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The University of Hong Kong
M.A. in Transport Policy and Planning
URBP61
31
Transport
Policy and Planning
1
st
Semester, 202
2
– 202
3
Group Project
Electronic Road Pricing Policy—
Challenges in Implementation
Authors:
Tsui Ka Hei Gavin Sagum 3035910357
Yu Kuo Heng
Tim
3035955656
Lee Yuen Wing
3036088682
Submission Date: 0
5
Dec
2022
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Contents
Part 1:
Introduction
Part 2:
Conceptual Review
Part 3:
Local Case Study
Part 4:
Global Case Studies
Part 5:
Challenges and Feasibility in Hong Kong’s context
Part 6:
Future Envision
Part 7:
Conclusion
References
Appendix
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Part 1:
Introduction
1.1:
Study Background & Objectives
Since the 1980s, Electronic Road Pricing (ERP) has been a topic of debate in Hong Kong. When it
came to be the fi rst in the world to recognise the potential of ERP to maintain the flow of goods and
people in urban contexts, Hong Kong was very foresighted and progressive at the time (Chang and Mei,
1997). After more than 30 years, several large cities comparable to Hong Kong in terms of influence
have adopted ERP to improve their residents’ quality of life through better mobility. A need for
proactive traffi c management has become more critical than ever as the traffi c situation in Hong Kong is
getting worse . Nevertheless, several proposals for ERP were issued by the Government, only to be
abandoned in the face of fi erce opposition from district councillors, politicians, and motorists (Hau,
2021). Is the Government ready to try again? What are the implementation challenges the Government
is facing? To answer these questions many people raise, knowing the essential success ingredients of
ERP implementation from other cities is indispensable. Although extensive research has been conducted
on how ERP is adopted in different cities, few studies demonstrate how to transfer those successful
showcases to Hong Kong’s context. In this regard, this study aims to understand the issues and
challenges of ERP implementation from a policy perspective and learn from cities such as Singapore and
London on how they overcome obstacles and achieve success in ERP implementation; review the
dynamics of the ERP scheme in Hong Kong; and suggest ways to transfer the successful experience to
Hong Kong’s context.
1.2:
Report Structure
The structure of this report follows the above three aims of understanding, reviewing, and suggesting the
implementation of ERP:
Understand
●
Part
1: Background to illustrate the study motivation, objectives and methodologies
●
Part
2: Conceptual Review to study ERP and their interplay in an academic and policy context
Review
●
Part
3: Case Study of Local Context to review the dynamics of the ERP scheme in Hong Kong
●
Part
4: Case Studies of Singapore and London to learn how they overcome obstacles on the road of
success in ERP implementation
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Suggest
ions
●
Part
5: Feasibility and challenges in local context to give recommendation for overcoming the ERP
implementation challenges in Hong Kong
●
Part
6: Future envision to combine with the insights and qualities of successful ERP implementation
in Hong Kong
●
Part
7: Conclusion to give summary of fi ndings of this study
1.3:
Scope & Methodology
Qualitative desktop research
A review of relevant literature regarding ERP implementation
is
demonstrated
in Chapter 2 of this
report, aiming to
identify
the strength, weaknesses, opportunities, and threats of ERP implementation in
Hong Kong from environmental, economic, and social perspectives. A case study of Hong Kong is
presented in Chapter 3 of this report which gives a clear picture of particular work that has been done on
ERP locally and globally, addresses fundamental challenges associated with the implementation of ERP,
and makes a more signifi cant contribution to reflection on the future envision. To promote a better
understanding of the topic, this report examines worldwide challenges and strategies to improve their
ERP scheme through the case studies of Singapore and London in Chapter 4 by reviewing innovative
implementation techniques and ensuring the lessons learned from the selected cities are possibly
incorporated into the ERP scheme in Hong Kong.
Quantitative desktop research
There needs to be more literature on recommendations for ERP implementation regarding how to
improve the ERP scheme before its commencement from drivers' perspectives. Thus, a semi-structured
interview helps to bridge the gap between research and public opinion, analysing the public involvement
in ERP scheme making connections with ways to cope with the challenges. User perceptions are
essential issues for successfully implementing a transportation policy. A better understanding of
user's
perceptions of ERP
approach
es
could
assist
transport planners and policymakers to
notice
the public
support for the scheme (Chowdhury et al., 2018).
A driver in the freight industry with more than 40 years of driving experience who witnessed the
extensiveness of the change in road pricing schemes of Hong Kong and experienced the taste of traffi c
congestion was invited to express his views on the improvement of the ERP scheme. He addressed the
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current and foreseeable challenges of ERP implementation. The details of the interview are presented in
Appendix I.
Part 2:
Conceptual Review
SWOT Analysis: Implementation of ERP
ERP can bring social benefi ts to the community while raising potential environmental challenges that
intersect with socioeconomic disadvantages. Although many researchers pointed out that the ERP was
successful in many cities (Seik, 1997; Hensher & Li, 2013; Nikitas et al., 2018); however, some cities'
social and economic structure still needs to cross for effective implementation of this option (Fong,
1985). In order to analyse the political, economic, sociocultural, and technological aspects of the ERP
scheme, this study adopted SWOT analysis which could help understand the implementation challenges
of ERP and support the Government to formulate future strategies or improvement actions for ERP in
the ever-changing urban environment.
In this section, strengths, weaknesses, opportunities, and threats
of ERP implementation mentioned in different literature are summarised in the table below, followed by
an illustration of some critical researchers' arguments.
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Strengths
Strengths are the capacities that ERP can use effectively to achieve its objectives. In terms of
convenience, ERP could have a positive impact on the quality of life in Hong Kong. The ERP scheme is
based on the "user pays" principle and imposes a fee on road users, and it could attract Hong Kong
drivers to use the lower volume roads, which would directly reduce the traffi c flow on the major trunk
roads, thus relieving traffi c congestion and reducing the commuting time of Hong Kong people and
enhancing the overall convenience of the community (Li et al. 2012). As such, the ERP scheme can
enhance the convenience of Hong Kong people and improve the quality of life in non-physical aspects.
Moreover, ERP allows users wh
o create
congestion to bear the costs, thus freeing
most
users from the
social costs
which were
caused by a small
portion
of people. The "user pays principle"
could control air
pollution and
reduce travel time (Wang et al. 2009). Until now, major cities that have caught up with
Hong Kong in implementing ERP
that
could give Hong Kong confi dence
and
residents will
benefi t
from
Strength
Opportunities
Fees can create economic incentives to reduce traffi c
in congested areas (Wang et al. 2009; Li et al. 2012)
Reduce vehicle traffi c and improve air quality in
individual areas (Rodriguez Garzon et al., 2022)
Improve road accessibility and convenience of life
(Parayil & Yeo, 2005)
Promote public health by reducing transport use and
increasing walking incentives
(Young & Daly, 1998; Hosford et al., 2021)
Support smart city components to optimise city
functions and improve the quality of life for citizens
(Bouchelaghem & Omar, 2019)
Enhance public trust and governance stability
through increasing public participation (Grossardt &
Bailey, 2018)
Weakness
Threats
Adjust the toll according to the traffi c conditions, the
toll level of major trunk roads or higher (Tang, 2009)
Increase the cost of living of Hong Kong people and
damage the profi ts of the automobile industry (Hau,
2021)
Detour driving increases time costs, resulting in
increased driving time, experience and pollutant
emissions (Fong, 1985)
Affect real estate prices (Agarwal et al., 2015)
Electronic system collects personal information,
security is doubtful. Risk of privacy problems and
surveillance of Hong Kong people's lives (Jardí-
Cedó et al., 2016; Hau, 2021)
ERP system increases the cost of car use and reduces
the incentive to buy a car which would pose a threat
to the economic security of automotive industry
(Hon, 2005)
Deal with change and uncertainty during COVID-19
pandemic (Christidis et al., 2022)
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ERP. In addition, a researcher also showed that the public's resistance will subside after implementing
the scheme. It is worth noting that the resistance is not due to restrictions on the use of private cars but
rather the initial perception that ERP is not a good solution for improving road congestion and
environmental quality (Li et al. 2012).
Weaknesses
Weaknesses are the components, capacities, or aptitudes that ERP lacks. It restricts the ability to
develop a long-lasting competitive advantage. In terms of cost of living and operating profi t, ERP could
harm the quality of life of Hong Kong people. ERP would directly increase the cost of using a car, and
the toll amount would be determined by the government only, with no influence from car owners and car
dealers (Tang, 2009). Therefore, the tolls would directly increase the fi nancial burden of existing
drivers, especially on signifi cant individual roads, which are essential for drivers and will undoubtedly
increase their cost of living (Hau, 2021). At the same time, the toll would reduce potential consumers'
desire to buy a car, causing a loss of revenue and overall profi t for car dealers (Hon, 2005). The ERP
scheme would reduce the income of individual Hong Kong people and raise the cost of living of the
Hong Kong people as a whole, ultimately undermining the quality of life at the material level.
Moreover, there is a shortcoming of ERP to protect public transportation
including
bus services.
Since
roads
are
more congested, public transport users,
especially
bus passengers, suffer unfair delays in their
travel time (Fong, 1985). This has the potential to cause people to turn to private vehicles, worsening
the transport
experience of the public
(Sunitiyoso et al., 2020).
Opportunities
Opportunities are trends that ERP can take advantage of to either strengthen its current market position
or expand further. ERP is considered good news for logistics operators, as it reduces travel and waiting
times, thereby
elevating
the number of round trips that
could
be made
day to day
. The ERP also enables
logistics operators
using
roads other than major trunk roads, further improving logistics
as well as
pedestrian flow
,
and setting a comprehensive vision for Hong Kong to become a public transport-
oriented city (Hosford et al., 2021). In addition, ERP would help foster "Smart Travel" as an essential
element in the smart city development of Hong Kong; it would improve the environment and promote
sustainable development through innovation and technology by facilitating people to plan their journeys,
making better use of public transport, relieving traffi c congestion and reducing emissions
(Bouchelaghem & Omar, 2019).
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Threats
Threats include environmental factors and developments that may jeopardize the ERP plan. One of the
most signifi cant public controversies over ERP is handling the privacy of the vehicles or drivers entering
the toll area
(Jardí-Cedó et al., 2016).
Although researchers repeatedly assured that the current
technology could solve the public's concern about privacy (Hau, 2021), with the current advanced
positioning technology and the earth information system, locating the car is not diffi cult, but it is not
reassuring (Ometov et al., 2019)
.
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Part 3:
Local Case Study
3.1
:
Context
Hong Kong has had a long history of pursuing the form of marginal cost since the 1980s. Alan Scott,
then Secretary of Transport, even mentioned that Hong Kong would be the fi rst in the world to test the
technical, economic, and administrative viability of ERP (T. D. Hau, 1990). In fact, the government has
totally conducted 4 studies in the past 40 years.
Due to the ever-changing economic situations, poor timing and lack of community consensus, ERP is
still a plan on paper only and yet to be taken forward.
3.2
:
1st Study: Hong Kong ERP Pilot Scheme (1983-1985)
From July 1983 to March 1985, Hong Kong’s fi rst ERP pilot scheme was designed and conducted in
Central with the intention to tackle traffi c congestion. There were about 2500 vehicles which joined this
21-month pilot stage voluntarily for test run without actual charge. The system employed a form of
automatic vehicle identifi cation (AVI) technology where an electronic plate, in the size of a video
cassette tape, was mounted underneath vehicles (Dawson and Catling, 1983), transmitting unique
identifi cation code to control center via roadside computer whenever the vehicles passed through toll
sites. The estimated total cost of this project was HK$50 million per year, and the benefi t-cost ratio of
ERP was at least 14 to 1.
It was pointed out from this pilot scheme that ERP was technically, administratively, and legally
feasible. It could effectively reduce congestion by time of day and location due to its inherent flexibility.
Estimated results included a 20-24
%
reduction in private car trips. What is more, fuel savings and
vehicle emissions would be reduced under ERP.
However, despite all the favorable arguments and positive results of this study, ERP was a failure in
1985 for several reasons. First, the opening of Island Line Route of MTR and Island Eastern Corridor
both served to ease congestion, making ERP less necessary. Second, the demand for private cars was
drastically decrease due to stock and property crash in 1982. Third, while the introduction of ERP was
also under the keen effect of the fi scal restraint measure, the declining number of private cars already
improved the average vehicle speed in urban area by 40
%
from 1979 to 1984. Forth, ERP was lacking
private car drivers’ support. They felt discriminated against as taxis, which created more congestions
were exempted from the ERP charges. Finally, it was introduced at a sensitive time. When the 1997
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Handover of Hong Kong from Britain to China took place, people were fear of “big brother”
government and the system’s possible intrusion into privacy. (T. D. Hau, 1990; Legislative Council
Panel on Transport, 2015).
3.3
:
2nd Study: Feasibility Study on ERP (1997-2001)
In 1994, ERP as one of the measures to tackle traffi c congestion problem in Hong Kong was brought up
again by the Government’s working party. In the early 1990s, number of private cars was increasing at a
fast rate, the community was prompted to discuss a combination of means to control car growth.
Measures restraining car ownership such as First Registration Tax (FRT), Annual License Fee (ALF) and
other correspondent traffi c management schemes has helped to maintain average traffi c speeds in urban
areas at about 20km/h, while this Feasibility Study on ERP, commissioned in 1997, was set to further
explore the practicability of applying ERP system in Hong Kong, in terms of its cost effectiveness and
consequences, to reduce traffi c.
This study has investigated the aspects of charging method, charging zone, charging period, charging
rate and exemption of a possible ERP system for Hong Kong (Transport Department, 2001)
.
Estimated
results included a 40
%
of car trips has diverted to public transport during morning peak, 10
%
has
changed their travel time, and the rest of 50
%
stuck with their original course and pay the road charges.
However, side effects such as deterioration of environmental conditions in non-charging zone might
occur as the result of overall redistribution of traffi c.
Main fi ndings concluded that ERP was not warranted before 2006 for Hong Kong Island and 2011 for
Kowloon if the growth in number of private cars could be maintained under 3
%
per year. For ERP
technologies, Dedicated Short-Range Communications (DSRC) System was more mature for adoption,
while Global Navigation Satellite System (GNSS) could also be considered but still at development
stage. Last but not least, ERP could only work with a high level of public consensus (Legislative
Council Panel on Transport, 2015)
.
3.4
:
3rd Study: Congestion Charging Transport Model – Feasibility Study
(2006-2009)
Fast forward to 2006, a feasibility study on congestion charging transport model was commissioned to
develop a computer-based transport model for analyzing congestion charging to a study area covering
Central and Wan Chai Districts for two design horizon years 2016 and 2021. This model was conducted
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