[sustran] Jakarta area pricing - equitable or not?

[Todd Litman]

The equity arguements raised in Jakarta are virtually the same that have
been raised with road pricing in developed countries. The questions you are
raising are exactly the ones that need to be raised. I suggest obtaining
the following publications:

CURBING GRIDLOCK, Transportation Research Board Special Report 242,
National Academy Press (Washington DC), 1994.

Gomez-Ibanez, "The Political Economy of Highway Tolls and Congestion
Pricing," JOURNAL OF TRANSPORT ECONOMICS AND POLICY, Vol. 46, No. 3, July
1992, pp. 343-360.

A Evans. "Road Congestion Pricing; When is it Good Policy?" JOURNAL OF
TRANSPORT ECONOMICS AND POLICY, Vol. Vol. 46, No. 4, 1992, pp. 213-243.

BUYING TIME; RESEARCH AND POLICY SYMPOSIUM ON THE LAND USE AND EQUITY
IMPACTS OF CONGESTION PRICING, State and Local Policy Program, University
of Minnesota (Minneapolis;website:
www.hhh.umn.edu/Centers/SLP/Conpric/conpric.htm; email:
imunnich at hhh.umn.edu), 1996.

Todd Litman, "Using Road Pricing Revenue; Economic Efficiency and Equity
Consideration," TRANSPORTATION RESEARCH RECORD 1558, 1996, pp. 24-28.

Todd Litman, EVALUATING TRANSPORTATION EQUITY, Victoria Transport Policy
Institute (Victoria), 1996. 


The actual equity impacts of road pricing vary significantly depending on
how equity is defined (there are at least three different types of equity
that apply to transportation policy), and the specific situation. Where
driving is a "luxury," there are good travel alternatives, and revenues are
used in a progressive way (for example, to subsidize transit service, to
reduce more regressive taxes, or returned to residents as a financial
rebate), road pricing can be considered to increase early all types of
equity. In many situations, it also helps lower income and disadvanted
travelers over the long-run by giving middle-class people an incentive to
use alternatives (transit and ridesharing in particular) which provides
economies of scale and political support for improvements to these services.

There are three general arguements to consider road-pricing as inequitable:

1.  It is regressive with respect to lower-income drivers, because they pay
a greater share of their income than people with higher incomes. This can
be evaluated by comparing tolls with income for people currently using the
roadway facility. In fact, people making peak-period automobile trips tend
to be relatively high income, and this should be particularly true in
developing cities. Most goods (for example, electricity and water bills)
are regesssive with respect to income), so the question is why road use
should be considered an exception (the answer is, because in the past roads
have been unpriced, so we are simply not accustomed to paying for this good. 

2. Drivers are already paying for roads through their fuel taxes, so road
pricing represents double taxing. In fact, fuel taxes only cover a portion
of the costs that road users impose, so this is actually a false arguement.

3. Road pricing is unfair because drivers to certain destinations must pay
it, while drivers to other destinations don't. This is actually an
arguement for MORE road pricing, not LESS. Road pricing is usually applied
where there is an extra high cost (in either facilities or congestion
impacts) of automobile travel.

How road pricing revenues are used is a KEY factor in program equity. If
revenues are used in a progressive manner, lower income and mobility
disadvantaged people will benefit overall. If they are dedicated to more
road construction, or are rebated to drivers as a group, then they are not
progressive.

Travel choices (i.e., the quality of walking, bicycling, ridesharing and
public transit services) is also a key factor. In an entirely automobile
dependent transportation system, road pricing constitutes a tax, since
there is no alternative to paying. In a multi-modal transportation system,
driving is a luxury, and it is only fair that drivers pay a premium for
their use of valuable road space (or, to put it another way, for the
external congestion and air pollution costs they impose).

Unfortunately, for all of the logical arguements for road pricing, there is
still a lot of political opposition that will be difficult to overcome in
most communities. This resistance is evidence that, although drivers will
complain endlessly about congestion, the problem is not serious enough for
them to accept real solutions.


Sincerely,

Todd Litman, Director
Victoria Transport Policy Institute
"Efficiency - Equity - Clarity"
1250 Rudlin Street
Victoria, BC, V8V 3R7, Canada
Phone & Fax: 250-360-1560
E-mail:      litman at islandnet.com
Website:     www.islandnet.com/~litman




At 02:20 PM 5/11/98 +0800, Paul Butler wrote:
>Dear sustran-discussers,
>
>As some of you may know, Jakarta currently has a traffic restraint scheme
>that has been in place since April 1992.  From 6.30 am until 10 am,  the
>city's most heavily trafficked corridor is out of bounds to cars with fewer
>than three occupants. It is known as the 'three in one' policy. Early
>results 3 months after the policy was imposed showed a decrease of 24
>percent in the number of private cars entering the zone, and dramatic
>increases (over 150 percent) in average travel speed by private cars.
>However, in the popular mind at least, the scheme has not been considered a
>success. Traffic growth between 1992 and 1997 was very high so much of the
>benefit was probably overwhelmed by increasing traffic. In addition, a
>practice emerged of youths offering to ride as passengers for a small fee
>("jockeys) to allow drivers to meet the occupancy requirement. This also
>undermined the image of the scheme (although it demonstrated some
>willingness to pay on the part of drivers).
>
>Recently the City Administration has proposed to replace the 3-in-1 policy
>with an area pricing scheme (or "sticker" scheme) taking in a similar area.
>The scheme sounds much like the Singapore Area Licensing Scheme.  Cars will
>need to buy and display stickers to enter the area in peak hours (7.30 -
>9.30 am and 5 - 7 pm). I am not sure if motorcycles will be charged or not.
>Trials are proposed for August to November this year. This proposal has
>generated controversy according to the Jakarta Post of April 14, 1998, p.
>3.
>
>Opposition politians (Hamzah Haz of the United Development Party - PPP) and
>a major consumers organisation (the Indonesian Consumers Foundation -YLKI)
>have come out against the scheme. They say, among other things, that the
>system would discriminate against the poor. On the other hand, Jakarta's
>Governor Sutiyoso argues that the scheme would hurt only the rich who are
>the ones who drive cars. But Hamzah Haz also argued that public transport
>was insufficient, saying that more buses should be put onto the road before
>the scheme is implemented.
>
>This kind of debate will be very familiar anywhere that traffic restraint
>has ever been suggested.    What are the right kinds of questions to be
>asking?  Many cities have considered such plans but they are often rejected
>on equity grounds. All proposals to raise private-vehicle related prices
>also face similar equity arguments. I am concerned that many of these
>equity arguments may be spurious. Which are spurious and which are valid?
>
>Is it true that such a scheme is inequitable? For example, the poorer half
>(roughly) might be better off because buses may be able to move faster
>through the restricted zone?  Is anyone aware of any careful studies of the
>actual equity impacts of traffic restraint schemes in low-income or
>middle-income cities?
>
>Who is actually hurt by such a scheme?  Perhaps those who currently drive
>but can only just afford to drive?  They are probably the ones whose
>behaviour would actually be changed by the scheme. In Jakarta these might
>be lower-middle-income people who can no longer afford to enter the zone in
>peak hours.
>
>But do they have viable alternative options?  For example, they might shift
>their travel time if they can. They might switch to riding the bus
>(probably the air-conditioned "PATAS" buses rather than the very crowded,
>cheap, non-aircon ones). They might try to "car-pool" even more, to share
>the cost around. They might use an alternative route around the restricted
>area and maybe walk a bit further to their final destination. Or they might
>just continue driving at an increased cost.
>
>Would the increase in bus speeds have the effect of increasing overall bus
>system capacity enough to cope with any additional riders generated by the
>scheme?  Otherwise, greater bus overcrowding might hurt bus riders.
>
>Is what is done with the revenue relevant to whether it is equitable or
>not?  For example, if revenues go explicitly towards improving access
>options for the lower income groups then this might make a big difference
>(and also make it more politically acceptable).
>
>
>******** PLEASE NOTE CHANGE OF MAILING ADDRESS ********
>
>A. Rahman Paul BARTER,
>SUSTRAN Resource Centre
>A0602 Palm Court, Brickfields, 50470 Kuala Lumpur, Malaysia.
>Phone: +603 274 2590, E-mail: <tkpb at barter.pc.my>
>
>The SUSTRAN Resource Centre hosts the Secretariat of SUSTRAN (the
>Sustainable Transport Action Network for Asia & the Pacific).
>SUSTRAN is dedicated to promoting transport policies and investments
>which foster accessibility for all; social equity; ecological sustainability;
>health and safety; public participation; and high quality of life.
>
>
>