"There will unquestionably be congestion charges in Israel, because there is no other solution. The only question is how they will be implemented, and how soon," Prof. Omer Moav from the Herzliya Interdisciplinary Center said at a session on transportation and real estate at the Israel Business Conference. "How do I know that the congestion charge solution works? Because it has been tried around the world, and the experiment was very successful. In Stockholm, they imposed a congestion charge, and they eliminated traffic jams immediately. 40% of the public supported the congestion charge initially, and the proportion of support rose to 70% within one or two years. It works excellently in London. In the Naim Layarok trial in Israel, half of the participants in the trial changed their behavior substantially. It's great that there are more railways, but the idea of getting people to switch from private vehicles to public transportation will not work without an economic incentive. Anyone in favor of public transportation has to clear the roads for it to some extent, because in order to get from Tel Aviv to Jerusalem, it's not enough to expand the interurban road. I have to get from my home to the station and from the station to my destination. It's not necessary to completely stop the use of private vehicles; you just have to charge a suitable price. This is an essential solution as a supplement to all the measures being taken by the Ministry of Transport."
Moav argued that a congestion charge is a successful solution for reducing traffic jams because the demand for transportation is not completely inelastic. "For us economists, it's obvious that when a person uses a resource in short supply and its price is incorrect, it will be overused. What does this resemble? Say that Israel decides tomorrow that bread should be free. Assume that Israel itself produces the quantity of bread needed, but distributes it free of charge. In the past, when bread was subsidized in Israel, people ate more bread, used it for animal feed, and so forth. Now assume that you were born in a situation in which bread was free and there were breadlines, and I offered you a magical solution: charging a realistic price that brings the demand in line with the supply. You would say, 'What a terrible burden for the public.' What I'm trying to say is that the status quo is sometimes very strong, and people think of something as a burden."
A congestion charge is a payment for the use of the road when it is crowded in places where there is congestion. Moav says, "You are already paying a congestion charge, but it is very inefficient. For example, gasoline is a congestion charge that no one gets bitter about. A congestion charge is a much more reasonable tax, because a tax on fuel also applies to outlying areas on uncrowded roads and in places where there is no reasonable public transportation, and there is unlikely to be any."
How will a congestion charge mechanism work? Moav gives an example of a town in which all of the residents work in a factory. Every day, the town residents take an hour-long bus ride on the long road to the factory, until one day, a bridge is built that shortens the time it takes to get to the factory. "The problem with the new bridge is that it is narrow, and cannot transport everyone, so there is a line at the entrance to the bridge. How long will the line be? Exactly one hour, because if it is longer, people will leave the line and go on the bus. If it is shorter, people will switch from the bus to the line. If the line is one hour, then what is the bridge's benefit for the public? Zero benefit; the bridge contributes nothing. What will happen if people pay NIS 10, for example, for using the bridge, or it is decided that anyone using the bridge has to throw NIS 10 into the river - in other words, to waste the money? What will happen? You can see that line will get shorter, so what happened to the benefit? It increased, because anyone who chose to pay the NIS 10 and wait less time in line benefits more. They threw NIS 10 into the river, and it was a more effective regulation of resources, and the public benefit increased. Incidentally, it would obviously be better to connect the money instead of throwing it into the river, and to use it to build more bridges," Moav explains.
Moav presented data for the number of vehicles and their speed at the entrance to Tel Aviv showing that the speed of travel diminishes when the number of vehicles increases. "And then something very interesting happens. Not only does the traveling speed fall, but fewer cars pass on the road. Moderate congestion charges actually increase the number of vehicles passing - it's a kind of magic," he says.
Moav asked why the use of roads in Israeli is under heavy regulation that prevents innovative uses of shared transportation - why there is no Via or Uber in Israel. "I very much admire what the minister of transport has done about open skies, so why are there no open roads?", he asks rhetorically.
Published by Globes [online], Israel Business News - www.globes-online.com - on January 14, 2018
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