UrbanRoadCongestionManagement:CapacityInvestmentsandPricingPolicies

HugoE.SilvaPontificia UniversidadCatólica deChile

LeonardoJ.BassoandIgnacioRiquelmeUniversidaddeChile

1

Introduction

• Congestionisamajorissue.

▫ Santiago2012:morethan30%ofworkersinSantiago

spendmorethan60minutesinbusesonlygettingtotheir

workplace

▫ US2013:eachpersonspends100minutesperdayintraffic

onaverage,valuedat$760billion(Winston,2013)

▫ London2015:AMPeakspeedincentralLondonis13,4

km/hr andininnerLondonis17,9km/hr

2

Introduction

• Congestionisamajorissue.

• Urbantransportpricesdonotreflectmgsocialcosts.

• Whatcanwedo?▫ Buildbigger(more)roads▫ Managecurrentcapacity� Publictransportpriority(e.g.subsidies,buscorridors)� Carcongestionpricing� Drivingrestrictions

3

4

5

$ 50,000 $ 55,000 $ 60,000 $ 65,000 $ 70,000 $ 75,000 $ 80,000 $ 85,000 $ 90,000 $ 95,000

2002 2004 2006 2008 2010 2012 2014 2016

Mill

ions

of d

olla

rs

Source: US. Bureau of the Census

US Total Construction Spending: Highway and street

Researchquestions

• Howefficientisaroadinvestmentpolicy?

• Howdoesitcompareandinteractwiththeother

possiblepoliciestoreducecongestion?

6

Literature

• Downs-Thomson paradox

▫ Downs (1962).Thomson(1977).Mogridge (1997)• Hypothesis:inequilibrium carandbusgeneralizedcost will beequal (perfect substitutes)

• Consequence:increasing road capacity makescongestion worse

• Graphically..

7

Downs-ThomsonhypothesisCost

Total demand

By car By public transport

Car

Public transport

Downs-Thomson paradox

What happens with road capacity expansion for cars?

Literature

• BassoandJara-Díaz(2012,TR-A)▫ Ifmodechoiceismorerealistic(imperfectsubstitutes)theDThypothesisdoesnotholdandcarsmaybebetteroffwithroadcapacityexpansion

• Zhang,Lindsey,Yang(2016,TR-B)▫ Relaxthe assumption offixed demand,perfectsubsitutability andinclude transit crowding.Differenttransit operation regimes

• The paradox may not hold

10

Literature• Duranton &Turner(2011.AER):empirical

▫ Increasinglanekilometers leadstoaproportionalincreaseofveh-kmtravelled.▫ Elasticityis1▫ Holdsforinterstatetravel

• Hsu&Zhang(2014.JUrbanE)▫ TheelasticityforJapanis1.2– 1.3

11

Literature• Issues with this approach

▫ Aggregate(spaceandtimeofday).▫ Nodistinctionbetweenincreasingcapacityofcurrentroadsorextendingthelengthoftheroads▫ Itdoesnotallowforcomparingpoliciesandassessingthesocialbenefit

12

Main features▫ Comparisonandinteractionofaroadinvestmentpolicy

withbuscorridors,congestionpricingandtransitsubsidization

▫ Detaileddemandmodel,MCPF,trafficengineering

▫ Cityeffects:� Congestionandnetworksize� Modalsplit� Income(GDP)

▫ Busstop&payment(BS&P)technology

13

14

Low vs high BS&P

15

Methodology

1. (Simplified)theoreticalmodelforinsights

2. Morerealisticanddetailedmodelforsimulationsconsideringthreecitytypes:

� European

� American

� Developing

16

The theory model

• 𝑌" = 𝐻 𝑔", 𝑔' 𝑌' = 𝑌 − 𝑌"

• 𝑔' = 𝐴𝐶𝐶 + 𝑃' + 𝑡' 𝑌", 𝑌', 𝑓, 𝐾 + 𝑡1 𝑌', 𝑓, 𝑘 + 𝑡3 𝑓

• 𝑔" = 𝐶𝑂" + 𝑃" + 𝑡" 𝑌", 𝑌', 𝑓, 𝐾 + 𝜀(𝑓) 8 𝑡1 𝑌', 𝑓, 𝑘

• 𝑊 = −∫∑ 𝑦=𝑑𝑔=�=

�� + 𝑃" 8 𝑌" + 𝑃' 8 𝑌' − 𝑐 8 𝑓 − 𝜌 8 𝐾

• Optimizeover𝑃", 𝑃', 𝑓,bussize(k)androadcapacity (𝐾).

• Constraintstomodeldifferentpolicies

17

The theory model

𝑃" − 𝑃' = 𝑌"𝜕𝑡"𝜕𝑌"

+ 𝑌'𝜕𝑡'𝜕𝑌"

LMNOP

− 𝑌'𝜕𝑡'𝜕𝑌'

+𝜕𝑡1𝜕𝑌'

MNOQR"NOSQ

+ 𝑌"𝜕𝑡"𝜕𝑌'

+ 𝜀𝜕𝑡1𝜕𝑌'

LMNOQ

• Onlythepricedifference canbeidentifiedhere,butseparatelyinthesimulationmodel

• Interpretationasinseparatemodels

18

The theory model

𝑃" − 𝑃' = 𝑌"𝜕𝑡"𝜕𝑌"

+ 𝑌'𝜕𝑡'𝜕𝑌"

LMNOP

− 𝑌'𝜕𝑡'𝜕𝑌'

+𝜕𝑡1𝜕𝑌'

MNOQR"NOSQ

+ 𝑌"𝜕𝑡"𝜕𝑌'

+ 𝜀𝜕𝑡1𝜕𝑌'

LMNOQ

• Onlythepricedifference canbeidentifiedhere,butseparatelyinthesimulationmodel

• Interpretationasinseparatemodels

19

The theory model

𝑃" − 𝑃' = 𝑌"𝜕𝑡"𝜕𝑌"

+ 𝑌'𝜕𝑡'𝜕𝑌"

LMNOP

− 𝑌'𝜕𝑡'𝜕𝑌'

+𝜕𝑡1𝜕𝑌'

MNOQR"NOSQ

+ 𝑌"𝜕𝑡"𝜕𝑌'

+ 𝜀𝜕𝑡1𝜕𝑌'

LMNOQ

• Onlythepricedifference canbeidentifiedhere,butseparatelyinthesimulationmodel

• Cross-congestioneffects.

20

The theory model

𝑃" − 𝑃' = 𝑌"𝜕𝑡"𝜕𝑌"

+ 𝑌'𝜕𝑡'𝜕𝑌"

LMNOP

− 𝑌'𝜕𝑡'𝜕𝑌'

+𝜕𝑡1𝜕𝑌'

MNOQR"NOSQ

+ 𝑌"𝜕𝑡"𝜕𝑌'

+ 𝜀𝜕𝑡1𝜕𝑌'

LMNOQ

• Onlythepricedifference canbeidentifiedhere,butseparatelyinthesimulationmodel

• Busstopandpaymenttechnologyeffects

21

The theory model• Buscorridors

• 𝑃" − 𝑃' = 𝑌"TUPTVP

+ 𝑌'TUQTVP

LMNOP

− 𝑌'TUQTVQ

+ TUWTVQ

MNOQR"NOSQ

+ 𝑌"TUPTVQ

+ 𝜖 TUWTVQLMNOQ

• Timefunctions𝑡" and𝑡' aredifferentwithbuslanes

22

The theory model• Increasingroadcapacitymakessometermslessimportant.Ifroadcapacityisverylarge:

• 𝑃" − 𝑃' = 𝑌"TUPTVP

+ 𝑌'TUQTVP

LMNOP

− 𝑌'TUQTVQ

+ TUWTVQ

MNOQR"NOSQ

+ 𝑌"TUPTVQ

+ 𝜖 TUWTVQ

LMNOQ

• 𝑃" ≈ 𝑃' −TUWTVQ

𝑌' + 𝜖𝑌"

• Hence,foranygivenPB,theoptimalcongestiontollmaybeverysmall.Evenhitzero.Itdependsheavily on𝑡1

• =>importanceBS&Ptechnology

23

The simulation model• BasedonBassoandSilva(2014,AEJ– EconomicPolicy)

• Totalelasticdemand.Twoperiods(peakandoff-peak)withintertemporal elasticity.Marginalcostofpublicfunds

• Weusethebestpossibleengineeringfunctionsavailablefor𝑡",𝑡',𝑡1,ε andbuscosts.Twobusstoptechnologies(Tirachini,2014TR-A).

▫ Partialeq.(nohousing.nolabor)=>fixedtraveldistance.shorterrun(thane.g.Duranton andTurner).

▫ Possiblymorefavorable forroadexpansionasinduceddemandcouldbehigher

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• Nestedlogitdemandmodel

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The simulation model

• Realdata

• Congestedbaselinescenario:13-18km/hr

• TwoBS&PTech:frontdoorboardingonly.Similarinitial

speeds.

▫ Inefficient:(A)paymentincash.1berth

▫ Efficient:(B)contactlesscard.2berths.

• Buscorridor:atmostonelane.

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Data european city

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Efficiency Results

Scenario REF SUBref100 CONref DLref CAP SUB100 CON DLSocialBenefit 0 3550 6725 5179 5033 5998 6746 7376CSchange 0 37130 28672 33954 42207 44624 29808 42899

Busfarepeak 0.19 0.00 0.16 0.16 0.17 0.00 0.16 0.16Busfareoff-peak 0.19 0.00 0.16 0.16 0.17 0.00 0.16 0.16Cartollpeak 0.00 0.00 0.62 0.00 0.00 0.00 0.58 0.00

Cartolloff-peak 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Frequencypeak 25 51 50 63 37 47 50 62

Frequencyoff-peak 25 30 24 44 24 28 24 39Bussize 39 35 51 47 37 40 50 39

Carpeakspeed 13 15 22 13 21 21 22 18Buspeakspeed 11 12 15 19 16 15 15 21

Caroff-peakspeed 41 41 41 36 47 45 42 50Busoff-peakspeed 26 25 24 26 28 26 25 28

Peakshare 41 43 41 43 45 45 42 45Off-peakshare 49 48 49 48 46 46 49 46NoTravelshare 9 9 9 9 8 8 9 8Carshare|peak 85 74 61 57 81 74 63 66Busshare|peak 15 26 39 43 19 26 37 34

Carshare|offpeak 84 76 83 79 83 77 83 81Busshare|offpeak 16 24 17 21 17 23 17 19Busstopsperkm 2 2 2 3 2 2 2 3

Numberofbuslanes 0 0 0 1 0 0 0 1RoadCapacity 3600 3600 3600 3600 4662 4355 3706 4446

3Lanes– BS&PTechA

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Efficiency Results• CaseA(lowBS&P)and3lanes

0

1000

2000

3000

4000

5000

6000

7000

8000

SUBref100 CONref DLref CAP SUB100 CON DL

Social Benefit

Without capacity investment With capacity investment

+0,9 lanes

+0,6 lanes

+0,1 lanes

+0,7 lanes

29

Efficiency Results• Investinginroadcapacityasauniquepolicyincreaseswelfare• =>TheDowns-Thomsonparadoxdoesnothold

0

1000

2000

3000

4000

5000

6000

7000

8000

SUBref100 CONref DLref CAP SUB100 CON DL

Social Benefit

Without capacity investment With capacity investment

+0,9 lanes

+0,6 lanes

+0,1 lanes

+0,7 lanes

30

Efficiency Results• CaseA(lowBS&P)and3lanes

0

1000

2000

3000

4000

5000

6000

7000

8000

SUBref100 CONref DLref CAP SUB100 CON DL

Social Benefit

Without capacity investment With capacity investment

+0,9 lanes

+0,6 lanes

+0,1 lanes

+0,7 lanes

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02000400060008000

100001200014000

+0,9+0,6 +0,1 +0,7

02000400060008000

100001200014000

+0,1+0,0

+0,6+0,9

Case A Case B

• WhathappensifBS&Pisimproved:CaseB• Inallcases,busandcarspeedsarelowandquitesimilaracrossreferencecases

Efficiency Results

32

02000400060008000

100001200014000

+0,9+0,6 +0,1 +0,7

02000400060008000

100001200014000

+0,1+0,0

+0,6+0,9

3

Case A Case B

• IfBS&Ptechisimproved,allotherpoliciesworkbetter(this,inadditiontothedirectbenefitsofimprovingBS&Ptech)

Efficiency Results

33

02000400060008000

100001200014000

+0,9+0,6 +0,1 +0,7

02000400060008000

100001200014000

+0,1+0,0

+0,6+0,9

3

Case A Case B

• IfKisfixed:Orderofpoliciesdoesnotchange

Efficiency Results

34

02000400060008000

100001200014000

+0,9+0,6 +0,1 +0,7

02000400060008000

100001200014000

+0,1+0,0

+0,6+0,9

3

Case A Case B

• Investinginroadcapacityasauniquepolicyalwaysincreaseswelfare=>TheDowns-Thomsonparadoxdoesnothold

Efficiency Results

35

02000400060008000

100001200014000

+0,9+0,6 +0,1 +0,7

02000400060008000

100001200014000

+0,1+0,0

+0,6+0,9

3

Case A Case B

• CaseA:Capacityinvestmentisdominated.Buildcapacitybutforbuses(corridor).

• CaseB:improvebusstops,implementapolicyandDONOTexpandroadcapacity

Efficiency Results

Conclusions• Increasingroadcapacityisefficientbyitselfbutitisnotthebestpolicy

• BS&Ptechiskey:itimprovesthebenefitsofallotherpolicies▫ LowBS&Ptech=>incentivestoinvestinroads,butFORBUSESdosomethingelseadditionally▫ HighBS&Ptech=>bettertoimplementcongestionmanagementpolicies,donotinvestincapacity

• Whatmattersisnotcongestionbut“congestionability”• BS&Pisneverseenasastrategictool.Butitaffectsstrategicdecisions

36

Conclusions• Resultsarerobustwithrespecttonetworksize

• Buildcapacityforbuses(corridor)

• WithoptimalK,optimal“congestion”tolliszero.

• “Optimal”subsidyisnegative.

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0

5000

10000

15000

20000

25000

30000

+1,5

+1,2+1,5+1,2

02000400060008000

100001200014000

+0,9+0,6 +0,1 +0,7

Case A

Conclusions• Resultsarerobustwithrespecttonetworksize

• Manageroadcapacityanddonotbuild.

• Before:congestionpricing.

• After:buscorridors

02000400060008000

100001200014000

+0,1+0,0

+0,6+0,9

05000

1000015000200002500030000

+1,4+1,0

+0,0

+0,0

Case B

Conclusions

• PreliminaryresultsforU.S.

▫ Buildingcapacityimprovesasastand-alonepolicy

▫ Itcansurpassmanagementpolicies(atref.capacity)

▫ LowBS&P:expandcapacitylessandbuildacorridor

forbuses

▫ HighBS&P:sameconclusion,implementcongestion

management

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Thanks! Questions? Comments?

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