Pricing our way out

Dr Patrick Carvalho
Insights Newsletter
26 April, 2019

This year’s close alignment of Easter and Anzac public holidays translated into 10 days of joy, family time and… congestion – with the New Zealand Traffic Agency (NZTA) issuing multiple heavy traffic warnings across the nation.

Unfortunately, traffic jams are not restricted to holiday seasons in New Zealand.

Widespread congestion in our urban centres is the new normal all year round, clogging “the lifeblood of community and commerce”.

Auckland, according to the Tomtom Traffic Index, is ranked among the top 40 congested cities in the world, with each driver idling on average an extra 45 minutes per day on busy roads (i.e. 172 hours of wasted hours in traffic per year).

Sluggish trips also frustrate commuters in Wellington (43 minutes per day in extra travel time), Christchurch (29 minutes), Hamilton (27 minutes), Tauranga (23 minutes), and Dunedin (21 minutes).

NZTA suggests traffic jams cost our economy more than $1.25 billion per year, while also contributing to higher levels of pollution and road crashes.

The good news is that a well-tested solution to jammed traffic exists.

The science behind congested streets is not hard to grasp: unchecked, the demand for road space in big cities generally outstrips supply.

To fix the congestion problem, cities must offer suitable transport options, while requiring users to pay the full costs of their road use.

This solution is at the heart of road pricing, which harnesses the power of markets to adequately address traffic congestion while enabling a full range of transport choices.

In other words, instead of Soviet-style rationing of road space by widespread queuing, congestion charges would encourage commuters to find trip alternatives such as looking for other travel times, routes and transport modes. In return, revenue from congestion levies should improve the supply of travel options.

Road pricing is not a new concept, with close to a hundred years of academic research backing it. Several countries – including the United States, Britain, Singapore, Canada, Germany, Japan, Sweden and Norway – have already implemented a range of road pricing schemes, showcasing both success stories as well as lessons.

New Zealand should follow international best-practice, starting with a national conversation about a road pricing model that suits us best.

In the meantime, safe travels as you drive home from the holidays – and be prepared for congested roads then and beyond.

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