Here is a really good documentary from the e2 Transport series. There are loads of examples of externalities in this clip and they discuss the merits of the congestion charge. Below is an extract from the PBS website.
As of 2008, cities were responsible for about 80% of greenhouse gas emissions and consumed roughly 75% of the world’s energy. Given that half of humanity lives in cities and that number is expected to grow to two-thirds by the year 2030, local policymakers in cities have a unique opportunity to affect the global climate crisis for better or worse. Ken Livingstone, the first directly elected mayor of London, has taken advantage of that opportunity to institute a number of policies that respond to London’s growth while also improving its livability.
The mayor created Transport for London (TFL), a local government body, that looks at all types of transportation including not only buses, subways, trains and motorists but also pedestrians and cyclists. TFL’s findings and actions have led to the reallocation of some roadways away from automobiles to buses, pedestrians and cyclists, resulting in a more equitable use of public space.
In 2002, the mayor launched the One Hundred Public Spaces Program to create or upgrade key public spaces and improve the quality of life in London. Trafalgar Square, Parliament Square and Kensington High Street are three of the places that have benefited from an initiative to give pedestrians priority over cars. While there is slightly less space on the roads for cars, which has upset some, the increased pedestrian traffic has revived London’s street life and changed the culture of the city for the better.