Economics of Land Transport in Singapore - Managing Traffic Congestion in Singapore
Summary
TLDRThe video explores how Singapore manages traffic congestion in a land-scarce environment. With 12% of its land taken up by roads and a growing number of vehicles, the government uses measures like taxes, the Additional Registration Fee (ARF), and the Vehicle Quota System (VQS) to regulate car ownership. However, car usage, not ownership, is the core issue. To address this, Singapore introduced the Electronic Road Pricing (ERP) system, a targeted, pay-as-you-drive approach that charges motorists based on road usage. Coupled with a robust public transport system, these strategies help reduce congestion and ensure smoother traffic flow.
Takeaways
- 🚦 Singapore has a limited land area, with 12% taken up by roads, totaling over 3,300 kilometers.
- 🚗 The number of vehicles on Singapore's roads exceeds 900,000 and continues to rise.
- 🌐 The increasing demand for road space leads to traffic congestion, causing negative externalities such as increased travel time and reduced productivity.
- 💸 Congestion leads to higher business costs, increased fuel consumption, and environmental issues like noise and air pollution.
- 💵 The Additional Registration Fee (ARF) was introduced to make car ownership less attractive by increasing upfront costs.
- 🚫 The Vehicle Quota System (VQS) was implemented to control the growth of the vehicle population by capping the number of new cars each month.
- 🛂 The Certificate of Entitlement (COE) is required for purchasing a car under the VQS, and its price is determined by market demand.
- 🚦 The Area Licensing Scheme (ALS) was the world's first road pricing scheme, requiring drivers to display a paper license to enter restricted zones.
- 💳 The Electronic Road Pricing (ERP) system was introduced to manage traffic flow by charging motorists based on time, location, and traffic conditions.
- 🚍 The ERP system encourages drivers to adjust their driving behavior, such as taking alternative routes or using public transport, to avoid congestion charges.
- 🌿 An efficient public transport system is crucial as an alternative to private car usage to ensure the success of traffic control policies.
Q & A
What percentage of Singapore's land area is taken up by roads?
-Up to 12% of Singapore's land area is taken up by roads.
How many kilometers of roads are there in Singapore?
-There are over 3,300 kilometers of roads in Singapore.
What is the total number of vehicles on Singapore's roads?
-There are over 900,000 vehicles on Singapore's roads, and this number is rising.
What is a negative externality in the context of traffic congestion?
-A negative externality is the adverse effect or cost on third parties who are not directly involved in the activity that causes the effect, such as longer traveling times and disruption to planned activities due to traffic congestion.
How does traffic congestion affect individuals and businesses?
-Traffic congestion leads to longer traveling times, disruption of planned activities, reduced productivity, increased business costs, higher fuel costs, and negative environmental impacts such as noise and air pollution.
What is the Additional Registration Fee (ARF) and how does it affect car ownership in Singapore?
-The ARF is a fee based on a percentage of a car's open market value, payable upon the registration of a vehicle. It increases the cost of car ownership, making cars less attractive to consumers.
What is the Vehicle Quota System (VQS) and how does it control the number of new cars on the road?
-The VQS is a quota system that caps the number of new cars added to roads each month. Buyers must bid and pay for a Certificate of Entitlement (COE) before purchasing a car, and the number of COEs available is limited by the quota.
How does the Certificate of Entitlement (COE) work in the context of the Vehicle Quota System?
-The COE gives the right to purchase a car, and without it, one cannot own a car. The price of the COE depends on demand, and it allows for control over the growth of the total vehicle population.
What is the Area Licensing Scheme (ALS) and how does it manage traffic flow?
-The ALS is a road pricing scheme that requires drivers to display a paper license to enter a restricted zone. It was the world's first road pricing scheme and aimed to manage traffic flow by discouraging driving in certain areas.
What is the Electronic Road Pricing (ERP) system and how does it differ from the ALS?
-The ERP system is an automated electronic road pricing system that charges motorists every time they drive on a priced road. It is more versatile than the ALS, with charges varying according to time, location, and traffic flow, and it encourages drivers to adjust their driving behavior.
How does the ERP system influence driving behavior and traffic flow?
-The ERP system encourages drivers to consider driving at non-peak hours, take alternative routes, switch to public transport, or even forgo the trip. It charges drivers based on the external costs they impose on others, leading to a more efficient market outcome with less car usage and smoother traffic flow.
Why is it important to have alternative modes of transport when discouraging car ownership and usage?
-Having alternative modes of transport is essential to ensure that people have viable substitutes to switch to, which is necessary for the effectiveness of traffic control policies. An efficient and effective public transport system serves as a major pull factor, convincing people that they are making the right choice.
Outlines
🚗 Road Congestion: A Growing Challenge in Singapore
The introduction highlights that 12% of Singapore's land area is dedicated to roads, equating to over 3,300 kilometers of road space. Despite the vast network, the increasing number of vehicles—exceeding 900,000—has resulted in challenges like congestion. As road expansion is limited by space, the focus shifts to finding ways to efficiently allocate road space to avoid traffic gridlock. The concept of negative externalities is introduced, using the example of Sean being late for a date due to congestion, negatively impacting his girlfriend Cindy. Congestion not only disrupts personal plans but also results in economic inefficiencies, increased business costs, fuel wastage, pollution, and an overall reduction in living standards.
🏷️ Car Ownership and Control Measures
To mitigate road congestion, Singapore has employed measures to reduce car ownership. The Additional Registration Fee (ARF) was introduced in the 1970s, based on the open market value of cars, to make ownership less attractive. While this did lead to some reduction in demand, rising affluence caused the demand for cars to persist, as buyers began substituting high-end cars with cheaper models. To further control vehicle population growth, the Vehicle Quota System (VQS) was introduced in 1990, requiring buyers to bid for Certificates of Entitlement (COEs), which are limited in number. This measure allowed for direct control over the growth of vehicle numbers on the roads.
🚦 Managing Car Usage: Road Pricing and ERP System
Car ownership alone isn't the root of congestion—it's car usage that directly impacts traffic flow. In 1975, Singapore introduced the world's first road pricing scheme, the Area Licensing Scheme (ALS), to charge motorists for entering congested zones. This system evolved into the Electronic Road Pricing (ERP) system in 1998, which automatically charges vehicles based on the time, location, and traffic conditions of their routes. By increasing the marginal cost of using roads, ERP effectively reduces road usage during peak hours, encouraging drivers to alter their behavior. The ERP system is a more precise tool than car ownership measures, functioning on a pay-as-you-use basis, and is effective in managing road congestion.
🚌 The Importance of Public Transport as a Traffic Solution
For Singapore’s traffic management strategies to work, it is essential to provide viable alternatives to driving. Measures like the VQS and ERP push drivers away from car usage, but the availability of a high-quality, affordable, and efficient public transport system acts as a pull factor, convincing people to shift away from personal car use. The final section emphasizes that improving public transport is key to achieving smooth traffic flow, helping to balance the demand for road space and enhancing overall traffic management efforts.
🎶 Closing Thoughts
This paragraph appears to be a placeholder or a conclusion, accompanied by music. It serves as the ending of the video, prompting viewers to reflect on the content and the issues discussed in the script, particularly the effectiveness of Singapore's road congestion management strategies.
Mindmap
Keywords
💡Negative Externality
💡Traffic Congestion
💡Vehicle Quota System (VQS)
💡Certificate of Entitlement (COE)
💡Electronic Road Pricing (ERP)
💡Area Licensing Scheme (ALS)
💡Additional Registration Fee (ARF)
💡Marginal Private Cost (MPC)
💡Public Transport System
💡Road Space Scarcity
Highlights
Up to 12% of Singapore's land area is taken up by roads, totaling over 3,300 kilometers of asphalt and concrete.
The total number of vehicles in Singapore is over 900,000, with demand continuing to rise despite limited road space.
Traffic congestion creates negative externalities, such as longer travel times, reduced productivity, and higher business costs.
Congestion affects not just drivers but also third parties, increasing costs for businesses and contributing to air and noise pollution.
Fuel costs rise as vehicles remain idle in traffic jams, contributing to inefficient fuel use and environmental harm.
To address congestion, Singapore introduced the Additional Registration Fee (ARF) in the 1970s to make car ownership less attractive by increasing its cost.
The Vehicle Quota System (VQS) was introduced in 1990 to control car population growth by limiting the number of new cars added to roads each month.
The Certificate of Entitlement (COE) system regulates the number of vehicles by requiring buyers to bid for the right to purchase a car.
Although ARF and VQS control car ownership, they do not directly address car usage, which is the main contributor to congestion.
In 1975, Singapore introduced the Area Licensing Scheme (ALS), the world's first road pricing system, to manage traffic in congested areas.
The Electronic Road Pricing (ERP) system was introduced in 1998 to automate road pricing, charging motorists based on the time, location, and traffic flow.
ERP encourages drivers to avoid congested roads by either driving during non-peak hours, taking alternative routes, or using public transport.
The ERP system internalizes the external costs of congestion, making drivers pay for the negative impact they create on other road users.
By charging more during high-traffic times, ERP shifts driving behavior and reduces congestion to a socially optimal level.
While ARF and VQS act as blunt tools to discourage car ownership, ERP is a more precise method to reduce car usage and manage traffic flow effectively.
For traffic control measures to work, Singapore must continue to invest in and improve its public transport system, providing people with viable alternatives to driving.
Transcripts
[Music]
did you know up to 12% of Singapore's
land area is taken up by roads
that's over 3,300 kilometers worth of
asphalt concrete total number of
vehicles and our roads over 900,000 at
rising even as we find ways to optimize
our land use in terms of Road planning
we cannot expand our road networks
indefinitely this is a situation of
scarcity limited space for roads but
ever increasing demand from motorists
wishing to drive their cars on the roads
so how does Singapore ensure the traffic
doesn't grind to a halt how do we
efficiently allocate a scarce resource
which is road space traffic congestion
imposes negative externalities on many
parties not just drivers stuck in a jam
if you recall a negative externality is
the adverse affect or the cost on third
parties who are not directly involved in
the activity that causes this effect
what do we mean let's say sean is on his
way to meet his girlfriend Cindy for a
date he considers his private costs and
benefits from driving to meet his date
now imagine many more drivers making
such decisions at the same time on route
Sean gets stuck in traffic as a result
he arrives an hour late now this puts
Cindy in a terrible mood for the rest of
the date
as you can see congestion is a negative
externality which causes problems such
as longer traveling time and disruption
to planned activities for all the time
last in congestion leads to less time
for family and leisure and lower
productivity as workers arrive late in
the office business costs will increase
for instance delivery companies will
require more resources because of the
longer time needed for deliveries
furthermore as congestion slows the
movement of goods and services it adds
to the price of products and reduces the
competitiveness of businesses in
addition fuel costs will also increase
as car engines continue to run while
cars are at a standstill and this
results in engines being used
inefficiently congestion also causes
noise and air pollution and ultimately
congestion causes detrimental effect on
the productivity for the whole economy
everyone loses from a lower standard of
living mitigation of congestion requires
that both the supply and demand sides of
the problem be addressed one way of
managing traffic congestion is by making
car ownership less attractive how with
taxes and other upfront costs like the
additional registration fee or a RF
introduced in the 1970s the a RF is a
fee based on a percentage of a car's
open market value it is payable upon the
registration of a vehicle in other words
it puts an additional cost to owning a
car with the higher prices of cars that
consumers had to pay cars became less
attractive the introduction of a RF
results in a higher cost of car
ownership which subsequently shifted the
supply curve for cars leftwards with a
given demand curve there should be a
fall in the number of cars demanded
unfortunately while it had some effect
it was not all that effective
why with growing affluence in Singapore
the demand for cars has increased
shifting the demand curve for cars to
the right also what happened was that
people started substituting the high-end
cars with cheaper models to offset the
higher taxes so the car population
continued to grow faster than desirable
and traffic conditions worsened another
measure was introduced to manage the car
population to ensure that it grew at a
desired and sustainable rate enter the
vehicle quota system or vqs introduced
in 1990 the vqs is a quota system that
puts a cap on the number of new cars
added to roads each month
under the system buyers have to bid and
pay for a certificate of entitlement or
Co II before purchasing a car the number
of co es available is limited by the
allowable quota hence the system allows
complete control over the growth of the
total vehicle population the co e gives
the right to purchase a car no co e
means no car a fixed quantity of CO e is
shown by a vertical supply curve the
price of co e will depend on the demand
the higher the demand for Co YZ the
higher will be its price ceteris paribus
with a limit on the number of cars that
can be registered each year through the
quota system it is much easier to
control car population growth
effectively but AR f & vq s are only
ownership measures congestion is not a
direct product of car ownership but
rather car usage taxes and quotas are
blunt tools as they target all vehicle
owners regardless of the distance and
time they actually spend on the roads
with high sunk costs to own a car
drivers are likely to drive more to
maximize their investment as the
marginal cost of car usage is
comparatively long to address burgeoning
traffic in the city area the government
introduced the area licensing scheme in
1975 the world's first road pricing
scheme
[Music]
the ALS was a manual system drivers had
to display a paper license on their
windscreen to enter the restricted zone
in 1998 the Land Transport Authority
improved the road pricing scheme by
introducing the automated electronic
road pricing or ERP system ERP charges
motorists every time they drive on a
priced road the erp charge is deducted
from a stored value card inserted into
an in vehicle unit erp system is a
versatile charging system to manage
traffic flow charges vary according to
time location and traffic flow erp
encourages motorists to consider driving
at non-p cars take an alternative route
switch to public transport or even do
away with the trip completely erp
charges are designed so that the drivers
internalize the external costs they
impose on third parties and pay for the
negative externality each time they use
a congested road with the erp charges
drivers face a higher marginal private
cost - than before resulting in a
leftward shift of the MPC curve an erp
charge of a B will reduce the number of
trips from q1 to q2 which is the
socially optimal level if the erp
charges correctly reflect the external
costs imposed on others the drivers cost
of driving will be sufficiently raised
to result in a more efficient market
outcome with less car usage and smoother
traffic flow so the ERP is a more
targeted approach to change the driving
behavior of existing drivers it is based
on a pay as you use principle the more
you drive on congested roads the more
you pay also it's effective because it
gives LTA the flexibility to target
specific roads areas or specific time
if you imagine the a RF and vqs as blunt
weapons in Singapore's fight against
congestion then the ERP is the fine
chisel used to sharpen LTS efforts when
used together we can better achieve the
desired outcome of smooth flowing
traffic when discouraging car ownership
and usage it is essential to ensure that
alternative modes of transport are in
place so that people have substitutes to
switch to having adequate viable and
close substitutes is essential for the
effectiveness of traffic control
policies that is why it is also equally
important for us to continually improve
and create a good-quality attractive and
affordable public transport system if
you think of the vqs and ERPs push
factors to move people away from driving
then an efficient and effective public
transport system is the major pull
factor to convince them that they are
making the right choice now that we have
a better understanding of how traffic
congestion is managed let us ponder
these questions
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you
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