This paper describes the fundamental principles and analytical framework of applying congestion pricing as a congestion and demand management measure. It provides four scenarios to introduce congestion pricing in a city. These scenarios range from tolling freeways only to tolling freeways, the CBD and arterial roads. Analytical speed-flow and demand functions are used to determine demand changes and efficient tolls for various road types. Various measures are proposed to distribute the net toll revenue for the benefit of the community. Four different packages for the four scenarios are described, including: extra road funds, better public transport, fuel levy replacement, motorist rebates, motorist rebates, extra services in safety and environment, and property rebates. The impacts of congestion pricing on individuals are analysed. The results suggest that the net benefit to the low income group is almost zero, whereas the high income earner could receive a much larger benefit of $470 per person. The cost of toll collection is an important issue for introducing congestion tolls on existing roads. It is argued that this cost should be less than 20 per cent of the gross revenue. (A)
Abstract