Hong Kong: Congestion pricing versus reality
Congestion pricing, or charging for road use during peak travel periods, is an idea advanced by economists to reduce traffic congestion.
 We have long suspected that congestion pricing was an example of a theory that did not take adequate account of human behavior. The experience of Hong Kong tends to demonstrate this.
A pilot Electronic Road Pricing system was tested from July 1983 to March 1985 (Hau 1990). Results per se were positive - but public reaction was exactly the opposite.
The test included 2,500 vehicles. The pricing system had three zones, and five fee levels which varied by time of day. Full-scale implementation was planned for 1985, but was stalled by public opposition. The paramount concern was privacy - that is, the concern that the system could be used to track the movements of individuals. A factor increasing such anxieties was the (then-) pending return of Hong Kong to Chinese sovereignty. Another concern was system reliability (Eliasson and Lundberg 2002).
Another reason for the "political failure" of road pricing was metro (subway) expansion. The MTR Island Line opened in stages during 1985-1986, and carried about 25 percent of all public transit boardings by 1988.
Today, road charges in Hong Kong, China, are seen as a device not to reduce congestion but to curtail air pollution and maintain the city's attractiveness (World Bank 2008, Ch 6, p. 185).
The Hong Kong government continues to study electronic road pricing, most recently as a means of road capacity management, but has not announced plans for implementation.
Levinson, reviewing Small and Verhoef (2007), wrote the following
Transportation economists have had a major effect on policy, and the trend toward modal deregulation and privatization is due to lessons from transportation economics. Yet, given what is known about transportation economics, it may seem surprising that such basic issues like road pricing, which in congested circumstances if efficiently implemented can provide enormous gains, have barely emerged as a policy consideration outside a few central cities, while investment decisions are still so misguided. The problem of course is politics, on which this text says little, but whose absence suggests a fundamental topic: why are political systems at odds with economic efficiency and equity, and how can they be aligned?
We think that the answer to Levinson's question is self-evident - but he chooses not to see it.
Eliasson, Jonas and Mattias Lundberg (project manager: Johanna Lindqvist Dillén). 2002. Road pricing in urban areas (VV Publication 2002:136E; pdf format). Borlänge (Sweden): Vägverket (Swedish National Road Authority).
Hau, Timothy D. 1990. "Electronic Road Pricing: Developments in Hong Kong 1983-89" (pdf format). Journal of Transport Economics and Policy, 24, 2: 203-214 (May 1990).
For further reading:
Cervero, Robert (1998). The Transit Metropolis. Washington, D.C.: Island Press.
Small, Kenneth A., and Erik T. Verhoef. 2007. The Economics of Urban Transportation. New York: Routledge.