hours in most towns in the united kingdom. A proper analysis of the expenses of congestion and an understanding of the impact congestion is wearing the UK economy is needed. Eddington discusses a national road pricing plan by 2015to deal with the extremely high levels of congestion.

A National road costs system must be put set up as it will provide the chance for a whole-scale change in the manner we pay for the road use. If highway prices were to be unveiled at a nationwide level then it'll set focuses on, which would include reduce congestion, weather change emissions etc. However if the federal government where to commit to implementing national highway pricing, there has to be evidence showing that the program would be effective, fair and value for money. However, road rates on this range is new and at this stage has unknown execution costs. There are extremely significant dangers and uncertainties involved with delivering a prices policy, particularly surrounding the technology necessary for its delivery: potential technologies are present but have never been used at a national level also concerns about equity and public acceptability, as well as the chance that the decrease in congestion brought about by road prices would be undone by induced traffic.


Travel demand management and highway user rates : success, failure and feasibility / edited by Wafaa Saleh, Gerd Sammer. 2009

Road costs : theory and information / edited by Georgina Santos, 2004

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