Road use charges should be introduced in the UK both for motorways and for urban areas

Whenever we hear today about the problems approach this country and how the organization intends to solve them, arguably the three most commonly occurring points for debate on the governments agenda ar education, the health system and transport. please often comes into focus when high profile incidences involving sub-standard humans transport (most nonably in recent clocks involving the railway network) be brought to light. And whole this does is honor the reasons why many of us choose to work a rail way car to travel in, quite a than public transport. Due to the increasing need to role cars, our bridle-paths ar becoming much and more congested. Now the government, in its position of trying to improve the situation, has to find a solution, which result at least ease the problem.Congestion arises when the volume of traffic exceeds alley capacity. This abridges the vivify of all vehicles and so increases the average time it unsays to complete a grouchy journey. The congestion chief(prenominal)ly occurs at peak times where the pray for the channel is at its highest. Particularly when queuing in traffic jams, more masses are utilize the roads, which increases the (marginal) speak to of time to early(a) people. Congestion occurs repayable to the situation that roads are a n 1xcludable public grievous, i.e. no one is excluded from using the roads (based on the assumption that anyone provoke afford a vehicle, can drive a vehicle, and can afford the additional be to rill a vehicle.) By its definition, when a nonexcludable public full is provided, it affects the welfare of any person in the society. A public good is one where some other individual using it will collect no force-out on the goods received by others using it (i.e. the marginal address of someone else eat it is zero) and on that pointfore in that respect is no competition for the service).Figure 1The rush along flow lift(Inverse relationship between the number of vehicles on a road and the average speed of vehicles)thither are many perplexs of congestion, which all lead to some economic equal and hence affect businesses and mappingrs of the roads.For a business the consequences of congestion are most likely to be incurred when transporting the goods and stabbing materials to and from agentive roleies and retail outlets. Congestion increases homes costs, resulting in a lower comparable acquire (to the value of profit without congestion) for the firm. Providing the impairment is inelastic these peculiar(a) costs could be passed on to consumers in the form of higher market prices (whereby demand for the good is not too sensitive to a change in price). These duplicate costs can be incurred by either the opportunity cost of time (delays) or direct costs of supernumerary fuel cosmos burned travelling at lower speed.Figure 2 write out and Demand during congestion for a price elastic good (Congestion costs shift the supply c ut back to the left, resulting in higher selling price and therefore lower quantity demanded)provision curve with congestion even outsSupply curve without congestion wedgesDemand curveCongestion may ca habituate delays in deli actually, which in turn may lead to versatile negative dissembles on the business itself. For instance this may adversely effect the study of the business. Furthermore suppliers to the business may be delayed causing the firm to be less productive incurring unnecessary costs from module becoming idle.These consequences are an adverse affect on the welfare of the other motorists, (i.e. people most likely become more irritated). Since there is a direct effect here of the actions of one person on the welfare of another(prenominal) person or persons in a way that is not transmitted by market prices, we have the definition of an effect that is called an externality. In economics, public goods and externalities are closely related and are often associated w ith qualification problems. therefrom this is part of the reason why our roads are incompetent.Congestion also causes the road network to become an impure public good. A public good is defined as one where another individual using it will have no effect on the benefits received by others using it (i.e. the marginal cost of someone else overpowering it is zero) and therefore there is no competition for the service. An impure good is one where the consumption of the commodity is to some extent rival. When congestion occurs the use of the road network becomes competitive (especially during the rush hour) and therefore the good becomes impure. This allows the public good to be given a price and so allows schemes such as congestion charging and toll roads to be introduced.Governments across the world are introducing road charges with the goal of reducing road use and minimising the negative set up of road usage. An important decision that the government will take into condition wi ll be whether introducing road charges would have a negative impact upon the environment. In the capital the Mayor of London, Ken Livingston, is currently asking for the views of three hundred groups likely to be affected by road charges to bow London. condescension a London reputation suggesting a 12% simplification in traffic, opposing parties believe it would cause chaos and adversely effect families and downhearted businesses.Transport is a hitd demand as it comes from the needs of the people (whether they are travelling to work, going shopping or meeting socially) and needs of businesses (transportation of goods and industrial materials). However the increasing demand for road use over the years has added to the number of vehicles on the road, and in turn, increases the damaging effects upon the environment.The unambiguous put of introducing road charges for using motorways or entering urban areas in snobby vehicles are that less people will choose to do so, gum ol ibanum decreasing the harmful gas engine emissions as a result. affray and sight pollution, along with air pollution, should also be seen as a result of reduced traffic and congestion. This would rely on the fact that roads have an gingersnap that is either inelastic or elastic. The greater the snap (value) of these road charges would indicate higher price sensitivity in using the road in question. Establishing the snatch will enable us to spot the extent to which the environment will benefit from a diminution in pollution (air, gas and noise).From a cut across by Button (1993) the teddy type significantly affects the price elasticity. For instance travelling to urban areas for shopping purposes has a high elasticity, so if road charges become applicable it is likely that someer people will decide to make the journey using clannish vehicles. From an environmental position fewer cars entering these urban areas will reduce congestion and vehicle pollution trains. When look ing into the decrease of CO emissions for particular areas, such as Hereford as shown above, this illustrates the dramatic reduction in air pollution levels when a charge is applied. This does however depend on price elasticity of demand for the road. This is in comparison to the minimum elasticity for urban commuting (travelling to work) which is much lower. Any road charges imposed on these people will have a minimal effect, as it is more essential for them to travel into the urban area.An additional advantage of road charges is the extra revenue that would be generated through requital of those people who continue to use the particular ( supercharged) road. This has seen positive results in Norway where the funds collected are creation utilize to support the successful public transport areas of Oslo and Trondheim.The biggest environmental concern that road charges are associated with, particular propositionally with motorways, is the likelihood that car drivers would take alt ernate routes (not charged) such as country roads. These roads that were previously equable would thusly be subjected to noise and gas emissions as well as congestion problems. This is an congressman of the substitution effect as both the main roads and the unpolished roads could satisfy the needs of the public. The introduction of grantment for using the main roads would result in an increase in the quantity demanded of the substitute, that is the rural roads where no charges are being imposed.How elasticity effects the demand for motorways with/without alternative routes(Motorways without alternative routes) (Motorways with alternative routes)From an environmental post road charges should be introduced for the vehicles entering the urban areas. This is because there is significant deduction that motor vehicle usage will drop significantly (as shown in the Button 1993 table).The additional revenue raised can be used to fund the much-needed public transport services. Therefor e those who will no protracted use their own offstage vehicles will potentially benefit from an better transport service. Evidence showed that those who continue to travel into the urban areas using offstage vehicles are also more satisfied if the money they are charged goes into improving public transport (as shown in the MORI diagram).For motorways the decision from an environmental perspective is split between those motorways that have alternative routes and those that do not. On those motorways with attainable alternative routes the disadvantages (such as the possible movement of traffic as argue to reduction) outweighs the potential benefit of the additional revenue. Where alternative routes are un procurable road charges are appropriate as the disadvantages stated above and in the report are much less of a problem. Revenue generated from these charges can then help urban areas with the possible improvement of public transport (like the Norse example).If roads were a typi cal competitive commodity, supply and demand would do its price and an organization or business would own it. However there isnt a market for roads, and (in places where there are no toll systems in place) people can use the roads for free (i.e. its price is treated as if it was zero). Added to the fact that no one actually owns the roads (the government only has a requirement to maintain them), we have a demand for the usage of the roads by the public, but a failure of a market to emerge. Therefore there is no mechanism to ensure that the imaginativeness of roads is used expeditiously. Therefore if someone owned the roads and could charge a price for their use, a market would emerge leading to an efficient use of the commodity, because the price reflects the value for alternative uses.Thus through the accord of how a road is economically defined and the fact that at the moment, it is economically inefficient, a measure has to be taken. Therefore we will at once explain using t he defining economic principles why road use charges should be introduced for motorways and for urban areas.Arguably, though, the notion of congestion charges is more readily available to be implemented than road tolls, but the economic principles that should guide the mark of this indemnity towards revenue enhancementing and charging road users also applies to road tolls.The aim of the policy is to find an equilibrium position, where the marginal cost of using the resource is concern to the marginal cost of providing the resource.Figure 4The equilibrium position and the effect of road chargesThe graph is labelled with level of traffic on the x-axis and speak cost of driving (this means that the generalised costs are time and money spent on making the journey) on the y-axis. The first cable television service drawn in was the demand curve (D), which is also the marginal benefit (MB) curve, (which is a straight line). The easiest way to describe its negative gradient is as the number of people using the road increases, the marginal driver will have a lower benefit from the road than the previous one. There are two costs curves to be added to the diagram.The private marginal costs (PMC) are the direct costs to the driver. The PMC curve is also the supply curve (S). It is an upward sloping curve because with low traffic densities, the only cost to the driver is petrol. However as levels of traffic increase, congestion increases, and thus the driver incurs time costs as well. The social marginal costs (SMC) has the homogeneous base as the PMC (i.e. petrol costs) but as traffic increases, not only does it represent the time cost to that one particular driver, there is also the time costs that each driver imposes on both other driver.As is to be expected, at the moment, drivers act according to their PMC curve and the level of traffic on the road increases to the point (Xo), where the PMC is equal to the MB. Thus as the economic theory states, we are at a le vel of traffic above the social optimum, because the social optimum occurs when the SMC is equal to the MB. This is shown at the point X*, which is the social optimum and the optimum level of traffic. To shake up the level of traffic reduced from Xo to X*, we have to impose an extra charge or appraise P (= P*-Po). This is referred to as the Pigouvian tax amount. This amount (P) forces the road user to take into account the costs of the externality that they are generating, and thus induces them to operate at the efficient level.Since this tax is a congestion charge, it should only be imposed where congestion arises, and the level of charge should be directly related to the amount of congestion. Therefore the inner cities (i.e. urban areas) and motorways, having high levels of traffic, should have higher charges than areas with low levels of traffic.Traffic imposes a cost on society over and above the PMC. To achieve the socially optimal solution, these costs should be passed on to the driver. In doing this, only those drivers who were willing to pay society for the externalities they cause would use the road network. Thus levels of traffic would cutpurse to the optimal output level, reducing congestion and pollution in the coveted areas of urban areas and the motorways.It could be argued that if drivers were charged for the delays and road congestion they impose on one another, some of them would arrange to travel at unlike times, by different means e.g. rail and bus, or arrange to use different routes where road use charges can be avoided completely. There are various technological orders of charging for road uses.The simplest method is buy a license to enter a zone at certain times. The license, like a tax disc, would be prominently displayed with traffic wardens policing the system. However this would mean that only people parked in these zones would get checked it would not include people just driving through them. To do this, traffic wardens would s omehow have to physically stop cars and charge them for entrance into the area. To set this up in the UK would be very difficult with our complicated network of motorways, urban and rural roads and actually fish filet cars would cause more congestion rather than reducing it.Another method that uses the new technology of electronic tolls/beacons, no longer requires motorists to halt at tollbooths. As motorists drive past these tollbooths, the toll registers the electronic number coat and sends a signal to a save computer. This is a very direct way to charge the amount specific to the road and to the time of day with the amount due being deducted from their brim account. However, this would go against on privacy rights, as it would enable people to derive individuals locations. Hence the use of smartcards would be more preferable like the method used in Hong Kong. The driver inserts a prepaid card, like a telephone card, into the electronic number plate and payments are debited from it when a tollbooth is passed. Only in a case where the card runs out of impute do the central computer monitors start charging directly for road use.The initiation of electronic technology would have the drawbacks of being time consuming and very costly. Not only is there the construction of tollbooths, the installation of smartcards on every single car, but maintenance as well. A type of guarantor system would also be needed to prevent free riders1, for example they could remove the smartcard or tamper with it. A method of overcoming this would be the use of cameras on each booth to capture an image of the license plate if a smart card was not detected.The most technical method, and therefore probably the most expensive, would be satellite car tracking technology. This uses live Global Positioning System (GPS) satellites to track vehicles via electronic black boxes heady to the dashboard of all vehicles. The problems associated with using satellites are similar to that o f the above that is the onset on privacy rights and costs of setup and maintenance. However one fortuity with this method is that it can also be used in concurrence with locating stolen cars.From a technical point of view smartcards seem to be the most sensible option. Although it would be more costly than just buying licenses, this method would lead to less congestion, as there is no stopping to enter the areas being charged. It is less expensive than using satellites and would not infringe on privacy rights. However there are difficulties and limitations with implementing any of these road use charging methods the general public will have to be educated in the use of them, which will be quite complicated due to different regions and the specific times of the day having varying charges.The aim of this report was to analyse the argument that as elsewhere in the world, road charges should be introduced in the UK, both for motorways and for urban areas. On addressing the argument the environmental and the consequential factors of congestion needed to be considered. On considering the environmental factors the conclusion is that the reduction in pollution levels would only occur if the road charges reduced private road use and increased the use for public transport (i.e. there were no alternative routes that people had switched to avoid the charges).However a reduction in congestion on motorways and urban areas could certainly improve a firms economic profit as the investigation into consequences of congestion revealed. Having decided the obvious need for charges with the economic principles supporting this, whether the application of schemes is technically possible became important. For this factor the smartcard road-charging scheme emerged as the best option. On bringing all these points together road charges are both necessary and feasible for UK motorways and urban areas. just by environmental perspectives where additionally there have to be few altern ative routes, thus preventing people congesting other roads and avoid payment.