Congestion pricing and driving restrictions offer two different ways for policymakers to address traffic congestion: the former levies fees individuals who drive into or within a designated “charging zone,” while the latter enforces “road-space rationing” (usually based on a car’s permit color or license plate number). Transportation experts strongly recommend the use of congestion pricing due to its efficacy and environmental benefits—so why do many cities choose to implement driving restrictions instead?
Equity concerns have been the biggest obstacle to the adoption of congestion-based pricing, which is seen as less fair to low-income drivers—and thus, less politically appealing—than a rationing system. Despite these concerns, existing evidence on the equity effects of congestion pricing has come only from developed countries, where even low-income individuals often own a car and drive to work. In a new RFF discussion paper, “Who Will Be Affected By A Congestion Pricing Scheme in Beijing?,” I work with my RFF colleague Joshua Linn and Lunyu Xie of Beijing’s Renmin University to examine the distributional consequences of a congestion pricing scheme currently under consideration in China, offering a glimpse into its effects on drivers in countries with developing economies. Our findings suggest that the burden of congestion pricing in Beijing would fall most heavily on wealthy and privileged drivers.
Beijing has adopted driving restrictions in the past, but ongoing pollution concerns have compelled the government to reconsider congestion pricing as a way to reduce driving within the city’s limits. Under the proposed scheme, all private and company-owned cars, shuttles, and taxis would be charged eight renminbi (about $1.25) upon entering the area inside Beijing’s 3rd Ring Road (akin to the Capital Beltway in Washington, DC), with zone residents eligible for a 90 percent discount. Using data from the 2010 Beijing Household Travel Survey, we examined the underlying distributional effects of congestion pricing by studying the social and economic characteristics of drivers directly affected by the scheme, focusing on commuting and school trips rather than discretionary driving.
Our findings indicate that only three percent of Beijing commuters—car owners who live outside and work inside the ring—would be directly affected by the congestion pricing scheme. In comparison to non-drivers who commute from outside the ring as well as all other employed Beijing individuals, commuters directly affected are more likely to be wealthy, well-educated, and male. This slim portion of drivers is also more likely to own their own home, earn a higher annual income, and enjoy more living space per household member than drivers who would not be charged under the scheme. When examined together, these trends point to progressive distributional effects.
The Beijing experiment suggests that the equity of congestion pricing is greater when the policy is used by developing rather than developed countries. Looking ahead, it would be interesting to see how congestion charges might indirectly affect other groups, such as people who live and work within the 3rd Ring Road but do not drive to work. Future studies might explore whether a congestion charge lowers the cost of driving in a way that instead induces some comparison group individuals to begin commuting by car.
