Finances of Commercialized Urban Road Network Subject to Congestion Pricing

Estimates of congestion costs in the Metropolitan Manila, Philippines, area and of the additional charges necessary to reduce traffic volumes to levels at which the congestion charges (paid by vehicle users) equal congestion costs (which their vehicles impose on the rest of the traffic) are presented. Calculations indicate that, on the basis of reported values of time for different vehicle classes and elasticities of the demand for road use assumed to be in the range of -0.1 to -1.0, a congestion charge in the range of 6 to 14 Philippine pesos (Php) per passenger car unit per km would be appropriate. Calculations also indicate that such a charge would likely increase traffic speeds by 44 to 101 percent. Traffic volumes would fall by 11 to 24 percent, with traffic with low time values falling more than traffic with high time values. Total revenues of 10.2 billion to 23.1 billion Php in congestion charges and a further 2.4 billion Php in parking charges could be raised each year, thus offering gross revenues of 12.6 billion to 25.5 billion Php/year to a Manila commercial highway organization (MaCHO). Net revenues to MaCHO could range from 5.6 billion to 14.3 billion Php/year.