Congestion Charging

Non-Technical Option | Generic Example
Climate & Air | Transport

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Congestion charging is a non-technical measure involving a system of charging users of a transport network in periods of peak demand to reduce traffic congestion. In general it is applied to congestion on public urban roads. However, application of this policy has thus far generally been limited to a small number of cities, including London, Singapore, Stockholm, and Milan.


This policy has generally been implemented through four different systems as follows: a cordon area around a city centre, with charges for passing the cordon line; area-wide congestion pricing, which charges for being inside an area; a city centre toll ring, with toll collection surrounding the city; and a corridor or single facility congestion pricing, where access to a lane or a facility is priced. Furthermore, the charge may be time varied to account for peak periods such as morning and evening times. Strictly speaking there is a distinction between congestion charging where charges are connected to busy periods of road resource use, and road pricing, which charges a flat fee regardless of the demand for the road space at that time.

Further modifications of such schemes include exemptions for behaviour that is encouraged by policymakers, e.g. exemptions of electric cars from charging.


It is expected that through the implementation of this policy measure, individuals pay a higher cost for their access to road space at peak times. This added cost serves to account for some of the negative externalities they create by paying at the margin. The common outcome from a congestion pricing measure is a reduction in transport activity affected. In general the results are quite positive in terms of reduced congestion (see ‘evidence and reference’ section). However, often this measure is met with stiff opposition in terms of public acceptance, where individuals feel that it is just another tax, that there are insufficient or inadequate alternative transport options, and fears that it will have a negative effect on businesses and retail outlets within the cordon area.

Costs & Benefits


  • Implementation costs
  • Extra road-user costs
  • Perceived threat to businesses and residents within cordon
  • Potential for land use change (relocation outside cordon)


  • Reduced congestion
  • Reduced emission levels
  • Quieter and safer cities
  • Increased use of public transport
  • Improved health (assuming a greater shift to walking and cycling)

Evidence & Reference

  • Atkinson, R.W., Barratt, B., Armstrong, B., Anderson, H.R., Beevers, S.D., Mudway, I.S., Green, D., Derwent, R.G., Wilkinson, P., Tonne, C., and Kelly, F.J. (2009) The impact of the congestion charging scheme on ambient air pollution concentrations in London, Atmospheric Environment, Vol. 43, pp. 5493-5500

The impact of the congestion charging scheme on ambient air pollution concentrations in London

  • Eliasson, J. (2009) A cost-benefit analysis of the Stockholm congestion charging system, Transportation Research Part A, Vol. 43, pp. 468-480

This paper presents a cost-benefit analysis of the Stockholm congestion charging system, based on the observed rather than on the model-forecasted data, such as travel time and traffic flow

  • Quddus, M.A., Bell, M.G.H., Schmöcker, J-D., and Fonzone, A. (2007) The impact of the congestion charge on the retail business in London: An econometric analysis, Transport Policy, Vol. 14, pp. 433-444

This paper employs an econometric analysis to investigate the impact of a the congestion charge on the retail business in London

  • Schmöcker, J-D., Fonzone, A., Quddus, M., and Bell, M.G.H. (2006) Changes in the frequency of shopping trips in response to a congestion charge, Transport Policy, Vol. 13, pp. 217-228

This paper presents an analysis of shopping trips into London's central shopping district (Oxford Street area) before and after the introduction of the congestion charging scheme in February 2003


A video of an early conference outlning some of the debated points of the Londing congestion charge:

Modelling this Measure

As with any policy measure, when comparing a measure that has been implemented in other cities, it is important to remember than conditions may differ between regions, and conditions that suit a policy in one place may not exist in another. For the congestion charging case, it is particularly important to understand the pre-conditions such as city structure (i.e. monocentric vs. polycentric (of which there are at least 3 types)). Thus a measure that was successfully introduced in a relatively monocentric city may not necessarily have the same success if introduced in a dispersed city.

Modelling the impact of this measure can be seen by accessing the literature sources outlined above and utilising econometric techniques. The success of this measure can be gauged by a number of factors, such as: reduced congestion, improved air quality, lower emissions, improved health, and changes in modal shift. However, the negative effects of this measure may be addressed in terms of the impact on retail and business. Cost benefit analyses can be undertaken to analyse the overall effect. Evidence is required on a number of crucial characteristics in order to model the likely effect of this measure, such as:

  • Travel patterns (origin-destination, distance travelled, modal split, sub-centre identification, land use and city structure, etc.)
  • Price elasticity of demand (to illustrate change in demand)
  • Elasticity of substitution modal shift
  • Baseline air quality and emissions levels

Site Entry Created by Policy Measures Admin on May 09, 2010

Reference This Source (2019). Congestion Charging. Available: Last accessed: 19th February 2019

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