Millions of people's lives

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Barriers and Opportunities for Technologies: Transport

With more than half of the world's population living in towns and cities, urban transport is an important aspect of millions of people's lives. Although, this ratio of urbanization falls substantially in the Less Developed Countries, the need to earn for livelihood and improved standard of living is making more and more people to move to urban city centres. This trend of growth is putting tremendous amount of pressure on the urban city services, as most of these countries do not have adequate infrastructure in place neither do they have enough wealth to add new infrastructure[1].

Economically, transport acts as the lifeblood of cities; in most countries, including the developing countries, cities are the major sources of the national economic growth. Cities and its growth can largely contribute to poverty reduction. A city with poor transport would inhibit its growth. Transport is an important social factor for the growth of the city as it provides access to jobs, education, health and other social services that are essential for the welfare of the people. On a contrary, lack of accessibility would result in social exclusion of the people in urban areas[2].

Post World War - II, many, current, developed countries had diverted their attention to urbanization of cities. More emphasis was laid on the expansion and installation of infrastructure services which enhanced the social and economic growth of the cities. However, it was realized very soon that the social and economic growth of the cities largely depend on the transport services that it offers. Hence, a concentrated effort was made to improve transportation and related services in the cities. Not only cities but also its surrounding towns were subject to transport planning and land-use planning policies. Development plan for the cities were drawn considering the future growth and expansion of the cities. This practice was however, missing in most of the current developing nations.

In the developed countries, where urban public transport has been predominantly provided by the public sector, recent trend has shown a shift towards liberalization and emergence of a range of competitive players in the transport sector. The rationale behind this is that competition improves efficiency and is more sensitive towards user's needs. This has been done through some modifications in the public policy and change in attitude towards private participation. Although it wasn't easy for the stringent policy makers in the public sector to accept this change, but the need of the hour and effective solutions provided by the private participants strained the public sector to do so.

In developing countries, a mixture of public and private players competes with each other in order to provide urban transport services. Usually this happens through some form of a organized scheme, but more often, it is a result of a plethora of private initiatives made in the sector. Lack of coordination amongst the players, public agitation towards lack of services, democratic arrangements, etc. makes it more difficult to regulate the transport sector.

There are various forms of competition that can, and have been, applied in the urban public transport. These have been used at varied levels and in respect of different components of public transport systems. There is an exponential growth in public and goods transportation. A large share of this transportation is in the form of motorized vehicles which have serious impacts on health and environment, urban development patterns, road conditions and road safety. Developed and developing countries are increasingly seeking strategies to guarantee individual mobility, and at the same time trying to make transportation more socially and environmentally acceptable.

" no other major area are pricing practices so irrational, so out-dated, and so conducive to waste as in urban transportation."[3] In the developed countries, and some developing countries, cities have increasingly adopted the incentive based transport strategies. This has specifically been done to raise revenues and reduce congestion and environmental problems in city centres, also known as the business centres. Since these transport measures, based on economic instruments, are highly city-specific and are more effective when applied as a part of the overall comprehensive transport strategy, it should be known that there is no single solution to successfully manage the transport demands on a local level. The most effective economic instruments implemented at a local level in many countries are surcharges on national measures, parking fees and urban road and congestion pricing[4]. The three measures stated here complement each other's policy, thereby proving to be effective transport strategy measures.

Parking fees is considered as the first step towards more complicated schemes of pricing urban traffic. Parking fees implemented as 'user pays principle' are comparatively easier to implement and it informs the road users that driving within the city or in a particular area is not free of charge. After the implementation of parking fees, the road-pricing is introduced more specifically in the area of central business districts.

Road and congestion pricing, on the contrary, are used as demand management strategies on local networks. Urban road pricing are aimed to recover the costs of urban infrastructure and its use. Though they are a complimentary solution of parking fees, they are enforced to put a levy on the usage of specific parts of the city network, thereby charging all the road users. They are a fair pricing measure as everyone using the road pays for it even regardless of their residency status. Usually, a large number of people visit the central business districts from neighbouring areas for jobs. Road and congestion pricing act as a good regulator when a huge traffic is caused by the non-resident people.

In congestion pricing, the focus is to reduce the overall congestion caused due to the traffic volume in urban areas. Congestion pricing is implemented to achieve the main objectives like change in travel time, alteration in route choice, shift to more sustainable mode of transport, contribution towards reduction in environmental effects, overall improvement of the quality of life and to generate revenues for the local authority. It is also useful to restrain the need for developing new road networks to enhance the carrying capacity.

Best Practices:

1. Mobility concept of LTA in Singapore: Singapore experienced unprecedented growth in 1970s and 1980s leading to a large increase in vehicle population. In order to secure its future growth prospects and avoid vehicular congestion and pollution, as experienced by major developed countries, Singapore proactively implemented Economic Instruments for demand side transport management. In 1995, the Land Transport Authority was formed to set up a comprehensive transport system that guarantees, controls and manages mobility in the city-state. Since then, Singapore has provided best-practice example of how Economic Instruments can be put into practice as part of the comprehensive management and planning strategy in urban transport[6].

"Singapore is a growing society with rising levels of influence and people will naturally want to own cars," said Chin Kian Keong of the Land Transport Authority. "And with more people wanting to own cars on the road there must be a sophisticated way to limit usage."[7]

Singapore's transport policy approach has followed three basic principles[8]:

  • To provide an effective integrated land transport network which is effective, economical and sustainable.
  • To plan, develop and manage the system so as to meet the needs of the nation such as growth, inclusion of economically weaker sections, etc.
  • To develop and implement policies so as to encourage commuters to choose the most appropriate mode of transport.

The main idea behind these goals is to set up an approach that integrates supply and demand side management strategies. The Economic Instruments play the role of demand side management. These are divided in three main categories:

Electronic Road Pricing (ERP)[9]: This technique is used to manage the transport demand through road pricing. It was introduced in 1998 replacing the Area Licensing Scheme. It has turned out to be a very effective way of road pricing since then. Today major networks of the city use ERP technique to regulate traffic flow and congestion through differentiated pricing measures. One of the best thing of ERP is that is does not require any toll both or lane dividers, nor do the vehicles have to slow down for detection. The ERP system uses two elements, in-vehicle unit and receptive unit installed on gantries, in order to effectively price each of the vehicles. An ERP in-vehicle unit is fixed in the car which accepts a stored value cash-card, which can be topped up using various means, and the ERP gantries are installed with receptive cameras which capture the signal emitted from the in-vehicle unit once the car passes under the gantry.

Charges are levied on a per-pass basis as per the principle of pay-when-you-use and they are differentiated according to days, time of the day, type and size of vehicle, current congestion level and road and place of gantry. These differentiations allow for flexible road pricing.

The Vehicle Quota System (VQS)[10]: This technique is aimed at restricting the ownership of vehicles in the city. Earlier, attempts were made to regulate the car ownership through taxes and heavy charges. Under the VQS, car licenses, also known as certificates of entitlement (COE), are subject to auctions. The number of licenses to be auctioned is decided by the government. The government the number of vehicles and acceptable growth rate of vehicle population and then gives a suitable figure for the auctions.

The certificate of entitlement is valid for a 10 year period. In a monthly tendering process, applicants are allowed to make a bid in order to receive a COE. After the bidding, all bids are ranked in descending order, and the highest bids are awarded a COE as long as the upper limit of the COE to be allocated (the 'quota') is reached. The last bid to be accepted eventually determines the prices of all other bids, as the COE price offered in this bid (the so-called 'quota premium') is applied to all bids.


Singapore has managed to reduce its congestion and pollution to a great extent while maintaining effective mobility in the city and between the central areas and the periphery. The survey results of reduced congestion show that the ERP system is working well. The traffic volumes in the central business district during the ERP period have reduced significantly.

Determined growth of vehicle population due to the Vehicle Quota System has been very successful in controlling the number of vehicles in Singapore.

Lessons Learned:

  • Centralised management and control: A single regulatory authority, LTA, has been established in Singapore my merging the previously existing regulatory authorities. To fulfill the demand side management, effective use of incentive policy was made and due to single authority control there were no policy coordination problems.
  • High public acceptance: The charges for road pricing were equal for everyone using a particular road. Therefore, people did not have any issues in accepting the fair pricing system. Automatisation for the congestion pricing was a reliable way to tackle the problem of prevention of delay due to detection, toll booths, lane dividers, etc.
  • Use of funds raised through ERP and VQS: Singapore has effectively managed the expenses incurred in the operation and maintenance of the road networks from the revenues generated through ERP and the VQS auctions. On top of that, they were able to save a significant amount of the revenues and were able to meet the expenditure requirements of public transport.

2. City Toll Ring in Trondheim, Norway: In 1991, Trondheim road-pricing scheme was introduced in the form of a toll ring around the city centre. The main purpose to do so was to generate revenues for investment in infrastructure. This infrastructure would provide services to car users, public transport, pedestrians and bike users. The demand management was of secondary importance. However, environmental benefits and increased quality of life were considered as the main long-term benefits.

Urban road pricing was prevalent in European cities but the Trondheim scheme was unique in two aspects: first, it was a fully electronic system with non-stop toll lanes at all stations, and, second, charges were time-differentiated. Originally, the scheme was based on a single cordon around the city centre (central business district). However, the policy makers are looking forward to further improvement of the scheme by developing a zone based system. This zone based system would have different charges for different zones and therefore the user will not be paying a single charge as today.

The road-pricing scheme is operated by the 'Tondelong Toll Road Company', two-thirds of which is owned by the public authorities and the remaining is owned by the local commercial organizations.

  1. Congestion pricing in Seoul, Korea
  2. City toll ring in Trondheim, Norway
  1. Halcrow Fox, Review of Urban Public Transport Competition: Draft Final Report, Department for International Development, 2000, pp. 08.
  2. Cities on the Move, A World Bank Urban Transport Strategy Review, 2002, pp. 01.
  3. Quoted by William S. Vickery, 1996 Nobel Price laureate in Economics.
  4. Jan A. Schwaab and Sascha Thielman, Economic Instruments for Sustainable Road Transport: An Overview for Policy Makers in Developing Countries, 2001, pp. 87.
  5. Jan A. Schwaab and Sascha Thielman, Economic Instruments for Sustainable Road Transport: An Overview for Policy Makers in Developing Countries, 2001, pp. 98.
  6. Smart Card Taxes Singapore Drivers, Article: BBC News -
  7. Smart Card Taxes Singapore Drivers, Article: BBC News -
  10. Jan A. Schwaab and Sascha Thielman, Policy Guidelines for Road Pricing: A Practical Step-by-Step Approach, 2002, pp. 112.
  11. Land Transport Authority Singapore -