Another rant on Beijing’s traffic and pollution

Posted: December 26, 2011 in Economics
Tags: , ,

The other night in Beijing I had somewhere to be at 7:00 that should take about 15 minutes to get to by bus on empty roads. But given that it’s Beijing, I left at 5:30…and I was still 20 minutes late. In related story, the next day I opened my pollution mask to change the filter. The one on the right in that picture is a new one. The one on the left is what it looks like after a month of casual (maybe an hour per week) use in Beijing.

Some problems in China are so complex and ingrained into habit that solving them will take decades; if they can even be solved at all. This is not one of those problems.

There was recently a hilarious report that claimed Beijing commutes have been slashed from an average of 145 minutes to 60 minutes since this time last year. This incredible 170% drop supposedly happened thanks to the odd-even license plate system that’s been in effect for three years – and it happened while over 240,000 new cars hit the road. I can’t imagine a single Beijinger (who hasn’t been bed-ridden for the past year) who believes this.

The 240,000 new cars are actually down from over 900,000 new ones last year, thanks to a new annual quota on licenses. But after doing extensive calculations of all the traffic reduction measures [looking at them], I found a common fatal flaw: they still allow the number of cars to go up.

If they actually wanted to solve the problem once and for all, it would be as simple as charging a toll to drive in the city. Singapore has a brilliantly simple system where drivers have a pre-paid card on their dashboard that overhead cameras scan, deducting money automatically as they drive around town. Prices are higher during weekdays and during rush hour. If traffic starts getting a little too congested, the price goes up and, magically, less people are on the roads.

The Singapore minister of national development said, “It’s not rocket science to know that if you charge people to use certain commodities, that use is managed and controlled.”

No, it’s not rocket science. It’s freshman economics 101. Use incentives and disincentives properly to achieve the desired result. Yet this is a concept that continues to elude many governments around the world.

While the number of cars has surged parking prices have naturally followed. The average cost of buying a parking space in the Beijing is now around 140,000 yuan ($21,726) while some spaces are fetching upwards of 800,000 yuan ($124,316). So what is the government doing? Accommodating the upset drivers by building 200,000 new spaces. If they had attended said economics 101, they would realize that when this measure makes parking more abundant, more people will have incentive to buy cars. Ditto if more roads are built. The problem will be solved very briefly, and then become worse. This is why several major cities have put caps on the number of new spaces that can be built.

The current measures being taken to alleviate traffic are all essentially gimmicks to pacify the greater public while avoiding too much agitation of car manufacturers and drivers. China doesn’t want to miss out on the boon that an auto industry gives the economy and the government doesn’t want to upset drivers – who are quickly becoming as whiny as Americans in defending their “need” and “right” to having a car.

Then there’s the social stability concern. Several drivers have beaten, and even killed, parking attendants over high fees.  But, to put that in perspective, the average life-expectancy of a Chinese traffic cop is 43. And how many others are having their lives shortened with blackening lungs each day and dying in traffic on the way to the hospital?

A Singapore-type measure wouldn’t solve Beijing’s horrific pollution completely, but it would help immensely. And it would, without a doubt, solve the traffic problem. In fact, it would work in any city that has a decent public transportation infrastructure. It would dent China’s auto industry, but if the government thinks it can develop the car culture the same way America did, we may as well all start digging our graves now.

Drivers would be upset, but frankly they can cry me a river. Why shouldn’t they pay for their negative externalities? It would be an egalitarian measure all around that does good for the maximum amount of people. Is there something I’m missing here?

  1. There is no way the Chinese are going to give up owning cars now that they just started. It will not matter how long the commute as long as they can afford the costs, they will embrace the car. They are not going to go back to the bicycle and even there, the bus (the Loser Cruiser) must be looked down on.

  2. FOARP says:

    “If they actually wanted to solve the problem once and for all, it would be as simple as charging a toll to drive in the city. Singapore has a brilliantly simple system where drivers have a pre-paid card on their dashboard that overhead cameras scan, deducting money automatically as they drive around town. Prices are higher during weekdays and during rush hour. If traffic starts getting a little too congested, the price goes up and, magically, less people are on the roads.”

    A congestion-charging system like this has also existed in London since 2003. The problem is that the reduction in traffic it brought essentially disappeared within 3-4 years despite an initial 20-30% reduction. The reduction in pollution over and above that which would have occurred anyway due to improved technology has been negligible.

    Why? Partly this is because London is a large, sprawling city with an area three times that of the island of Singapore. London’s area makes it difficult to get around using public transport despite the extensive network of bus routes and the highly usable London Underground – there is often no way of easily getting from one place to another via public transport without changing trains or buses a few times.

    Partly also this is because much of the traffic in London is from out-of-town, something which is not such a problem for Singapore as it is a city-state. Despite the UK’s extensive rail network, it is often simply not practical to travel to London via train or bus – especially when making deliveries.

    Were such a system brought in in Beijing, it might have an initial effect, but pretty soon the cost of the congestion charge would be passed onto the customers/employers/etc. of those using the road and the traffic would rise again. Also, since the congestion charge has brought about a rise in the number of people avoiding the charge using false number plates in London, it seems likely that evasion would be rampant if such a system were introduced in Beijing, given the evasion of restrictions that already occurs. Such a system is therefore unlikely to result in a long-term decrease in pollution in Beijing.

    Additionally, congestion charging is a very wasteful and expensive way of collecting money. Of every eight pounds collected by the London congestion charging system, five is spent on maintaining the system itself.

    • sinostand says:

      All valid points. But out of town traffic is one thing that the current Beijing licence plate cap scheme doesn’t really address. People can just get out of town plates, so at least with a toll everyone who uses the roads would be charged equally. Don’t know the situation in London, but do these fines really dissuade one-time travelers to the city? I would think the people it would really dissuade are the daily commuters.

      And if the costs are passed on to the customers/employers of drivers I don’t see a problem with that either. When gas prices go up, the cost is passed on to consumers in nearly every commodity. But it’s still good when gas prices go up because it boons alternative energy solutions and causes people to minimize their fuel use. It’s the same principle here.

      And if the number of drivers climbs back up eventually, then the price can just increase until you get the desired amount again. Eventually if any consumers or employers are bearing the costs they’ll demand a way to make the price lower; such as adjusting it so these drives can be made during non-peak hours or at night. (same principle as how electricity use is charged in the city, which people adapt to by trying to use what energy they can during non-peak hours).

      And even if 5 pounds (or yuan) for every 8 collected goes directly toward maintaining the system, that’s still 3 pounds that can go toward improving public transport and pollution mitigation measures. Traffic and pollution are negative externalities that both have very real economic costs. Drivers (and anyone that relies on them financially) should pay whatever it costs to offset these. (Just as there should be a carbon tax – but alas, a topic for another post).

      I think the most valid point is counterfeiting/gaming the system, which would obviously happen in very large numbers in Beijing. Don’t know a good solution to this except frequent checkpoints to verify compliance with exorbitant fines or jail time for violators.

  3. FOARP says:

    Out-of-towners in London also have to pay the congestion charge. This is something that causes problems on all the roads into the city when people suddenly realise that they have to pay the charge and quickly have to phone the hotline to pay – otherwise they will receive a fine. It does lead to a degree of switching of journeys to off-peak times – particularly to Sundays when there is no congestion charge.

    But the fact remains – the congestion charge has not lead to a lasting marked reduction in overall traffic levels or pollution levels, because in a large city that receives a lot of out-of-town traffic (like London and Beijing, but not Singapore) road transport is not easily replaceable. Moreover, a direct road-tax is a much more efficient way of gathering money for investment in public transport or what have you.

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