Anti-congestion Charge Could Solve Traffic Problems in Downtown Munich

An anti-congestion charge of EUR 6 per day could reduce traffic in Munich inside the city’s Middle Ring Road by 23 percent. At EUR 10, the reduction would even be 30 percent. This is the finding of a study produced by the ifo Institute together with consultants Intraplan Consult and with financial support from the Chamber of Industry and Commerce for Munich and Upper Bavaria. “This would let us get to grips with the problem of downtown traffic jams,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. “We assume that the results will also be applicable to other congested cities.”

“If motorists switched to other means of transport, traffic would decrease and it would be quicker and easier to reach shops and customers again. Ultimately, the retail trade also stands to gain from this, as it will make Munich even more attractive and productive as a business location. One advantage of congestion charges over driving bans is that people at least have the option of driving,” Falck says.

The calculations already reflect higher parking fees of EUR 10 instead of EUR 6 per day, as is currently being trialed in parts of downtown Munich. However, he adds, an increase in parking fees alone would have virtually no effect.

Demand for public transport increases when a congestion charge is introduced. In the case of Munich, however, the study shows that this increase would relate primarily to those routes for which expansion is already planned. The revenue from the anti-congestion charge could be invested in further improving public transport. This even increases the traffic-directing effect: a charge of EUR 6 per day could generate annual revenue of some EUR 600 million. Part of the income could also be used to ease social hardship. “This makes an anti-congestion charge more socially balanced than other measures,” Falck says.

Finally, he adds, an anti-congestion charge benefits suppliers, taxis, and logistics companies. According to the calculations, it reduces the journey time for commercial transport by 7.5 percent. This leads to a time saving that can be valued at EUR 204 million per year, not counting the resulting lower stress and higher productivity.

Falck points out that some cities have already introduced similar charging models for their downtown areas and have had a positive experience with them. In Singapore, London, and Stockholm, for example, road traffic has been reduced by between 15 and 44 percent over several years. A similar model is also currently under discussion in Berlin.