British Academy: The UK's National Academy for the Humanities and Social Sciences

BA PDF Symposium 2004: Abstracts

21 April 2004

Dr Georgina Santos

Preliminary Impacts of the London Congestion Charging Scheme

On 17 February 2003, the London Congestion Charging Scheme came into effect. The £5 charge to drive or park within the central London zone is a dramatic step, in one of the world's largest cities, to internalize the external cost of congestion. Preliminary results show a significant response to the charge. Congestion has been reduced by 30.5 per cent, while overall traffic levels within the zone have fallen by 16 per cent. Speeds for car travel have increased by over 20 per cent and bus travel has become more reliable.

The elasticities of demand for car trips with respect to travel costs and average marginal congestion costs are computed in this paper using preliminary data from the London Scheme. Elasticities are estimated to be between -1.6 and -2.5. The average marginal congestion cost within the central zone is estimated at £1.62 per veh-km. Perhaps the most striking achievement of the Scheme so far has been the relative quiet of any public opposition. While transport economists have been praising the merits of road pricing for over 80 years, the public opposition to imposing a form of taxation on what is thought of as a free good has made the idea politically unpopular. However, the early success of the London Scheme is demonstrating that the political hurdle is not insurmountable.

Georgina Santos holds an MSc in Environmental and Resource Economics from University College London, and a PhD in Economics from University of Cambridge, England. She has worked on two research projects on road pricing funded by the Economic and Social Research Council in the UK and a contract with the former Department of the Environment, Transport and the Regions. She is now a British Academy Postdoctoral Fellow hosted by the Department of Applied Economics at Cambridge and a Junior Research Fellow in Wolfson College. Her interests include transport economics and environmental economics.