Quantifying travellers’ willingness to pay for a tolled tunnel in central Copenhagen
To predict whether Copenhagen drivers will pay a toll to take a proposed tunnel across the city's harbour, RAND Europe researchers sought to measure drivers' 'value of travel time', as well as whether there was any evidence of 'tunnel phobia' or resistance to paying tolls.
Using choice experiments and the latest choice modelling methods, the study quantifies travellers' values of time and how this varies across the population. We find that respondents reacted more negatively to tolls than to other driving costs, but not significantly so. Additionally, there was little evidence of tunnel phobia. In fact, the tolled tunnel was viewed positively relative to the untolled routes, over and above the toll and travel time savings.
The findings will feed into Copenhagen's Travel Model to help inform the business case for the tunnel project.
The Danish Road Directorate commissioned this study to quantify the willingness of car and van travellers to pay to use a proposed new tunnel to cross to and from Amager in central Copenhagen. The results from this study will be used in a detailed travel demand model to explore the business case for the tunnel investment, ensuring that up-to-date and high-quality evidence are used to inform the policy decision.
The aim of the study is to quantify car and light van travellers' willingness to pay for a proposed new tunnel in Copenhagen, taking account of:
- the income of the travellers;
- travel time conditions and the time of travel;
- the purpose of the journey, for example for business, commuting or other purposes; as well as,
- differences between drivers and passengers.
For a driver to choose to use a tolled facility, such as the proposed Harbour Tunnel, he or she must consider whether the time saving offered by using the tunnel is worth more than the cost of the toll. The crucial issue in predicting whether drivers will choose to pay the toll is then to understand the 'value of travel time' (VTT) of each driver. Simply put, the VTT is the monetary valuation - in this study for a driver or car passenger - of a one minute change in his or her travel time (and that of the passengers, if any). Demand for the new tolled tunnel can then be estimated by comparing travellers' VTT against the likely time savings and proposed toll, as well as taking account of aversion to travelling in a tunnel or paying a toll.
Over 3,500 travellers who made journeys by car or van, either as a driver or passenger on a weekday across the harbour in Copenhagen participated in a survey, including a stated choice (SC) experiment. The SC experiment was specifically designed to quantify respondents' VTT, as well as determine their sensitivity to paying a toll and their relative sensitivity to switching departure times compared to switching their route of travel (and using a tolled facility).
Based on the SC data, discrete choice models were developed to quantify travellers' VTT. The models reflect best practice in terms of discrete choice modelling, specifically testing whether models with additive or multiplicative error structures fitted the data better; the presence of reference dependence (size and sign effects); deterministic heterogeneity (through socio-economic segmentation); and random heterogeneity in the resulting valuations.
Below are the key findings from the research in terms of travellers' VTTs and the study methodology.
- Travellers with higher (personal) incomes and those making longer journeys have higher VTTs.
- Respondents reacted more negatively to tolls than to other driving costs, but not significantly so.
- For commute and other travel, the VTTs are influenced by the socio-economic characteristics of travellers (the study did not observe significant variation in VTTs for business travellers, except whether they are reimbursed for travel).
- The study did not observe differences in the formulation of VTTs for drivers and passengers, although they will vary in practice because of differences in their socio-economic and trip characteristics.
- There is little evidence of tunnel phobia. In fact, the tolled tunnel was viewed positively by car and van travellers relative to the untolled routes, once tolls and travel time savings were taken into account.
- Models with multiplicative error structures fit the SC data better and give more reasonable VTTs.
- The study did not observe significant reference dependence in the stated choices.
- The design of the experiments — specifically the position of time and cost in the stated choice alternatives — impacted the resulting VTTs.
- Significant random heterogeneity in free flow and congested VTTs for commuting and other travel was observed, in addition to other measured covariates (we were not able to identify random variation terms for business travel, perhaps because of the relatively small sample size for this segment).
- In contrast to other recent studies, the resulting VTTs were not impacted by the survey recruitment methodology, specifically whether respondents were recruited from an online panel or intercepted while making an in-scope journey.