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Article Excerpt
Abstract
Facing traffic congestion in the Central Business District and enormous demands on scarce land resources by the growing number of motor vehicles, Singapore, a small island city-state the size of Seattle, embarked on a bold decision to reduce road congestion by implementing the famous Area Licensing Scheme in 1975. This was a manual system of tolls for multiple entries into the Restricted Zone. While achieving the intended effect of cutting down on the volume of vehicular traffic in the Restricted Zone, the authors (and others) found that the problem of congestion had merely shifted in time and place. Many changes were implemented, including shoulder pricing (reduced tolls before and after the peak period) to even out traffic flows in 1994, and the Weekend Car Scheme (1991) and Off Peak Car Scheme (1994) to encourage people to use the roads during off-peak hours. The Road Pricing Scheme was introduced in 1995 on a congested highway to familiarize the public with linear passage tolls.
In 1998, Singapore discarded the manual system of road pricing in favor of Electronic Road Pricing, which permitted the charging of tolls per entry, based on vehicle size, route taken, and time of the day. This article traces the rationale for the various measures and discusses the successes and shortcomings for the various measures over a twenty-eight year period from 1975 to 2003.
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Singapore is an island city-state, about 685 square km in area, strategically located at the crossroads of commerce and tourism at the southern tip of the Malay Peninsula. With a population of around 4.17 million, it has a very high population density of about 6,086 persons per square km. Economic growth has been impressive over the past three decades, averaging about 8 percent per year. Singapore's per capita gross domestic product in 2002 was S$37,333 or US$20,856 (where US$1 = S$1.79), a level comparable to that of the United States and most western countries. From a transportation perspective, this economic success has not come without a price. Because the country is hot and humid, the demand for air-conditioned private transportation is very high and income-elastic.
To allocate rights to car ownership and usage, Singapore has combined market mechanisms with taxation and active restrictions designed to contain traffic congestion. The rationale for such an approach is simple: Roads already constitute 12 percent of the island's area, about the same percentage as housing, so room for continued expansion is clearly limited.
This article provides an overview and analysis of the road congestion measures adopted over the last three decades: the Area Licensing Scheme (ALS) and Road Pricing Scheme (RPS); the Weekend Car Scheme, which was replaced by the Off-Peak Car Scheme; and Electronic Road Pricing, which replaced the ALS and RPS.
AREA LICENSING SCHEME
In the early 1970s, the problem of traffic congestion, especially with the unrestrained growth of car ownership due to rapidly rising incomes, was perceived to be serious (Smith 1974). In 1975, during the morning and evening rush hours, traffic in the Central Business District (CBD)--one of the most congested parts of the city, with an area of about 5.59 square kilometers--crawled at an average speed of only 19 km per hour. The authorities decided, among other things, to dissuade the entry of private passenger cars and taxis into the CBD during the morning peak by instituting a manual system of toll collection. The famous Area Licensing System (ALS), the world's first comprehensive road pricing scheme, was born.
The ALS was implemented in June 1975, defining a Restricted Zone (RZ) in the CBD with initially twenty-two vehicular entry points manned by human monitors. All vehicles except those in the exempt categories (public service and military vehicles, goods vehicles, motorcycles, and buses) were required to buy and display a special paper license in the form of a mountable decal (obtainable from roadside sales booths), costing S$3 per day or S$60 per month (company-registered cars pay double) in order to enter the RZ during the restricted times from 7:30 a.m. to 9:30 a.m. Monday through Saturday. The original target was to reduce traffic volumes by between 25 percent and 30 percent during the morning peak hours. It was also hoped that the morning restrictions would have a "mirror image" effect on the evening return flow.
To encourage carpooling, vehicles with four or more passengers were exempted. Parking fees in the RZ were raised by almost 100 percent, and the Park-and-Ride Scheme was implemented, under which motorists could park their cars for a small fee in fifteen fringe car parks with a total of 15,000 parking spaces, and then shuttle into the city center.
Theory of Road Pricing
The theoretical foundations of road congestion pricing for allocative efficiency are well documented (see Toh 1977; Toh and Phang 1997). Economists argue that traffic congestion arises because marginal users of a crowded road consider only their private cost and ignore the fact that their vehicles slow down and inconvenience others--thus the marginal social cost exceeds the marginal private cost. Therefore economists argue for a Pigovian toll (Pigou 1920) on the use of congested roads to increase the individual cost of usage by an amount equal to the external diseconomies imposed by one driver on all others, in order to equate marginal social cost with marginal social benefit. Hau (1992) provides an excellent comprehensive review of the theory of road pricing.
Initial Results
Table 1 documents the entry of motor vehicles into the RZ according to different peak periods. Note that by the fourth week of operation, the total number of motor vehicles entering the RZ during the...
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