Transport Policy 13 (2006) 115126 www.elsevier.

com/locate/tranpol

Modelling and evaluation of road pricing in Paris*

de Palma a,*, Robin Lindsey b Andre
a

de Cergy-Pontoise and ENPC, Institut Universitaire de France, Department of Economics Universite THEMA, 33 Boulevard du Port, F-95011, Cergy-Pontoise Cedex, France b Department of Economics, University of Alberta, Edmonton, Alta., Canada T6G 2H4

Abstract This article describes the impacts of road pricing in Ile-de-France, a region that includes Paris. The morning peak is studied using METROPOLIS: a dynamic network simulator that treats endogenously travellers mode, departure time and route-choice decisions. Timeindependent tolls on selected links, time-varying cordon tolls, and a network-wide toll proportional to travel time are considered. Welfare gains from the link and cordon tolls are relatively small. The comprehensive travel-time-based toll yields much higher benets. In all cases, benets to users amount to a large fraction of toll revenues and exceed the monetised value of reductions in noise, accidents and vehicle emissions. q 2006 Elsevier Ltd. All rights reserved.
Keywords: Dynamic network equilibrium; Time-of-day pricing; Link tolls; Cordon tolls JEL classication: R41; R48

1. Introduction Since the seminal work of Dupuit (1844/1962), French engineers and economists have been leaders in promoting efcient pricing and nancing of public utilities and transport facilities.1 Notable theoretical contributions include Boiteux (1949/1960) on peak-load pricing, and a series of papers by vy-Lambert (1968), Marchand (1968) and Bertrand (1977) Le on second-best transport pricing when some routes or transport modes cannot be priced at marginal cost. Boiteuxs work helped to launch the Tarif Vert (the green rate for off-peak de France in the 1950s, electricity consumption) by Electricite
* Financial support from the European Commission is gratefully acknowledged. The opinions expressed in this paper are those of the authors and do not necessarily reect the views of the European Commission. For helpful discussions the authors would like to thank Jean Delons (Coroute), Fabrice Moyano (adpC), Stef Marchal (LET), Kiarash Motamedi (THEMA), Jose Proost (KUL), Emile Quinet (ENPC), and S. Zirguini (Paris XII). Thanks are nagement et dUrbanisme en also due to the ofce of IAURIF (Institut dAme Ile-de-France) and in particular to Dany Nguyen for providing us with data for the road network, origindestination matrix, and mode choice model. Finally, Lindsey would like to thank the Social Sciences and Humanities Research Council of Canada for funding of the project Road pricing in urban areas. * Corresponding author. Tel.: C33 1 34 25 61 81; fax: C33 1 34 25 62 33. E-mail addresses: andre.depalma@eco.u-cergy.fr (A. de Palma), rlindsey@ualberta.ca (R. Lindsey). 1 bert (1999). See Button (2004, Section 4) and Ekelund and He

and peak/off-peak pricing was later introduced into telephone, gas and airline rates and fare structures.2 By comparison with these theoretical and practical achievements, the history of road pricing in France is mixed. Tolls on goods entering urban areas were abolished in the French Revolution to assure free use and equality between citizens.3 But in the face of a growing need to secure funds for road construction, in 1955 a law was passed to authorise tolled motorways with the proviso that toll-free alternatives be available. These motorways are now managed and operated by te s de conomie mixte concessionnaires the SEMCAs (Socie dautoroutes) and they comprise about 80% of the French intercity highway network. In the early 1990s, France became the rst country to introduce congestion pricing on an intercity road. The A-1 motorway linking Paris to Lille in the north had become congested on Sundays as Parisians were returning home from weekend trips. As an experiment, the toll was raised 25% during the afternoon Sunday peak, and reduced by 25% in the early afternoon and late evening in order to maintain revenue neutrality. The experiment was well received by politicians and the public.4
mez-Iba n ez and Small (1994, Chapter 5). Go See Raux and Souche (2004). 4 Revenue neutrality was a key element in gaining approval from the Ministry of Transport. The scheme was also supported by survey respondents, and by journalists because these journalists were familiar with the merits of mez-Iba n ez and Small, peak-period pricing in airlines and other industries (Go 1994, p. 43).
3 2

0967-070X/$ - see front matter q 2006 Elsevier Ltd. All rights reserved. doi:10.1016/j.tranpol.2005.11.013

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A. de Palma, R. Lindsey / Transport Policy 13 (2006) 115126

And it was successful in smoothing Sunday trafc owsthereby demonstrating the potential of time-varying tolls to reduce congestion by inducing motorists to re-time their trips. Tolls on a number of other French motorways also now feature some degree of variation by time of day and day of week. Given its intellectual contributions to efcient pricing, and its success with interurban road pricing, one might expect France also to be a leader in urban road pricingparticularly since congestion and pollution are problems in large French cities. But France has actually been rather a laggard in this respect. It was not until 1986 that a law was passed to allow tolls on urban roads. And as was the case with intercity motorways 30 years earlier, the primary motivation was to raise funds for road investment rather than to manage demand. Moreover, the legislation permitted tolling only on new structures, not on existing roads. As a consequence, there have been rather few applications of urban road pricing in France. Within the vicinity of Paris, the only tolled roads are Highway A1 (the southern end at Roissy near Charles-deGaulle airport and towards Belgium) and Highway A14 to the west.5 There is also a plan to levy time-varying tolls on the western end of Highway 86, which is presently under construction (the A86 West project) and will complete the outer ring road around Paris (Coroute, 2005).6 Lyon, the second biggest city in France, provides an example of the difculties of urban road pricing in France generally, and private sector involvement with toll roads in riphe rique (the particular.7 The Northern Boulevard Pe so-called Trans Est-Ouest) toll road was opened in Lyon in 1997. The contract with the private operator stipulated that capacity on a free parallel alternative be reduced in order to assure sufcient trafc on the toll road for the operator to break even. But motorists reacted strongly against the new toll road and its accompanying restrictions, and there were public demonstrations. Legal challenges were successfully launched, the capacity of the alternative was returned to its original level, and both the toll and the length of the tolled portion of the road were reduced. The concession was also cancelled (on a legal technicality) and the toll road is now managed by a public corporation. From this brief review, it is evident that there are strong legal and acceptability barriers to urban road pricing in France.8 There is widespread public and political resistance to tolls on urban roads even though tolls are commonplace on intercity motorways where congestion is generally much less of a burden. Moreover, notwithstanding French leadership in the theory and practice of marginal-cost pricing, Delons (2004) claims that the general theoretical underpinnings of road
5 le pe age) and manual collection are Both automatic toll collection (Te available on these highways. 6 A plan was formulated in the late 1980s to develop a large-scale network of privately nanced toll tunnels in Paris, but two big competing proposals were rejected in 1990 (Poole and Sugimoto, 1994, p. 120). 7 The account here draws on Raux and Souche (2004). 8 and These barriers may reect traditional French sentiments for Liberte galite . E

pricing are not well known or appreciated by either the public or decision-makers. This he refers to as a cultural barrier. In short, it would be dangerous to assume that success with the Central London Congestion Charging Scheme, 9 and a decision10 to expand the charge area, herald the way for road pricing in Parisa capital city of similar size and stature. In light of the barriers to road pricing in France, the Paris case study assumes that pricing is introduced gradually. The implementation path is assumed to unfold over the 10-year period 20022012 in four phases, numbered 03. Tolls on selected road links are introduced in Phases 0 and 1, and replaced in Phase 2 by a cordon toll around the city centre. The link tolls are assumed to be at (time-independent) whereas the cordon toll incorporates time variation in the form of peak and off-peak levels. Finally, in Phase 3 a toll proportional to travel time on all auto trips in the case-study area is introduced. Road congestion is generally viewed to be the most costly external cost of travel in the Paris area, and a priority of the case study is to model how motorists respond to at or timevarying tolls by altering their mode, route and trip-timing decisions. To accomplish this, simulations are performed with METROPOLIS11: a dynamic simulator that is able to handle large-scale road networks at a ne level of geographical and temporal resolution.12 Section 2 following provides an overview of the METROPOLIS model and the case study area. It also describes the simulated equilibrium for the base-case year (2002) in the absence of any tolls. Section 3 presents the forecast for growth in travel demand and the implementation path. Section 4 reports the results for the implementation path. Finally, Section 5 summarises the main ndings and discusses how the analysis could be extended in future research. 2. The model, case study area and base-year equilibrium 2.1. The METROPOLIS model13 METROPOLIS is a dynamic simulator that treats endogenously mode, departure time, and route choice decisions.14 It features a two-stage nested logit model with a binary choice between auto and public transport in the outer nest, and a continuous choice of departure time for the auto mode in the inner nest so that trips are not allocated into pre-dened discrete time intervals such as peak and off-peak.
9 See for example, Transport for London (2003) and Shaffer and Santos (2004). 10 Transport for London (2005). 11 Distributed by PTV (Germany). 12 As a point of historical and methodological interest, the operator of Highway A1 (Coroute) used a dynamic model to analyse the Sunday time-ofday pricing experiments in the early 1990s, and was able to forecast the effects quite accurately (Delons, 2004, p. 269). 13 More detailed descriptions of METROPOLIS are found in De Palma et al. (1997) and De Palma and Marchal (2002). 14 Other travel decisions such as the number of trips, destination, vehicle occupancy (xed at unity), etc. are treated as exogenous. Choice of parking location is not modelled, and parking is implicitly assumed to be priced at marginal social cost.

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The generalised cost of the auto mode includes three components: travel time cost, schedule delay cost (the cost of arriving early or late), and user chargesall of which depend generically on departure time, t, and the route taken. Travel time cost is aT(t), where T denotes in-vehicle travel time and a the unit cost of travel time.15 A given traveller has an on-time arrival window at the nal destination of [t*KD,t*CD], and incurs a unit schedule delay cost of b (resp. g) for arriving early (resp. late). Given toll and other user charges of t, the generalised cost of travel by auto is: CA t Z aT t C b max0;t KD Kt KT t C g max0; t C T t Kt KD C tt: (1)

Table 1 Unit values for external automobile costs (Paris) Externality Noise Accidents Pollution Greenhouse Total Low value (V/1000 veh km) 2.61 34.83 9.01 12.50 58.95 High value (V/1000 veh km) 5.58 34.83 42.16 24.38 106.95

Source. Quinet (2004) and UNITE (2001).

To allow for individual-specic idiosyncratic preferences for departure time, a double exponentially distributed random error term is added to the generalised cost in Eq. (1) to obtain a standard logit choice specication. Route-choice decisions are computationally burdensome to solve exhaustively on large-scale networks because of the huge number of possible routes between a given origin and destination. METROPOLIS avoids complete path enumeration (and the burden of the cross-nested logit) by assuming that at each intersection drivers review their choice of route based on predicted travel times to the destination and on the direct observation of travel conditions on adjacent links. Though the choice process is a heuristic, the paths chosen in practice are usually very close in travel time to the dynamic shortest paths. For the public transport alternative the generalised cost of a trip between a given origin and destination is treated as exogenous and independent of time of day.16 The cost includes the fare, in-vehicle travel time, waiting time, transfers, access and distribution time, average schedule delay cost, discomfort, etc. Fares are assumed to be set equal to the marginal cost of service so that public transport pricing inefciencies are not featured in the model. Finally, the mode choice between auto and public transport is determined at the upper level of the nested logit model. Simulations of the full model are carried out using a day-to-day adjustment process with learning by travellers. After several dozen iterations the simulations reach an approximate stationary state although small-amplitude uctuations in mode, route and departure-time decisions persist indenitely thereafter. Welfare is measured in METROPOLIS using social surplus, W. The rst component of W is consumers surplus, CS, which is computed using the logsum formula for the nested logit model and accounts for the congestion externality via travel time and schedule delay costs. Revenues from tolls and any
Travel time is the sum of free-ow time and congestion delay time. For the Paris case study, congestion is assumed to take the form of queuing on links. With METROPOLIS it is also possible to specify ow congestion on links, but not intersection delays. 16 Thus, public transport has neither positive nor negative externalities of usage (viz. neither economies of trafc density nor congestion), and public transport departure time and route choice decisions are not modelled.
15

other user charges, R, form the second component. Revenues are multiplied by a factor 1CMCPF, where MCPF is the marginal cost of public funds. For the Paris study MCPF was set equal to 0.14 because this value is used in the macroeconomic models developed by the Bureau du Plan. The nal component of social surplus is the monetised costs of externalities other than congestion, CEXT. The externalities accounted for are noise, accidents and emissions of four pollutants: carbon monoxide (CO), volatile organic compounds (VOCs), nitrous oxides (NOx), and carbon dioxide (CO2) which is classied separately as a greenhouse externality.17 For purpose of sensitivity analysis, low and high unit values were used for auto; see Table 1.18 The environmental costs for public transportation (Table 2) are substantially lower than for the auto. The change in social surplus, DW, induced by a given tolling regime is thus given by19 DW Z DCS C 1 C MCPFDR KDCEXT : (2)

Welfare-distributional concerns are not built into Eq. (2); instead welfare-distributional effects are measured by an equity index dened to be the standard deviation (over origin zones) of consumers surplus. As far as calibration of the model20, measures traditionally employed for static models were used for the origin destination matrix and road network. Commuting and noncommuting trips are assumed to take place during the morning
17 CO2 emissions are assumed to be proportional to fuel consumption. Emissions of the various pollutants are calculated using CORINAIR model formulas (see http://reports.eea.eu.int/92-9167-036-7/en and references cited therein). These formulas depend on speeds and ows, which change continuously on each link during a simulation with METROPOLIS. To simplify calculations for the case study, the costs were assumed to be proportional to distance travelled. 18 Quinet (2004) conducts a meta-analysis of external transport costs in Europe for six modes. For the automobile his point estimate (Table 2, p. 468) for the aggregate cost is V93 (s.d. V99) per 1000 passenger km. This value is within the range shown in the last row of Table 1 here. The valuation of accident costs is not varied since estimates reported in the literature are much more stable than for the other externalities. 19 When reporting the results in Section 4 the term MCPF$DR is treated as a reduction in external costs in order to include it as a net social benet rather than a transfer, and to streamline the accounting. 20 The calibration procedure and resulting parameter values are documented in De Palma et al. (2004a). Data were obtained from three sources: IAURIF nagement et dUrbanisme de la Re gion Ile-de-France), DREIF (Institut dAme gionale de LEquipement de lIle-de-France), and a telephone (Direction Re survey of 4400 individuals administered by SOFRES.

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A. de Palma, R. Lindsey / Transport Policy 13 (2006) 115126 Table 4 Growth in number of trips over the implementation path horizon (Paris) Phase 0 1 2 3 Year 2002 2005 2008 2012 Number of trips 6,787,670 7,205,170 7,647,490 8,457,980 Annual growth rate between phases (%) 2.00 2.00 2.55

Table 2 Unit values for external public transportation costs (Paris) Externality Noise Accidents Pollution Greenhouse Total Source. Quinet (2004). Medium value (V/1000 veh km) 2.96 2.3 2.5 1.3 9.06

gionale de lEquipement de lIle-de-France Source. Y. Corte, Direction Re (DREIF), personal communication.

Table 3 Characteristics of the Ile-de-France area Area Population Economic activity and employment Road network Public transport network Travel 1,201,200 ha 18% of French population, with 11 million inhabitants 28% of GNP, 30% of higher education. 42% of French R&D staff, 34% of executives 700 km of highways, 12,000 km of roads 211 km of metro, 580 km of RER, 3000 km bus lanes 390 train stations with daily movements of 5000 trains Approximately 25% of car registrations. 3.2 billion trips, and 22.6 billion journey-kilometres per year. 10,000 trucks traverse Paris daily

2.3. Base-case equilibrium The implementation path begins in 2002. It is assumed that tolls have already been introduced on selected links, but as a benchmark it is useful to examine the simulation results for 2002 without tolling. These are presented in Table 5. For 2002, it is assumed that 6,787,670 trips are made during the simulation period (4:0012:00 AM). In equilibrium, 3,394,026 of these trips are made by car so that the modal split between auto and public transport is almost exactly 50:50.22 Equilibrium driving time is about 25 min, and the private travel cost is nearly V7. The congestion indexdened as the ratio of queuing delay to free-ow travel time on the route takenhas an average value over the network of 27.56%. Thus, travel-time delay amounts to just over one fth of total travel time. The average cost of travel delay per trip is V1.46. Coincidentally, this is nearly the same as the average schedule delay cost of V1.47. About 25% of drivers arrive on time, about 30% arrive late, and the remainder are early. The combined external costs of noise, accidents and emissions (all of which are assumed to be proportional to distance travelled) amount to about V1.10 per driver for the low unit values for external costs (cf. Table 1), and V1.99 per driver for the high unit costs. 3. The implementation path

Source. INSEE (2005).

travel period (4:0012:00 AM). The value of time, a, and the parameters describing trip-timing preferences (b, g, D and t* in Eq. (1)), were assumed to be distributed in the population according to a parameterised (normal or lognormal) distribution. As a consequence, two parameters (the mean and the standard deviation) sufce to describe the behavioural parameters in a given population segment (i.e. for commuters and for non-commuters). These parameters are estimated for the Paris population in De Palma and Fontan (2000).21 2.2. Case-study area The Paris case study covers Ile-de-France: an area that includes Paris Intra Muros, the suburbs, the new town around Paris, and the dispersed distribution of residences and employment within Ile-de-France. Selected characteristics of the Ile-de-France area are provided in Table 3. Various employment categories and economic activities are concentrated in Ile-de-France, and salaries are about 23% higher than for France as a whole (Quinet and Vickerman, 2004, Chap. 4)which is reected in relatively high values of travel time (parameter a). Trafc demand is assumed to grow over the 10-year time horizon of the implementation path (to be described in Section 3) as shown in Table 4.

An implementation path is dened as a sequence of second-best optima, with the constraints on the policy instruments at each stage determined by underlying barriers. As Rouwendal and Verhoef (submitted for publication) explain earlier in this special issue, it is difcult to translate barriers into constraints on the scope of pricing, levels and degree of differentiation of tolls, and other characteristics of the instruments. Nevertheless, it is clear from the review in Section 1 that there are strong legal and acceptability barriers to urban road pricing in France generally and Paris specically. For this reason, a big bang implementation was ruled out for the Paris case study. The implementation path
The elasticity of auto trips with respect to the fuel tax is about K0.12. The TRACE project (TRACE, 1999, Tables 8 and 9) reported an elasticity for auto travel of K0.11 for commuting, and K0.19 for all purposes (commuting, business, education and others). Since the Paris simulations feature a high fraction of commuters, the two elasticity values are quite close.
22

De Palma and Fontan (2000) also estimate the functional form of the schedule delay cost function, and conclude that the linear specication is satisfactory.

21

A. de Palma, R. Lindsey / Transport Policy 13 (2006) 115126 Table 5 Daily travel statistics for 2002 with no tolls (Paris) Base-case scenario Number of car trips Travel time (min) Travel cost (V) Net cost (V) Consumers surplusa (V) Toll revenue (V) Equity (V) Early arrivals (%) On-time arrivals (%) Late arrivals (%) Schedule delay cost (V) Travel delay cost (V) Congestion (%) Speed (km/h) Total driving (106 veh km) Distance per auto trip (km/veh) 3,394,026 25.5 6.98 6.98 K5.21 0 5.41 43.9 26.0 30.1 1.47 1.46 27.56 46.6 63.09 18.59 Denitions Number of trips by car (one individual per vehicle) Mean automobile travel time (from origin to destination) Mean automobile travel cost (from origin to destination) User surplus (logsum for auto and public transportation) Zero in the base case with no tolls Standard deviation of accessibility Percentage of drivers arriving earlier than their desired arrival time at destination Percentage of drivers arriving on time Percentage of drivers arriving later than their desired arrival time at destination Mean schedule delay cost Mean cost of queuing time Congestion delay as percentage of free-ow travel time Mean speed by car Total number of kilometres driven by auto Mean distance travelled by car Externalities for private transport Low valuation Auto noise (V) Auto accidents (V) Auto pollution (V) Greenhouse emissions (V) Social cost of public fundsb (V) Total external costsc (V) 164,912 2,197,355 568,171 788,411 0 3,718,848 High valuation 352,031 2,197,355 2,659,790 1,537,896 0 6,747,072

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Source. Authors calculations. a Because consumers surplus is dened only up to multiplicative and additive factors, only changes in consumers surpluses are relevant for making comparisons across scenarios. b Social cost of public funds: toll revenue multiplied by the marginal cost of public funds. c Total external costs: sum of costs from noise, accidents, pollution, greenhouse and marginal cost of public funds for auto trips.

was instead assumed to unfold gradually in four phases over the 10-year period 20022012. The path is summarised in Table 6, and the tolled infrastructure at the various stages is shown in Fig. 1 and described in Table 7. Because the only existing tolls in the Paris area are on Autoroutes A1 and A14, it is natural to assume that sections of the Autoroutes within Ile-de-France are the rst infrastructure to be tolled. Among the most heavily congested Autoroutes are four radial highways, A1, A4, A6, and A13 that join A86
Table 6 Implementation path (Paris) Phase 0 Year 2002 Coverage or scope of the pricing system Alternative selected links Autoroutes A1CA6 Autoroutes A4CA13 Autoroutes A1CA6CA4CA13 Ring road A86 All candidate links in Phase 0: A1CA6C A4CA13CA86 Cordon toll around city centre Cordon tolls around city centre and Paris riphe rique) intra-muros (Boulevard Pe Travel-time-based toll on all auto travel

(the outer ring road around Paris) to the inner ring road riphe rique, labelled BP in Fig. 1). A86 itself is (Boulevard Pe also heavily congested. Several alternative subsets of these ve Autoroutes, identied in the rst row of Table 6, were chosen as candidates for tolling in Phase 0. Tolls on the four radial highways are assumed to be levied in the inbound direction only, whereas A86 is tolled in both directions (clockwise and counterclockwise). The tolls are assumed to be at; i.e. timeindependent. It is true that the tolls on A1 and A14 currently

Composition and levels of prices Flat tolls

Degree of differentiation of prices By link

1 2 3

2005 2008 2012

As Phase 0 Time-dependent tolls As Phase 2 Proportional to travel time

As Phase 0 Single time step (peak/off-peak) As Phase 2 By trip duration

Source. Authors judgments.

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Fig. 1. Map of the tolled arterials (Paris).

feature peak/off-peak differentials at certain times of the week. However, introduction of tolls on existing urban roads would constitute a major reform in France, and it is plausible that tolling would be kept as simple as possible in order to facilitate public acceptance. Furthermore, the main urban tolling schemes in Europe todaythe London congestion pricing scheme and the Norwegian toll ringsfeature either at tolls or a very limited time variation. In Phase 1 (2005) of the implementation path all ve of the candidate highways in Phase 0 are tolled together. The tolls continue to be at, and a common toll rate per kilometre is imposed on them. By Phase 2 (2008), it is assumed that legal and acceptability barriers have weakened enough for tolling to be introduced within the centre of Paris. It takes the form of a cordon toll around the city centre (see Fig. 1) that is paid in the inbound direction and has a peak/off-peak time differential. The peak period was xed at 7:0010:00 AM, and the off-peak toll during the remainder of the 4:0012:00 AM simulation period.23 The tolls on the arterial links, meanwhile, are abandoned. Two alternative tolling schemes are entertained for the nal phase (Phase 3 in 2012). The rst alternative retains the cordon toll around the city centre, and adds a second outer cordon around Paris intra-muros. The outer cordon coincides with riphe rique and has a radius of approximately Boulevard Pe 4.5 km; i.e. slightly more than twice the radius of the inner cordon. Like the inner cordon, the outer cordon is levied in the inbound direction only, and it includes a peak/off-peak differentiation with the same timing.24 The second alternative for Phase 3 is a travel-time-based toll for all travel in the case-study area. The toll is implemented with METROPOLIS by increasing the value of time
The timing of the peak period was chosen on the basis of the temporal evolution of congestion for simulations without tolls. 24 Tolling schemes with multiple time steps are technologically feasible, and they have been implemented in Singapore and on a few High Occupancy Toll (HOT) lane facilities in the US. Optimising the timing of these tolls is facilitated by the fact that they apply only to single roads or lanes. Fine-tuning a cordon toll is more difcult because of the multiplicity of link ows that are affected, and by the fact that the optimal timing and levels of the toll steps generally vary with location around the cordon.
23

(parameter a) by a uniform percentage for each traveller. This toll falls short of rst-best optimal pricing for two reasons. First, the toll varies across travellers in proportion to their individual values of time whereas an optimal toll would be anonymous.25 Second, the toll does not vary directly with location or time of day. Nevertheless, as Section 4 will reveal this travel-time-based toll yields much higher welfare gains than do the other tolling schemes examined. The toll can be viewed as establishing a lower bound on the welfare gains that could be derived from a system of network-wide link-based tolls with relatively ne time-of-day variation that would approach a rst-best optimum.26 In summary, the implementation path comprises three types of tolls: at link-based tolls in Phases 0 and 1, a peak/off-peak cordon toll in Phase 2, and a choice between a double cordon toll and a comprehensive travel-time-based toll in Phase 3.27 Consideration was given to combining these tolls with supplyside enhancements as a policy package that would help to overcome public and political barriers to road pricing. It is possible with METROPOLIS to modify the free-ow travel times and/or capacities of links on the road network to account for road investments. And the generalised costs of public transport can be reduced to account for improvements in public transport service. However, due to the high costs and impediments to such investments in the case-study area, as well as the relatively short time span of the implementation path, a decision was made not to include supply-side enhancements.28 4. Results The levels of the tolls for each tolling scheme are reported in Table 8. For the link tolls, a common value per km was used for each tolled link in Phases 0 and 1.29 As mentioned earlier, the
25 Population distributions of parameter a are generated with METROPOLIS by specifying the mean and variance of the distribution. It is not possible to shift the distribution up by a constant amount, as would be necessary to model an anonymous toll. 26 Setting distinct toll schedules on each link of a large road network is not practically feasible with METROPOLIS because tolls have to be input manually on each link. 27 The levels of the link tolls and cordon tolls were derived by using an iterative heuristic search procedure over a range of reasonable values. The value of the time-based toll was not optimised, but rather set according to an acceptability criterion described in Section 4. 28 Building new surface transport infrastructure in the Ile-de-France region is inhibited by the scarcity of land and environmental concerns. A proposal to construct an automated highway was made, but the idea has not yet been taken forward. Marin (2003) presents a simulation study of an automated highway riphe rique, A86, and nine radial arterial network comprising Boulevard Pe roads. His model differs from the one used here in several respects. In particular, it uses static route assignment software (AEL-DAVIS) and concerns travel during the evening peak period rather than the morning. 29 Because the arterial highways are well separated geographically, and serve outlying areas at different points of the compass, trafc ows on the arterials interact with each other only weakly. However, they interact rather more strongly with ows on A86. And because of growth in travel demand from 2002 to 2005 (see Table 4) optimal tolls are likely to be slightly higher in Phase 1 than in Phase 0. Thus, computation time permitting, it would have been worthwhile to allow for toll differentiation across links, and over time.

A. de Palma, R. Lindsey / Transport Policy 13 (2006) 115126 Table 7 The tolled infrastructure (Paris) Type of tolling scheme Link tolls on radial arterial Location A1 A4 A6 A13 riphe rique Boulevard Pe A86 Paris City Center Paris intra-muros Comprehensive Priced section Inbound only (from A86 to Boule riphe rique) vard Pe Length (km) 6.4 11.07 8.12 12.52 70.28 (both directions) 130.9 (both directions) Radiusz2 km Radiusz4.5 km

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Link tolls on ring roads Cordon tolls Travel-time-based toll Source. Authors calculations.

Clockwise and counterclockwise Inbound only All links in all directions

Table 8 Optimal levels of tolls (Paris) Type of tolling scheme Link tolls on radial arterials (Phases 0 and 1) Location A1 A4 A6 A13 A86 Paris City Centre Paris intra-muros Toll proportional to travel time (option for Phase 3) Source. Authors calculation. Comprehensive Toll level(s) V0.23/veh km

Link tolls on ring road (Phases 0 & 1) Cordon tolls (Phase 2, option for Phase 3)

Per vehicle entry: 7:0010:00 AM: V6.86 4:007:00 AM & 10:0012:00 AM: V4.57 Per vehicle entry: 7:0010:00 AM: V9.15 4:007:00 AM & 10:0012:00 AM: V6.10 Increase in mean value of time of V5.64/h

travel-time-based toll was modelled by increasing the value of travel time for each traveller by the same percentage. Social surplus turned out to be an increasing function of the percentage over a wide range of values. Since it is unlikely that huge toll increases would be politically acceptable even after tolling becomes commonplace, the mean increase in value of time was capped at about 50% of the current price of gasoline. Given current travel speeds and vehicle fuel economy, this worked out to V5.64/h; the value reported in Table 8. To economise on space, attention is limited in this section to two aspects of the results: a summary of the impacts of tolling in Phase 2 (Section 4.1), and a welfare analysis of the overall implementation path (Section 4.2). Phase 2 is selected for detailed examination because the impacts of tolling in Phase 2 are more pronounced than for Phases 0 and 1, and because the choice of tolling scheme for Phase 2 is predetermined whereas alternative candidates for the implementation path are considered in Phases 1 and 3. 4.1. Welfare impacts of the cordon toll in Phase 2 (2008) In Phase 2, a cordon toll is introduced around the city centre with a peak level from 7:00 to 10:00 AM of V6.86, and an offpeak level of V4.57 (see Table 8). Table 9 lists the impacts of the toll using a layout similar to Table 5 for Phase 0. The number of drivers falls by 1.8%, and mean auto travel time drops by 0.9%. Mean private travel cost rises by V0.10, but social cost drops by V0.05. The difference is accounted for by toll revenues of about

V0.15 per auto trip. Since the toll is V4.57 during the off-peak period, and higher during the peak, less than one in 30 drivers pays the toll. But despite the uneven incidence of the toll, there is no appreciable change in the equity index.30 Rows 1012 of Table 9 report changes in the fractions of users who arrive early, on-time or late. The changes are minimal, and there is no signicant change in schedule delay costs.31 However, there is a reduction in congestion delay (Row 14) and an increase in average auto speed (Row 15). Total vehicle kilometres travelled fall (Row 16) but travel distance per trip rises slightly (Row 17) because some drivers divert around the toll cordon. Note that the combination of a 0.6% increase in distance per trip and a 1.4% increase in speed results (to within rounding error) in the 0.9% reduction in travel time as reported in Row 2. The impacts of tolling on external costs and revenues in Phase 2 are summarised in Table 10. Annual impacts are computed on the assumption that two trips are made per day for 300 days per year.32 Because noise, accident, pollution and
30 Recall that the equity index is the standard deviation over origin zones of consumers surplus. 31 METROPOLIS is based on the Vickrey (1969) bottleneck model in which time-varying tolls reduce queuing without altering arrival times or schedule delay costs. 32 Because the morning and evening commutes differ in terms of the OD matrix, path constraints imposed by one-way streets, personal scheduling constraints and so on, morning and evening simulations should be done separately. METROPOLIS is capable of modelling evening travel, but project time constraints precluded doubling the number of simulation runs.

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Table 9 Summary statistics for no-toll and tolled equilibria in Phase 2 (Paris) Base case 2008 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Number of car trips Travel time (min) Travel cost (V) Net cost (V) Consumers surplus (V) Toll revenue (V) Net surplus (V) Relative surplus gain Equity (V) Early arrivals (%) On-time arrivals (%) Late arrivals (%) Schedule delay cost (V) Congestion (%) Speed (km/h) Total driving (106 veh km) Distance per auto trip (km/veh) 3,721,663 26.3 7.17 7.17 K5.28 0 K5.28 5.51 43.8 25.9 30.4 1.48 31.57 44.8 68.66 18.45 Phase 2 2008 3,652,895 26.1 7.27 7.12 K5.31 551,801 K5.154 5.51 43.5 26.0 30.4 1.48 30.36 45.4 67.83 18.57 Change K1.8% K0.9% 1.4% K0.7% K0.03 551,801 0.123 1.72% 0 K0.2% 0.1% 0.1% 0.0% K1.2% 1.4% K1.2% 0.6%

Travel cost-toll revenue/no. car trips

User surplusCtoll revenue/no. car trips) Surplus gain/travel cost in base case

Source. Authors calculations.

greenhouse costs are all assumed to be proportional to distance travelled, they all fall by 1.2% (cf. Row 16 of Table 9). Given a marginal cost of public funds of 0.14, tolling yields an (additional) efciency gain of 0.14!V551,801ZV77,252 that is tallied in the accounting framework as a reduction in external costs in order to count it as a net social benet rather than as a transfer. Adding this to the reductions in accident and environmental costs yields a total reduction in external costs of 3.3% using the low unit costs in Table 1, and 2.5% using the high unit costs. The majority of the gains derive from reductions in user costs (V269.87 million annually) rather than reductions in external costs (V69.01 million or V84.69 million). This is also the case in the other three phases of the implementation path. The annual social gain per capita from tolling is V44 with the low unit external costs, and V46 with the high unit costs.33 Though these gures may seem small, they are broadly representative for most of the policies that were examined as candidates for the implementation path, as well as for applications of METROPOLIS to smaller road networks such as Sioux Falls with just 70 links (De Palma and Marchal, 2004). The main reason for the modest gains here is simply that the cordon toll covers a very small fraction of Ile-de-France and it is paid on less than 3% of auto trips. 4.2. Results for the implementation path The implementation path, described in Table 6, incorporates four phases over the period 20022012. The main impacts at each phase are presented in Table 11. 4.2.1. Phase 0 In 2002, at tolls are introduced on selected Autoroutes. Four alternatives are examined: highways A1 and A6 to the north and south of the centre, A4 and A13 to the west and east
33

of the centre, the four highways together, and the outer ring road A86. In each case, the reductions in external costs are somewhat greater when the marginal cost of public funds is set at the benchmark value of MCPFZ0.14 than with MCPFZ0. But the total welfare gains do not vary very much in percentage terms, and the welfare rankings of the alternatives are unaffected. Tolling A4 and A13 yields more than double the welfare gains from tolling A1 and A6. At least in part this is explained by the fact that A4 and A13 are more than 60% longer (Table 7). Tolling all four highways generates a welfare gain that is almost identical to the sum of the gains obtained from tolling the two pairs independently. Since the highways are well separated geographically it is not surprising that the gains are approximately additive. Tolling Highway A86 yields the highest welfare gain of the four candidates. Again, this can be attributed in part to the length of the tolled section and also to tolls being levied in both directions (Table 7). Since A86 yields the highest gains, it is assumed to be chosen for the rst phase of the implementation path as indicated by highlighting the corresponding row in Table 11. It is noteworthy that for all four candidate schemes the welfare gains are similar to the toll revenues, and the user benets exceed the reductions in external transport costs. This pattern is also apparent in the other three phases. One unexpected result is that mean auto travel speed drops slightly when either A86 or the A1 and A6 pair is tolled.34 This happens despite the fact that tolling reduces congestion on the tolled links because the speed on these links exceeds the network average, and tolling them shifts trafc onto the slower untolled links. 4.2.2. Phase 1 (2005) In Phase 1, at tolling is implemented on all ve of the highways examined in Phase 0. The welfare gains are nearly
Mean speed falls by 0.2% when A1 and A6 are tolled, and by 0.3% with A86. There is a 0.5% mean increase in speed with A4 and A13, and a 0.4% increase when A1, A6, A4 and A13 are all tolled together.
34

The respective annual gains per driver are V93 and V97.

A. de Palma, R. Lindsey / Transport Policy 13 (2006) 115126 Table 10 External costs and revenuesbase case (2002) and Phase 2 (2008), Paris Low valuation Auto noise (V) 179,475 Auto accidents (V) 2,391,393 Auto pollution (V) 309,171 Greenhouse emissions (V) 858,032 0 Social cost of public fundsa (V) Total external costsb (V) 3,738,071 Change in social cost (privateC public)c (V) Change in social cost per userd (V) Social gain per usere (V) Relative social gainf (V) Annual social gain per userg Annual impact (V million) 300 days, AM and PM Total revenues Gain of users Reduction of external costs (privateCpublic) Total gain of users and reduction of external costs 177,300 2,362,414 305,425 847,634 K77,252 3,615,521 K115,012 0.03 0.15 5.06% 92.8 331.08 269.87 69.01 338.88 K1.2% K1.2% K1.2% K1.2% K3.3% High valuation 383,117 2,391,393 1,447,332 1,673,700 5,895,542 378,475 2,362,414 1,429,793 1,653,419 K77,252 5,746,849 K141,156 0.04 0.16 5.29% 97.1 331.08 269.87 84.69 354.56 K1.2% K1.2% K1.2% K1.2% K2.5%

123

Source. Authors calculations. a Social cost of public funds: toll revenue multiplied by the marginal cost of public funds (0 or 0.14). b Total external costs: sum of costs for auto noise, auto accidents, auto pollution, auto greenhouse gas emissions and social cost of public funds. c Change in social cost (privateCpublic): total external cost in the evaluated scenario minus total external cost in the base-case scenario for private and public transportation. d Change in social cost per user: change in social cost (privateCpublic)/number of cars. e Social gain per user: reduction in social cost per userCchange in consumers surplus. f Relative social gain: social gain per user/(net costKfree-ow travel time cost). g Annual social gain per user: relative social gain!600 (300 days per year, AM and PM trips each day).

double the gains from tolling A86 in Phase 0. There is a 1.8% reduction in total travel distance, and a commensurate reduction in external costs of travel. However, as happens with tolling A86 in Phase 0, there is a slight drop (0.4%) in mean auto travel speed. 4.2.3. Phase 2 (2008) In Phase 2, tolling is introduced for the rst time within the centre of Paris in the form of a one-step cordon toll. The impacts of the cordon were examined in Section 4.1. Compared to the ve link tolls in Phase 1, the cordon yields about 25% higher welfare gains. A greater proportion of the benets are realized as benets to users. Benets from external cost reductions are actually smaller because total travel distance by auto falls by only 1.2% compared to 1.8% in Phase 1. However, average travel speed rises by 1.4%. 4.2.4. Phase 3 (2012) Two candidates are considered for the nal phase of the implementation path. (a) The double cordon option entails continuation of the inner cordon toll around the city centre, and addition of a second riphe rique. The double outer cordon on the Boulevard Pe cordon boosts revenues and welfare gains by about 2/3 compared to Phase 2. The reduction in total travel distance by auto rises to 4.3%, and the improvement in average auto speed more than doubles to 3%. Nevertheless, the

average toll paid still amounts only to V0.24 per driver. And the equity index increases by only 1.3%, so that the double cordon toll does not raise inequality in generalised travel costs by much. (b) In contrast to the double cordon, the travel-time-based toll is levied on all auto travel so that drivers cannot avoid it by shifting their routes or their departure times. The average toll paid per trip is V1.11: some ve times the average outlay for the double cordon. Revenues and welfare gains are also higher by nearly the same factor, and with the marginal cost of public funds set at MCPFZ0.14, the annual welfare gain is V328 per capita and V734 per driver. Because of the dramatically higher benets from the travel-time-based toll, it is selected rather than the double cordon for the nal stage of the implementation path. This assumes, of course, that the technology to implement a comprehensive travel-time-based toll is available within 10 years after tolling is initiated. It also assumes that acceptability barriers can be overcome by this date. In fact, the equity index increases by 5.2% (four times the increase with the double cordon toll), so this assumption should not be taken lightly. Table 11 shows that most of the benets from road pricing accrue in the nal phase of the implementation path. However, the pattern of gains is broadly similar at each stage. The welfare gains are not particularly sensitive to the value assumed for

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Table 11 Summary statistics for the implementation path (Paris) Phase Year Tolling policy Revenue (V106/yr) User benets (V106/yr) External cost reductiona (V106/ yr) MCPFbZ0.14 0 2002 A1CA6, at A4CA13, at A1CA6CA4CA13, at A86, at A1CA6CA4CA13CA86, at Cordon around City Centre, step Cordons around City Centre and Paris intra-muros, step Travel-time-based toll 24.25 56.29 83.36 133.79 248.65 31.08 543.27 2515.30 16.41 48.48 68.10 86.65 188.01 269.87 386.40 2136.41 14.57 15.99 27.30 57.48 87.48 76.85 190.91 635.10 MCPFbZ0.00 11.17 8.11 15.96 38.75 52.67 30.50 114.85 282.96 Welfare gaina (V106/yr) MCPFbZ0.14 30.98 64.47 95.73 144.13 275.49 346.72 577.31 2771.51 MCPFbZ0.00 27.59 56.59 84.06 125.40 240.68 300.37 501.25 2419.3

1 2 3

2005 2008 2012

Source. Authors calculations. a Auto external costs evaluated using average of low and high unit monetary valuations. b Marginal cost of public funds.

the marginal cost of public funds. User benets range from 1.5 to 3.5 times the reduction in external costs. Thus, savings to users in travel time and schedule delay costs account for the bulk of the welfare gains. Moreover, user benets amount to 6585% of toll revenues. This suggests that if more than about a third of the revenues were returned to users, either as rebates or useful services, users would be left better off and support for road pricing might be gained. However, to assess the welfaredistributional effects and acceptability of road pricing properly, the analysis of gainers and losers would have to be undertaken at a more disaggregated level.

5. Concluding remarks This article describes a case study of road pricing in Ile-deFrance that was conducted as part of the MC-ICAM project on marginal-cost-based pricing in urban areas. To assess the efciency and welfare-distributional impacts of alternative tolling policies, the study employed the dynamic network simulator METROPOLIS. METROPOLIS differs from traditional static equilibrium models in treating as fully endogenous the departure-time decisions of travellers. The software also describes drivers route-choice decisions, as well as mode choice in a simple way that facilitates calibration of the price elasticity of auto travel demand. Because of strong legal and acceptability barriers to road pricing in France, tolling is assumed to unfold gradually in four phases. Tolling begins with time-independent (at) tolls on selected Autoroutes (Phases 0 and 1), progresses to a cordon toll around the city centre in Phase 2, and culminates in a comprehensive travel-time-based toll in Phase 3. Several results from the simulations deserve emphasis. As measured by social surplus the welfare gains from tolling links in Phases 0 and 1 are modest. The gains are small because only a very small portion of the whole road network is covered, and tolls need to be set at low levels in order to avoid excessive diversion of trafc to alternative untolled routes. (The welfare gains would be somewhat higher, but still modest, if time-

varying tolls were imposed on the links to suppress queuing). The welfare gains from tolling several routes are approximately additive; i.e. equal to the sum of the gains from tolling them independently. This result is attributable to the fact that the tolled infrastructure is well separated geographically so that trafc spillover effects between tolled routes are minimal.35 The single cordon toll in Phase 2, and the double cordon toll contemplated for Phase 3, yield somewhat higher gains than the link tolls while generating similar distributional effects in terms of the relative magnitudes of revenues, user benets, external cost reductions and welfare gains. However, like the link tolls in Phases 0 and 1, the cordon tolls are paid on only a small fraction of auto trips. The travel-time-based toll in Phase 3 yields much higher welfare gains than any of the other tolling schemes considered because it covers the whole of Ile-de-France. Nevertheless, the travel-time-based toll falls short of rst-best pricing because it does not vary directly with location or time of day, and also because it varies across travellers in proportion to their individual values of time. A comprehensive system of timevarying link-based tolls could do better, and in this respect the impacts of the travel-time-based toll provide a lower bound on the potential gains from road pricing in the area. In several respects the implementation path identied in the case study is conservative as far as its potential to improve travel conditions: (1) tolls are not optimised independently for each component of the tolled infrastructure or phase, (2) time variation of tolls is delayed until Phase 2, and it is then implemented only as a peak/off-peak differentiation, and (3) the travel-time-based toll in Phase 3 does not vary directly over time or space (cf. the previous paragraph) and the level of the toll is not optimised. Future research on road pricing with METROPOLIS either in Ile-de-France or other urban areascould fruitfully be extended in several directions of which four will be mentioned
It is well established in the literature that the benets from tolling links that are strong substitutes or strong complements are not additive; see for example Mills (1995), Verhoef et al. (1996) and De Palma et al. (2004b).
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here. One extension is to model link tolls with ner time steps thatif imposed network-widewould support an approximate rst-best optimum. Due to computational time constraints this was not attempted in the case study, but it has been done using METROPOLIS on smaller road networks36 and with further software development it may become possible on large networks such as Ile-de-France. A second extension is to make land use endogenous. Work is currently underway to integrate METROPOLIS with the land-use software URBAN SIM. Considerable effort is required to combine software packages that are designed for different purposes, and much time is also required to calibrate land-use models. But accounting for landuse decisions is vital if the long-run impacts of road pricing and other transport policy measures are to be fully understood and predicted accurately. Third, the rudimentary treatment of public transport in METROPOLIS could be rened to include routes, service timetables, capacity constraints and fares. Doing so would alter the benets from reducing auto travel depending on how fares compare with marginal social cost, and on whether the social cost of a transit trip increases with volume (e.g. because of congestion) or decreases because of scale economies (the Mohring (1972) effect). A nal goal is to develop a more rened approach to derive implementation paths for road pricing that better reect the particular features of a given study area. As discussed earlier, there are strong barriers to urban road pricing in France, and some attempt was made to account for this in the case study. One can hope that successful examples of road pricing such as the congestion charging scheme in London will speed up adoption of road pricing elsewhere. It is sobering that the ofce , recently announced a of the mayor of Paris, Bertrand Delanoe plan to reduce trafc in the city centre using conventional command-and-control methods.37 The three-phase plan features road-narrowing, a new cycle lane and eventual closure (coincidentally, by 2012) of a wide area to non-residential trafc. Ironically, the plan was drawn up by a consultancy that worked on Londons congestion charge system. And a transportation ofcial in Paris is quoted as saying that a toll system would not be a good solution for Paris. Further research on road pricing is evidently needed to convince decision-makers of its merits, and to assure that the pioneering work of Dupuit (1844/1962), Pigou, (1920) and others does not remain forever as an ivory-tower idea. References
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36 37

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Shaffer, B., Santos, G., 2004. Preliminary results of the London Congestion Charging Scheme. Paper Presented at the 83rd Annual Meeting of the Transportation Research Board, Conference CD. TRACE, 1999. Elasticity Handbook: Elasticities for Prototypical Contexts. TRACE. Costs of Private Road Travel and their Effects on Demand, Including Short and Long Term Elasticities. Prepared for the European Commission, Directorate-General for Transport, www.hcg.nl/projects/trace/trace1.htm Transport for London, 2003. Congestion Charging: Six Months on. Transport for London, London, October, www.t.gov.uk/t/downloads/pdf/congestion-charging/cc-6monthson.pdf (accessed September 12, 2003).