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Putting a price on travel

Every day, we try to get from A to B and back again in the quickest and most convenient way possible. We want to avoid time wasted sitting in a traffic jam or waiting at the bus stop. This can be achieved only with an efficient transport system, and that comes at a cost.

Travel demand patterns for buses may change substantially when more MRT lines are ready. Photo: Ooi Boon Keong

Travel demand patterns for buses may change substantially when more MRT lines are ready. Photo: Ooi Boon Keong

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Every day, we try to get from A to B and back again in the quickest and most convenient way possible. We want to avoid time wasted sitting in a traffic jam or waiting at the bus stop. This can be achieved only with an efficient transport system, and that comes at a cost.

But who should bear this cost?

Various means of transportation pricing such as road pricing, the Certificate of Entitlement (COE) system, bus and MRT fares and parking fees are subjects of fiery debate, in Parliament House and coffee shops.

One of the main challenges in finding the right strategy is the tight connection between all of these pricing policies. They can influence and reinforce one another or pull in opposite directions. Therefore, a single policy measure cannot be studied in isolation.

An integrated approach — which takes the combined outcome of the policy mix on traffic conditions, quality of life and social fairness — is inevitable.

How can we find Singapore’s answer to this challenge?


Singapore can be considered a pioneer in the use of pricing as a traffic management tool.

It was the first city in the world to introduce congestion pricing in 1974 and served as a model for others, such as London and Stockholm. Also, the early adoption of a cashless smart card payment system for public transport and introduction of distance-based fares made payment for MRT and bus trips easier, faster and fairer.

As a tool to optimise road use in Singapore, Electronic Road Pricing (ERP) has succeeded in increasing the average speed on priced roads by 20-30 per cent and in reducing traffic volumes by 13-20 per cent. This is comparable to the effects of similar pricing schemes implemented in parts of London’s downtown area in 2003.

However, as we expect the population in Singapore to continue to rise and road usage to increase, the ERP system will only remain effective if we start to rethink related traffic management systems, such as the vehicle ownership quota system and its integral — COEs.

High COE prices lower the price sensitivity of road pricing. This comes as no surprise — if you had paid S$100,000 for a car, spending a few dollars a day on ERP will mean less to you. Therefore, only if ERP and COE are well balanced can ERP continue to be effective.

In fact, it makes more sense to think about potential measures to lower COE prices — or perhaps even a “pay as you use” scheme, as recently discussed by policymakers and experts.

We are already experiencing congestion in locations beyond the restricted zones of the city centre. To overcome that, feasibility studies for a new generation of ERP technology are being conducted.

Such new technology would have to allow for more flexibility in terms of time and location in charging for road use, in order to tackle congestion at its roots.

This might include the use of Global Positioning System technology for tracking individual cars and charging motorists based on the length of congested roads they use.

However, this new technology brings with it a number of challenges — privacy is one of the most obvious issues that can be expected to arise. Regulations have to be put in place to ensure that the privacy of individual motorists is protected.


The other, and perhaps larger, challenge facing transport researchers, planners and economists is finding the right price to charge.

How much differentiation between prices on different roads is required to design an efficient system? How can we ensure that the system is fair and accessible to everyone at the same time?

Reconciling these two questions is not an easy task as traffic conditions depend not only on the capacity of the road network, but also on human behaviour.

Addressing these challenges requires careful research and sophisticated tools — researchers from the Future Cities Laboratory, for example, are developing tools which utilise computer simulations based on actual travel behaviour of individuals, and these can help policymakers play out scenarios before they implement new road pricing schemes or policies.

At the same time, more research is necessary to better understand the effects of more complex road pricing schemes and policies on daily routines and habits of Singaporeans.


As a consequence of policy changes, some drivers may change their travel times or take alternative routes to avoid the charge, or decide to visit restaurants and malls nearby instead of driving to the city centre.

Some may switch to other means of transport such as buses, trains or emerging technology like electric bicycles. It is then crucial to ensure that viable alternatives to the car are maintained. This is what the authorities tried to provide after the introduction of the Area Licensing Scheme back in 1974 and later ERP by adding bus services and subsequently building the MRT network.

Continuing investment in the public transport system and alternative transport infrastructure, such as bicycle paths and covered bicycle stands, is required. In some cities, such as London and Stockholm, the money collected from road charges is even channelled directly back into the upgrading of the public transport system.

Many motorists must surely contemplate overcrowded trains, long waiting times and unreliable bus services when they think of taking public transport to work. Overcrowding during peak hours makes the MRT or bus ride an unpleasant experience. It is also one of the main reasons for travel time unreliability.

The recently announced measure to have free rides before 7.45am is an attempt to ease peak-hour crowds, but this initiative may not be sufficient to ameliorate the extra demands that a rising population will place on the public transport system. In the long run, the plans for islandwide extension of the MRT network are a huge step in the right direction.


Meanwhile, it is also a good time to think about redesigning the bus network. The intention, however, should not just be to prune or stop bus services, but to restructure them so they complement the MRT networks and serve commuters better.

For example, for longer trips, an MRT ride plus a short, reliable bus ride will prove a quicker commute than today’s long bus rides. Travel demand patterns for buses will change substantially when more MRT lines are ready. It is likely that there will be less need for long bus route lines.

A good example of effective bus network transformation is Seoul. In 2004, the city restructured 600 bus routes and lines to complement the subway system. The highly efficient and sophisticated bus system resulted in a nearly 40 per cent increase in public transport ridership.

Such a bold rethink would require the Singaporean authorities and research institutes to think through each of the elements of the current transport system: Private vehicles, buses and the MRT and alternatives means of transport.

At the end of the day, as long as everyone wants to own a car and would prefer to use it for each and every trip, the price of car ownership and usage will continue to rise.

The solution to this spiral of rising prices is to make public transportation a mode people choose to use because they want to and not because they have to.


Artem Chakirov is a researcher and Alexander Erath is a senior researcher, both in the Mobility and Transport Planning research module at the Future Cities Laboratory, established by ETH Zurich and Singapore’s National Research Foundation.

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