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A framework for estimating the effects of congestion pricing : moving towards full-user-pay road pricing Haber, Lee 2015

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A Framework for Estimating the Effects of Congestion Pricing:Moving Towards Full-User-Pay Road PricingbyLee HaberB.Eng. McGill University, 2009A THESIS SUBMITTED IN PARTIAL FULFILLMENTOF THE REQUIREMENTS FOR THE DEGREE OFMaster of Arts in PlanninginTHE FACULTY OF GRADUATE AND POSTDOCTORAL STUDIES(Planning)The University of British Columbia(Vancouver)April 2015c© Lee Haber, 2015AbstractRoad pricing has been touted by economists as a tool for financing infrastructure and curbingmany of the problems associated with urban transportation such as congestion and pollution. Thisresearch establishes a framework for examining the effects of a Full-User-Pay (FUP-RPS), that is asystem where road users pay the full cost incurred by driving that includes road maintenance as wellas air, noise and water pollution. FUP road pricing scenarios were tested on Metro Vancouver inorder to answer three questions: 1) How will an FUP-RPS affect different user groups by geographyand transportation mode; 2) Which areas of a region can we expect to become more desirable orless desirable with a fully user pay road pricing system, and; 3) How will business and industrybe affected in a FUP-RPS? Three FUP-RPS scenarios were tested, each one subsidizing transitdifferently.It was found that users of all modes in a FUP-RPS would benefit and that no transportationmode was favoured significantly. Although drivers would experience higher user fees in a FUP-RPS, they would also experience greater benefits in the form of reduced gas taxes and congestion.FUP road pricing also did not make urban areas more desirable than suburban ones. Finally, FUProad pricing was found to reduce the transportation costs for business and industry. The propertytax and congestion savings were found to be greater than the anticipated Roadway Facility tollsand externality charges.iiPrefaceThis dissertation is original, unpublished, independent work by the author, L. Haber.iiiTable of ContentsAbstract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iiPreface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iiiTable of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ivList of Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viiiList of Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xGlossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiAcknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiiDedication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiv1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 Background On Road Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.2.1 Global Transportation Context . . . . . . . . . . . . . . . . . . . . . . . . 31.2.2 Road Pricing Technology Context . . . . . . . . . . . . . . . . . . . . . . 41.2.3 Metro Vancouver Context . . . . . . . . . . . . . . . . . . . . . . . . . . 41.3 Full User Pay Road Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.3.1 Why Implement FUP Road Pricing? . . . . . . . . . . . . . . . . . . . . . 61.3.2 Designing A FUP Road Pricing System . . . . . . . . . . . . . . . . . . . 81.3.3 Selecting A Technology for FUP Road Pricing . . . . . . . . . . . . . . . 81.3.4 Subsidization Of Other Transportation Modes . . . . . . . . . . . . . . . . 11iv1.3.5 Freight Trucks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121.3.6 Transit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121.3.7 Walking And Cycling . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131.3.8 Research Questions And Hypotheses . . . . . . . . . . . . . . . . . . . . 131.3.9 How Will An FUP-RPS Affect Different User Groups By Geography AndTransportation Mode? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131.3.10 Which Areas Of A Region Can We Expect To Become More Desirable OrLess Desirable With A FUP-RPS? . . . . . . . . . . . . . . . . . . . . . . 141.3.11 How Will Business And Industry Be Affected In A FUP-RPS? . . . . . . . 142 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152.1 Analyzed Costs In This Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152.1.1 Roadway Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162.1.2 Air Pollution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172.1.3 Noise Pollution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182.1.4 Water Pollution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192.1.5 Congestion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202.2 Analyzed Transportation Modes . . . . . . . . . . . . . . . . . . . . . . . . . . . 222.3 Methodology Framework and Data Summary . . . . . . . . . . . . . . . . . . . . 223 Determining How Existing Transportation Costs Are Paid . . . . . . . . . . . . . . . 263.1 Internalized Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263.1.1 Fuel Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273.1.2 Property Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283.1.3 Other Sources Of Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . 323.1.4 How Would The Taxes Be Replaced/Reduced? . . . . . . . . . . . . . . . 333.1.5 Replacing The Fuel Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . 333.1.6 Reducing Property Taxes And Subsidizing Transit . . . . . . . . . . . . . 343.2 Externalized Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363.2.1 Deferred Road Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . 363.2.2 Congestion Estimation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373.2.3 Calculating Driver Congestion Benefits . . . . . . . . . . . . . . . . . . . 37v4 Developing A Full-User Pay Road Pricing Scenario . . . . . . . . . . . . . . . . . . . 404.1 Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404.2 Included Tolling Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404.3 Roadway Facility Tolls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414.4 Air Pollution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 424.5 Noise Pollution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 434.6 Water Pollution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435 Estimating How Different User Groups Would Be Affected . . . . . . . . . . . . . . 455.1 User Dimensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455.2 Estimating Transportation Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 455.3 Property Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465.3.1 Area Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465.3.2 Testing Reduction Measures . . . . . . . . . . . . . . . . . . . . . . . . . 466 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476.1 Summary Of Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476.1.1 Explanation Of Results Tables . . . . . . . . . . . . . . . . . . . . . . . . 476.2 Scenario 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486.2.1 Effects On Drivers In Scenario 1 . . . . . . . . . . . . . . . . . . . . . . . 486.2.2 Effects On Transit Users In Scenario 1 . . . . . . . . . . . . . . . . . . . . 546.2.3 Effects On Pedestrians And Cyclists In Scenario 1 . . . . . . . . . . . . . 566.2.4 Effects On Municipalities In Scenario 1 . . . . . . . . . . . . . . . . . . . 576.3 Scenario 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 586.4 Scenario 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 616.4.1 Effects On Drivers And Pedestrians/Cyclists In Scenario 3 . . . . . . . . . 616.4.2 Effects On Transit Users In Scenario 3 . . . . . . . . . . . . . . . . . . . . 656.4.3 Effects On Various Modes Of Transport . . . . . . . . . . . . . . . . . . . 676.4.4 Effect On Municipalities In Metro Vancouver . . . . . . . . . . . . . . . . 716.4.5 The Effect On Business And Industry . . . . . . . . . . . . . . . . . . . . 717 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 747.1 Comments On Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 747.2 Policy Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 757.2.1 Equity Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75vi7.2.2 Real-Time Toll Adjustment Vs. Periodic Toll Adjustment . . . . . . . . . 767.2.3 Passing Down Of Property Tax Savings . . . . . . . . . . . . . . . . . . . 767.3 Significance Of Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 777.4 Limitations Of Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 787.4.1 Limitations In Estimation . . . . . . . . . . . . . . . . . . . . . . . . . . 787.4.2 Limitations In Estimating Externalities . . . . . . . . . . . . . . . . . . . 787.4.3 Limitations In Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 797.5 Predicting Shifts In Travel Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . 797.6 Application Of Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 807.6.1 Application To Other Regions . . . . . . . . . . . . . . . . . . . . . . . . 807.7 Engaging The Public . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 817.8 Areas For Further Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83A Estimation Model: Business and Industry Effects Estimation . . . . . . . . . . . . . 88B Estimation Model: Dissemination Area Level Estimations . . . . . . . . . . . . . . . 93C Estimation Model: Residential Property Tax Reduction Estimation . . . . . . . . . 102D Estimation Model: Externality Estimation . . . . . . . . . . . . . . . . . . . . . . . 105E Estimation Model: Road Cost Estimation . . . . . . . . . . . . . . . . . . . . . . . . 109F Estimation Model: Transit Congestion Benefit Estimation . . . . . . . . . . . . . . . 113G Estimation Model: Additional Calculation Sheets . . . . . . . . . . . . . . . . . . . 116viiList of TablesTable 1.1 Examples Of A Range Of Road Pricing Schemes . . . . . . . . . . . . . . . . . 9Table 1.2 Transit Subsidization Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . 13Table 2.1 Analyzed FUP-RPS Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Table 2.2 Transportation Modes Analyzed Under FUP Road Pricing. . . . . . . . . . . . 22Table 2.3 Data Sources used to estimate effects of a FUP-RPS in Metro Vancouver . . . . 23Table 3.1 Road User Internalized Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Table 3.2 Translink Road Related Revenues and Expenses (2013) . . . . . . . . . . . . . 28Table 3.3 Property Taxes Raised In Metro Vancouver (2013) . . . . . . . . . . . . . . . . 28Table 3.4 Estimated Metro Vancouver Roadway Facility Costs (Translink RTS) . . . . . . 29Table 3.5 Metro Vancouver Arterial And Local Road Annual Expenditures (2013) . . . . 30Table 3.6 Property Tax Revenue Going To Road Facilities In Metro Vancouver (2013) . . 31Table 3.7 Estimated Roadway Facility Expenditure For Metro Vancouver Municipalities . 32Table 3.8 Property Assessment Rates Of Metro Vancouver Municipalities (2013) . . . . . 33Table 3.9 Distribution Of Property Tax Savings Between Residents And Business AndIndustry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34Table 3.10 2013 Translink Revenues And Expenses . . . . . . . . . . . . . . . . . . . . . 34Table 3.11 Metro Vancouver Transit Social Good Value Estimation . . . . . . . . . . . . . 35Table 3.12 Funding Gaps In Transit Subsidization Scenarios . . . . . . . . . . . . . . . . . 35Table 3.13 Road User Externalized Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 36Table 3.14 Recurrent Freight Congestion Cost Estimates (000s) (2013 dollars) . . . . . . . 38Table 3.15 Estimated Congestion Reduction Benefits For Transit Users And Transit Operator 39Table 4.1 Roadway Cost Responsibility Per Mile . . . . . . . . . . . . . . . . . . . . . . 41viiiTable 4.2 FUP-RPS Roadway Facility Tolls (2013 CDN Dollars) . . . . . . . . . . . . . 42Table 4.3 FUP-RPS Air Pollution Charge Rates (2013 CDN Dollars) . . . . . . . . . . . 43Table 4.4 FUP-RPS Noise Pollution Charge Rates (2013 CDN Dollars) . . . . . . . . . . 43Table 4.5 FUP-RPS Water Pollution Charge Rates (2013 CDN Dollars) . . . . . . . . . . 44Table 5.1 Summary Of Transportation Costs And Benefits Applicable To Each Mode . . . 46Table 6.1 Budgetary Effects Of A FUP-RPS On Drivers In Scenarios 1 And 2 – Annualper Driver FUP-RPS Costs And Benefits . . . . . . . . . . . . . . . . . . . . . 53Table 6.2 Transit Operations Benefits And Costs (2013) . . . . . . . . . . . . . . . . . . 54Table 6.3 Annual per Capita Budgetary Effects Of A FUP-RPS On Transit Users In Sce-nario 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55Table 6.4 Annual per Capita Budgetary Effects of a FUP-RPS on Pedestrians and Cyclistsin Scenario 1 and 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56Table 6.5 Scenario 1: Average Annual Cost Shift by Municipality in a FUP-RPS . . . . . 57Table 6.6 Annual per Capita Budgetary Effects Of A FUP-RPS On Transit Users In Sce-nario 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59Table 6.7 Scenario 2: Average Cost Shift By Municipality In A FUP-RPS . . . . . . . . . 60Table 6.8 Annual per Capita Budgetary Effects of a FUP-RPS on Drivers in Scenario 3 . . 62Table 6.9 Annual per Capita Budgetary Effects Of A FUP-RPS On Pedestrians And Cy-clists in Scenario 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63Table 6.10 Transit Fare Increases In All Three Subsidization Scenarios . . . . . . . . . . . 65Table 6.11 Annual per Capita Budgetary Effects Of A FUP-RPS On Transit Users In Sce-nario 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66Table 6.12 Effect Of FUP Road Pricing On Business And Industry . . . . . . . . . . . . . 73ixList of FiguresFigure 1.1 How A GPS Road Pricing Would Work . . . . . . . . . . . . . . . . . . . . . 10Figure 1.2 Annual Transportation Subsidies In Metro Vancouver ($ millions) [34] . . . . . 11Figure 2.1 Framework for Estimating the Effects of Full-User-Pay Road Pricing . . . . . 23Figure 3.1 Transit Route Load Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39Figure 6.1 Annual per Capita Financial Balance for Drivers in Scenario 1 . . . . . . . . . 49Figure 6.2 Annual per Capita Financial Balance with 50% Externality Rebate for DriversIn Scenario 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50Figure 6.3 Annual per Capita Financial Balance and Net Benefit for Drivers in Scenario 1 52Figure 6.4 Comparison of User Net Benefits in Scenario 1 . . . . . . . . . . . . . . . . . 68Figure 6.5 Comparison of User Net Benefits in Scenario 2 . . . . . . . . . . . . . . . . . 69Figure 6.6 Comparison of User Net Benefits in Scenario 3 . . . . . . . . . . . . . . . . . 70Figure 6.7 Average Financial Balance vs. VKT for Metro Vancouver Municipalities . . . 71Figure 6.8 Freight Costs In FUP Road Pricing . . . . . . . . . . . . . . . . . . . . . . . . 72xGlossaryCONGESTION PRICING A form of road pricing where vehicles are charged higher rates for travelat certain times as a way of reducing congestionCORDON TOLLING A form of tolling that involves creating a virtual enclosure around a specificarea, usually a central business district. Vehicles are tolled when cross the enclosureboundaryDISTANCE-BASED ROAD PRICING A form of road pricing where vehicles are charged based on thedistance they travelEXTERNALITIES Costs generated by the user that are not borne by the userFUP ROAD PRICING Short for Full-User-Pay Road Pricing. It is a form of road pricing where roadusers alone pay for the costs they impose on road infrastructure as well as theexternalities they impose on the rest of societyGPS ROAD PRICING A form of road pricing that uses the global positioning system to recordvehicle location data which is used for assessing tollsMODE SPLIT The distribution of travel in a given area by mode of transportationROAD PRICING Direct charges levied for the use of roads, including road tolls, distance or timebased fees, congestion charges and charges designed to discourage use of certain classesof vehicle, fuel sources or more polluting vehiclesROAD TOLL COSTS The annual cost of tolls that go towards maintaining road facilitiesROAD USER CHARGE The sum of road toll costs and externalities charged upon a road userxiAcknowledgmentsThere are many people I would like to acknowledge for helping me in my research on this pressingtopic.I would like to acknowledge my supervisor Larry Frank for his guidance and support as Ideveloped my thesis.I would like to acknowledge my supervisory committee members Stephanie Chang and GordonPrice for their guidance.I would also like to acknowledge the people who helped out with my research. I would liketo thank the people at Translink including Victor Gaspar and Graeme Brown for providing mewith data and other information that was vital to my thesis. I would especially like to thank ChrisQuigley who helped guide my research through the early stages and helped me get the materials Ineeded.I would like to acknowledge the staff at Metro Vancouver for directing me towards data andresources that were essential for my thesis.I would like to thank Jonathan Arnold for his work on congestion pricing and for providingguidance on my own work. I also want to thank George Poulos for his advice and resources as Iplanned my research.I would also like to thank Paul Lesack from the Koerner Library for helping me acquire data Ineeded and helping me with using GIS.I would like to thank Bern Grush for contributing so many resources over the years and beinga constant source of inspiration with his work on tolling.I want to thank all the people at SCARP who provided a fun, loving space during the rain,cloudy west-coast winters. I also want to thank Patti Toporowski for ensuring I graduate (enjoyyour retirement!).Finally, I would like to acknowledge my family for their love and support which I am gratefulfor. (I further acknowledge my dad for taking some of his time to edit parts of my thesis) I wouldxiinot be able to enjoy the life I am living nor make contributions like this without them.xiiiDedicationI dedicate this thesis to my recently deceased grandfather Hu Sheng Luo. My grandfather was aman who never wanted to stop learning and growing and was a source of inspiration for me growingup. He earned a Bachelors degree in economics at the age of 71.His love and work has bettered my life and my hope is that my work may do the same for futuregenerations.xivChapter 1Introduction1.1 Executive SummaryThe world is experiencing greater problems with transportation, especially as more people moveinto cities. Governments around the world are finding it challenging managing congestion, main-taining infrastructure, reducing air pollution and curbing urban sprawl. Road pricing has beenproposed by economists as a solution to these problems and some cities around the world, mostnotable London, UK, have experienced the benefits of implementing road pricing. Civic leadersin Metro Vancouver are considering road pricing as an option for reducing congestion and fundingtransportation infrastructure.This study provides a framework for estimating the effects of implementing a Full-User-PayRoad Pricing System (FUP-RPS), a form of road pricing that is fair and efficient, where road usersalone pay for the cost of maintaining roads as well as the external costs they impose on the restof society. This is in contrast to the current situation in most cities where the costs associatedwith driving are largely borne by those who dont drive. FUP Road Pricing would require that allvehicles within a region be tolled based on distance, location and time of travel in order to assesstolls that match consumption and abate recurrent congestion. A FUP-RPS would require on-boardGPS meters in most vehicles in order to perform this form of tolling.One of the barriers to implementing a FUP-RPS is political resistance. Much of this resistancestems from people and groups who fear that they will pay significantly more in a FUP-RPS. Thisincludes people who drive mostly, people who live in areas that the necessitate driving and busi-nesses and industry who fear that tolls on freight trucks will increase their business costs. Thisstudy seeks to address these concerns by answering three questions:1• How will an FUP-RPS affect different user groups by geography and transportation mode?• Which areas of a region can we Expect to become more desirable or less desirable with aFUP-RPS?• How will business and industry be affected in a FUP-RPS?A framework for implementing a FUP-RPS was developed with Metro Vancouver being usedas a case study. The first part of implementing a FUP-RPS involved replacing existing taxes usedto fund road infrastructure with a road toll. In the case of Metro Vancouver, this meant eliminatingexisting user fees (fuel tax and bridge tolls) and reducing municipal property taxes. The secondpart of implementing a FUP-RPS involved creating suitable tolls for different vehicle classes toaccount for roadway facility use, air pollution, noise pollution and water pollution. Finally, imple-menting a FUP-RPS involved estimating the benefits of significantly reducing recurrent congestionfor commuters, freight vehicles and transit vehicles.Three different scenarios were produced for estimating the effects of a FUP-RPS. Each oneinvolved subsidizing transit to varying degrees. The effects on drivers, transit users and pedestri-ans/cyclists were examined. In Scenario 1, transit was treated as a social good with subsidizedcapital investment. In Scenario 2, transit was treated as a social good, but capital costs were notsubsidized. In Scenario 3, all subsidies to transit were removed.In Scenario 1, it was estimated that a FUP-RPS would benefit to all modes, with transit usersbenefiting the most. It was found that a FUP-RPS would not significantly affect drivers finan-cially. It was estimated that in 10 out of 21 municipalities that the tax savings of a FUP-RPS wouldoutweigh the cost of tolling with the most negative financial change being less than $200. Thesenegative effects could be mitigated by returning 50% of externality revenue to people in the formof a rebate. When congestion reduction benefits are factored in, a FUP-RPS was found to signif-icantly benefit drivers. In Scenarios 2 and 3, it was estimated that drivers and pedestrians/cyclistswould benefit greatly. However, transit users would experience costs associated with increasedfares needed to compensate for reduced subsidies.It was found that a FUP-RPS would not make suburban areas less desirable compared to urbanones. The financial effects of a FUP-RPS were found to have no correlation with increased driving.Finally, a FUP-RPS was found to be a net benefit to business and industry with the tax sav-ings and congestion benefits ($899 M per year) being greater than the charges assessed on freightvehicles ($678 M per year).In conclusion, a FUP-RPS implemented in Metro Vancouver is estimated to be a benefit to both2roads users and non-road users. Much of this benefit comes from its ability to reduce recurrent con-gestion, estimated to be cost around $1.6 billion per year. Therefore, it is recommended that anyregional road pricing system use GPS technology since such a system is capable of abating con-gestion. Political acceptability is an essential component for implementing any particular variantof FUP-RPS. Policies such as an externality rebate would make a FUP-RPS both more politicallyacceptable and equitable to all income groups.1.2 Background On Road Pricing1.2.1 Global Transportation ContextIn the year 2009 the world became an urban planet with the majority of its inhabitants now living incities [38]. As the world becomes even more urbanized, the world faces greater and greater trans-portation problems in cities will continue to grow. Today we face unprecedented transportation-related problems in the forms of congestion, air pollution, decaying infrastructure and urban sprawl.Congestion is a significant problem around the world. The Texas Transportation Institute es-timates that in 2010, congestion in the US caused approximately 4.8 billion hours of travel delaywith an estimated total cost of $101 billion [17]. Not only does congestion lead to lost produc-tivity for commuters and businesses, it also means lost productivity for transit users and increasedpollution due to idling [36].Decaying infrastructure is an issue in many urbanizing areas around the globe and in manyNorth American cities. In the United States, decaying roads, bridges, railroads and transit sys-tems were found to cost $129 Billion annually in increased operating costs and travel delays [4].Canada’s transportation infrastructure deficit is estimated to be $20.7 Billion [15]. There is a sig-nificant amount of infrastructure that needs to be repaired or replaced without any obvious newfunding sources. Fuel taxes only pay a fraction of the cost needed to maintain infrastructure andthis source of revenue is declining as people drive less and adopt more fuel efficient vehicles [47].Air pollution is a serious problem worldwide that reduces peoples’ health and quality of life.A great deal of air pollution is caused by motor vehicles. Although this problem has improvedwith clean vehicle technology in developed countries, certain forms of pollution such as particulatematter remain ad will continue to exist even with electric vehicles [44].Although, not often thought of as a transportation problem, urban sprawl is a problem largelyincentivized by the fact that road users do not pay the full costs associated with driving. This canhappen in two ways that are both caused by the fact that in most places in North America, local3roads are largely paid by municipalities funded by property taxes. The first way is that everybodypays for the roads whether they drive or not. This naturally gives people and incentive to drive moreand to live in locations that accommodate more driving. Secondly, only the people who live in themunicipality pay property taxes that are used to finance local roads, not those who live outside themunicipality. People from a town on the periphery of a city may be using those roads to the sameextent (or even more) and do not pay any of those costs. Their property taxes are therefore lower,thus people are naturally encouraged to live towards the edge of an urban area.1.2.2 Road Pricing Technology ContextRoad pricing is increasingly seen as a solution to all these problems. Road pricing is the practiceof having road users pay for at least some of the cost of using roads. Road pricing is not a newconcept; roads have been tolled since antiquity. However, with motorization in the early twentieth,roads came to viewed as a public good, not just a utility. Currently road pricing exists to someextent through fuel taxes, tolled highways and cordon pricing systems seen in cities like Londonand Stockholm [2]. Road pricing has only been applied to certain road users as is the case inGermany with truck tolls [2].However, the technologies currently employed in road pricing systems are limited in capability.For example, cordon pricing technology is expensive and can only toll drivers when they enter acertain zone [52]. Also, the tolls do not correlate with actual road consumption as it only matterswhen a vehicle crosses the boundary, not how far that vehicle travelled.Distance-based road pricing is touted as a fairer tolling option, since it is an actual measureof usage [37]. Distance-based tolling could be done with odometer measurements or with GPStechnology [2]. If GPS technology is used, such as system could vary tolls by location, time-of-day, acceleration and class of road used. These measures could be used to largely eliminaterecurrent congestion.1.2.3 Metro Vancouver ContextIn the Lower Mainland of British Columbia, there is increasing discussion of using road pricing asa way of funding transportation infrastructure which includes roads and transit. This discussion isthe result of an increasing need to find a replacement of the fuel tax.Currently, road infrastructure in the region is funded and maintained by three sources: theProvince of British Columbia, Translink and the 21 municipalities that comprise the Metro Van-couver region. The Province is responsible for the operation and maintenance of provincial high-4ways, Translink is responsible for the major road network and the municipalities of the region areresponsible for all local roads.Translink is the region’s transportation authority and is responsible for both transit and themajor road network. One of its major sources of revenue is the fuel tax. Fuel tax revenues havebeen declining in recent years as people drive less and vehicles become more fuel efficient [29].A replacement is needed in order to fund the maintenance of transportation infrastructure in theregion.Mobility pricing is seen as a viable solution to this problem. The Mayors’ Council, a body thatrepresents the mayors of the region’s municipalities as proposed implementing mobility pricing inthe next 5-10 years [20]. The Mayors’ Council’s plan sees mobility pricing raising $110 millionper year initially, eventually increasing to $390 million per year[20]. The funds would be used tosupport transit improvements and would enable a reduction of the fuel tax by $0.06 per litre[20].Translink’s Regional Transportation Strategy, a vision for the next 30 years, recognizes thatgovernment subsidies have skewed travel patterns and that road pricing could ”encourage the mostefficient use of the system” [33],p8). One of its stated goals is to implement mobility pricing for thepurposes of fairness, efficiency and revenue. A research paper prepared by Deloitte for Translinkstates the two most viable options being tolling major infrastructure (e.g. Bridges, tunnels andhighways) or creating a distance-based charging system where road users are charged on a perkilometre basis [9].1.3 Full User Pay Road PricingA Full-User-Pay Road (FUP) Pricing System is a road pricing system where road users alone payfor the damage they do to road infrastructure as well as the externalities they impose on the rest ofsociety. Specific road users are charged in a way that reflects the costs they impose on the networkand on society in order to create a fair playing field amongst all transportation modes. Simplyput, in a FUP Road Pricing system, users pay for driving based on how much their driving affectseverybody. Though a few countries have proposed nation-wide road pricing of all vehicles, theseplans have been stopped by political opposition [30]. There is no such system that exists in theworld today.A FUP Road Pricing System has two goals. The first goal is to establish a fair playing fieldwhere road users pay for the costs they impose on the network and society. The current manner inwhich road infrastructure is financed in North America is unfair. People do not pay for using roadsbased on how much they damage the roads or how much damage they do to other peoples’ health5or the environment. In effect, some citizens end up subsidizing the inefficient and wasteful usageof our transportation system by other citizens, leading to undesirable outcomes.The second goal of an FUP road pricing system is to encourage economically efficient andenvironmentally beneficial outcomes. Existing road pricing systems have often been implementedwith the purpose of being a congestion or pollution reduction tool. However, many of them becauseof technical limitations are not able to do this effectively.In order to achieve these goals, a FUP road pricing system must fulfill five different criteria.The first four criteria involve measuring various aspects of driving that correlate with the actualcosts of driving. The last one concerns the coverage of the system. These criteria are listed below:1. Distance is recorded2. Location is recorded3. Time is recorded4. Vehicle tolls vary with vehicle class5. The tolling is region-wideThe most important of these is distance. Vehicles that are driven more impose more costson society than those that drive less. However, an FUP road pricing system must go beyond justcharging based on distance. In order to produce more economically efficient outcomes, an FUProad pricing system must be able to eliminate recurrent congestion and this involves chargingdifferent roads at different rates depending on the time of day. Also, certain surfaces may costmore to maintain than others and should be charged differently. Therefore, a FUP road pricingsystem must also be able to charge vehicles based on when they travel and where they travel.To sum it all up, a FUP road pricing system must be able to charge based on vehicle-type,time, distance and place. Finally a FUP road pricing system must be implemented region-wide.Otherwise, those inside the tolling region would be unfairly punished compared to those outsidethe tolling area.1.3.1 Why Implement FUP Road Pricing?By allocating costs dynamically and transparently, FUP Road Pricing promises transportation sys-tems that will be more efficient for their users and much more equitable to the communities theyserve.6Nobel-prize-winning economist William Vickrey first proposed congestion pricing as a way ofapplying market forces to balance supply and demand in transportation [43]. He proposed a systemwhere electronic identifier units carried in each vehicle, which would activate recording devices inor on the road. Computers would sort the information and determine charges; motorists wouldbe billed monthly. He stated that efficient pricing should adhere to 12 principles, the following ofwhich apply to FUP road pricing:• Charges should reflect as closely as possible the marginal social cost of each trip in terms ofthe impacts on others.• Charges should vary smoothly over time.• Efficient charges cannot be determined solely by conditions at the time of the individual trip,but must take into account the impact of the trip on other traffic from the time the trip is madeuntil the end of the congestion period.• Efficiency can be enhanced, for a given level of data collection, by charging on the basis ofthe trip segment from one observation point to the next, rather than by merely the passage ofan observation point.• All vehicles should be charged without exception, including trucks, doctors’ cars, press cars,and cars of public officials and diplomats, among others.In line with these principles, the first goal of an FUP Road Pricing System (FUP-RPS) is tofully capture the costs that users impose on the road network and society. This will contrast withthe manner in which road infrastructure is currently financed in North America which appliesseveral perverse incentives: users do not pay proportionally for the externalities of damage toroads and costs imposed on well-being, health and the environment. In effect, some citizens endup subsidizing the inefficient and wasteful usage of our transportation system by other citizens,leading to undesirable outcomes. The current manner in which road infrastructure is financed inNorth America is unfair. People do not pay for using roads based on how much they damage theroads or how much damage they do to other peoples’ health or the environment.Capturing these full costs is essential to realizing the second goal of FUP-RPS, a transportationsystem that is more efficient economically and which respects the environment better. By linkingdirectly the costs they impose on society with the charges they pay, users will be given clear in-centives to reduce these costs. With their interests thus aligned, users and society benefit alike.7The true test, therefore, of whether a FUP-RPS is succeeding is the extent to which it moves atransportation system toward this beneficial outcome.1.3.2 Designing A FUP Road Pricing SystemTo better align the interests of road users and society, and thus more closely approach the goalsof fairness and economic efficiency, it is essential that a FUP-RPS: a) measure vehicle use and itseffects accurately and as close to real-time as feasible; and b) the system be implemented on aregional basis.There’s an old management adage that “you can’t manage what you can’t measure”. In orderto effectively measure vehicle use, an FUP-RPS must measure at a minimum how much a vehicleis driven, where it is driven, when it is driven and what type of vehicle is being driven. All ofthese factors determine the costs and effects that a vehicle has on society. The most important ofthese is distance. Vehicles that are driven more impose more costs on society than those that aredriven less. However, an FUP road pricing system must go beyond just charging based on distance.In order to produce more economically efficient outcomes, an FUP road pricing system must beable to eliminate recurrent congestion and this involves charging different roads at different ratesdepending on the time of day. Also, certain surfaces may cost more to maintain others and shouldbe charged differently. For example, the road surface on a bridge is more costly to maintain that arural road.Secondly, an FUP-RPS must be implemented, at the very minimum, at a regional scale. Tollingonly certain areas of a region, such as a core area would unfairly punish certain users and not be aseffective in improving transportation. (In this case a region is defined as an area where an inhabitantcould be reasonably foreseen to carrying out daily tasks). With the exception perhaps of emergencyvehicles all users should be charged by tolling for the costs they impose. Avoiding these charges bydiverting’ defeats the purpose of FUP-RPS, so tolling must be applied throughout an entire region.1.3.3 Selecting A Technology for FUP Road PricingThe choice of FUP-RPS technology reflects both the technical and economic feasibility at the timeof implementation and which public policy objectives the designers aimed to achieve. Table 1.1summarizes examples of a range of implementations of road pricing schemes.The Fuel Tax is a method many governments around the world have used to fund road infras-tructure. Of all the measures listed here, it is the easiest to implement at a regional level. It issomewhat effective in measuring vehicle use in that vehicles that are driven more tend to use more8Table 1.1: Examples Of A Range Of Road Pricing SchemesForm of Tolling Implementations LimitationsFuel Tax Many countriesNot effective inreducing congestion.Cordon TollingLondon, Stockholm,Milan, SingaporeOnly vehicles enteringCBD are tolled.Regional GPSTruck TollingGermanyOnly trucks are tolled.Not effective inreducing congestion.Odometer Readings OregonNot effective inreducing congestion.GPS Tolling ofAll VehiclesNoneNo technical limitations,privacy concernsSources: Arnold, J. (2013) Walker, J. (2011)fuel. It can also be somewhat effective as a charge for greenhouse gas (GHG) emissions as vehiclesthat consume more fuel tend to emit more. However, there are two main limitations that precludethe fuel tax as an effective means for FUP road pricing. First, it incorporates no information aboutwhen and where the vehicle is using the road system and thus cannot be used as a tool for reducingcongestion. Second, taxing a specific fuel contributes nothing to the costs imposed on the trans-portation system if the vehicle does not use that fuel e.g. electric or (partially the case for) hybridvehicles.Cordon Tolling involves creating a zone in which vehicles are tolled when they enter or exitthe zone [51]. An enclosure is usually created around the Central Business District using gantrieswhich automatically scan vehicles as they pass under them. Although cordon tolling has producedpromising results wherever it has been implemented, it does not fulfill the goals of an FUP RoadPricing system [2]. A cordon tolling system only tolls people who enter or exit the tolling zone; itdoes not toll people who drive entirely within the zone or entirely outside the zone. It also cannotcharge based on how much one drives. Finally, using physical gantries is costly and the costs toimplement it on a larger scale would be prohibitive [52].Odometer readings measure distance, but, like fuel taxes are unable to reduce congestion, be-cause they provide no information on time and place of road useRegional Truck Tolling has been implemented in Germany. This form of tolling uses GPS me-ters to measure where and how much trucks travel. This may be an effective policy for maintaining9Figure 1.1: How A GPS Road Pricing Would WorkSource: K.U.Leuven/COSICroad infrastructure as trucks do far more damage than other vehicles to the roadway. However, sincetrucks only make up a small portion of all vehicles, this form of tolling is ineffective in reducingcongestion.The only technology capable of doing FUP Road Pricing is GPS. A GPS meter placed insideevery vehicle is capable of measuring time, distance and location. In addition, it could also mea-sure vehicle speed and acceleration which could be used for more accurately measuring pollutionimpacts or determining insurance premiums.The main concern of implementing a GPS road pricing system is that of privacy. There aremany ways to protect people’s location data. The first level of protection is by making all dataanonymous. The second way privacy could be protected is to have all location data processedwithin the unit so that the only data that goes back to the tolling authority is pricing data. Finally,users who do not wish to have a GPS meter could by a pass that allows them to drive on the roadsan unlimited amount for a period of time, similar to a bus pass. However, the cost to the user ofthis option would be greater than using a GPS meter.A GPS system would be complemented with existing enforcement technology such as mobilelicence plate scanners, tamper-proof meters and a guest pass system that would allow out of towndrivers and citizens concerned about privacy to use and pay for the road network [12]. However,to ensure that the system could effectively reduce congestion, a majority of drivers would need10Figure 1.2: Annual Transportation Subsidies In Metro Vancouver ($ millions) [34]Source: Translinkto be using GPS meters. Rewards and discounts could be employed as an incentive to ensure themajority of drivers use a GPS meter.1.3.4 Subsidization Of Other Transportation ModesThe private automobile is not the only mode of transportation that is effectively subsidized throughour existing mechanism for funding transportation. Almost all modes of transportation are in effectsubsidized to varying degrees. Some of these other forms of subsidization are analyzed in thisthesis.111.3.5 Freight TrucksThough freight trucks only make up a small portion of all motor vehicles, they cause a dispro-portionate amount of damage to road infrastructure. On average, freight trucks do 3.37 times moredamage to roads than passenger vehicles [47]. According to Translink, freight trucks are subsidizedby around $690 M annually [34].Since the impacts of the freight truck traffic are significant, its costs will be evaluated in thisstudy.1.3.6 TransitTransit is subsidized significantly in Metro Vancouver. Translink’s RTS estimates that transit issubsidized by around $848M per year [34]. Transit revenue only covers 58% of its operatingexpenses [35].One of the main goals of a FUP-RPS is to establish a fair transportation that does not un-justifiably favour some modes over others. However, in the case of public transit, much of thissubsidization can be justified. First, much of the capital investment in transit is compensating forprevious disproportionate capital investment in road infrastructure. Secondly, transit can be con-sidered a social good, providing basic mobility for all citizens in order to create an egalitariansociety.How transit should be subsidized is the subject of much debate and the extent to which it issubsidized varies greatly around the world. Some cities heavily subsidize transit, meaning userspay little or nothing in fares. The justification for subsidizing is that transit is the most affordableform of mass transit and is used heavily by low-income users. Other systems do not receive orrequire any subsidies. How we subsidize transit very much relies how on we view transit. Dowe transit as purely a social good like health care and education or do we view it as any othertransportation mode?The purpose of this study is not to debate which view is the best, but rather to determine theeffects of different ways of subsidizing transit in a FUP-RPS. This study examines three scenariosthat treat transit subsidization differently: one where it is considered partially social good andcapital investments are subsidized, a second where it is considered partially a social good butcapital investments must be funded through transit revenues and finally a scenario where transit isnot subsidized in any manner.Although transit is often considered a net benefit to society as it reduces the number of auto-mobiles, transit vehicles, especially buses still damage roads and the environment. These costs are12Table 1.2: Transit Subsidization ScenariosTransitSubsidization ScenarioCapitalInvestments are SubsidizedTransitis Treated as a Social GoodScenario 1 Yes YesScenario 2 No YesScenario 3 No Noevaluated in this study.1.3.7 Walking And CyclingThe subsidization of walking and cycling was not examined in this study. This is for severalreasons. First, it is difficult to charge pedestrians and cyclists user fees. Second, the cost of in-frastructure required and damage caused by these users is minimal [47]. Third, infrastructure forwalking and cycling, can be considered a social good as these are the most affordable modes oftransportation. Finally, previous studies have found that the physical activity benefits from thesemodes more than compensates for their cost of infrastructure ([25].1.3.8 Research Questions And HypothesesThis study seeks to answer several questions related to the implementation of a FUP-RPS. Thesequestions are listed below:• How will an FUP-RPS affect different user groups by geography and transportation mode?• Which areas of a region can we expect to become more desirable or less desirable with aFUP-RPS?• How will business and industry be affected in a FUP-RPS?1.3.9 How Will An FUP-RPS Affect Different User Groups By Geography AndTransportation Mode?The implementation of road pricing has always been met with resistance. In the case of Stockholm,Sweden, residents were opposed to congestion pricing before it was implemented. However, theysupported keeping it after they experienced the benefits. Unfortunately, this knee-jerk resistance toswitch to a fair and efficient road pricing system prevents it from being implemented. Much of this13resistance is borne out of a fear, especially among current drivers, that they will pay significantlymore within a road pricing system. Answering this question, how much different mode users indifferent parts of the region can expect to pay in a FUP-RPS will eliminate much of this uncertainty.Since drivers will be paying the full cost associated with their driving, it is hypothesized thatdrivers will experience greater transportation costs in a FUP-RPS. However, this cost will be rela-tively small in comparison with other vehicle operating costs, and will be in the hundreds of dollars,not thousands. It is also anticipated that pedestrians and cyclists to benefit the most in a FUP-RPS.Transit users are anticipated to benefit in Scenario 1, however, it is expected that they will pay morethan they currently do in scenarios 2 and 3 where transit subsidies are reduced.1.3.10 Which Areas Of A Region Can We Expect To Become More Desirable OrLess Desirable With A FUP-RPS?Answering this question seeks to address another fear associated with road pricing, that peoplewho live in suburban areas will pay significantly more. Will urban areas pay less? Will suburbanareas that require more driving pay more?Since I predict transit users, pedestrians and cyclists to benefit more in a FUP-RPS, I predictthat urban areas which have a higher portion of active transportation users will benefit the most.However, I do not expect the increase in transportation costs in suburban areas to be significant.1.3.11 How Will Business And Industry Be Affected In A FUP-RPS?Freight vehicles cause a disproportionate amount of damage to roads and to the environment. AFUP-RPS would address these costs. Although business and industry recognize the high cost ofurban congestion, there is a concern that road pricing will significantly increase their transportationcosts [2]. Answering this question will address this concern.I predict that the congestion benefits for freight vehicles will be significant and come close tocompensating for the increased road user charges.14Chapter 2Methodology2.1 Analyzed Costs In This StudyFUP Road Pricing involves measuring and tolling costs associated with driving alone and onesthat could easily be incorporated into a road toll. FUP Road Pricing does not include all costsassociated with vehicle use, even significant ones such as parking and insurance. Though one canmake an argument that parking and insurance costs are both subsidized and unfairly priced, theyare already priced within existing established systems. Parking and insurance are discussed furtherin the conclusion.Driving costs measured and tolled in a FUP-RPS have been thoroughly established throughexisting research and are deemed to be significant [44][49][46]. Air pollution, noise pollution andwater pollution costs have been incorporated into this study for this reason.This thesis will examine the following costs: roadway facility, air pollution, noise pollution,water pollution and congestion. Of these costs, roadway facility, air pollution, noise pollution andwater pollution costs will be incorporated directly into the tolls so that toll revenues fully accountfor their costs. In the case of congestion, toll rates would be varied throughout the day in order toeliminate congestion. Congestion is a problem of too many people using to use the same road at thesame time [45]. During peak hours, kilometre driving rates would be higher than during off peakhours. It is therefore not expected that charging to reduce congestion would require an increase ingross tolling revenue.15Table 2.1: Analyzed FUP-RPS CostsTransportation CostRoadway FacilitiesAir PollutionNoise PollutionWater PollutionCongestion2.1.1 Roadway FacilitiesDefinitionRoadway facility costs are those needed to maintain roadway facilities and repair damage causedby vehicular use. Roads need to be maintained in order to properly convey vehicular traffic. Mostroads in the world are owned and maintained by government and this maintenance is largely fundedthrough taxation. However, which taxes governments use to fund road infrastructure varies greatlythroughout the world. In Metro Vancouver, provincial highways are maintained by the province;major roads and certain bridges are maintained by Translink, and local roads are maintained by theregions municipalities. Each of these governmental bodies uses different taxes to fund their roads.The Provincial government finances road infrastructure through general revenue, some of whichcomes from the motor fuel tax. Translink funds roads through its revenue sources which includebridge tolls, property tax and fuel tax [35]. Local municipal roads are funded primarily throughproperty taxes.Roadway facility costs in this study are set at the level of funding needed to maintain roadinfrastructure at a functional level. In government budgets these include both capital and operatingcosts. Usually major road works or bridge construction are considered capital costs, even if theend result is maintaining the quality of the existing system and not improving the system. For thepurposes of our study, we consider this road capital and operating costs to be one cost.How It VariesRoadway facility costs vary depending on the type of roadway facility and how much damagevehicles do to the road. Facility costs vary depending on the size of the road and the class ofroad[47]. For instance, the cost of maintaining an elevated freeway is significantly more than thatof maintaining a gravel road.16The damage done to roads by a vehicle depends upon how much it is driven and the size of thevehicle [47]. (e.g. a vehicle that has been driven 10000 km has done more damage than one thathas driven 5000 km). Heavier vehicles have also been found to do much more damage to roadsthan lighter ones. A study by Transport Canada found than freight trucks do 3.37 times as muchdamage to roads as passenger vehicles [47].CostsIt’s estimated that annual roadway facility costs in Metro Vancouver amount to around $547 M peryear [1]. The City of Vancouver alone spent $55 M on road infrastructure in 2013 [8].Estimation ProcessRoadway facility costs are estimated by adding the cost of providing the facilities with the damagecosts. Facility costs are estimated by adding the cost of all the road facilities’ components. Damagecosts are estimated from vehicle testing and experience.How It Could Be ImplementedSince vehicles that travel more do more damage to roads that those that don’t, roadway facility feesshould vary by distance. Roadway facility tolls should also vary based on vehicle class (heaviervehicles do more damage) and location (certain road types are more expensive to maintain).2.1.2 Air PollutionDefinitionAir pollution is the introduction of particulates into the atmosphere that are harmful both to humanhealth and the environment. Air pollution is generated both from tail pipe emissions and from roadcontact [44].How It VariesThe amount of air pollution generated by a vehicle varies according to several factors, including thetype of vehicle and its age, how much it is driven, and how it is driven (speed, acceleration, braking)and the driving conditions[44]. The effect on people varies depending on where the pollution isgenerated and how many people are affected by it.17EffectsAir pollution generated by vehicles still has a major effect even though it has declined significantlyin developed countries as a result of better combustion technology. Vehicles are a major source ofair pollution in Metro Vancouver with almost a quarter of smog forming emissions coming fromvehicles [42]. Air pollution affects both peoples health and the environment. Vehicle combustiongenerates nitrous oxides, ozone, volatile organic compounds, particulate matter and in the case ofdiesel vehicles, sulphur oxide emissions, all of which are harmful to human health[44]. Particulatematter is also generated from vehicle contact with the roadway surface. Combustion vehicles alsogenerate greenhouse gas emissions which may influence the planets climate[44].Estimation ProcessThe health costs of air pollution are estimated by looking at the effects of respiratory illnessescaused by vehicular emissions such as hospital admissions and reduced lifespans[44].The environmental cost of greenhouse gas emissions is more difficult to estimate as there is alot of dispute as to the extent that human generated GHGs have on the earths climate. Generally,this is estimated by looking at the effects of environmental changes caused by climate change suchas sea level rises.How Tolling Could Be ImplementedWith GPS technology, air pollution costs could be estimated by using the vehicles class, age, thedistance traveled, where it travelled and the speed of travel.2.1.3 Noise PollutionDefinitionNoise pollution consists of unwanted sounds and vibrations. Transport is a major generator ofnoise pollution in urban areas. For vehicles, noise pollution is generated by engines, acceleration,braking, road contact, horns and alarms. At low speeds, most of the noise comes from engines; athigh speeds most of the noise comes from road contact [46].18How It VariesThe noise pollution generated by a vehicle varies by vehicle type, engine type, the speed of thevehicle, the pavement type and the presence of sound attenuating barriers. The effect of noisepollution increases with the number of people near where the noise is generated and at night [46].EffectsNoise pollution is undesirable and reduces the value of properties near sources of noise pollution.It has also been found to affect the cognitive development of children [53].Estimation ProcessThe impacts of noise pollution have been estimated primarily by examining its effects on propertyvalues [46]. From this, per km cost estimates by vehicle class were derived.How Tolling Could Be ImplementedNoise pollution tolls charged to vehicles could be based on the type of vehicle, its speed, where ittravels and when it travels. Tolls should vary by location as a way of measuring the actual impact ofa vehicle on people. For instance, noise pollution tolls should be higher in urban areas as opposedto rural ones as more people are affected by noise in urban areas. Tolls could also be higher at nightsince noise is considered a greater disturbance when people are trying to sleep.2.1.4 Water PollutionDefinitionWater pollution consists of harmful substances released on the surface or into groundwater. Dam-age done by vehicles consists of leaked oil and fuels. Additional damages associated with facilitiesfor road vehicles are those caused by road salts and added runoff caused by the roadways impervi-ous surface [49].How It VariesWater pollution damage caused by excessive runoff depends on the porosity of the road surface.Impervious pavements will have higher runoff and cause more damage. Some cities have startedbuilding roads with pervious pavements that allow rainwater to soak into the ground [31].19The water damage caused by vehicles depends on whether the vehicle is leaking hazardousfuels. However, fuel leaks are common with 46% of vehicles in the US found to have leaks. Itcan be therefore assumed that fuel leaks are a consequence of automobile use[49]. Therefore, theamount of damage caused by a vehicles fuel leaks will largely depend upon on how much it is used.EffectsWater pollution causes significant damage to the environment. Increased runoff reduces ground-water supply, increases erosion and leads to loss of habitat. Fuel leaks harms fauna and flora [49].Estimation ProcessWater pollution damages caused by transportation are estimated by estimating the damage causedby excessive runoff and the damage to the environment caused by fuel leaks. This value is thendivided by the total distance travelled by vehicles in that area to provide a per km charge.How Tolling Could Be ImplementedA per kilometre fee could be charged to road users to account for fuel leaks and the damages causedby runoff. This fee could be reduced if pervious pavements are used as the runoff damage will belower.2.1.5 CongestionDefinitionCongestion is a cost resulting from vehicles interfering with each other [45]. Often this results invehicle trips taking longer than they should, resulting in lost productivity, excessive fuel consumedand increased air pollution.There are two forms of congestion: recurrent congestion and non-recurrent congestion. Re-current congestion occurs when too many vehicles want to use the same road space at the sametime [36]. Often this occurs during peak hour periods when people are commuting to and fromwork. Non-recurrent congestion occurs randomly and is caused by uniques events such as trafficincidents, accidents and construction. A FUP-RPS, like other other forms of congestion pricing, isonly capable of reducing recurrent congestion.20How It VariesCongestion occurs when too many vehicles want to use the same road space at the same time.Recurrent congestion occurs during peak hours and at bottlenecks in the road network and is to agreat extent predictable. Non-recurrent congestion can be spontaneous as the result of a car crashor other event [45].EffectsCongestion results in longer than necessary travel times for all road users. This longer than nec-essary travel time reduces productivity and increases the amount of fuel consumed. Congestionalso results in increased air pollution as vehicles are travelling at slow speeds and are generatingemissions for a longer period of time. It is estimated that congestion costs Metro Vancouver $1.5billion annually [5].Estimation ProcessThe costs of congestion are estimated by estimating the cost of delays, additional fuel consumedand additional air pollution generated by congestion. The delay is estimated by comparing thecongested travel time with the travel time at a certain speed (between 50 and 70% of free flowspeed) that reflects an economically efficient traffic flow [36]. A monetary value is assumed as acost for travel time, usually a percentage of the average wage in the region.How It Could Be ImplementedRecurrent congestion would be alleviated not by implementing an additional toll, but by varyingtolls by time-of-day. Following the principles of supply and demand, when demand is high, suchas during peak hours, tolls would be more expensive than during off-peak hours. During lowvolume periods, tolls could be low or even free. Toll rates should be scaled to ensure economicallyefficient traffic flows so that the road network generates the highest level of revenue possible. Thesevarying tolls would be determined by analyzing traffic patterns and road users would be informedof the tolls in advance. The rates would be periodically adjusted to account for changes in travelpatterns. Though real-time rate changes that change with current traffic patterns is possible withGPS technology, this is not advised for reasons of fairness (see Section x.xx).212.2 Analyzed Transportation ModesIn this study, the following transportation modes are analyzed. It should be noted for the purposesof this study users were assumed to travel only by the primary mode. In reality, people use severaltransportation modes in their lives, with new modes such as car-sharing and bike-sharing emerging.These modes have been analyzed as they are the most common transportation modes and wheredata was readily available.Table 2.2: Transportation Modes Analyzed Under FUP Road Pricing.Transportation ModesAutomobile (Driver and Passenger)TransitWalking and CyclingAutomobile, transit and walking and cycling were analyzed from a users perspective. Sinceboth modes would be treated the same under this analysis, walking and cycling were combinedinto one mode. It was examined how users of these modes of transportation would be affected bythe implementation of a FUP road pricing system.Freight trucks were analyzed at a broad, regional-level. This was done by comparing the es-timated total increased cost of tolls with the savings resulting from reduced property taxes andcongestion reduction. Examining at a smaller scale, such as at the level of a freight company or atypical business in the region was deemed out of the scope of this thesis.2.3 Methodology Framework and Data SummaryFigure 2.1 summarizes the methodology that was used in this study to estimate the effects of aFUP-RPS.22Figure 2.1: Framework for Estimating the Effects of Full-User-Pay Road PricingTable 2.3 summarizes the data used to produce the results in this thesis:Table 2.3: Data Sources used to estimate effects of a FUP-RPS in Metro VancouverSource Relevant Information Used to estimate2011 National HousingSurveyDissemination area levelhousing and transportation data,commuting dataProperty tax savings bydissemination area, averagecongestion benefit for transitusers23Table 2.3 – continued from previous pageSource Relevant Information Used to estimate2013 Translink BusPerformance ReviewBoardings, boardings per hour,peak loads, operating costs ofTranslink bus routesTotal congestion benefit fortransit users, Total congestionbenefit for transit operator2011 Translink TripSurvey DataDetailed information of trips inMetro Vancouver includingmode, length and time of day.Broken down into TranslinksubregionsVehicle kilometres travelled ofautomobile trips at a Translinksubregional level2012 Translink BusinessPlanBus operationsservice-kilometre dataRoadway facility tolls of transitoperations, externality costs oftransit operations2013 Translink AnnualReportRevenue and expenseinformationGas tax savings, property taxreductions, fare increases inScenarios 2 and 32013 BC AssessmentDataMunicipal property tax ratesand assessment valuesDistribution of property taxsavingsVictoria TransportInstitute - TransportationCost and Benefit Analysis(TCA)Summaries of existing researchon transportation costs withestimatesRoadway facility costdistribution between passengervehicles, freight vehicles andtransit, externality costs ofpassenger vehicles, freightvehicles and transit2013 Canada EmissionsTrendsData on fuel economy trends forpassenger and freight vehicles2013 air pollution externalitycosts for passenger and freightvehicles2014 Statistics CanadaRoad Network FileLength of roads by class andmunicipalityDistribution of roadway facilitycosts between municipalities,distribution of property taxsavings24Table 2.3 – continued from previous pageSource Relevant Information Used to estimate2014 Translink BusinessPlanBreakdown of 2013 transitrevenuesPortion of transit revenues thatare not fares (advertising, fines),fare increases in Scenarios 2and 32006 Cost of UrbanCongestion in CanadaCosts of congestion in MetroVancouverCongestion reduction benefitsfor passenger vehicles2013 Translink RegionalTransportation StrategyRoadway facility inventory inMetro Vancouver and estimatedannual costRoadway facility tolls andproperty tax reductions2003 Impact ofCongestion on BusOperations and CostsFormula estimating effect ofcongestion and boardings onbus travel timeCongestion reduction benefitson transit operations25Chapter 3Determining How ExistingTransportation Costs Are Paid3.1 Internalized CostsInternalized costs are defined as transportation related costs that are largely paid for right now in thecurrent system. However, in most cases these costs through existing taxing structures are unfairlyallocated.The internalized costs analyzed in this study are roadway facility costs, transit costs and airpollution. Roadway facility costs are funded through a mixture of tolls, gas tax and property taxrevenues. In Metro Vancouver, transit is funded largely through fares, gas tax and property taxrevenues [35]. With the carbon tax in British Columbia, the greenhouse gas component of airpollution can be considered an internalized cost [23]. The Table 3.1 summarizes these internalizedcosts associated with road use and the taxes used to fund themTable 3.1: Road User Internalized CostsInternalized Cost Applicable Source of FundingRoadway Facility Municipal Property Tax, Fuel Tax, Road TollsTransit Transit Fare Revenue, Fuel Tax, Translink Property TaxAir Pollution (GHG emissions) BC Carbon Tax263.1.1 Fuel TaxDescriptionThe Motor Vehicle Fuel Tax is a tax applied whenever motor vehicle fuel is purchased in the MetroVancouver region for vehicle use. The fuel tax is a tax levied based on volume not on value,therefore the tax does not increase if the price increases.Currently, in the Metro Vancouver area, the fuel tax is set at 17 cents/L. The tax revenue goesto Translink, which in 2013 raised $349.1 M [35]. This tax goes towards Translink’s revenue andis used for both transit and roads.LimitationsThe fuel tax has been thought to have been an adequate way of financing road infrastructure asmotor vehicle consumption generally correlates fairly well with road usage. However, it has severalflaws. First, fuel usage does not necessarily correlate with the damage the vehicle does to the road[51]. Certain vehicle classes such as freight trucks do a disproportionate amount of damage toroads. Second, though taxing fuel may be a suitable way of accounting for GHG emissions (whichis what the Carbon Tax attempts to do), it does not account for pollution that isn’t generated bycombustion, such as particulate matter, nor does it account for the fact that not every locationequally affected by pollution [44]. Third, a fuel tax cannot vary with time and therefore cannotbe used to mitigate congestion. Finally, as fuel consumption dwindles with the adoption of moreefficient vehicles, there will be less and less tax revenue. With the universal adoption of electricvehicles, fuel tax revenues will disappear completely.ReallocationIn this study, it is assumed in this thesis that FUP Road Pricing will completely replace the fuel tax.In 2013, Translink spent a total of $191.3 M on roads in both operations and amortization/interestexpenses [35]. Factoring in the $39.4 M the Golden Ears Bridge generated in tolls and assumingall fuel tax revenues are allocated to roads first, this means that $197.2 M of the Fuel Tax goes totransit [35]. This gap would have to be replaced by some combination of increased governmenttransfers, new funding sources, increased efficiency or increased fares.27Table 3.2: Translink Road Related Revenues and Expenses (2013)2013 Revenues/Expenses Value (millions)Motor Vehicle Fuel Tax $349.1Golden Ears Bridge Toll Revenue $39.4Road and Bridge Maintenance $97.9Road and Bridge Amortization and Interest $93.5Total Road and Bridge Expense $191.3Fuel Tax dedicated to Transit $197.1Source: Translink3.1.2 Property TaxDescriptionProperty taxes that are used to fund road infrastructure are collected by both municipal governmentsand Translink. Property taxes are the main source of revenue for municipalities. In 2013, MetroVancouver municipalities raised $2.06 Billion dollars [22].Table 3.3: Property Taxes Raised In Metro Vancouver (2013)Revenue ($ Millions)Municipal Property Tax Revenues $2,065Translink Property Tax Revenues $316.3Property taxes are also a major source of revenue for Translink. In 2013, Translink raised$316.3 M or 22% of its revenue from property taxes [35]. If we assume that gas tax and tollrevenues first go towards roads, then Translink’s property taxes go towards subsidizing transitoperations.LimitationsThere are several problems with funding roads using property taxes. First, property taxes paid byan individual do not correlate with their actual use of roads or transit. Second, there is no incentiveto reduce one’s driving. In effect, people who do not use transit or roads (or use them sparingly)end up subsidizing those who do.28EstimationTo estimate the amount of property tax revenue spent on road facilities, the annual cost of maintain-ing road facilities needed to be determined. This was estimated using Translink Regional TransitStrategy data to determine the cost of maintaining all road infrastructure within the region. Thiscost was estimate using by determining the inventory of various roadway infrastructure compo-nents and multiplying them by their unit costs. This total, shown in Table 3.4, was estimated tobe $547 M annually with $295.7 M for maintaining arterial roads and $251.2 M for maintain localroads [1].Table 3.4: Estimated Metro Vancouver Roadway Facility Costs (Translink RTS)Asset TypeCurrentDollar Re-placementValueExpectedService Life(years)AnnualCapitalReinvest-ment(Replace-ment Value/ ServiceLife)AnnualResurfacingCosts +WinterRoutine Ex-pendituresAnnualFundingNeeds(Capital +O&M)ArterialRoads$4,865million60 $81,090,000$106,183,000 $187,273,000CollectorRoads$1,110million60 $18,510,000 $43,985,000 $62,495,000Local Roads$3,819million60 $63,650,000 $85,140,000$148,790,000Bridges -MinorStructures$1,143million75 $15,240,000 $1,572,000 $16,812,000Bridges -MajorStructures$4,130million75 $55,070,000 $2,655,000 $57,725,000Curb andGutter$554 million 50 $11,080,000 N/A $11,080,00029Table 3.4 – continued from previous pageAsset TypeCurrentDollar Re-placementValueExpectedService Life(years)AnnualCapitalReinvest-ment(Replace-ment Value/ ServiceLife)AnnualResurfacingCosts +WinterRoutine Ex-pendituresAnnualFundingNeeds(Capital +O&M)Signals $550 million 25 $22,000,000 N/A $22,000,000Signs $96 million 15 $6,390,000 N/A $6,390,000Street Lights $908 million 50 $18,160,000 N/A $18,160,000Barriers $135 million 38 $3,560,000 N/A $3,560,000Medians $71 million 30 $2,370,000 N/A $2,370,000RetainingWalls$31 million 50 $620,000 N/A $620,000Lanes $328 million 50 $6,550,000 $2,700,000 $9,250,000Tunnels $19 million 40 $480,000 N/A $480,000TOTAL$547,005,000Table 3.5: Metro Vancouver Arterial And Local Road Annual Expenditures (2013)Cost ($ Millions)Arterial Roads Expenditure $295.7Local Roads Expenditure $251.2Total Expenditure $547.0Of the $547 M spent annually on roads, $191.3 M was estimated to come from Translink, withthe revenue going specifically towards maintaining major roads and bridges. From this, it wasestimated that $355.7 M of municipal budget revenue went towards maintaining roadway facilities,with $104.5 M of this total going towards maintaining arterial roads [35].30Table 3.6: Property Tax Revenue Going To Road Facilities In Metro Vancouver (2013)Cost ($ Millions)Annual Roadway Facility Cost $547.0Translink Roadway Facility Expenditure $191.3Municipal Arterial Road Expenditure $104.5Municipal Local Road Expenditure $251.2Annual Municipal Road Expenditure $355.7Sources: Translink (2013), AECOM (2012)ReallocationWith the implementation of a FUP-RPS, existing tax revenues currently used to maintain roads areeliminated. A large portion of these reduced taxes would come in the form of reduced propertytaxes since property taxes are currently largely used to pay for road maintenance. Savings areallocated to each municipality based on the value of road infrastructure contained within theirboundaries. This was estimated using 2014 Statistics Canada Road Network Data and by dividingroads into both arterial and local roads. This data was adjusted to match data from Translink’sRegional Transportation Strategy as it was found to underestimate the length of arterial roads. Theroad lengths were then used to estimate the road expenditure for each municipality.With this comes the question of how the property tax savings should be distributed betweenproperties of different types. The BC Government assesses properties according to 9 differentcategories and these categories are taxed at different rates. For instance, in Vancouver commercialproperties are assessed at 4.32 times the rate of residential properties [22] . The table below showsthe different property tax rates by municipality and property type.In this study, property tax savings are be distributed proportionally so that the ratio between theproperty taxation rates is maintained. With a proportional distribution, $220.1 M of the propertytax reduction goes to residential properties with $132.1 M going to business and industry.However, a proportional distribution may result in drivers paying significantly more than inthe current system. Another way that property tax savings could be distributed is to ensure thatresidential property owners who drive the average amount do not pay more than what they arepaying now. This would make public acceptance much easier.31Table 3.7: Estimated Roadway Facility Expenditure For Metro Vancouver MunicipalitiesMunicipality Adjusted ArterialRoad Length (km)Adjusted LocalRoad Length (km)Municipal ArterialRoad CostLocal RoadCostEstimated RoadwayFacility ExpenditureAnmore 0.0 10.7 $0 $324,448 $324,448Belcarra 0.0 5.0 $0 $152,414 $152,414BowenIsland 0.1 40.9 $6,047 $1,239,118 $1,245,165Burnaby 119.2 667.2 $9,450,448 $20,198,233 $29,648,682Coquitlam 83.5 456.0 $6,616,511 $13,805,635 $20,422,146Delta 120.2 532.0 $9,531,839 $16,105,980 $25,637,820LangleyCity 26.6 91.4 $2,111,333 $2,768,338 $4,879,671LangleyDistrict 92.1 827.7 $7,302,229 $25,058,111 $32,360,339LionsBay 0.0 12.2 $0 $367,895 $367,895MapleRidge 34.4 450.1 $2,726,182 $13,625,390 $16,351,572NewWestminster 29.9 173.9 $2,372,317 $5,263,970 $7,636,287NorthVancouver City 15.6 136.9 $1,239,492 $4,145,158 $5,384,650NorthVancouver District 58.4 345.8 $4,633,977 $10,467,944 $15,101,921PittMeadows 12.8 140.5 $1,013,943 $4,253,063 $5,267,007PortCoquitlam 14.5 190.2 $1,150,482 $5,757,826 $6,908,308PortMoody 9.6 112.4 $762,755 $3,403,082 $4,165,837Richmond 188.1 571.5 $14,911,519 $17,303,418 $32,214,936Surrey 303.1 1,666.3 $24,033,258 $50,449,037 $74,482,295Vancouver 152.7 1,523.4 $12,103,825 $46,121,798 $58,225,623WestVancouver 56.0 282.0 $4,437,936 $8,537,617 $12,975,553WhiteRock 0.6 63.9 $47,650 $1,935,781 $1,983,431Total 1.3 8.3 $104,451,744 $251,284,256 $355,736,0003.1.3 Other Sources Of RevenueTranslink has several other sources of revenue, however, most of these are quite small in compari-son. One of its largest sources of revenue is farebox revenue, raising $495.6 M in transit revenuein 2013. Translink’s minor sources of revenue include the Golden Ears Bridge Tolls, the parkingsales tax and the hydro levy [35]. The parking tax and hydro levy are not included in this study asthey raise a comparatively small amount of revenue. The only other transportation related sourceof revenue outside of Translink are the tolls collected from the Port Mann Bridge and this is not32Table 3.8: Property Assessment Rates Of Metro Vancouver Municipalities (2013)Property Tax Rate(per 1000 in assessed value)Residential BusinessMajorIndustryMinorIndustryFarmAnmore 1.416 1.416 1.4164 1.4164 1.4164Belcarra 1.640 4.018 0 0 0Bowen Island 2.487 2.487 0 10.34589 1.2435Burnaby 2.242 9.461 44.9518 9.4612 9.4612Coquitlam 3.056 13.755 29.1984 13.5994 17.2428Delta 3.315 10.633 33.8031 10.6329 17.5923Langley City 3.806 8.784 0 9.8006 3.8061Langley District 3.274 9.830 8.8328 9.9089 10.0465Lions Bay 1.701 4.167 4.167 4.167 6.02528Maple Ridge 4.283 12.231 37.2342 12.2307 27.8646New Westminster 3.548 13.020 28.5644 20.5863 3.5483North Vancouver City 2.450 8.614 31.53642 8.61408 0North Vancouver District 2.370 8.601 36.76622 10.91026 0Pitt Meadows 3.907 12.111 37.5265 16.7859 29.8779Port Coquitlam 3.822 13.103 13.5325 14.7749 23.2291Port Moody 3.402 10.042 65.285 18.6482 0Richmond 2.122 7.629 14.42822 8.13367 12.25825Surrey 2.379 6.988 11.41012 6.25559 2.58574Vancouver 1.895 8.204 32.98091 8.20424 1.81589West Vancouver 1.689 4.234 13.8675 13.8675 0White Rock 3.584 8.928 0 0 0included in this study as data related to its revenue as it has not been made available to the public.3.1.4 How Would The Taxes Be Replaced/Reduced?Vehicle user fees such as the fuel tax and road tolls should be the first financing mechanisms to bereplaced with FUP road pricing. After these revenue sources have been replaced should propertytaxes be reduced.3.1.5 Replacing The Fuel TaxIn 2013, Translink raised $349.1 M in Fuel Tax Revenue. Of this revenue $191.3 M went to roadsand bridges. Eliminating the fuel tax would leave Translink with a budget deficit of $149.4 M.33Table 3.9: Distribution Of Property Tax Savings Between Residents And Business And In-dustryFUPRoad Pricing Municipal Property Tax ReductionReduction($ Millions)Residential Property Tax $220.1Business and Industry Property Tax $132.1Total Municipal Property Tax $355.7(The discrepancy between the sum of residential and business and industry is the result of asmall portion going towards other property classes. Business and industry includes business, majorindustry, minor industry and farm)Table 3.10: 2013 Translink Revenues And Expenses2013 Translink Revenues and Expenses ($ Millions)Revenue ExpensesTransit Revenue $495.60 Transit Operations $859.40Fuel Tax $349.10 Transit A&I $230.90Property Tax $316.30 Road A&I $97.80Capital Contributions $142.00 Roads and Bridges $93.50Parking Rights Tax $56.60 Corporate $67.40Other $44.60 Transit Police $30.60Golden Ears $39.40 Air Care $16.20Total $1,443.60 $1,395.80Source: 2013 Translink Annual Report3.1.6 Reducing Property Taxes And Subsidizing TransitThe degree to which property taxes are replaced and the affects a FUP-RPS depend, at least in thecase of Metro Vancouver, on how transit is subsidized.This study examines three scenarios for how transit could be subsidized in a FUP-RPS. Thefirst scenario examines what would happen if government continues to subsidize the capital costsof transit and treats it as a social good with a portion of the operating expenses subsidized in orderto accommodate students, low-income, disabled and senior users. The value of existing capitalcontributions to Translink would need to be increased $88.9 M per year in order to match its capitalcosts of $230.9 M per year. The cost of running HandyDART and UPass programs were combinedwith concession fares to produce an estimate of transit’s social good value. This was found to be34$277 M per year. Assuming there is a social good component for low-income users puts the socialgood value of transit at over $300 M or roughly the amount of money raised through Translink’sproperty taxes. For this reason, Translink’s property tax revenues will subsidize the social goodcomponent of transit.Table 3.11: Metro Vancouver Transit Social Good Value EstimationSocial GoodProgram/ServiceApproximate Annual Cost ($ Millions) Group ServedHandyDART $50 People with disabilitiesUPass $116 University studentsConcession Fares $111 Children, SeniorsSources: Translink Efficiency Review, CBC NewsWith increased capital contributions, the deficit in Scenario 1 decreases to $60.5 M. This gapwould need to be reduced either through increased efficiencies or increased fair revenue.In Scenario 2, transit is treated as a social good, but capital costs are no longer subsidized. Inthis scenario, it is estimated that (assuming 2013 levels of investment continue) there would be a$291.4 M gap.In Scenario 3, transit is not subsidized and there is no social good component. Translink’sproperty tax has been eliminated with only minor sources of revenue such as the parking tax andhydro levy remaining to fund the corporate operations and transit police. This scenario would resultin a budget gap of $607.7 M. The budget gaps of the three scenarios are summarized in the tablebelow.Table 3.12: Funding Gaps In Transit Subsidization ScenariosTransitSubsidization ScenarioExplanation Funding Gap ($ Millions)Scenario 1Capital Investments,Social Good Component$60.5Scenario 2 Social Good Component $291.4Scenario 3 Not Subsidized $607.7353.2 Externalized CostsExternalized costs in this study are defined as costs imposed on people and the environment thatare not paid for directly through any form of taxation. These are costs that are paid for in the formof diminished quality of life. Since no real market prices exist for these externalized costs, theyhave been estimated by economists using a variety of methods. These cost estimates therefore varyand the results calculated in this study should be taken as estimates and not precise and definitecosts. The externalized costs analyzed in this study are listed below:Table 3.13: Road User Externalized CostsExternalized CostAir Pollution (Non-GHG emissions)Noise PollutionWater PollutionCongestionDeferred MaintenanceAir Pollution, Noise Pollution and Water Pollution are estimated based on the findings in pre-vious transportation cost studies. These studies have produced cost per km estimates which werethen used to produce a theoretical tolling scenario. Annual distance travelled estimates can then beused to produce estimates for the total damage and the total amount of revenue raised by the toll.3.2.1 Deferred Road MaintenanceDeferred Road Maintenance is the amount of the money that needs to be invested in the roadnetwork that isn’t being invested. Years of deferred maintenance accumulates into an infrastructuredeficit.Estimating both the infrastructure deficit and the annual deferred maintenance is difficult. Somestudies have tried to compare current levels of investment in infrastructure with historic levels inorder to estimate a deficit. The Conference Board of Canada estimates the national road bridgeinfrastructure deficit to be $66 Billion [32]. However, this methodology may be flawed for severalreasons. First it assumes that historical investment levels were ideal and does not consider thatthere may have been over-investment in infrastructure. Secondly, it ignores the fact that improvedtechnology may reduce the costs of building and maintaining infrastructure.Though it may be the case that Metro Vancouver governments are not investing adequately inroad infrastructure, determining exactly the size of the deficit is beyond the scope of this thesis.36Therefore, deferred maintenance has not been factored into the roadway facility calculations.3.2.2 Congestion EstimationCongestion can be considered an external cost as it is once that is currently not fully captured bythe user, even though the individual user does experience some of its effects [36].Reduced congestion offers clear benefits to all users in the form of reduced travel time and fuelcosts. Drivers, transit riders, freight trucks and transit operators would all benefit from reducedcongestion. Pedestrians and cyclists may also benefit from reduced congestion, however, this ben-efit is likely small a difficult to estimate [45]. For this reason, these benefits have not been includedin this study.3.2.3 Calculating Driver Congestion BenefitsFor Automobile CommutersTransport Canada’s congestion study, which examines the travel time, fuel consumption and emis-sion costs of congestion, estimates that (at a 70% of free-flow speed threshold) congestion costsMetro Vancouver commuters $1.5 Billion per year [5]. Of this $827.2 Million is recurrent con-gestion. Using 2011 data that indicates that 71.8% of people commute by car, it is estimated thatif recurrent congestion were eliminated that the benefit to the average commuter would be around$472 annually. Since people who drive more are expected to experience the benefits of congestionreduction more, this average savings was adjusted based on the average VKT within an area.For automobile commuters, some of the congestion benefit will be offset by increased tollcharges incurred for driving during peak periods. However, this in turn may be offset by lower tollcharges for driving during off-peak periods. In this study, it is assumed that these two effects canceleach other out with drivers simply paying an average toll for their road usage and the externalitiesthey generate. It is likely though in reality that drivers who drive during peak periods wouldpay more than average, therefore, the congestion benefit estimated should be thought of as themaximum benefit drivers would experience.For Goods MovementJonathan Arnold’s Caught in Traffic:Road Congestion in Metro Vancouver and its Impact on Com-mercial Goods Movement was used to estimate the cost of recurrent congestion on goods movementvehicles [3]. An average of the high and low estimates was used and the cost of recurrent conges-37tion was estimated to be $603.4 M per year.Table 3.14: Recurrent Freight Congestion Cost Estimates (000s) (2013 dollars)2013 Levels ofContainer TrucksMaximum Trip ScenarioContainer TrucksExtrapolation to allGoods MovementRecurrent Costs(per year)$13,876 - 30,950 $21,476 - 47,903 $205,836 - 1,000,944Source: Arnold, J.For Transit Users And OperatorsTransit also benefits from reduced congestion. Transit riders benefit from having a shorter traveltime; transit operators benefit from lower operation expenditures.Translink’s bus performance tables were used to estimate congestion benefits. The congestionbenefits for transit were estimated using a 70% of free flow speed travel time. The fastest time of abus route during any period was taken as its free flow travel time. Travel time was estimated for sixdifferent time periods on Weekdays, Saturdays and Sundays/holidays. Due to time constraints, thecost of delays from the free flow were estimated and adjusted using data from Transport Canada’scongestion study.The delay was estimated by first estimating how much time the average passenger spent on abus. A “triangle shaped” boarding profile with one peak load was assumed for each route, similarto the one shown in Figure 3.1. (The diagram shows the number of passengers in the bus at everystation along its route. The higher the line, the more occupied the bus is.)The calculation can be seen in Formulas 3.1, 3.2, 3.3.Route Delay = Route Travel Time−Route Free Flow Travel Time (3.1)Average Passenger Time Factor = Route Travel Time = 0.5(Peak LoadBoardings)(3.2)Average Passenger Delay = Average Passenger Time Factor×Route Delay (3.3)In addition not all bus delay is caused by congestion. Some of it is caused by there being morepassengers boarding and disembarking during peak hours. One study of New Jersey Transit busesshowed that each passenger boarding delays a bus by 3.6 seconds. This was accounted for whenestimating the effects of congestion.38Figure 3.1: Transit Route Load ProfileSTM - August 2010To estimate the cost of the time delay for passengers, 35% of the average regional wage ($25)was used during peak hours and 25% during non-peak hours [48]. Translink operating benefitswere estimated by multiplying the total reduced delay with the operating cost per hour whichvaried between $98/hour for conventional buses to $60/hour for community shuttle buses.Table 3.15: Estimated Congestion Reduction Benefits For Transit Users And Transit OperatorTransit Users Transit OperatorTotal Annual Benefit - From Freeflow ($ Million) $145.2 $145.6Total Annual Benefit - From 70% Freeflow ($ Million) $105.5 $105.8Annual Benefit per User $216 N/A39Chapter 4Developing A Full-User Pay RoadPricing Scenario4.1 PrinciplesIn developing a FUP road pricing system, several basic principles have been applied. These princi-ples ensure that the road pricing system is fair and leads to efficient transportation outcomes. Theprinciples for designing an FUP road pricing system are listed below:• All road maintenance is funded through user fees and roads will be fully funded• Existing tax revenue used to fund roads would be replaced with existing user fees beingreplaced first• New charges for air pollution, noise pollution and water pollution would be added• Different vehicle classes would be charged differently• Different road classes would be charged differently• Roads would be tolled in a way to alleviate congestion4.2 Included Tolling CostsIn our FUP-RPS study the following costs were incorporated into a road-user charge:40• Road Maintenance• Air Pollution• Water Pollution• Noise Pollution4.3 Roadway Facility TollsRoadway facility tolls were estimated using Translink Regional Transit Strategy data to determinethe cost of maintaining all road infrastructure within the region. This total was estimated to be$547 M annually [1].It was then necessary to estimate how much of this cost should be apportioned between goodsmovement vehicles and passenger vehicles. Using estimates in Victoria Transport Policy Institute’sTransportation Cost and Benefit Analysis, it was found that freight trucks traffic accounts for only9% of traffic yet accounts for 25% of damage done to roads [47]. From a USDOT study on the costresponsibility of various classes of vehicles, the relative damage between buses and automobilesand this was found to be 3.28:1 [41]. Translink bus service-kilometre data and Translink 2011 TripDiary data were used to create tolls and costs for both buses and automobiles. Community shuttleswere assumed to do 2/3 damage of a conventional diesel bus. The roadway facility tolls for eachclass analyzed in this study are shown in Table 4.1.Table 4.1: Roadway Cost Responsibility Per MileVehicle ClassVMT(million)FederalCostsStateCostsLocalCostsTotalCostsTotal UserPaymentsExternalCostsAutomobiles 1,818,461 $0.007 $0.020 $0.009 $0.035 $0.026 $0.009Pickups andVans669,198 $0.007 $0.020 $0.009 $0.037 $0.034 $0.003Single UnitTrucks83,100 $0.038 $0.067 $0.041 $0.146 $0.112 $0.034CombinationTrucks115,688 $0.071 $0.095 $0.035 $0.202 $0.157 $0.044Buses 7,397 $0.030 $0.052 $0.036 $0.118 $0.046 $0.072All Vehicles 2,693,844 $0.011 $0.025 $0.011 $0.047 $0.036 $0.010Sources: USDOT (1997), Victoria Transport Policy Institute (2009)41Table 4.2: FUP-RPS Roadway Facility Tolls (2013 CDN Dollars)Vehicle Class Toll ($/km)Passenger Vehicles $0.033Freight Trucks $0.110Diesel Buses $0.108Trolley Buses $0.108Community Shuttle Buses $0.0724.4 Air PollutionToll rates for air pollution were based of information found in using several different cost estimatestudies. Since Metro Vancouver is affected by the BC Carbon tax, only the Non-GHG air pollutioncosts are tolled. Air pollution cost estimates varied significantly between studies, however, mostof estimates put the cost of air pollution to be a few cents per km for passenger vehicles withsignificantly higher costs for freight vehicles. CE Delft (2008) estimates that the health air pollutioncosts are $0.003/km for passenger vehicles and $0.212/km for freight vehicles (in 2013 $CDN)[19]. Delucchi et al. estimate air pollution costs for passengers vehicles to range from $0.009/kmto $0.144/km and for freight vehicles to range from $0.060/km to $1.372/km (in 2013 $CDN) [21].Small and Kazimi estimated in 1995 that freight vehicles created air pollution costs of around 53cents/mile, around 16 times that generated by at typical passenger vehicle [28].An average value of $0.025/km was taken as the air pollution cost generated by passengervehicles (in 2013 $CDN) [44]. It was estimated that freight trucks did 15 times as much damageas cars [28]. Based off of Victoria Transport Policy Institute’s estimates, diesel buses and trolleybuses were estimated to generate $0.082/km and $0.035/km respectively (in 2013 $CDN) [44].Community shuttle buses were assumed to do 2/3 the air pollution damage of conventional dieselbuses. Air pollution charges for average cars and diesel buses were taken and adjusted to accountfor improvements in fuel economy using data from Canada’s Emissions Trends [11]. The calculatedair pollution charge rates are shown in Table 4.3.42Table 4.3: FUP-RPS Air Pollution Charge Rates (2013 CDN Dollars)Vehicle Class Rate ($/km)Passenger Vehicles $0.025Freight Trucks $0.382Diesel Buses $0.082Trolley Buses $0.035Community Shuttle Buses $0.0554.5 Noise PollutionMost studies estimate passenger vehicle noise pollution costs to be 0.1 - 1.0 cents/km (2013 CDN)[46]. Buses and freight vehicles were estimated to generate significantly higher noise costs. In1997, the US Department of Transportation estimated the cost of noise generated to be around 0.11cents per mile for passenger vehicles, 1.72 cents per mile for buses and 3.73 cents per mile forcombination trucks [41]. CE Delft estimated noise costs to be $ 0.001/km for passenger vehicles,$0.048/km for buses and $0.125/km for heavy trucks [19].An average value of $0.009/km was taken as the noise pollution cost generated by passengervehicles (in 2013 $CDN) [46]. Based off of Victoria Transport Policy Institute’s estimates, dieselbuses and trolley buses were estimated to generate $0.037/km and $0.022/km respectively (in 2013$CDN) [46]. Freight trucks were estimated to produce twice as much noise damage as the averageof diesel and trolley buses. The table of noise pollution charge rates can be seen in Table 4.4.Table 4.4: FUP-RPS Noise Pollution Charge Rates (2013 CDN Dollars)Vehicle Class Rate ($/km)Passenger Vehicles $0.009Freight Trucks $0.060Diesel Buses $0.037Trolley Buses $0.022Community Shuttle Buses $0.0254.6 Water PollutionWater pollution charges were set to account for vehicle fuel leaks and roadway runoff. Bray andTisato estimated the cost of fuel leaks to be around $0.002/km for passenger vehicles (in 201343$CDN) [7]. In 1997, Bein estimated the cost of fuel leaks and runoff to be around ten timesas much at $0.021/km (in 2013 $CDN) [6]. Water pollution costs were found to be consistentamongst all vehicle types, except for trolley buses which have lower fuel leak costs [49].Many of the studies include parking runoff costs in their estimate of the hydrological effects ofdriving. It was deemed that these should be part of parking pricing and not included in a road toll.Values from Victoria Transport Policy Institute’s Transportation Cost and Benefit Analysis wereadjusted to factor out parking runoff costs [49]. The tolls can be seen in Table 4.5.Table 4.5: FUP-RPS Water Pollution Charge Rates (2013 CDN Dollars)Vehicle Class Rate ($/km)Passenger Vehicles $0.007Freight Trucks $0.007Diesel Buses $0.007Trolley Buses $0.004Community Shuttle Buses $0.00744Chapter 5Estimating How Different User GroupsWould Be Affected5.1 User DimensionsThis study examines the effects of a FUP-RPS on various mode users throughout the region. Theeffects on driver, transit users and pedestrians/cyclists were analyzed at municipal and census dis-semination area levels.5.2 Estimating Transportation CostsThis study estimated the shift in costs for transportation users by different modes across the re-gion. Transportation costs were estimated by combining data and performing calculations using aspreadsheet. For drivers, the benefits were reduced property taxes, reduced fuel taxes and reducedcongestion. The costs were road tolls and externality charges (air pollution, noise pollution, waterpollution). For transit users, the benefits were reduced property taxes and reduced congestion withthe cost being any fare increase needed. For cyclists and pedestrians, the benefits were reducedproperty taxes with no costs. This is summarized in Table 5.1.45Table 5.1: Summary Of Transportation Costs And Benefits Applicable To Each ModeDoes the benefit/cost apply? Driving Transit Walking/CyclingProperty Tax Savings Yes Yes YesGas Tax Savings Yes No NoRoad Toll Cost Yes No (applied to operator) NoExternalities Yes No (applied to operator) NoCongestion Benefits Yes Yes NoExternality Rebate Yes Yes Yes5.3 Property Analysis5.3.1 Area Analysis2011 National Housing Survey dissemination area data was used to determine which areas wouldsee their transportation costs increase or decrease. Using commuter data, an average of transporta-tion costs shifts was determined for each dissemination area. In total, 3332 dissemination areasin the Metro Vancouver area were analyzed. (Dissemination areas in Indian reserves were notanalyzed. 77 dissemination areas were missing property value data).5.3.2 Testing Reduction MeasuresFor areas that saw their transportation costs increase with a shift to a FUP road pricing system, itwas estimated how much they would have to reduce their automobile travel to get back to a revenueneutral position. Determining how exactly this should take place (consolidating trips, using transit,walking and cycling more) was deemed outside the scope of this study.46Chapter 6Results6.1 Summary Of Results6.1.1 Explanation Of Results TablesThe tables in the following sections show how average users of every mode in each municipalitywould be affected by the implementation of a FUP-RPS. For example, in Scenario 1, a typicaldriver from Anmore can expect to receive $689 per year in tax savings.Balance is the financial bottom line that users would see. It is the tax savings minus roadwayfacility tolls and externality charges.Road Toll Costs refers to the annual cost of tolls that go towards maintaining road facilities.Externalities is the annual sum of charges for air, noise and water pollutionRoad User Charge is the sum of road toll costs and externality chargesExternality Rebate is a tax rebate given back to the user in order to make the externality chargecomponent of FUP road pricing revenue neutral. A 50% rebate means 50% of externality revenueis given back in the form of reduced taxes.Net is the net benefit or cost that users would experience. It includes benefits that would bedirectly apparent to the user. It is the balance added to the congestion benefits the user wouldexperience.476.2 Scenario 16.2.1 Effects On Drivers In Scenario 1In Scenario 1, transit is treated as a social good and capital investments continue to be subsidized.In this scenario it was found that even though drivers would experience increased costs in the formof roadway facility tolls, they would also experience the congestion benefits of FUP-RPS to thegreatest degree.Drivers would receive tax savings in the form of an eliminated fuel tax and reduced propertytaxes. In Metro Vancouver, this varies from $359 - $1027 per year.Drivers would pay a 3.3 cents per km roadway facility toll. For every municipality, the costof the roadway facility toll was less than the estimated tax savings. When externality charges areadded, drivers in 11 out of 21 municipalities experience negative balances. However, the overalldifference that a FUP-RPS would make to drivers’ budgets is small especially when compared withother costs associated with driving such as owning a vehicle. When excluding West Vancouver (anotable outlier) the standard deviation between municipalities is only $95, with a mean of $42. A50% externality rebate would result in all typical drivers across the region paying less in a FUP-RPS.48Figure 6.1: Annual per Capita Financial Balance for Drivers in Scenario 149Figure 6.2: Annual per Capita Financial Balance with 50% Externality Rebate for Drivers In Scenario 150When congestion reduction benefits are factored in, it becomes clear that a FUP-RPS wouldsignificantly benefit all drivers in Metro Vancouver. Congestion benefits were estimated to varybetween around $331 - $672 per year. With congestion benefits included, the net benefit to driversranges between around $315 and $968 per year.51Figure 6.3: Annual per Capita Financial Balance and Net Benefit for Drivers in Scenario 152Table 6.1: Budgetary Effects Of A FUP-RPS On Drivers In Scenarios 1 And 2 – Annual per Driver FUP-RPS Costs AndBenefitsMunicipality TaxSavings VKTRoadToll Cost Externalities BalanceExternalityRebateBalance with50% RebateBalance with100% RebateCongestionBenefitNetBenefitNet Benefitwith 50%RebateNet Benefitwith 100%RebateAnmore $689 10,244 $335 $422 -$67 $431 $148 $364 $668 $601 $816 $1,032Belcarra $591 10,244 $335 $422 -$166 $431 $49 $265 $668 $502 $718 $933BowenIsland $830 10,244 $335 $422 $73 $431 $289 $504 $668 $741 $957 $1,173Burnaby $442 6,253 $205 $257 -$19 $431 $196 $412 $408 $388 $604 $820Coquitlam $540 7,224 $236 $297 $6 $431 $222 $437 $471 $477 $693 $908Delta $667 8,170 $267 $336 $63 $431 $279 $495 $533 $596 $812 $1,028Langley $584 8,246 $270 $339 -$26 $431 $190 $406 $538 $512 $728 $944Langley $771 9,721 $318 $400 $53 $431 $269 $485 $634 $687 $903 $1,119LionsBay $893 10,244 $335 $422 $136 $431 $352 $568 $668 $805 $1,020 $1,236MapleRidge $751 10,296 $337 $424 -$10 $431 $206 $422 $672 $662 $878 $1,093NewWestminster $462 6,687 $219 $275 -$32 $431 $184 $400 $436 $405 $620 $836NorthVancouver $359 5,073 $166 $209 -$16 $431 $200 $415 $331 $315 $531 $746NorthVancouver $605 6,339 $207 $261 $136 $431 $352 $568 $414 $550 $765 $981PittMeadows $768 8,097 $265 $333 $170 $431 $385 $601 $528 $698 $914 $1,129PortCoquitlam $440 8,206 $269 $338 -$166 $431 $50 $265 $535 $369 $585 $801PortMoody $519 7,689 $252 $316 -$49 $431 $167 $383 $502 $453 $669 $884Richmond $525 6,291 $206 $259 $60 $431 $276 $492 $410 $471 $687 $902Surrey $651 8,224 $269 $338 $43 $431 $259 $475 $537 $580 $796 $1,011Vancouver $366 5,540 $181 $228 -$43 $431 $173 $388 $361 $319 $534 $750WestVancouver $1,027 6,834 $224 $281 $522 $431 $738 $954 $446 $968 $1,184 $1,400WhiteRock $521 8,969 $294 $369 -$141 $431 $75 $290 $585 $444 $660 $875536.2.2 Effects On Transit Users In Scenario 1A FUP-RPS would affect transit operations by reducing operating costs through reduced congestionand increase costs with road user charges. The congestion reduction benefits on transit operationswere estimated to be around $105.8 M and the road user charges $20.7 M. This results in a netbenefit of $85.1 M, which is greater than the deficit of $60.5 M. Since there is a small net surplusin Scenario 1, fares do not need to be increased.Table 6.2: Transit Operations Benefits And Costs (2013)Value ($ Millions)Congestion Savings $105.8Roadway Facility Tolls $10.7Externality Charges $10.0Total Cost $20.7Net Benefit/Cost $85.1In a FUP-RPS, transit users would benefit from reduced property taxes and not have to payincreased fares. This balance varies from $236 to $867 per year. In Scenario 1, transit users wouldalso benefit from reduced congestion and this benefit is estimated to be around $149 per year. Thisis much smaller than the congestion benefit drivers would experience. With the congestion benefitfactored in, transit users would experience around the same benefit as drivers in Scenario 1.54Table 6.3: Annual per Capita Budgetary Effects Of A FUP-RPS On Transit Users In Scenario 1Municipality TaxSavingsFareIncrease BalanceExternalityRebateBalance with50% RebateBalance with100% RebateCongestionBenefit NetNet with50% RebateNet with100% RebateAnmore $449 0 $449 $431 $665 $880 $149 $598 $813 $1,029Belcarra $350 0 $350 $431 $566 $781 $149 $499 $714 $930BowenIsland$589 0 $589 $431 $805 $1,021 $149 $738 $954 $1,169Burnaby $296 0 $296 $431 $511 $727 $149 $444 $660 $876Coquitlam $370 0 $370 $431 $586 $801 $149 $519 $734 $950Delta $475 0 $475 $431 $691 $906 $149 $624 $840 $1,055Langley $390 0 $390 $431 $606 $821 $149 $539 $754 $970Langley $543 0 $543 $431 $759 $975 $149 $692 $908 $1,123LionsBay$653 0 $653 $431 $868 $1,084 $149 $801 $1,017 $1,233MapleRidge$509 0 $509 $431 $725 $941 $149 $658 $874 $1,089NewWestminster$305 0 $305 $431 $521 $737 $149 $454 $670 $886NorthVancouver$240 0 $240 $431 $455 $671 $149 $388 $604 $820NorthVancouver$456 0 $456 $431 $671 $887 $149 $604 $820 $1,036PittMeadows$578 0 $578 $431 $793 $1,009 $149 $726 $942 $1,158PortCoquitlam$247 0 $247 $431 $463 $679 $149 $396 $612 $828PortMoody$339 0 $339 $431 $555 $770 $149 $488 $703 $919Richmond $378 0 $378 $431 $593 $809 $149 $526 $742 $958Surrey $458 0 $458 $431 $674 $889 $149 $607 $822 $1,038Vancouver $236 0 $236 $431 $452 $668 $149 $385 $601 $816WestVancouver$867 0 $867 $431 $1,082 $1,298 $149 $1,015 $1,231 $1,447WhiteRock$311 0 $311 $431 $527 $742 $149 $460 $675 $891556.2.3 Effects On Pedestrians And Cyclists In Scenario 1Pedestrians and cyclists are the least affected by a FUP-RPS, both positively and negatively. Pedes-trians and cyclists would benefit from lower property taxes, but would not benefit from reducedcongestion. When all costs are factored in, pedestrians and cyclists benefit slightly less than driversand transit users in Scenario 1.Table 6.4: Annual per Capita Budgetary Effects of a FUP-RPS on Pedestrians and Cyclists inScenario 1 and 2Municipality Tax Savings BalanceExternalityRebateBalancewith 50%RebateBalancewith 100%RebateAnmore $449 $449 $431 $665 $880Belcarra $350 $350 $431 $566 $781Bowen Island $589 $589 $431 $805 $1,021Burnaby $296 $296 $431 $511 $727Coquitlam $370 $370 $431 $586 $801Delta $475 $475 $431 $691 $906Langley $390 $390 $431 $606 $821Langley $543 $543 $431 $759 $975Lions Bay $653 $653 $431 $868 $1,084Maple Ridge $509 $509 $431 $725 $941New Westminster $305 $305 $431 $521 $737North Vancouver $240 $240 $431 $455 $671North Vancouver $456 $456 $431 $671 $887Pitt Meadows $578 $578 $431 $793 $1,009Port Coquitlam $247 $247 $431 $463 $679Port Moody $339 $339 $431 $555 $770Richmond $378 $378 $431 $593 $809Surrey $458 $458 $431 $674 $889Vancouver $236 $236 $431 $452 $668West Vancouver $867 $867 $431 $1,082 $1,298White Rock $311 $311 $431 $527 $742566.2.4 Effects On Municipalities In Scenario 1To provide a picture of which parts of the region people would benefit the most from a FUP-RPS,an average of driver, transit user and pedestrian/cyclist balances was calculated. This was donebased on existing travel patterns observed in the 2011 National Housing Survey. When mode splitsare factored in virtually every municipality benefits from FUP road pricing with only Belcarra, PortCoquitlam and White Rock experience a negative balance. When congestion benefits are factoredin, all municipalities benefit significantly.Table 6.5: Scenario 1: Average Annual Cost Shift by Municipality in a FUP-RPSMunicipality Driving % Transit % Walking/Cycling % Average BalanceAnmore 85.3% 13.2% 1.6% $9Belcarra 100.0% 0.0% 0.0% -$166Bowen Island 71.7% 21.2% 7.1% $219Burnaby 66.4% 28.5% 5.1% $87Coquitlam 78.6% 17.4% 4.0% $84Delta 84.2% 10.6% 5.2% $128Langley 89.3% 4.8% 5.9% $19Langley 92.6% 3.6% 3.8% $90Lions Bay 83.0% 17.0% 0.0% $224Maple Ridge 86.6% 9.5% 3.9% $60New Westminster 64.6% 28.9% 6.6% $88North Vancouver 63.1% 23.2% 13.7% $78North Vancouver 78.9% 15.2% 5.9% $204Pitt Meadows 82.7% 13.3% 4.0% $240Port Coquitlam 82.8% 12.8% 4.4% -$95Port Moody 80.9% 16.5% 2.6% $25Richmond 76.9% 18.2% 4.8% $134Surrey 84.1% 12.9% 3.0% $109Vancouver 52.4% 30.4% 17.2% $90West Vancouver 78.9% 13.9% 7.2% $59557Table 6.5 – continued from previous pageMunicipality Driving % Transit % Walking/Cycling % Average BalanceWhite Rock 84.2% 8.4% 7.4% -$706.3 Scenario 2The effects of an FUP-RPS on drivers and pedestrians/cyclists are identical to those experienced inScenario 1. The only difference in Scenario 2 applies to transit. In Scenario 2, transit is treated as asocial good, but capital investments are no longer subsidized. To compensate, fare revenue wouldneed to increase 55%. This scenario assumes fares would increase by this percentage (although inall likelihood they would have to increase more to compensate for decreased ridership). Using anaverage annual transit cost of $1502 per year, this amounts to an annual fare increase of $824.Transit users end up negatively affected by this fare increase with the average balance varyingbetween -$588 and $43. The only policy that results in Scenario 2 being a net benefit to most usersis if there is a full externality rebate. Even with a full externality rebate, transit users in Vancouverand the city of North Vancouver would be marginally negatively affected. With the drivers andcyclists and pedestrians experiencing a significant benefit, there would also likely be a shift awayfrom transit to these modes.58Table 6.6: Annual per Capita Budgetary Effects Of A FUP-RPS On Transit Users In Scenario 2Municipality TaxSavingsFareIncrease BalanceExternalityRebateBalance with50% RebateBalance with100% RebateCongest.Benefit NetNet with50% RebateNet with100% RebateAnmore $449 $824 -$375 $431 -$159 $56 $149 -$226 -$11 $205Belcarra $350 $824 -$474 $431 -$258 -$43 $149 -$325 -$109 $106Bowen Island $589 $824 -$235 $431 -$19 $197 $149 -$86 $130 $345Burnaby $296 $824 -$528 $431 -$313 -$97 $149 -$380 -$164 $52Coquitlam $370 $824 -$454 $431 -$238 -$23 $149 -$305 -$90 $126Delta $475 $824 -$349 $431 -$133 $83 $149 -$200 $16 $231Langley $390 $824 -$434 $431 -$218 -$3 $149 -$285 -$70 $146Langley $543 $824 -$281 $431 -$65 $151 $149 -$132 $84 $299Lions Bay $653 $824 -$171 $431 $44 $260 $149 -$23 $193 $409Maple Ridge $509 $824 -$315 $431 -$99 $117 $149 -$166 $50 $265New Westminster $306 $824 -$518 $431 -$303 -$87 $149 -$370 -$154 $62North Vancouver $240 $824 -$584 $431 -$369 -$153 $149 -$436 -$220 -$4North Vancouver $456 $824 -$368 $431 -$152 $63 $149 -$219 -$4 $212Pitt Meadows $578 $824 -$246 $431 -$30 $185 $149 -$97 $118 $334Port Coquitlam $247 $824 -$576 $431 -$361 -$145 $149 -$428 -$212 $4Port Moody $339 $824 -$485 $431 -$269 -$54 $149 -$336 -$121 $95Richmond $378 $824 -$446 $431 -$231 -$15 $149 -$298 -$82 $134Surrey $458 $824 -$366 $431 -$150 $65 $149 -$217 -$2 $214Vancouver $236 $824 -$588 $431 -$372 -$156 $149 -$439 -$223 -$8West Vancouver $867 $824 $43 $431 $259 $474 $149 $192 $407 $623White Rock $311 $824 -$513 $431 -$297 -$82 $149 -$364 -$149 $6759The overall regional picture is also negatively affected. Only 8 municipalities now experiencea positive balance, as opposed to 18 in Scenario 1. A full externality rebate would be needed toensure every part of the region benefits from a FUP-RPS.Table 6.7: Scenario 2: Average Cost Shift By Municipality In A FUP-RPSMunicipality Driving % Transit % Walking/Cycling %AverageBalanceAverage BalanceWith 100% RebateAnmore 85.3% 13.2% 1.6% -$100 $332Belcarra 100.0% 0.0% 0.0% -$166 $265BowenIsland71.7% 21.2% 7.1% $44 $476Burnaby 66.4% 28.5% 5.1% -$149 $283Coquitlam 78.6% 17.4% 4.0% -$59 $372Delta 84.2% 10.6% 5.2% $41 $472Langley 89.3% 4.8% 5.9% -$20 $411Langley 92.6% 3.6% 3.8% $60 $492LionsBay83.0% 17.0% 0.0% $84 $516MapleRidge86.6% 9.5% 3.9% -$19 $413NewWestminster64.6% 28.9% 6.6% -$150 $281NorthVancouver63.1% 23.2% 13.7% -$113 $319NorthVancouver78.9% 15.2% 5.9% $78 $510PittMeadows82.7% 13.3% 4.0% $131 $562PortCoquitlam82.8% 12.8% 4.4% -$200 $231PortMoody80.9% 16.5% 2.6% -$110 $321Richmond 76.9% 18.2% 4.8% -$17 $415Surrey 84.1% 12.9% 3.0% $3 $434Vancouver 52.4% 30.4% 17.2% -$161 $271WestVancouver78.9% 13.9% 7.2% $480 $912WhiteRock84.2% 8.4% 7.4% -$139 $293606.4 Scenario 36.4.1 Effects On Drivers And Pedestrians/Cyclists In Scenario 3In Scenario 3, transit is not considered a social good and the Translink property tax has beeneliminated. Transit fares are now Translink’s only major source of revenue.Drivers and pedestrians/cyclists would benefit from the tax reduction. Typical drivers in everymunicipality would no longer experience a negative balance. With congestion benefits factored in,drivers would experience a net benefit between $594 to $1640 per year. Pedestrians and cyclistswould experience a net benefit between $629 and $1754 per year.61Table 6.8: Annual per Capita Budgetary Effects of a FUP-RPS on Drivers in Scenario 3Municipality TaxSavings VKTTollCost Externalities BalanceExternalityRebateBalance with50% RebateBalance with100% RebateCongestionBenefitNetBenefitNet Benefitwith 50% RebateNet Benefitwith 100% RebateAnmore $1,036 10,244 $335 $422 $279 $431 $495 $710 $668 $947 $1,163 $1,379Belcarra $854 10,244 $335 $422 $98 $431 $313 $529 $668 $766 $982 $1,197BowenIsland $1,048 10,244 $335 $422 $291 $431 $507 $723 $668 $960 $1,175 $1,391Burnaby $740 6,253 $205 $257 $278 $431 $494 $709 $408 $686 $902 $1,117Coquitlam $759 7,224 $236 $297 $226 $431 $441 $657 $471 $697 $913 $1,128Delta $858 8,170 $267 $336 $254 $431 $470 $685 $533 $787 $1,003 $1,218Langley $727 8,246 $270 $339 $118 $431 $334 $550 $538 $656 $872 $1,087Langley $932 9,721 $318 $400 $214 $431 $430 $646 $634 $848 $1,064 $1,280LionsBay $1,242 10,244 $335 $422 $486 $431 $701 $917 $668 $1,154 $1,369 $1,585MapleRidge $895 10,296 $337 $424 $134 $431 $350 $566 $672 $806 $1,022 $1,237NewWestminster $680 6,687 $219 $275 $186 $431 $402 $618 $436 $623 $838 $1,054NorthVancouver $638 5,073 $166 $209 $263 $431 $479 $695 $331 $594 $810 $1,026NorthVancouver $923 6,339 $207 $261 $455 $431 $670 $886 $414 $868 $1,084 $1,299PittMeadows $909 8,097 $265 $333 $311 $431 $526 $742 $528 $839 $1,055 $1,270PortCoquitlam $606 8,206 $269 $338 $0 $431 $215 $431 $535 $535 $751 $966PortMoody $758 7,689 $252 $316 $190 $431 $405 $621 $502 $691 $907 $1,123Richmond $830 6,291 $206 $259 $365 $431 $581 $796 $410 $775 $991 $1,207Surrey $853 8,224 $269 $338 $245 $431 $461 $676 $537 $782 $997 $1,213Vancouver $795 5,540 $181 $228 $386 $431 $601 $817 $361 $747 $963 $1,178WestVancouver $1,699 6,834 $224 $281 $1,194 $431 $1,410 $1,626 $446 $1,640 $1,856 $2,071WhiteRock $797 8,969 $294 $369 $134 $431 $350 $566 $585 $719 $935 $1,15162Table 6.9: Annual per Capita Budgetary Effects Of A FUP-RPS On Pedestrians And Cyclists in Scenario 3Municipality Tax Savings Balance Externality Rebate Balance with 50% Rebate Balance with 100% RebateAnmore $795 $795 $431 $1,011 $1,227Belcarra $614 $614 $431 $830 $1,045BowenIsland$808 $808 $431 $1,023 $1,239Burnaby $593 $593 $431 $809 $1,025Coquitlam $590 $590 $431 $806 $1,021Delta $666 $666 $431 $881 $1,097Langley $534 $534 $431 $749 $965Langley $704 $704 $431 $920 $1,136LionsBay$1,002 $1,002 $431 $1,218 $1,433MapleRidge$653 $653 $431 $869 $1,085NewWestminster$523 $523 $431 $739 $955NorthVancouver$519 $519 $431 $735 $950NorthVancouver$774 $774 $431 $990 $1,205PittMeadows$719 $719 $431 $935 $1,150PortCoquitlam$413 $413 $431 $629 $84563Table 6.9 – continued from previous pageMunicipality Tax Savings Balance Externality Rebate Balance with 50% Rebate Balance with 100% RebatePortMoody$577 $577 $431 $793 $1,008Richmond $682 $682 $431 $898 $1,113Surrey $660 $660 $431 $875 $1,091Vancouver $665 $665 $431 $880 $1,096WestVancouver$1,539 $1,539 $431 $1,754 $1,970WhiteRock$586 $586 $431 $802 $1,018646.4.2 Effects On Transit Users In Scenario 3Table 6.10: Transit Fare Increases In All Three Subsidization ScenariosScenario 1 Scenario 2 Scenario 3% Fare Increase 0% 55% 120%$ Annual Fare Increase $0 $824 $1801Annual Transit Expenditure $1502 $2326 $3303Transit users would benefit from the tax reduction as well, but would have to pay even greaterfares. In this scenario, fare revenues would have to increase 120% or $1801 per year. Even with afull externality rebate, it would be significant increase in costs with the net cost ranging between-$354 and -$973 per year.65Table 6.11: Annual per Capita Budgetary Effects Of A FUP-RPS On Transit Users In Scenario 3Municipality TaxSavingsFareIncrease BalanceExternalityRebateBalance with50% RebateBalance with100% RebateCongestionBenefit NetNet with50% RebateNet with100% RebateAnmore $449 $1,801 -$1,352 $431 -$1,136 -$921 $149 -$1,203 -$988 -$772Belcarra $350 $1,801 -$1,451 $431 -$1,235 -$1,019 $149 -$1,302 -$1,086 -$871BowenIsland $589 $1,801 -$1,212 $431 -$996 -$780 $149 -$1,063 -$847 -$631Burnaby $296 $1,801 -$1,505 $431 -$1,289 -$1,074 $149 -$1,356 -$1,141 -$925Coquitlam $370 $1,801 -$1,431 $431 -$1,215 -$999 $149 -$1,282 -$1,066 -$851Delta $475 $1,801 -$1,326 $431 -$1,110 -$894 $149 -$1,177 -$961 -$746Langley $390 $1,801 -$1,411 $431 -$1,195 -$979 $149 -$1,262 -$1,046 -$831Langley $543 $1,801 -$1,257 $431 -$1,042 -$826 $149 -$1,109 -$893 -$677LionsBay $653 $1,801 -$1,148 $431 -$932 -$717 $149 -$999 -$784 -$568MapleRidge $509 $1,801 -$1,291 $431 -$1,076 -$860 $149 -$1,143 -$927 -$711NewWestminster $306 $1,801 -$1,495 $431 -$1,280 -$1,064 $149 -$1,347 -$1,131 -$915NorthVancouver $240 $1,801 -$1,561 $431 -$1,345 -$1,130 $149 -$1,412 -$1,197 -$981NorthVancouver $456 $1,801 -$1,345 $431 -$1,129 -$914 $149 -$1,196 -$981 -$765PittMeadows $578 $1,801 -$1,223 $431 -$1,007 -$792 $149 -$1,074 -$859 -$643PortCoquitlam $247 $1,801 -$1,553 $431 -$1,338 -$1,122 $149 -$1,405 -$1,189 -$973PortMoody $339 $1,801 -$1,462 $431 -$1,246 -$1,031 $149 -$1,313 -$1,098 -$882Richmond $378 $1,801 -$1,423 $431 -$1,208 -$992 $149 -$1,274 -$1,059 -$843Surrey $458 $1,801 -$1,343 $431 -$1,127 -$912 $149 -$1,194 -$978 -$763Vancouver $236 $1,801 -$1,564 $431 -$1,349 -$1,133 $149 -$1,416 -$1,200 -$984WestVancouver $867 $1,801 -$934 $431 -$718 -$503 $149 -$785 -$569 -$354WhiteRock $311 $1,801 -$1,490 $431 -$1,274 -$1,058 $149 -$1,341 -$1,125 -$910666.4.3 Effects On Various Modes Of TransportIt was determined that in a FUP-RPS users of all modes would benefit, with the exception of transitusers in Scenarios 2 and 3. It appears for the most part that the benefits and costs of each modewould balance out. Although drivers would be charged for using the roads and damaging theenvironment, they would also benefit from the elimination of the gas tax and congestion reduction.On the other hand, pedestrians and cyclists would benefit from tax savings and only tax savings.In Scenario 1, it was found that all users would benefit with drivers and transit users benefittingthe most. In Scenario 2, transit users would pay more due to increased fares and could only expect abenefit with a full externality rebate. In Scenario 3, drivers and pedestrians/cyclists would roughlybenefit equally in a FUP-RPS with transit users paying significantly more.67Figure 6.4: Comparison of User Net Benefits in Scenario 168Figure 6.5: Comparison of User Net Benefits in Scenario 269Figure 6.6: Comparison of User Net Benefits in Scenario 3706.4.4 Effect On Municipalities In Metro VancouverThere does not appear to be a relationship between municipalities and benefits expected in a FUProad pricing system. Urban municipalities do not appear to benefit in a FUP-RPS, nor does itappear to cost users in suburban areas. This is shown in the graph of Figure 6.7.Figure 6.7: Average Financial Balance vs. VKT for Metro Vancouver MunicipalitiesWest Vancouver is a notable outlier, experiencing significantly greater benefits than any othermunicipality. This probably the result of several factors. First, has a sizeable road network withresidential property taxes accounting for a large portion of property tax receipts (92.5%). Second,properties in West Vancouver are very valuable. Altogether, this means that the property tax savingsfor residents will be substantial. Finally, people in West Vancouver drive less than average and canexpect to pay less in roadway facility tolls and externality charges. When all these factors arecombined, residents in West Vancouver should expect a significant savings in a FUP-RPS.6.4.5 The Effect On Business And IndustryFUP Road Pricing was found to be a net benefit for business and industry in Metro Vancouver, eventhough freight vehicles would pay substantial externality charges. This was the case in all three71Figure 6.8: Freight Costs In FUP Road Pricingtransit subsidization scenarios.FUP Road Pricing would affect business and industry in the following ways. Business andindustry would first benefit from eliminated fuel taxes and reduced municipal property taxes. In thecase of the third transit subsidization scenario, the Translink property tax would also be removed.The tax savings benefit to business and industry was found to be $195.1 M in Scenarios 1&2 and$300.7 M in Scenario 3. In all the scenarios, the tax savings were greater than the tolls that wouldgo to the roadway facilities.However, freight traffic generates significant pollution externalities. In total, these were es-timated to be $541.2 M with air pollution charges accounting for more than 85% of this cost.With these externalities factored in, business and industry would be paying $678.0 M in road usercharges, meaning that they would paying more in a FUP Road Pricing system ($483.0 M in Sce-narios 1&2 and 377.3 M in Scenario 3).However, FUP road pricing would also greatly benefit business and industry by reducing con-gestion. Freight vehicles would no longer be impeded by congestion and the resulting cost savingswould be significant, estimated to be around $603.5 M per year. When considering all the costsand benefits for business and industry, FUP road pricing ends up being a net benefit of $102.4 Min Scenarios 1&2 and $226.0 M in Scenario 3.72Table 6.12: Effect Of FUP Road Pricing On Business And IndustryScenarios 1 & 2 Scenario 3Property Tax Reduction Benefit $132.5 M $238.1 MFuel Tax Reduction Benefit $62.6 M $62.6 MTotal Monetary Savings $195.1 M $300.7 MFreight Roadway Facility Costs $136.8 M $136.8 MFreight Air Pollution Costs $460.7 M $460.7 MFreight Noise Pollution Costs $71.8 M $71.8 MFreight Water Pollution Costs $8.7 M $8.7 MFreight Cost Total $678.0 M $678.0 MTotal Monetary Balance $-483.0 M $-377.3 MCongestion Benefit $ 603.5 M $ 603.5 MNet Benefit/Cost $120.4 M $226.0 M73Chapter 7Conclusion7.1 Comments On ResultsImplementing an FUP-RPS would benefit all users in Metro Vancouver, even freight vehicles.Contrary to predictions, it was found that FUP road pricing did not favour or punish certain modesand did not increase transportation costs in suburban areas vs urban ones. Compared to othertransportation costs, the effect of a FUP-RPS on peoples’ budgets would be quite small, varying byonly a few hundred dollars per year.In scenarios where transit is considered a social good, drivers in 11 of the region’s municipali-ties would expect to pay more, with the highest increase being $166 in Port Coquitlam. However,a 50% externality rebate would ensure that no typical driver for each municipality would pay moreand could be used to make a FUP-RPS more politically acceptable. If roads are tolled in order toreduce congestion, a FUP-RPS would be a net benefit to all drivers.Transit users would benefit from a FUP-RPS, but only if transit is treated as a social goodand capital expenditures continue to be subsidized. Otherwise, substantial fare increases wouldbe needed and these increased fare costs would more than offset any tax and congestion reductionbenefits. Pedestrians and cyclists would benefit financially from all FUP-RPS scenarios.FUP-RPS was also found to be beneficial to business and industry as freight vehicles wouldbenefit significantly from the elimination of recurrent congestion. This congestion benefit withproperty and gas savings would be greater than the combined roadway facility tolls and externalitycharges combined.747.2 Policy ImplicationsThis research clearly demonstrates the importance of the ability to eliminate recurring congestionin a FUP-RPS. This study calculates these benefits to be approximately $1.64 Billion per year. It isonly with congestion reduction benefits that all road users, including freight vehicles, benefit in aFUP-RPS. This underscores the importance of using GPS technology as unlike other technologiesit can enable pricing that varies by time and location.This study also examines the effects of policies that would make a FUP-RPS more acceptableto the public such as making the system revenue neutral or having a portion of the revenues fundimprovements to the network. It was estimated that externality charges would raise $1.05 Billionper year. If the entirety was given back to all residents in the form of a tax rebate, the value ofthe rebate would be $431 per year. A 50% rebate would be enough to ensure typical drivers fromacross the region would not see a negative balance. Giving a 50% rebate may be an effective policyas it would increase the likelihood of public acceptance and provide a $528.6 Million per yearsource of revenue that could towards investing in transit improvements. It could also be given tothe public as a basis transportation voucher in order those with low-incomes.7.2.1 Equity ConsiderationsThough FUP road pricing is equitable amongst users of similar incomes, there are concerns thatroad pricing will disproportionately affect low-income users. Road pricing, like any other con-sumption tax, is by nature regressive, affecting the budget of low-income users to a greater extent.In addition, high-income users would benefit the most from reduced congestion [18]. Existingstudies of comprehensive road pricing systems have shown this to be the case [39].However, how regressive a FUP-RPS would be to low-income users is perhaps not as significantas some may fear [16]. First, the taxes being replaced by a FUP-RPS (fuel tax and property tax)are regressive as well. Second, low-income users tend to drive less than high-income users and useother more affordable modes such as transit [18]. Third, a FUP-RPS would make both driving andtransit more efficient by reducing congestion, benefitting low-income users who drive or use transit[16]. However, there are rare situations of low-income users whose lifestyle necessitates a largeamount of driving such as working women with significant family responsibilities.It is therefore recommended that a FUP-RPS be implemented with policies to alleviate theseequity concerns. Using externality revenues to improve transit would improve the transportationoptions available to low-income users [16]. In addition, an externality rebate given to every citizencould be considered a basic transportation voucher and would reduce the likelihood low-income75drivers would pay more in a FUP-RPS [16]. Finally, targeted vouchers or exemptions could begiven in exceptional circumstances, however, this policy is risky as it may lead to more groupsgetting exceptions, compromising the entire system.7.2.2 Real-Time Toll Adjustment Vs. Periodic Toll AdjustmentFor a FUP-RPS to be effective, tolls most reflect real-world traffic congestions as closely as possi-bly. It will be necessary to adjust toll rates to reflect changing conditions, and with GPS technologythis can be done in real-time or periodically. Real-time adjustments involves using an algorithmthat analyzes traffic demand in real-time and adjusts toll rates in real-time as well. Road userswould need a display to show up-to-date toll rates. Periodic toll adjustments would involve analyz-ing traffic data to determine a toll rate scheme in advance. Road users would know well in advancewhat tolls to expect.There are advantages and disadvantages to both toll adjustment methods when it comes tofairness and efficiency. Having tolls be adjusted in real-time to reflect current conditions is moreeffective in reducing congestion and would lead to a more efficient pricing system. It may evenbe able to alleviate some non-recurrent congestion. However, as experience with Uber’s similarreal-time systems has shown, sudden changes in rates may be perceived as unfair to road users whomay feel “trapped” in paying a higher fee that they could not have anticipated [26]. One way toalleviate this problem would be to have a preset maximum toll-rate limit which cannot be exceeded.In addition, drivers reacting to sudden rate changes may cause traffic safety issues.Periodic toll adjustments would be perceived as more fair as toll rates would be known wellin advance. However the system would be somewhat less efficient as tolls could only be adjustedperiodically to reflect traffic patterns. Considering it is likely more politically feasible to implementa fairer road pricing system than a more efficient one, it is recommended that toll rates be adjustedperiodically.7.2.3 Passing Down Of Property Tax SavingsThis study shows that implementing a FUP-RPS would result in people receiving significant sav-ings on their property taxes. However, many people in Metro Vancouver rent and do not ownproperty and there is a concern that landlords will not pass these savings to renters. If these sav-ings are not passed down, this would affect low-income earners disproportionately as low-incomeearners tend to rent.Measures should be put in place to ensure that these property tax savings are passed on to76renters. Policy makers should follow the example of the Government of Ontario’s property taxreform in the late 1990s where landlords were required by law to notify tenants of property taxreductions and to pass down those reductions [10].7.3 Significance Of ResearchThere has a been a great deal of research already done on the subject of road pricing. Existingstudies have estimated transportation costs as well as how tolling could change transportation pat-terns. Most often these studies have been done in conjunction with existing or planned road pricingsystems.However, there are few existing studies examine how the implementation of a road pricingsystem will affect peoples’ budgets. No existing study has analyzed road pricing as a revenueneutral tax replacement in a real municipal context. Few studies have looked at how a fair andefficient road pricing system would affect residents as well as business and industry in a region.The research findings from this study should help inform both governments and the public ofwhat they could expect from the implementation of a road pricing that is meant to create a fair andefficient transportation system.For policy makers, this study shows how existing taxes that fund road infrastructure could bereplaced with user fees. This research also goes over some important questions that policy makerswill have to consider when implementing a FUP road pricing system, namely how the tax savingsshould be divided and how non-driving modes should continue to be subsidized. This study showswhere in a region citizens may be willing to accept FUP road pricing and under what conditions.For example, automobile commuters in Port Coquitlam would see an increase in costs of around$166, however, this could be offset with a 50% externality rebate of around $230.In addition, this study provides policy makers options for how road pricing policy can be de-signed in a manner that the public would readily accept it. This study provides clear quantifiableestimates as to how users across the Metro Vancouver region would be affected monetarily by theimplementation of a fair and efficient road pricing system. Several different scenarios were testedto inform policy makers on how FUP road pricing could be implemented and their projected con-sequences. For example, this study clearly demonstrates that typical users of all modes from allparts of the region will not expect to pay more with 50% of externality revenues given back as partof a tax rebate and that when congestion benefits are included, everyone will greatly benefit fromthe implementation of a FUP-RPS.For the public, this study shows in real terms what different mode users in a region could expect77to pay or save under an FUP-RPS. It clearly demonstrates to the public that even suburban driversand freight trucks should not fear, but embrace the implementation of a FUP-RPS. This study showsthat commuters of all transportation modes and who live in different parts of the region will benefitsignificantly in a FUP-RPS.7.4 Limitations Of Research7.4.1 Limitations In EstimationDue to the limitations of the tools available, this study largely assumes that benefits of congestionreduction are spread evenly. Driver congestion benefits are scaled based on the amount of drivingand transit congestion benefits are distributed evenly amongst transit users. However, this is not thecase as congestion occurs only on certain roadways at certain times. A more detailed traffic studyand different tools would be required to address this limitation.In addition, the roadway maintenance costs in each municipality were estimated by separatingroads into two categories: arterial and local. It was found that the way of estimating road costsproduced estimates that were far too high in small, peripheral municipalities such as Anmore,Belcarra, Lions Bay and Bowen Island and were reduced by 50% to account for the fact that mostof the roads in these municipalities are narrow, rural roads. Detailed lane-km data from eachmunicipality would have provided a more accurate picture, but was unavailable. This study alsoassumes that roads in the region are being adequately maintained and that no new funds are neededwhich is not the case.In addition, this study does not examine in detail what the effects on the freight industry orwhat the affect on businesses in the region would be. Also, in most cases this study is unable todetermine how travel patterns would be affected by the implementation of FUP road pricing.7.4.2 Limitations In Estimating ExternalitiesThe estimated externality charges calculated in this study should be taken as estimates and notprecise values. Since there is no market place for externalities such as air pollution (and thosethat are government constructs), it is impossible to produce an exact price. The externality chargesestimated in this study were derived from estimates made by economists using various tools to puta dollar value to things that do not naturally have values such as congestion. They are not preciseand there is a fair amount of variation between estimates. The values for these externalities shouldbe revised as more accurate estimates are produced with better understanding and research on these78phenomena.7.4.3 Limitations In ScopeThe goals of this study was to examine the budgetary effects of a FUP-RPS on different modeusers in different parts of the Metro Vancouver region. However, there are many important aspectsrelated to the implementation of a FUP-RPS that were beyond the scope of this study.This study examined the static effects of FUP road pricing, but ignores perhaps the more impor-tant dynamic effects such as how people will adjust their behaviour now that there is an incentiveto do so. In addition, not all every dollar affects peoples’ actions equally. A visible and apparentroad toll may affect behaviour much more than a hidden fuel tax. How an FUP-RPS will changehow people travel and what the effects of those changes will be will require more sophisticatedtools and should be examined in future studies.7.5 Predicting Shifts In Travel PatternsThis study is limited in determining shifts in travel patterns. It can only determine that a shiftwill occur if the costs of two different transportation modes go in different directions in a certainarea. In order to properly determine how a FUP road pricing system would cause a shift in travelpatterns, a more rigorous analysis using transportation modelling software would be required.Based on logic we can predict a shift will occur if the cost of one mode increases relative toanother. It is also very likely there will be a shift if one mode’s cost changes dramatically morethan another mode’s cost. However, predicting the shift that will occur if the cost of both modesincrease or both modes decreases to a similar degree is impossible to predict. This study found thatsuch shifts only occur away from transit in scenarios 2 and 3 when transit fares are significantlyincreased. It also impossible to predict the extent of the shift.This study also does not predict how traffic patterns will shift due to congestion pricing andwhere those vehicles removed during peak hours will go.There are several ways peak hour traffic will be reduced:• People choose another mode of transportation• People choose to travel at another time• People choose a different route• People consolidate trips (the trip disappears)79It appears from Stockholm, Sweden’s experience that a shift to other modes accounted for lessthan half the reduction in trips [14]. This is in a city with a well-developed public transportationsystem. Cycling decreased when congestion pricing was implemented. Traffic also did not appearto increase on other routes around the city centre nor at other times of day. This suggests that tripsdisappeared, were consolidated or walking trips increased and were not recorded.Without any other further evidence to go by, we could expect something similar to happen inVancouver where other modes are well-developed with half of trips shifting to other modes. Asmall portion may shift to other times of day or less congested roads with most trips in rush hourbeing consolidated. In areas with poorly developed networks for other modes, consolidation maymake up almost the entirety of the reduction with small shifts to other modes and other times.7.6 Application Of Findings7.6.1 Application To Other RegionsThis study analyzes the effects of a FUP-RPS is Metro Vancouver. However, one must be carefulin deciding which findings can be applied to other cities and regions. Metro Vancouver is a uniquecase even within Canada: it is a region composed of many municipalities and its transit agencyreceives a large portion of its revenue from dedicated fuel and property taxes. The findings inMetro Vancouver may not be the same as those found in a different city or region when applying asimilar methodology.How a FUP-RPS would be implemented in other regions would depend upon who funds andmanages roads, through what taxes roads are funded, how transit funded and how many people useeach mode of transportation.The methodology for implementing FUP road pricing would be as follows:1. Determine which agencies fund road infrastructure2. Determine which agencies fund public transportation3. Determine which taxes are used to fund these agencies4. Replace any existing road user fees with road pricing. (This includes existing tolling andfuel tax revenues)5. Replace other taxes used to fund road infrastructure80The manner in which FUP road pricing system was implemented in this study for Metro Van-couver would more readily apply to North American cities where roads are largely funded byregional and local agencies largely through fuel and property taxes. For cities in European coun-tries which have much higher fuel taxes, FUP road pricing may be simply a replacement of the fueltax, with the additional benefits of congestion reduction [40].What a region can expect in terms of effects will depend on the local conditions. However, itis clear no matter where FUP road pricing is implemented that the additional cost to drivers will beminimal except and that these costs will largely be offset by significant congestion benefits.7.7 Engaging The PublicThe most challenging aspect of implementing a FUP-RPS will be in gaining public acceptance. Awell-thought out strategy should be developed on how to engage the public before attempting toimplement a FUP-RPSI recommend that when engaging the public, policy makers clearly show what will happen andwhat the benefits of road pricing are to them. It should clearly be shown how people can reducetheir transportation costs. A calculator app would be a good way of informing the public andeducating them as well.The messaging should be carefully developed. It should emphasize that roads, though essential,are a utility like electricity and water, that there is a real cost to providing them and that users shouldpay for their use based on much they use them. Also, the benefits of eliminated congestion shouldbe emphasized since this study has found that they are substantial.7.8 Areas For Further InvestigationAspects of road tolling that were outside the scope of this study should be investigated further.This includes investigating in greater detail what the effects on the freight industry and businessesmay be. The research performed this study could be enhanced by finding more accurate ways ofestimating the benefits of reduced congestion on users throughout the region. How a FUP-RPSwould affect travel patterns should be investigated using modelling software.In addition, other forms of vehicle pricing that could be performed using GPS technologyshould be investigated such as parking pricing and distance-based insurance [24]. Many trans-portation economists believe free parking is the most egregious subsidy that automobiles receive[50]. Another application of GPS technology would be distance-based insurance, which in previ-ous studies has been found to significantly reduce how much people drive. Not only would this81make transportation more sustainable by addressing other areas where excessive automobile use issubsidized, it would also defray the costs of implementing a GPS road pricing system[52] .With road pricing comes the possibility of creating a truly fair transportation market placewhere uses pay the true cost of the transportation they use, a cost that includes not just maintenancebut also damages to other users. Once people see the true cost in the form of a price signal, theywill make better choices.This information will also allow utilities that manage roads to see whether using the land thatroads occupy as a means of conveying motor vehicles is the best option. For example, a road tollingauthority may find that the maximum toll revenue collected from a six-lane highway does not coverthe costs of maintaining that six-lane highway. The road tolling authority would naturally concludethere is not enough traffic to justify such a wide road and thus may decide to scale down the road tofour lanes. Similarly, a road tolling authority may find that even though the earnings of a six-lanehighway may cover the costs, it should still be converted to a four-lane highway as renting out thespace taken up by the outer two lanes (e.g. For food trucks) is even more profitable.Finally, how a FUP-RPS would affect the implementation of self-driving cars should be exam-ined. Google believes that self-driving cars could be coming on to roads in the next 3-5 years [13].FUP road pricing will affect the fares charged by self-driving taxis and may also influence whatvehicles are used. Tolling self-driving car services would also likely be more politically feasible asusers of such services would only experience the tolls indirectly [27]. This is an area for furtherinvestigation.82Bibliography[1] AECOM. Regional Transportation Strategy – Asset Management Project RegionalTransportation Strategy – Asset Management Project Regional Transportation Strategy -Asset Management Project Regional Transportation Asset Inventory. Technical report, June2012.[2] Jonathan Arnold. Congested And Nowhere To Go: Congestion, Road Infrastructure, AndRoad Pricing In Metro Vancouver. Technical report, October 2013.[3] Jonathan M. Arnold. Caught In Traffic: Road Congestion In Metro Vancouver And ItsImpact On Commercial Goods Movement. 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URLwww.who.int/ceh/capacity/noise.pdf. Retrieved on: March 3, 2015.87Appendix AEstimation Model: Business andIndustry Effects Estimation8889909192Appendix BEstimation Model: Dissemination AreaLevel Estimations93949596979899100101Appendix CEstimation Model: Residential PropertyTax Reduction Estimation102103104Appendix DEstimation Model: ExternalityEstimation105106107108Appendix EEstimation Model: Road CostEstimation109110111112Appendix FEstimation Model: Transit CongestionBenefit Estimation113114115Appendix GEstimation Model: AdditionalCalculation Sheets116117118119

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