Indian toll road profitability declines and Ontario floats more tolls

India

A lot of new highways in India are invariably being toll funded, albeit with manual tolling systems. A recent report has noted that returns on such projects have been declining in recent years.

My Iris reports that Build Operate Transfer (BOT) projects (also known as BOOT) before 2009, could earn an average equity return of 22%. In most of the 23 projects surveyed, the reason for this is put down to the relatively low cost of bidding (related to the lack of bidders, an average of five) and higher than expected traffic growth boosting toll revenue (10-12% over two years). The lack of bidders was put down to property developers being unsure about land being available for construction on time, and contractual provisions that made it complicated for developers to sell their full equity stake in the project concessions. 

This environment appears to have changed, with land acquisition being accelerated by government offering an option for developers to exit, and more lucrative projects being pursued. As a result, the number of bidders is now averaging 25-30. Conversely, traffic forecasts are no longer being met by some projects. Fitch Ratings reports that actual traffic may be as low as 45% of the estimates for the first year. 

Optimism bias in such forecasts is driven by construction companies in consortia keen to capture the lucrative contracts for building the roads (and to be paid for them), which means they are keen to support forecasts that are more likely to mean their consortium wins the concession. In addition, poor reliability of traffic statistics (and lack of robust research into preferences of users) makes such forecasting particularly prone to error. 

The key point for investors is to have some decent expert scrutiny of the projects they are being asked to invest in, and base forecasts on a range of plausible scenarios. 

Ontario

Ontario Premier Dalton McGuinty has announced that the tolled Highway 407 will be extended, first from Pickering to Oshawa, with the province owning the 22-kilometre link but charging a fee to use it.  This has been described by theLF Press as crossing  “a Rubicon city and provincial politicians have been loathe to dip their toes into”.

Ontario's last civic toll road was scrapped in 1926, and of course the 407 toll road remains the only exception to date which is also privately owned.  Building the extension as a private road is also an option under consideration, which is likely to be controversial.   To privatise and allow tolls for a new link is an obvious option for administrations lacking finance and options to fund such improvements.  No doubt the debate in the province will be vigorous on this one, although given the success of the 407, I would have thought it should not be as controversial as it is made out to be.

Congestion pricing beats higher public transport subsidies in achieving mode shift

So says an article in the Atlantic Cities about "what really matters for increasing transit ridership".

It cites an upcoming article reporting research that ranks measures to increase the cost of car use well above capital expenditure on improving rail transit and reducing rail fares as a way to achieve mode shift.

In an upcoming issue of Transport Policy, a group of Chilean researchers led by Louis de Grange of Diego Portales University investigated these three ideas to see which emerged as most effective. Using data from 41 major cities around the world, de Grange and company ran a total of 16 econometric models comparing these methods. After controlling for key demographics the researchers found a consistent pattern: System expansion increases transit ridership a little. Car regulation increases it a lot. And fare subsidies have no effect at all.

Now I will wait  until I read the article in detail to see if the statistics used are comparable.  For a start, I don't think there is much evidence to demonstrate meaningful increases in rail usage in London and Stockholm from congestion charging, but rather meaningful reductions in car use.  The key mode shift appears to be increases in bus use.  However, it is entirely plausible that 10% expansion of rail system capacity may only increase usage by 3-4%, and the more damning view that increased public transport subsidies may simply reduce productivity and increase costs with little effect on patronage is worth consideration, against those who advocate higher fare subsidies as a way of achieving mode shift.

The implied lesson is that people are more likely to be dissuaded from cars to public transport by being priced out of driving, rather than being lured by cheap fares.  Free public transport wouldn't have a significant impact, compared with charging road space more efficiently.

So if the policy goal is mode shift, it may be time for cities to think more about pricing roads and targeted improvements in networks and services, rather than reducing fares, suggesting that pricing scarce road space more to match demand with supply makes more sense than underpricing public transport to attract more demand.

Congestion pricing floated for Sri Lanka

Following on from a similar reference in Bangladesh, the Daily News of Sri Lanka reports that Private Transport Services Minister C B Ratnayake advocates congestion charging as part of an overall integrated transport strategy. 

He said: "In general, Sri Lankan cities have not made much progress in implementing the demand side transport management measures, such as congestion pricing, restraints on parking etc. Although policy measures that involve restraining the use of private cars and two-wheelers are likely to be unpopular, a gradualist approach of progressively introducing restraints on road use, while at the same time improving public transport, is more likely to lead to greater acceptance. It is believed that improved public transport and more efficient management of demand would help to combat the trend away from public transport vehicles towards greater use of personalized modes.” 

 In other words, congestion pricing can be part of the toolbox of a developing country as car ownership increases, to ensure the inevitable drift from public to private transport is constrained efficiently in ways that manage congestion and help maintain the relative competitiveness of public transport, particularly where road space is scarce. 

Of course, the challenges to introduce this in Sri Lanka are enormous. Some basic infrastructure to identify vehicles reliably, and pursue and penalise non-payment is the biggest issue. However, it is heartening to see such a positive view being taken in Sri Lanka on this. Mr Ratnayake appears to have fairly sound economics behind many of his views, including the need to have strict appraisal procedures for large capital projects, so that scarce resources are spent on the highest value projects first (avoiding politically driven projects with poor returns). If he can institute reforms that can lead to more tolls and eventually congestion charging in Sri Lanka, then he will be a leader in development of such systems in South Asia.

News shorts - Australia, Canada, USA

Australia

The New South Wales Government is facing continued pressure on budgets, like many governments, and so according to the Daily Telegraph (Australia) appears to be pushing for another PPP toll road in the form of the F3-M2 motorway.  It is expected the new highway will be tolled and entirely privately financed and owned.   The F3 is the Sydney to Newcastle freeway that currently ends in the northern suburbs, the M2 is a private toll road (managed by TransUrban) that forms the northwest to north-central connection of the “Sydney orbital” motorway network connecting the M7 toll road (which effectively forms the western leg of a “Sydney bypass”) to the freeways at the northern end of the Sydney Harbour Crossings.   The M2 is a fully electronic free flow toll road as of January 2012.  The F3 to M2 link would complete the Sydney bypass by providing a full motorway standard ring route from the north to the south, and so is considered to be a strategically critical link in Sydney’s motorway network.  The Government is apparently having talks with TransUrban about the project, although   Other projects under consideration include widening the M5 motorway (the toll road running south-west from the airport to the southern outskirts of Sydney) and the M4 east (an expensive extension from the major western motorway to bypass inner city suburbs to connect to the downtown Western distributor freeway).

Calgary

The Calgary Herald reports that the University of Calgary School of Public Policy has published a paper advocating that users be charged directly to fund infrastructure including roads.  Although it will be “phenomenally difficult” politically, it needs to be undertaken in an open and transparent way, with acknowledgement that existing taxes are incapable of stretching to pay for maintenance and renewal of networks.

The newspaper reports:

Although tolls exist throughout the United States, on Toronto’s 407 Highway and the Vancouver area’s Golden Ears Bridge, it’s a no-go issue in much of Canadian politics. It’s so hot that when a Transport Canada call for proposals for a study on road pricing made headlines on the eve of the 2008 election, the Harper government’s transportation minister swiftly quashed that idea.

Similarly there is little enthusiasm with the current Alberta Provincial Government for tolls:

Transportation Minister Ric McIver said he won’t go near the idea of user fees on the big-city ring roads. He’ll entertain the possibility of tolls for the fast-tracked twinning of Highway 63, but only as part of his promise to “look at all the options,”

The Calgary Mayor, Naheed Nenshi also ruled out congestion pricing on existing roads.  Brian Flemming, from the School of Public Policy says the reasons to consider user pays are:

•  The need to find a gap in funding following the end of “stimulus spending”, which can also leverage private capital;
•  Increased fuel efficiency and alternative fuels diminishing revenues from fuel tax.

 However, this doesn’t mean just a few toll roads, he is pushing for proper network road pricing, and that is a debate that Canada hasn’t started to have yet.

“This means something far beyond mere traditional tolling of roads and bridges. It means creating a system whereby those who use infrastructure will electronically have to pay small and sophisticated fees or this use.”

That means a debate about replacing existing taxes, the debate that has started to emerge in the US and Australia, and one that could well do with being catalysed in Canada.

Florida

What about rental cars? An article by Larry Elkin, President of the Palisades Hudson Financial Group, sings the praises of a Florida state policy to convert all toll roads into fully electronic free flow operations. I can agree with all that.  However, his concern is how to deal with rental cars when those hiring fail to pay for a toll road.   He wants regulations for rental car companies to stop them charging high surcharges for passing on toll fees.   I disagree.   Experience elsewhere suggests a range of alternative options.  For a start, toll roads are usually well signposted, so it shouldn't be a surprise to motorists.  In Australia, rental car hirers in Sydney (which has many such toll roads) receive a leaflet explaining how to pay electronic free flow tolls online or by phone.   In addition, it is perfectly feasible for rental car firms to install tags in vehicles so that tolls can be charged to a vehicle, and then charged to the hirer at the end of the hire, or to have accounts based on number plates which also enable the same thing.   Given the rental car industry is competitive, with low barriers to entry, it seems more likely that suitable solutions will be developed by providers working with toll operators than some sort of government regulation.

Indiana

Debate over the privatisation of the Indiana Toll Road continues.  This time in the Evansville Courier and Press (Indiana), the Press Secretary of Indiana's Governor, Mitch Daniels, counters an article by a journalism lecturer.   She claims the sale helped fix the state's finances and provided a structure within which tolls could be increased to allow the road to be upgraded.  The view she is countering is that the lease meant revenue that would have come to the state would be going to a foreign private company.   Interesting the debates in a country sometimes held up to be the bastion of free market capitalism.

Budapest congestion charge in 2013?

Hungarian financial paper, Napi Gazdaság, leaked a draft budget last week suggesting that the Budapest owned public transport company, BKV, is to cease receiving central government subsidies from next year. The speculation is that the city of Budapest will be expected to make up the difference with a congestion charge. Budapest is already required to have a congestion charge as part of a deal it struck in receiving European Commission funding for new metro line M4.

According to the Budapest Times, Mayor István Tarlós said that around 15 Billion Hungarian Forints (about US$64 million) is needed to make up the difference, and options for congestion pricing for the city are likely to raise between 20 and 40 billion Forints (US$85 million and US$170 million) per annum. Budapest does have chronic traffic congestion, as car ownership has increased significantly in the past 20 years, road capacity in the city has not. Although the public transport network is to a good standard, the simple point is that with car ownership, people prefer to drive even if they face considerable delays. A congestion charge for Budapest intrinsically makes sense, the primary issue (as always) is what sort of system should be installed, where and what the structure of a charge should be. The Mayor suggests the cordon should be the one identified below, following one of Budapest’s inner ring routes. 

 

However, I suggest it may be more worthwhile to have lower charges for crossing a wider number of zones, to better target congestion by spread the charge equitably according to time of day, location and direction of travel. 

 

However, if it is intended that something be operational in a year’s time, it is already too late to get started. Even if an option was selected today, it should take no less than two years to get installed, tested and operating a reliable system for users, including providing the necessary information and publicity (and enforcement systems) so that it operates in a way that is most acceptable to users. Given rumours that the Hungarian government is highly resistant to the use of overseas consultants and contractors, it seems unlikely that Hungarian only companies could do this quickly, given that road pricing experience in Hungary of this nature is limited to the (admittedly reliable, efficient and well functioning) motorway only electronic vignette system. 

Work is apparently underway on the “limits” to a congestion charge, suggesting that it has already been decided that it will be a single cordon based scheme, although decisions on whether it is an area charge, whether it will charge inbound AND outbound traffic, and at what times and rates, do not appear to have been made. 

 For Budapest congestion pricing to proceed, it needs work done not just on traffic flow (which will change in multiple ways once pricing is introduced), public transport capacity and technology, but also customer service, enforcement/compliance and business rules necessary when dealing with people who have little exposure to paying to use roads that were previously uncharged. 

 If it can do it well, it will not only help provide funds for public transport, but also the city’s road network, significantly reduce congestion, improve the attractiveness of walking, cycling, river, metro, tram and bus services, and improve air quality. It also would be the first large city in the east of Europe to have taken such a bold step forward. Given that it has to happen, the city and the national government need to move fast to make sure it can happen in a way that delivers the greatest gains for the city in terms of congestion reduction, improve air quality and generating net revenue. At present, there is not much evidence of the right amount of action needed to ensure this will happen. 

In my previous article on Budapest congestion pricing around a year ago, I noted the city does not have legal authority to introducing pricing in itself – there needs to be national legislation to permit it. Until that is passed, nothing much is likely to be able to happen beyond planning. 

Local support?

Curiously, a website has been set up by economist Szilárd Erhart, which appears to be promoting the idea (the English sections appear to not have been updated for a few years, but Hungarian is kept up to date). It isn’t common to find private citizens advocating for road pricing, but good on him.

Bangladesh road pricing?

This report from BDNews24 suggests the Bengali government is seriously considering it as an option. The country’s Finance Minister, A M A Muhith believes introducing road pricing across the country would reduce congestion and generate funds to improve road maintenance. 

The report states that “Under the plan, he said, in order to ease traffic congestions, sedan cars should not be allowed to ply on the city roads unless three passengers travel together. "Otherwise, extra toll should be imposed." In short, some sort of HOT lanes, or a congestion charge for all but high occupancy vehicles. Unsurprising, given Mr Muhith is an economist. 

An article in the country’s Daily Star newspaper elaborates that the Minister is interested in introducing tolls on roads and bridges “wherever possible”. It was supported by Transport management expert Prof Shamsul Hoque of Bangladesh University of Engineering and Technology in principle, but he claimed it couldn’t work without more public transport. In a city like Dhaka, this is unsurprising, as there is no Metro system as of yet, and bus services battle with gridlocked roads, whilst commuter rail services serve relatively few routes. However, there has been some useful construction of major highways, yet these remain inadequate with insufficient orbital links. In short, urban road pricing in Dhaka would need to be matched by a medium term strategy on highway construction, reform of the bus system and consideration of how to make best use of railway corridors (including development of new ones underground). 

A bigger issue is alluded to in the article, which is that the state and local authorities do not effectively enforce existing traffic laws on safety.  It is likely that having a good six months of hard enforcement followed by ongoing efforts may address congestion in itself, by getting some drivers and vehicles off the roads, but that's another issue.  As such it seems practically impossible to effectively introduce any form of tolls or road pricing that do not involve manual barrier controlled toll booths, if the enforcement regime is not robust. Bangladesh could undoubtedly do with a more robust source of funding for its highway infrastructure, but this should be a matter of a couple of parallel tracks.

 New highways where a toll booth is unlikely to cause congestion problems, can always be tolled. That should be happening now, as it is happening in neighbouring India. However, for the nationwide network the pre-requisite has to be the motor vehicle registry and enforcement of any vehicle registration requirements and basic traffic laws. For if you can’t effectively fine motorists who pose a risk to others on the road, you wont be able to enforce a road pricing system that is dependent on mailing fine notices to vehicle owners. 

Yet if Bangladesh, a country of over 150 million people, with average GDP per capita (PPP) of around US1,700 a year, wanted to, it could consider a Dhaka only road pricing system if that was empowered to enforce, rigorously, against motorists. Such a system could catalyse improvements in safety enforcement, vehicle registration and allow for more road capacity for buses to make a bigger difference. It would also complement the proposed metro. However, this sort of step change would cost serious money in the short term, and would need, in my view, a dedicated traffic police function. 

Yet although Bangladesh is vastly different from many countries considering road pricing, the fundamental problems remain the same: 

- Lack of funds to maintain and improve highway infrastructure; 

- Congestion on roads where demand grossly exceeds supply.

Hopefully the Finance Minister, Mr Muhith, will consider getting some serious consultancy work commissioned on options for his country, which ought to range from a Dhaka only pilot, to the use of fuel tax and motor vehicle registration taxes as interim steps. In any case, it is refreshing to read about any senior politician who understands the value of road pricing as a potential tool to address financing and congestion issues.

Update, changes soon

Readers

I have been offline for a few weeks for unfortunate personal family reasons.  Apologies for this, I intend to return to "regular service" next week, following the Queen's Diamond Jubilee.

I look forward to having more regular articles, a series of minor catchups on the sector and to dedicate a little more time to updating on tolling and road pricing across the world.

Regards

Scott Wilson

Mileage based usage fees - distance based charging - vehicle mileage tax - a future?

I just returned from the International Bridge, Tunnel and Turnpike Association (IBTTA) Symposium on Mileage Based Usage Fees (MBUF) in Jersey City, New Jersey, USA, where the main theme was around whether such fees could replace existing forms of charging road users as a source of funding for highways.

Terminology

Before I get onto some key conclusions from that Symposium, it is worth clearing up terminology.  MBUF is the latest acronym applying to something that is also called VMT (Vehicle Mileage Tax).   What is common with all references is that it is a form of road pricing based on distance travelled.  At its simplest, it means a vehicle pays on a per kilometre (or mile) as distinguished from traditional tolling which I describe as "point based" charging (whereby the chargeable event is crossing a tolling point, regardless of how far one travels), or even the amount of time spent on a network ("vignette" systems in Europe are the closest parallel to that, but the London congestion charge is effectively the purchase of 11 hours access in one calendar day to the area subject to the charge).

In the UK, the acronym "TDP" has been used to describe "time distance place" charging, primarily because the economic advantages of distance based charging primarily arise from the ability to charge road users different prices at different times on different roads.  This means truly economically efficient road pricing that could target congestion, and see revenue and pricing related to infrastructure costs. The UK's road pricing feasibility study in 2004 estimated road pricing could save the UK economy £12 billion (US$19 billion) a year in congestion costs - which is 25% more than total spending on highway infrastructure by central and local government.   In effect, delays would be halved as severe congestion was priced off the network at peak times, either suppressing trips or shifting trips into other modes or less congested times of the day.

It's about revenue

However in the USA, the driver for distance charging is not the benefits that could come from the "TDP" model, as attractive as it is for transport economists.  It is more fundamental, it is about revenue.

In the USA, a significant source of revenue for highway funding is hypothecated fuel taxes (or "gas tax" as it is called there).  This has been under pressure for two reasons, both of which one presenter at the forum (Travis Dunn) estimated have been equally responsible for creating a "challenging" funding environment that means revenue is now (at the federal level) 30% lower than budgeted expenditure.  Fuel taxation in the US is at the federal and state levels, and while the situation in each state varies, by and large a majority of states - and the federal government - no longer collect enough revenue from fuel taxation to fund the maintenance of the highway network.

The two issues are:

-  Inflation eroding the purchasing power of fuel taxation faster than politicians are able to increase the tax;

-  Fuel efficiency of vehicles eroding the per mile revenue per vehicle.

Why not raise fuel taxes?

In the US, the political environment is absolutely toxic around increasing fuel taxation.  For the Federal Government and most states it is pretty much impossible to increase fuel taxes according to inflation, let alone to catch up with the rising fuel efficiency of vehicles.  Even given that, the fuel efficiency argument suggests serious equity issues arising if fuel taxation is increased, and the people able to avoid this are those that either live parallel to viable public transport alternatives (which will always be very few) or those who can afford new fuel efficient vehicles (again, most car owners buy second-hand vehicles).

An additional argument is the predicted rise of electric vehicles and plug-in hybrids, neither of which use gasoline as a fuel.  If either take-off as an option, then fuel taxation is simply useless as a revenue raising source, and it raises equity implications as well, given that most who purchase such vehicles will not be those on low incomes.

The obvious answer for Europeans is to raise fuel taxes in the meantime, given that is exactly what European governments do.  The UK government infamously had a fuel excise "escalator" that increased fuel tax every year by inflation plus 3% (or 5%) since 1993.  That was not to raise money for transport, but as a general revenue source as the revenue today is around four times what is spent on roads by government (and none of it is hypothecated).  Of course this has now become politically toxic as well, as the UK government cut excise duty by 1c/litre last year, to provide some relief on fuel prices (given increases in the wholesale price of petroleum), although it is due to rise by that amount and more (£0.0302 in August 2012 or US$0.184 per gallon), simply as a measure to reduce the overall budget deficit.

Although the politics in Europe make such rises difficult, they are almost impossible in the US.  The rise of the anti-tax Tea Party driving part of the Republican Party agenda means that proposals for such rises are vehemently resisted, and such opposition is popular among voters for fairly obvious reasons given the prevailing economic climate.

Even if it was not so difficult, the fuel efficiency/alternative fuels issue means that such increases may not be sustainable in the long term.  So rather curiously, debate and discussion among transport policy and operational professionals has moved to a truly long term sustainable solution - distance based charging - as the US political environment is making it impossible to agree on the obvious short term solution of increasing existing charges (or drastically cutting back existing expenditure programmes).

Increase other taxes or reduce spending?

The other options are barely considered at all.  One would be increased annual ownership taxes (registration fees), but these face exactly the same political pressure and also present their own issues of equity and enforcement.   Increasing the cost of owning a vehicle reduces mobility overall.  Even the small minority of Americans who have alternative commuting options are almost certainly likely to own a car, so to penalise those who may use a subway, bike or walk as much as those who may drive into downtown Manhatten or San Francisco, appears perverse.  

The other obvious alternative of insufficient revenue is to check the efficiency of existing expenditure.  To discuss this is outside the terms of reference I set up for this blog, but my observations over the years do suggest ample scope for US federal, state and local agencies to make substantial efficiency gains in:

-  Highway maintenance using asset management systems and long term performance specified contracting to drive efficiencies in total lifecycle management of networks;

-  Capital programme spending based on prioritisation using benefit/cost criteria rather than politically driven "pork barrel" or subjective "fair share" criteria based on perceptions of fairness;

-  Public transit programmes which are heavily capital intensive (more rail than bus), built and managed by public sector operators rather than private contractors, with poor farebox revenue recovery also reflecting cutting corners on service quality/frequency as marginal cost pricing (including peak charges) are virtually unknown.

I'm sure that a fair proportion of the existing gap could be bridged by improving the quality of expenditure, the management of assets and operations, and use of private contractors.  However, that conversation and debate is not being had.  In the longer term this still will not be enough, as there are significant long term deficits in maintenance and renewals on many roads.

So what's happening about MBUF?

The conclusion of many in the US surface transport sector is that there needs to be a shift from fuel taxation to road usage based taxation.  Some suggestions are around greatly expanded use of tolls, where possible, but this Symposium was about something bigger than that - which is distance charging.

Oddly enough, there is little discussion about the fact that four US states already have a weight/distance tax for trucks which is similar to the systems in place in New Zealand and Switzerland.   Oregon, New York, Kentucky and New Mexico all charge trucks for use of their highways on a weight/distance basis in order to better recover the costs of highway maintenance.

However, it is Oregon leading the way on studies and a forthcoming pilot for charging cars on a mileage basis.  I'll write later about Oregon, but in essence what is progressing now is a forthcoming pilot for electric cars to be charged based on mileage.  Why electric cars?  Because they are a small proportion of the fleet, it makes programme development economical and possible to reduce risks with such a small startup.  They also do not pay fuel taxes now, so the argument that it is equitable to charge them on the basis of distance, is widely accepted in the state.   If it is agreed that electric cars move onto such a system, then there is potential to extend it to plug-in hybrids, other hybrids and other unconventionally fueled vehicles, and eventually the most fuel efficient conventionally fueled cars.

In short, Oregon is developing a platform that could enable a long term shift away from the "gas tax" to MBUF.   Other states are also undertaking studies.  Washington, Nevada, Colorado and Minnesota are all notable in this regard.   However, Oregon is widely acknowledged as the leader.  The Federal Government appears to have washed its hands of direct interest in any of this, for political reasons.   What appears to be happening is that funding for the Federal Programme is being approved, on a very short term basis, using general spending to cover the deficit in revenue from the Highways Trust Fund.  The states are pursuing their own initiatives because they, quite reasonably, think that as fuel tax increases, ownership tax increases, transfers from other taxes and cutting expenditure are not sustainable, MBUF are.  So the debate continues.

Outside the USA?

Of course distance based charging is not new.  Even excluding the handful of US states with rather simple paper based truck weight/distance taxes,  New Zealand has been a pioneer with distance based Road User Charges (RUC) since 1978 for all vehicles over 3.5 tonnes on all public roads, and all diesel vehicles (including cars, vans and other light vehicles).  Switzerland introduced distance based charging, called the LSVA, in 2001 on all vehicles over 3.5 tonnes on all public roads (after a referendum).  Germany more famously introduced distance based charging, called LKW-Maut, in 2005 on all trucks over 12 tonnes on all motorways (and some A roads).   Austria introduced distance based charging, called Go-Maut, for all vehicles over 3.5 tonnes on motorways in 2004.   The Czech Republic, Slovakia and Poland also have similar systems using different technology.  French and Belgian administrations are progressing such systems for introduction in the next couple of years, with the Danish government announcing it intends to introduce such a heavy vehicle charging system as well.

Watch this space

From economics, policy and technological points of view, distance based charging of vehicles is by far the most interesting concept of any form of road pricing.   It is directly tied to use, and has the potential to vary by factors that directly influence infrastructure costs and the efficient use of the infrastructure.  Debate on shifting from existing fuel and ownership taxes to distance based charging has only emerged in the United States in the past five years, and is also emerging in Australia.  The systems in Europe have been driven by the desire to gain revenue from foreign truck operators using national highways whether or not they ever pay fuel tax.   In the US and Australia, that dimension has largely been ignored (although it may prove lucrative for some states in both countries), but is more about replacing other taxes.  The questions arising from this concept form a very long list, and will challenge not only existing tax mechanisms, but also the management and governance of highways more generally, the allocation of expenditure on them and will mean, in effect, that all roads can be "toll roads".

The drivers of this debate are political and technological.  There are also substantial political barriers to progress on MBUF in the USA that cannot be underestimated, as motorists view paying as being a negative regardless of the means used.  However, the fact that most policy makers have started acknowledging that a shift to MBUF/distance based charging is desirable or even inevitable, is an enormous first step along a long path of transition.  For now the biggest issue is what such a transition will mean, and how to do it in a way that achieves public and political acceptability.  It isn't the technology that is the problem - it is how to address the enormous bubble of cynicism, distrust and ignorance around charging for using roads and spending money on roads that exists today.

I will be writing up a few points on the Symposium in coming weeks, focusing on some of the critical points as I see them in promoting and developing MBUF systems, acknowledging some key presenters.  Only a decade ago, it was Europe that was at the forefront of moving on road pricing with studies and interest in pricing to relieve congestion and better price road use to reduce externalities and finance infrastructure.  Today, that centre of gravity is moving to the United States.  Hopefully this will mean lessons learnt across continents in this sector can be shared, so that workable, affordable, acceptable and efficient options can be embraced in the years ahead.