Congestion Pricing for the American Future
For the past 15 years, transportation planners, engineers, and economists have investigated the ability to use congestion pricing as a means of managing the demand for public facilities relative to that of their capacities. As studied and implemented throughout the United States, the concept offers substantial variation in terms of implementation, however the concept remains the same – using price signals to manage demand. Demand management through congestion pricing can involve many strategies, including increasing the average vehicle occupancy of facility users, expanding freeway capacity, or optimizing the time, length, and duration of travel. Congestion pricing, if properly applied, can provide a guaranteed non-congested alternative to clogged freeways and arterials. Congestion pricing holds much promise for not only better allocating and growing scarce transportation resources, but also to provide new and enhanced mobility options for all travelers.
Congestion Pricing – Current Status
Despite the considerable promise of congestion pricing in responding to the transportation needs of stakeholders and travelers, only a select few communities have actually implemented it. Deemed impractical prior to modern electronic toll collection technologies developed in the early 1990s, congestion pricing generally falls into three roadway pricing categories and one non-roadway category:
Applying Congestion Pricing to the American Future
In short, communities across the United States, Canada, Australia, and Europe are considering all facets of congestion pricing. All four categories of congestion pricing are being considered by various communities in the U.S.: as managed lanes; as variable pricing on toll facilities; as areawide/mileage-based pricing; as pricing of existing capacity; and as pay-as-you-drive insurance. For the future, it appears likely that these considerations will continue to play a role in U.S. transportation policy.
Why would travelers support or accept congestion pricing? The answer lies in receiving a direct benefit to quality of life or improved economic environment to a region. Congestion pricing is a new fee introduced to roadway users. Thus, these users must see a direct correlation between the fee paid and the new service or benefit received (i.e., congestion-free travel or guaranteed travel time). In addition, not every trip justifies paying this fee. Subsequently, there must be options to not pay this fee. For example, a “free” alternative, albeit slower, should be available. This option could be adjacent freeway lanes or parallel arterial streets. Transit options must also be available for those willing and able to change their mode of travel. Lastly, the pricing structure should allow those unable to change modes or divert to another route to alter their time of travel and reduce the impact of the congestion pricing.
Regardless of the eventual categories of pricing or mechanisms of implementation, key policy questions remain that may be asked in the course of dialogue among policymakers:
Congestion Pricing – Current Status
Despite the considerable promise of congestion pricing in responding to the transportation needs of stakeholders and travelers, only a select few communities have actually implemented it. Deemed impractical prior to modern electronic toll collection technologies developed in the early 1990s, congestion pricing generally falls into three roadway pricing categories and one non-roadway category:
- Area or cordon pricing charges vehicles for travel during peak periods in congested areas, generally city centers. This can be done by charging vehicles as they enter the priced area (cordon pricing) as in Singapore, Rome, Trondheim, and Stockholm. Alternatively, all vehicles traveling in a priced area could be charged (area pricing) as in London. Oregon and Washington have recently experimented with these applications, and New York City has proposed a cordon pricing scheme under the Urban Partnerships Agreement (UPA) program.
- Variable or dynamic pricing of a toll facility charges tolls that vary by time of day or congestion level such that peak period travel is more expensive than off-peak travel. Examples include two toll bridges in Lee County Florida, Toronto’s Highway 407, New Jersey Turnpike, and Port Authority of New York and New Jersey crossings.
- Managed lanes with pricing often comprise two forms: 1) HOT Lanes, which combine variable pricing for lower occupancy vehicles with free or discounted travel for higher occupancy vehicles, and, 2) Express Toll Lanes, which charge the same variable fee for all vehicles. The common element for both types of managed lanes with pricing is its adjacent position relative to un-priced general purpose lane capacity. Examples of HOT lanes include I-10 and US-290 in Houston, I-25 in Denver, I-394 in Minnesota, and I-15 in San Diego. Dallas will soon implement this form of pricing on I-30 in 2008. The only operational express toll lane is the SR-91 express lanes in Orange County (CA).
- Non-roadway pricing concepts include parking pricing, pay-as-you-drive insurance, parking cash-out, carsharing, and other strategies that aim to enhance options and reduce vehicular use through non-roadway price signals. Recent projects including parking-based programs in Washington and Minnesota.
Applying Congestion Pricing to the American Future
In short, communities across the United States, Canada, Australia, and Europe are considering all facets of congestion pricing. All four categories of congestion pricing are being considered by various communities in the U.S.: as managed lanes; as variable pricing on toll facilities; as areawide/mileage-based pricing; as pricing of existing capacity; and as pay-as-you-drive insurance. For the future, it appears likely that these considerations will continue to play a role in U.S. transportation policy.
Why would travelers support or accept congestion pricing? The answer lies in receiving a direct benefit to quality of life or improved economic environment to a region. Congestion pricing is a new fee introduced to roadway users. Thus, these users must see a direct correlation between the fee paid and the new service or benefit received (i.e., congestion-free travel or guaranteed travel time). In addition, not every trip justifies paying this fee. Subsequently, there must be options to not pay this fee. For example, a “free” alternative, albeit slower, should be available. This option could be adjacent freeway lanes or parallel arterial streets. Transit options must also be available for those willing and able to change their mode of travel. Lastly, the pricing structure should allow those unable to change modes or divert to another route to alter their time of travel and reduce the impact of the congestion pricing.
Regardless of the eventual categories of pricing or mechanisms of implementation, key policy questions remain that may be asked in the course of dialogue among policymakers:
- What role should congestion pricing play in the development and financing of new capacity? For example, managed lanes may be given significant consideration in new capacity development, not only due to their revenue generation possibilities but also due to their active management of demand to ensure return-on-investment.
- Will public opinion accept congestion pricing as a strategy? Congestion pricing have inevitably been controversial to one extent or another everywhere they have been considered. Public and political support has taken a considerable amount of time to nurture in states with implemented projects. Furthermore, trends in parallel industries equally prone to congestion of capacity (wireless telecommunications, internet broadband, etc.) have tended towards unlimited-style services for fixed payment, counter to the concepts of congestion pricing. As a result, transportation policymakers will need to not only overcome opposition to congestion pricing, but also overcome counterintuitive messages from other industries.
- To what extent should congestion pricing be used to manage all roadway capacity? Congestion pricing, if used in an areawide context, may be a means of improving efficiencies concurrent with generating revenue. Initial interests in mileage-based user fees to augment and/or replace the fuel tax for revenue purposes may miss examining the impacts upon overall system management.
- How will revenues be shared among modal options? Key to congestion pricing implementation is the availability and viability of modal options for the traveler, such as transit, vanpools, telework (trip avoidance), and ridesharing. If the transportation sector expects these options to be viable alternatives, then sufficient funding should be in place to ensure these systems are adequate upon implementation. Congestion pricing revenues, then, may be viewed as one form of funding platform for these options.
- Are bond covenants compatible with future congestion pricing implementation? Contractually, has the public sector provided opportunities for itself for future implementation of congestion pricing? Bond covenants on toll facilities, for example, may need to be reviewed in order to provide for this possibility.
