Does Urban Road Pricing Cause Hardship to Low-Income Car Drivers?

Abstract

A major criticism of the principle of urban road pricing (also known as congestion charging and congestion pricing) is that it is regressive, namely, that the implementation of a charging scheme is likely to result in the imposition of a disproportionately large financial burden on low-income car users and their dependents, thereby resulting in hardship. A road pricing proposal in Edinburgh, Scotland, was used as a case study to assess the potential for road pricing-related hardship. Hardship occurs when people are denied access to basic needs. A quantitative definition of hardship was developed on the basis of an affordability measure derived from the utilities sector, supplemented by two additional conditions to account for the fact that transportation in itself is not a basic need. By using this definition, it was demonstrated that households in the lowest income quintile already spent an unaffordable proportion of their income on motoring costs, as much as about 40%, whereas the affordability threshold was 32.5%. The impact of a £2 (approximately $4 in 2008) charge on these low-income households would be negligible if it were paid less than once a week but would have a significant impact if it were paid four or more times a week, taking average aggregate motoring costs to above 50% of a low-income household's total disposable income. A simple regression analysis showed that of the five different basic needs identified in the research literature, work trips were the most likely to be linked to frequent congestion charge payment among low-income car users and, thus, the most likely to be linked to an additional risk of hardship.

The social consequences of transport decision-making: clarifying concepts, synthesising knowledge and assessing implications

“…Bonsall and Kelly, 2005;Crawford, 2000;Graham et al, 2009;Rajé, 2003;Santos and Rojey, 2004). Cain and Jones (2009), for example, looked at the likely consequences of a proposed two-cordon congestion charging scheme in Edinburgh on low income households, by applying the concept of 'hardship' that is widely used in the energy and water sectors; this results when a household spends more than a threshold percentage of their expenditure on a given sector. The study found that around 8.5% of Edinburgh households in the lowest income quintile (around 3500 households) could suffer hardship as a result of the introduction of the scheme.…”

Equity in transport: Learning from the policy domains of housing, health care and education

“…Two studies conducted in Australia found that car-related costs sometimes exceed 40% of the income of households in the lowest income quintile [13,25]. Comparable figures were found for Scotland by Cain and Jones [10].…”

“…A higher share of overall household budget spent on transport expenditures suggests that household may be at risk of accessibility poverty, because they may not be able to maintain such a level of expenditures over a longer period of time or may experience problems in purchasing other necessities due to high transport expenditures. Some low-income car-owning households may also seek to control their transport expenses by minimizing car use, suggesting that car ownership does not necessarily translate into car-based accessibility under all circumstances [10]. The share of income spent on transport is thus an indicator pointing at households at risk of transport poverty, which may translate into a risk at accessibility poverty, as explained above.…”

“…Based on the studies cited above, we estimate that between 40% to 60% of car-owning households in the lowest income quintile spend more than the threshold level of 20% on car-related transport costs. Given that only about a quarter to one third of all households in this quintile own a car (e.g., [10]), this implies that between 10% to 20% of low-income households could face affordability problems, which equals about 2% to 4% of all households in the population (for instance: 20% of households belong to the lowest quintile, of which about 30% own cars, of which 60% may experience affordability problems: 20%*30%*60% = 3.6%).…”

Substance precedes methodology: on cost–benefit analysis and equity

“…Given this situation, car availability could be used as the prime criterion to divide the population into groups with high and lower levels of potential mobility. Furthermore, since potential mobility is also related to transport costs, an additional partitioning into income groups may supplement the initial division by car ownership level (e.g., Cain and Jones 2007).…”