Policy Instruments

Road user charging
SummaryTaxonomy and descriptionFirst principles assesmentEvidence on performancePolicy contributionComplementary instrumentsReferences


Urban road user charging (also called congestion charging or road pricing) involves charging drivers for the use of roads they drive on. The charges are designed to reduce traffic congestion (and its associated problems), so an ‘ideal’ charging scheme would vary charges according to location (more expensive in the city centre), time of day (more expensive at peak) and type of vehicle (more expensive for large and polluting vehicles). Road user charging also raises revenue, which may or may not be ploughed back into transport (typically public transport) improvements. Urban road user charging can take the following three basic forms; variations, from simple to complex, are possible on all of them:

  1. Area licensing schemes (ALS): vehicles using the roads within a designated area (and designated time) pay a licence fee, usually related to vehicle type. The Singapore ALS (from 1975 to the late 1990s) was an early example.  The congestion charging scheme in central London applies the same principle.
  2. Cordon pricing (or ‘toll rings’): charging points are located at all entries to a given area (often a city centre), usually with higher charges for large or polluting vehicles and at more congested times of day. Oslo has been operating a toll ring since 1990, and the Stockholm scheme also uses a cordon.
  3. Continuous charging systems: these charge vehicles for all travel within a defined area (such as a city). The charge can be based on distance travelled or time spent travelling, or can involve a charging point on every road link. The complexity means that fully automatic electronic charging (‘electronic road pricing’ or ERP) must be used.. Singapore is using an ERP system, which is not yet a truly continuous system, but may become one in the future.

Road user charging can reduce traffic levels in the affected area, typically by 15% to 20%, with more substantial reductions in congestion. Key issues with road charging are its acceptability to drivers (and to others who may be affected by it, e.g. businesses within the charged area), the type and complexity of the chosen technology (manual, video-based, fully electronic), and enforcement.