A cost benefit analysis of road pricing in the Netherlands

12-10-2015 | Publication

Many Dutch political parties consider road pricing an important instrument to improve accessibility. In 2012, six of the ten parties had included some form of road pricing policy in their election manifestos. The most recent Cost Benefit Analysis (CBA) of road pricing in the Netherlands dates from 2007. Since then, much has changed. Therefore, in order to re-evaluate the costs and benefits of road pricing schemes in the Netherlands, CPB Netherlands Bureau for Economic Policy Analysis and PBL Netherlands Environmental Assessment Agency conducted a new CBA.

Costs and benefits calculated for four road pricing schemes

This paper focuses on four road pricing schemes for passenger vehicles: a flat rate charged on all roads; a congestion charge during peak hours on highly congested roads; a combination of these two; and a flat rate during peak hours on the main roads in western and central Netherlands. For the traffic implications of these pricing schemes, we used the Dutch National Transport Model.For this CBA, the socio-economic long-term scenarios Global Economy (GE) and Regional Communities (RC) were used from the study Welfare, Prosperity and Quality of the Living Environment (Janssen, L.H.J.M. et al., 2006).

When is road pricing beneficial to society?

Whether road pricing is of benefit to society, strongly depends on the chosen form and congestion level (this varies per scenario). With an increasing population and an expanding economy, we expect more traffic and congestion in the future, which also means that road pricing is likely to be of greater benefit to society. Road pricing policies specifically aimed at congested roads during peak hours are efficient if costs remain limited. A congestion charge is projected to have only a small impact on total car use, but will reduce congestion more efficiently, compared to a flat rate. Because cars are becoming safer and more energy efficient, the reduction in the external effects of road pricing is limited. Welfare losses due to reduced demand and system costs will outweigh the benefits of reduced congestion in the case of a flat-rate road pricing scheme, unless congestion levels are very high, as is the case under the GE scenario.