Five years on, Stockholm's congestion pricing program remains a great success

At some point, cities in the United States will adopt congestion pricing to reduce traffic. When they do, their policies should be informed by the programs in existence today — and preferably by the longest-running ones, like those in London and Stockholm. In London, the jury on road pricing is still out. One recent analysis questioned whether or not traffic had been reduced in the city, and wondered if improving the bus system alone would have been more cost-effective.

Stockholm's program, however, looks to be a unanimous success. That's the conclusion reached by a group of Swedish researchers in an upcoming issue of the journal Transport Policy. Their evaluation of the city's pricing policy, which began in 2006, found that it accomplished three core goals: congestion has plunged without rebounding, sales have grown for exempt fuel-efficient vehicles and both public and political opinion has pivoted from cynical to strong.

First a brief history: Stockholm introduced a six-month trial of congestion pricing in January of 2006. A two euro charge was imposed on all vehicles entering and exiting the city center at peak hours, with the rate dropped to 1.5 euros near peak and 1 euro the rest of the day (with a maximum daily charge of 6 euros). After the trial voters approved a referendum to continue the system and it was reintroduced in August 2007. Alternative fuel vehicles were exempt from the charge until 2009.

The effect on city traffic was robust and immediate. Congestion in January 2006 alone was 28 percent less than it had been the previous year. That rate fell a bit toward the end of the trial in what the researchers now recognize as natural seasonal fluctuations in traffic, but stayed around the 20 percent level. Much of the drop in traffic came from commuters who chose to ride transit instead of driving to work, according to the researchers; nearly a quarter of regular commuters made the shift.

Interestingly, during the year the program was suspended starting August 2006, traffic didn't rebound as much as one would expect. That finding appears to support a psychological l phenomenon we've documented before: that drivers who try public transit enjoy it more than they thought they would. The authors would seem to agree:

Apparently, some car users developed new travel habits during the trial —  habits persisting even after the charges were abolished. It is impossible to certify the cause-effect relationship underpinning our observation of a residual traffic decrease. One hypothesis is, however, that some drivers were pressed by the charges to search for travel alternatives, and found such alternatives that were indeed more suitable for them, once they were tested.

The major question in the minds of transport experts was whether or not Stockholm could maintain its drop in congestion over time. Some economists predict that congestion pricing fails to sustain itself over the long-term because either people will get used to the charge and fail to consider it a deterrent, or the additional road space will induce demand from those who aren't currently driving.

In Stockholm, at least, those fears do not seem to have materialized. When controlling for external variables like inflation and employment growth, the researchers found no evidence that the effect of the pricing structure was wearing off. In fact, they report that the effect increased over time — in other words, traffic has continued to fall since the program began. (They do believe that, in time, the city will have to raise its fees to keep pace with population increases.)

The second major accomplishment of the congestion pricing program has been its ability to nudge drivers into fuel-efficient cars. At the time of the initial trial only about 2 percent of all cars in the pricing zone were considered alternative-fuel vehicles. Those types of cars were exempt from the charge until 2009. Sure enough, by the end of 2008 that figure had grown to 14 percent. In 2008, sales of fuel-efficient vehicles skyrocketed in all of Sweden, but the sales rate was even greater in Stockholm itself, the researchers report:

Last, the researchers found that public and political opinion of the pricing program has swung from skeptical to highly favorable. Before the pricing trial only about a third of Stockholm residents were willing to approve a permanent system; once it was implemented that figure rose to about 50 percent. In the 2006 referendum to implement the program permanently, slightly more than half of city residents voted to keep the system. The new political party — which was ideologically opposed to pricing — honored the vote but kept the charges as part of a broader transport investment program, a move that resulted in higher political support as well.

An August 2009 poll found that roughly 56 percent of city residents wanted to keep the charges as they were, with another 18 percent actually wanting to increase them — in other words, nearly three in four residents found the system agreeable. A May 2011 poll confirmed support at a level of roughly 70 percent. As to reasons for the shift in opinion, the researchers point to two in particular: first, the positive effect on traffic was significant and sustained; and second, the negative side effects of the system, such as forcing some people onto transit or making alternative roads more crowded, weren't nearly as bad as people feared they might be.

All told, the findings of this report suggest that Stockholm's system might provide a blueprint for those American cities who do ultimately push for congestion pricing. The authors state as much in their conclusion:

In summary, the Stockholm case has several policy implications that may be useful for other cities considering introducing congestion charges. It is crucial for the legitimacy of introducing congestion charging in other cities that the effects persist in the long-term, which indeed is the case in Stockholm. Moreover, deeper knowledge of long-term effects is crucial for designing new charging systems and developing the existing ones. The finding that adverse effects on uncharged roads are small, for instance, is important for the justification of congestion charging, as well as the increasingly positive public opinion in favour of charges once they have been introduced. The Stockholm case also suggests that the crucial political support for congestion charging largely depends on if regional politicians have influence over the use of the revenues and the design of the system.

Photo credit: Bob Strong/Reuters

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