What is a Congestion Fee?

To reduce congestion and excess demand for public goods, market economists have introduced the concept of congestion charges. Congestion costs increase the prices of high demand public goods without increasing their supply. Users pay for the negative effects (such as traffic congestion) produced by their use of the goods. The congested tariffs are directed to traffic congestion in urban areas.

Several cities have applied congestion charges to control traffic congestion through the introduction of cordon areas in city centers, city tolls, congestion charges for individual facilities and congestion charges to be within a certain large area. A white “C” inside a red circle indicates the beginning of a congestion zone and a “C” is crossed at the end of the zone. Listed below are some urban cities that have successfully implemented congestion costs.

What is a congestion charge?


Durham introduced congestion rates in 2002 that reduced traffic congestion by around 85% within the first year. The Durham City congestion tax applies to drivers using Saddler Street to access Durham Cathedral and Durham Castle. Because Saddler Street is narrow, traffic congestion was a common problem that led to numerous traffic accidents and pedestrian casualties. Durham was the first city in the United Kingdom to introduce congestion charges.


London has the largest congestion zone in the world and was implemented for the first time in 2003. A congestion-prone area was established in central London where vehicle users are charged within the area. The rates are applicable during weekdays and are suspended on weekends, public holidays and between December 25th and January 1st. The implementation of the system is monitored through automatic vehicle recognition and fees and fines are applicable.


Stockholm introduced the congestion tax on an experimental basis between January and July 2006. The process was a success and the system was implemented in October 2007 with the aim of reducing environmental pollution. The fee applies to vehicles leaving or entering the central region of Stockholm during the day and on weekdays.

Other cities with congestion congestion systems

Valletta, Milan and Gothenburg have implemented congestion rates in 2007, 2012 and 2013 respectively. Cities have introduced tariffs to reduce traffic congestion, create extra parking spaces within congestion areas, reduce pollution and protect and restore the public transport sector.


Supporters of the concept of congestion taxes cite benefits such as revenue generation for local governments and environmental conservation. Another advantage is the reduction of traffic congestion because drivers will most likely avoid unnecessary driving. By introducing congestion rates on urban roads, users are more likely to use alternative means of transport such as public transport, on foot or by bicycle. This reduces the consumption of fossil fuels and air pollution. Reduced traffic on roads also reduces noise and delays associated with excessive traffic.


The congestion tax system is criticized by many who believe it is a way to introduce additional taxes for citizens. This applies in particular to low-income travelers because the charges further strain their finances. While the charges reduce road congestion, they are criticized for shifting congestion to other means of transport such as trains and public vehicles. However, the benefits of congestion charges have had a positive impact on the economy and the environment. The concept is increasingly implemented in more urban centers.

What is a congestion charge?

degree city ​​name Year Congestion Pricing Istated
1 Durham 2002
2 London 2003
3 Stockholm 2007
4 Valletta 2007
5 Milan 2012
6 Gothenburg 2013


Leave a Comment