Pay-As-You-Drive Driving

The case has been made for the benefits (lower miles driven, more equitable pricing) of pay-as-you-drive insurance (“Pay-As-You-Drive Auto Insurance: A Simple Way to Reduce Driving-Related Harms and Increase Equity,” by Jason E. Bordoff and Pascal J. Noel of Brookings; report here).

But one thing some of you may not know about, and which I was reminded about it by a notice to this event, tomorrow in D.C., is that the Netherlands, by 2016, aims to have the entire country wired for a radical new policy, as described by this report: “a price per kilometre on all roads for all distances travelled in the Netherlands, differentiating by environmental characteristics, time and place, abolition of the motor vehicle tax (MRB) and all or part of the tax on passenger cars and motorcycles (BPM).”

In essence, this system shifts the standard all-you-can-eat Las Vegas buffet that is automobile ownership (in essence, once you’ve paid for the car, you’re free to unthinkingly chow down on as many lane-miles as you’d like) to an a la carte system in which you will be charged for every nibble you take off the mobility menu. The lighter eaters will no longer be subsidizing the road hogs.

This will be, among many other things, a fascinating social experiment writ large, with no small amount of room for possible unintended consequences, which are all addressed (if not exactly solved) in the report.

For example, there’s the idea of “diversion effects”:

“Differentiation by time and place can have unwanted diversion effects. The rate system and suitable measures, such as applying time and place differentiation on evasive routes, prevent unwanted diversion effects. Because there is no actual experience with the effects and communicability of the effect of such differentiation, it is important to start simply. For example, at the start of the price per kilometre, there will be a small number of rate levels, national time windows and a limited number of locations.”

What about foreign cars?
“In principle, non-residents driving a passenger vehicle in the Netherlands with a foreign registration (mostly tourists) participate in the price per kilometre. The feasibility of participation by these road users will be explored at a later stage.”

Paradoxically there will be more cars…
“As a result of converting fixed burdens to a price per kilometre, the purchase price of new cars decreases and, depending on the configuration of the price per kilometre, the tipping point between
petrol and diesel cars. This causes the size of the fleet to increase. The way that the environmental component of the fixed burdens is variabilised in a rate per kilometre in the investigated variants results in changes in the composition of the fleet; the fleet becomes heavier and newer and there are more diesels. This occurs in all investigated variants.”

But congestion is reduced…
“In all variants investigated, congestion on the road network is strongly reduced. The decrease in vehicle loss hours is 20 to 60%. Even a price per kilometre without differentiation by time and place contributes to a reduction in congestion. Note that this refers to structural congestion. Total congestion reduction is lower because the price per kilometre does not affect incidental congestion (for example, as a result of a lorry tipping over and other accidents).

And the privacy question…
“A system that can, in principle, locate a vehicle everywhere and at all times presents privacy aspects, whether desired or not. Two variants of the vehicle equipment are relevant to the privacy discussion:
− Detailed movement information is converted to levy information in the vehicle equipment. Only the driver/registration holder has access to his or her movement data. This is a strong guarantee of
privacy. The drawback to this solution is that software management may be complex.
− Detailed movement information is converted in the back office. The guarantees are obtained through measures such as pseudonymisation and job separation. The party processing the movement data into data for invoicing cannot make a connection to a registration or physical person. The party sending the invoices has no access to the detailed movement data either. In this solution, it is important for the wall between positions/organisations to be set up such that no identities can be linked to movement data.”

This entry was posted on Wednesday, November 19th, 2008 at 10:00 am and is filed under Cars, Cities, Congestion. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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Traffic Tom Vanderbilt

How We Drive is the companion blog to Tom Vanderbilt’s New York Times bestselling book, Traffic: Why We Drive the Way We Do (and What It Says About Us), published by Alfred A. Knopf in the U.S. and Canada, Penguin in the U.K, and in languages other than English by a number of other fine publishers worldwide.

Please send tips, news, research papers, links, photos (bad road signs, outrageous bumper stickers, spectacularly awful acts of driving or parking or anything traffic-related), or ideas for my Transport column to me at:

For publicity inquiries, please contact Kate Runde at Vintage:

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For speaking engagement inquiries, please contact
Kim Thornton at the Random House Speakers Bureau:

Order Traffic from:

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Traffic UK
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For UK publicity enquiries please contact Rosie Glaisher at Penguin.

Upcoming Talks

April 9, 2008.
California Office of Traffic Safety Summit
San Francisco, CA.

May 19, 2009
University of Minnesota Center for Transportation Studies
Bloomington, MN

June 23, 2009
Driving Assessment 2009
Big Sky, Montana

June 26, 2009
PRI World Congress
Rotterdam, The Netherlands

June 27, 2009
Day of Architecture
Utrecht, The Netherlands

July 13, 2009
Association of Transportation Safety Information Professionals (ATSIP)
Phoenix, AZ.

August 12-14
Texas Department of Transportation “Save a Life Summit”
San Antonio, Texas

September 2, 2009
Governors Highway Safety Association Annual Meeting
Savannah, Georgia

September 11, 2009
Oregon Transportation Summit
Portland, Oregon

October 8
Honda R&D Americas
Raymond, Ohio

October 10-11
INFORMS Roundtable
San Diego, CA

October 21, 2009
California State University-San Bernardino, Leonard Transportation Center
San Bernardino, CA

November 5
Southern New England Planning Association Planning Conference
Uncasville, Connecticut

January 6
Texas Transportation Forum
Austin, TX

January 19
Yale University
(with Donald Shoup; details to come)

Monday, February 22
Yale University School of Architecture
Eero Saarinen Lecture

Friday, March 19
University of Delaware
Delaware Center for Transportation

April 5-7
University of Utah
Salt Lake City
McMurrin Lectureship

April 19
International Bridge, Tunnel and Turnpike Association (Organization Management Workshop)
Austin, Texas

Monday, April 26
Edmonton Traffic Safety Conference
Edmonton, Canada

Monday, June 7
Canadian Association of Road Safety Professionals
Niagara Falls, Ontario

Wednesday, July 6
Fondo de Prevención Vial
Bogotá, Colombia

Tuesday, August 31
Royal Automobile Club
Perth, Australia

Wednesday, September 1
Australasian Road Safety Conference
Canberra, Australia

Wednesday, September 22

Wisconsin Department of Transportation’s
Traffic Incident Management Enhancement Program
Statewide Conference
Wisconsin Dells, WI

Wednesday, October 20
Rutgers University
Center for Advanced Infrastructure and Transportation
Piscataway, NJ

Tuesday, March 8, 2011
Ontario Injury Prevention Resource Centre
Injury Prevention Forum

Monday, May 2
Idaho Public Driver Education Conference
Boise, Idaho

Tuesday, June 2, 2011
California Association of Cities
Costa Mesa, California

Sunday, August 21, 2011
American Association of Motor Vehicle Administrators
Milwaukee, Wisconsin

Wednesday, October 26, 2011
Attitudes: Iniciativa Social de Audi
Madrid, Spain

April 16, 2012
Institute for Sensible Transport Seminar
Gardens Theatre, QUT
Brisbane, Australia

April 17, 2012
Institute for Sensible Transport Seminar
Centennial Plaza, Sydney
Sydney, Australia

April 19, 2012
Institute for Sensible Transport Seminar
Melbourne Town Hall
Melbourne, Australia

January 30, 2013
University of Minnesota City Engineers Association Meeting
Minneapolis, MN

January 31, 2013
Metropolis and Mobile Life
School of Architecture, University of Toronto

February 22, 2013
ISL Engineering
Edmonton, Canada

March 1, 2013
Australian Road Summit
Melbourne, Australia

May 8, 2013
New York State Association of
Transportation Engineers
Rochester, NY

August 18, 2013 “Ingenuity” Conference
San Francisco, CA

September 26, 2013
TransComm 2013
(Meeting of American Association
of State Highway and Transportation
Officials’ Subcommittee on Transportation
Grand Rapids MI



November 2008

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