Modelling tolls: values of time and elasticities of demand: a summary of evidence

Lake, Maree & Ferreira, Luis (2002) Modelling tolls: values of time and elasticities of demand: a summary of evidence. Queensland University of Technology, Brisbane.


This report summarises a review which was prepared as part of a study conducted for the Queensland Department of Main Roads (QDMR) and the Brisbane City Council (BCC) into future transport infrastructure options for Brisbane. The provision of additional cross-river links and the issues associated with the possible use of tolls as the pricing of those links are of special interest in the study. The Transport Research Consortium at QUT has been asked to contribute to this study by:

(a) Reviewing values of time used in demand modelling. Particular emphasis should be placed on the most appropriate values to be used when conducting traffic assignment (analysis of traffic flows using specific paths in the road network); (this is dealt with in Appendix A).

Currently, the Brisbane strategic transport model (BSTM) uses a single value of time for all road users. This value is used to obtain generalised costs of travel and hence to assign an Origin-Destination (O-D) vehicle trip matrix to the road network.

Ideally, to estimate the extent of traffic re-assignment due tolls being introduced on specific links, different values of time should apply to:

• different tripmakers to reflect differences in income levels; • different trip purposes – ‘business’ trips and all other trips being the most common distinction made. In this way, commercial vehicle trips, for example, would use a different value of time for assignment purposes. • different trip distances to reflect the different elasticities of demand to tolls for different trip lengths.

The literature surveyed points to a wide range of VTT used for modelling purposes. However, 40% to 50% of average wage rates seems to be widely accepted for non- ‘business’ trips (where ‘business’ trips are those made during employers’ time). The latter tend to be valued at higher rates of up to 80%-100% of the wage rate. With the current Australian weekly average wage of around $22/hr., this would translate into values of time of between $9-$11/hr. and $18-$22/hr. for ‘business’ trips. The Brisbane Strategic Transport Model uses a single value of time of $12/hr.

(b) Reviewing the evidence on the elasticities of demand for road tolls in urban networks from elsewhere and reporting on the appropriateness of transferring the results to Brisbane;

The use of tolls to finance capital expenditure on road facilities offers an opportunity to include a component of the toll which can be used to reflect congestion related topics. Road user charges or tolls for the use of congested road space has long been seen by economists as the preferred option to allocate scarce resources efficiently. Such charges have been made politically acceptable when the revenues obtained have been used to fund improvements in public transport services and facilities.

A range of toll elasticities was found in the literature. It would appear that elasticities of between -0.2 and –0.3 could be used in Brisbane as average values. However, there is a wide range of values found for different trip purposes, income levels and overall trip costs. In addition, the availability of alternative routes which are attractive enough, in terms of levels of service, will have a significant impact on elasticities of demand for tolled roads.

The main options used to undertake traffic assignment with toll estimation remain as put forward in QT (1993), namely:

• Use conventional assignment techniques with generalised costs and treat the toll as an additional cost on a specific link, using an assumed value of time for all drivers;

• Use multi-class assignment with each vehicle class having a different assumed value of time. Values of time for different trip purposes can be used to reflect differences in drivers’ perceptions. This option also allows for different toll rates by vehicle class. This option could also see the use of more detailed modelling techniques based on logit type ‘diversion’ curves. This allows for different classes of vehicle or trip purposes to be modelled separately with the probability of using the tolled facility given by a function of the generalised cost difference between it and its next best alternative.

Whilst there have been advances in the way in which the main software transport planning packages deal with the modelling of tolls, the basic options and their data requirements remain as outlined in QT (1993). The needs identified in that report related to specific surveys to obtain up-to-date data on drivers perceptions of time and operating costs, still remains.

Impact and interest:

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ID Code: 2495
Item Type: Report
Refereed: No
Keywords: demand, toll roads, modelling, elasticities, travel time values
Subjects: Australian and New Zealand Standard Research Classification > ENGINEERING (090000) > CIVIL ENGINEERING (090500) > Transport Engineering (090507)
Divisions: Past > QUT Faculties & Divisions > Faculty of Built Environment and Engineering
Copyright Owner: Copyright 2002 (please consult author)
Deposited On: 11 Nov 2005 00:00
Last Modified: 09 Jun 2010 12:28

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