Time has come for general road tolls on all roads across all of Europe

Hans-Werner Sinn, Professor of Economics and Public Finance at the University of Munich writes on the topic.

 

It’s the same story every year. European motorists fight their way through heavy traffic on their way to their holiday destinations. Instead of comfortably stretching out their legs in their hotel rooms, they spend long hours cramped behind the steering wheels of their cars. Stress instead of rest and relaxation. Hours in taxing stop-and-go traffic until their long-anticipated goal is reached. This has got to stop. EU countries should be able to put an end to the chaos on their highways.

The popular slogan “free and open highways ahead for free citizens” cannot become reality by building more and more highways, bridges, and tunnels. That would be too expensive, and is also prevented by environmental concerns. Instead, the EU countries need to implement road tolls, finally, in order to regulate the traffic flow – on all of its roads. Freeways, highways, and city streets must be treated equally. Only with a comprehensive road toll can the available capacity of the roads be used in such a way that motorists hinder each other as little as possible.

Of course the toll must be dependent on where and when people drive. Whoever insists on driving when all others are on the road must pay an amount that will compensate the others for arriving at their destinations somewhat later. Whoever is flexible, however, and prepared to drive at a time when no one else is hindered should be able to drive more cheaply. This would regulate the flow of traffic and increase the load-carrying capacity of the roads far more than any road building programmes that stretch into the billions would do.

I would have been sceptical about the idea earlier. But having seen the success of toll roads in India, I can only agree to the idea. By success, I do not mean financially (as there have been episodes of failures) but socially. I used to think people would not want to pay tolls and there will be strikes etc. Not really. After the initial crib of having to pay for what was once a free road, people have started to pay and have actually started to enjoy the ride. The roads are much better maintained (atleast at most places if not all) and the drive is quite good. It also reduces travel time and overall is less costly as vehicle maintenance charges are lower as well.

But there is one catch to all this. First toll road companies need to be honest about their projections (some overestimated the flows which led to overestimated cash flows and problems later) and two, the roads should be well-managed and maintained. People understand good quality roads are important and are willing to pay.

Though am not saying all roads in India should be tolled. But it is an idea which has worked.

PS. All this is based on pure experience. I have no real research on this. People who have come across any research and find things contrary, please do let me know. I will be happy to point it on the blog and correct my views.

Addendum:

As I wrote this post, I came across articles (see this) which show people are not happy payint tolls as roads are poorly maintained. They are full of potholes.

5 Responses to “Time has come for general road tolls on all roads across all of Europe”

  1. Harpreet Says:

    Hey Amol,

    I agree with the point of over estimation of cash flows, Recently u must have read the case of Delhi-Gurgaon expressway where the company is understating the traffic flow which may lead to an increase in the concession period.
    The consultant for the study estimated higher traffic than being stated by the company.

    In this case wht do you think is the solution.

    Harpreet

    • Amol Agrawal Says:

      Solution is simple. Be honest with the cash-flows. Both economics and finance teach you to be conservative in your estimates/forecasts. There is no harm in being conservative and then building a road. It is aggressive projections which lead to trouble.

  2. Harpreet Says:

    Amol,

    I think in case of Gurgaon-Jaipur, the forecasts were badly underestimated cos nobody expected the cyber city to grow so much.

    • Amol Agrawal Says:

      Hmmm… well there are case studies for all different toll-roads. I don’t think you can perfect the forecast. In fact most likely it is going to be wrong. So how I understand this toll road business is —-try and keep a conservative estimate on traffic flows but build the road looking at 10-20 years of traffic. So it should be wide/4lane/6 lane/whatever possible. Now I am not saying build all roads like that. You need to have some broad idea. If you are making a toll road between two small towns/villages you might not be very aggressive about the width. Infrastructure is not built everyday. so best to keep supplies in excess.

      It is a case by case study. As you mention Gurgaon and Jaipur highway, i have not seen the estimates. But if they underestimated growth in Gurgaon, it was plain stupid. Gurgaon was always meant to be a bustling town. I have never seen a city change so much. Every year you go and you realise it has developed further. So it was a development waiting to happen.

  3. soe Says:

    “free and open highways ahead for free citizens” – who ever could believe such slogan? Of course, if people believe that roads are “free” (e.g. that they don’t pay anything for them now), then they will have problems with paying the tolls.

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