Congestion Pricing A PRIMER: OVERVIEW Quality Assurance Statement The Federal Highway Administration (FHWA) provides high quality information to serve Government, industry, and the public in a manner that promotes public understanding. Standards and policies are used to ensure and maximize the quality, objectivity, utility, and integrity of its information. FHWA periodically reviews quality issues and adjusts its programs and processes to ensure continuous quality improvement. Contents The Primer Series and the Purpose of This Volume 2 The Congestion Problem 3 Costs of Traffic Congestion 3 Alarming Trends 3 Causes of Congestion 3 What Is Congestion Pricing? 4 Technology for Congestion Pricing 4 Variably Priced Lanes 5 Variable Tolls on Roadways 5 Zone-Based or Cordon Pricing 6 Area-Wide or System-Wide Pricing 7 Use of Revenues from Pricing 7 Benefits of Congestion Pricing 8 Benefits to Transit Riders and Carpoolers 8 Benefits to Drivers 9 Benefits to Businesses 9 Examples in the United States 10 HOT Lanes on I-15 in San Diego, California 10 SR 91 Express Lanes in Orange County, California 10 Bridge Pricing in Lee County, Florida 10 Oregon’s Mileage-Based Pricing Test 10 Examples From Abroad Central London 11 Stockholm City Center 11 Singapore 12 Nationwide Truck Pricing in Germany 12 Federal Policy and Programs on Pricing 13 Federal Legislation 13 U.S. DOT’s Congestion Relief Initiative 13 Frequently Asked Questions 15 How does electronic tolling work? 15 How does dynamic pricing work? 15 How do out-of-town motorists who don’t have a transponder pay? 15 Wouldn’t electronic tolling invade a motorist’s privacy? 15 How much is the charge? 16 Isn’t pricing inequitable toward low-income motorists? 16 Isn’t congestion pricing “double taxation”? 17 Won’t adjacent free roads get more congested due to diverted traffic? 17 Do people have flexibility to change the time when they travel? 17 Will the public accept congestion pricing? 17 Will congestion pricing lead to privatization of highways? 18 Won’t congestion pricing involve high costs for implementation and operation? 18 What effect will congestion pricing have on the quality of the environment? 18 References 20 The Primer Series and the Purpose of This Volume States and local jurisdictions are in- based on charging for access and use of our roadway About This Primer Series creasingly discussing congestion network. It places responsibility for travel choices The Congestion Pricing Primer Se- pricing as a strategy for improving squarely in the hands of the individual traveler, where ries is part of FHWA’s outreach transportation system performance. it can best be decided and managed. The car is often efforts to introduce the various aspects of congestion pricing to In fact, many transportation econo- the most convenient means of transportation; how- decision-makers and transporta- mists and national transportation ever, with a little encouragement, people may find it tion professionals in the United experts believe that congestion pric- attractive to change their travel habits, whether States. The primers are intended ing offers promising opportunities through consolidation of trips, car-sharing, by using to lay out the underlying rationale for congestion pricing and some to cost-effectively reduce traffic public transportation, or by simply traveling at less- of the technical issues associated congestion, improve the reliability congested times. The use of proven and practical de- with its implementation in a man- of highway system performance, mand-management pricing, which we freely use and ner that is accessible to non-spe- and improve the quality of life for apply to every other utility, is needed for transporta- cialists in the field. Titles in this series include: residents, many of whom are experi- tion. Through usage and access fees, on local, regional, • Congestion Pricing Overview. encing intolerable traffic congestion and national levels, we can build a fund that supports • Non-Toll Pricing. in regions across the country. a sustainable transportation system, while decreasing • Technologies That Enable Because congestion pricing is still congestion and improving the environment. Congestion Pricing. a relatively new concept in the The application of tolling and road pricing to • Technologies That Comple- ment Congestion Pricing. United States, the Federal Highway solve local transportation and sustainability prob- • Transit and Congestion Pricing. Administration (FHWA) is embark- lems provides the opportunity to solve transporta- • Economics: Pricing, Demand, ing on an outreach effort to intro- tion problems without federal or state funding. The and Economic Efficiency. duce the various aspects of conges- size of the revenue stream that could be appor- • Income-Based Equity Impacts of Congestion Pricing. tion pricing to decision-makers and tioned to where the revenue was generated would transportation professionals. One mean that a city or region could address its road and element of FHWA’s congestion- public transportation projects with confidence and pricing outreach program is this Congestion Pricing determination. It could also mean that further gas Primer Series. The aim of the primer series is not to tax, sales tax, or motor-vehicle registration fee in- promote congestion pricing or to provide an exhaus- creases are not necessary now or in the future. The tive discussion of the various technical and institu- idea of congestion pricing is a conceptual first step, tional issues one might encounter when implement- not a complete plan of action. It has to be coordi- ing a particular project; rather, the intent is to provide nated with other policy measures and environmen- an overview of the key elements of congestion pric- tal measures for sustainability. ing, to illustrate the multidisciplinary aspects and Against this background, this Overview primer skill sets required to analyze and implement conges- was produced to explain the concept of congestion tion pricing, and to provide an entry point for practi- pricing and its benefits, to present examples of con- tioners and others interested in engaging in the con- gestion-pricing approaches implemented in the Unit- gestion-pricing dialogue. ed States and abroad, and to briefly discuss federal-aid The concept of tolling and congestion pricing is policy and programs related to tolling and pricing. 2 | CONGESTION PRI C ING The Congestion Problem COsts OF TRAFFIC CONGEstION area size categories, indicating that even small areas are unable to keep pace with rising demand. Growing congestion in the U.S. transportation net- For example, on the basis of current trends, a work poses a substantial threat to the U.S. economy medium-sized city should expect its congestion in and to the quality of life of millions of Americans. 10 years to be as bad, or worse than, what is cur- Each year, Americans are paying billions of dol- rently experienced by a large city. The rate of con- lars in terms of lost time and productivity, air pollu- gestion growth has been greater in rural areas than tion, and wasted energy. The Texas Transportation in urban areas, portending increased congestion in Institute’s (TTI’s) latest survey of mobility in Amer- communities of all sizes. ica’s 437 urban areas shows that in 2005, traffic congestion resulted in 2.9 billion gallons of wasted fuel and 4.2 billion hours of lost time stuck in traf- CAUSES OF CONGEstION fic. The cost of this delay and wasted fuel totaled At its most fundamental level, highway congestion $78 billion in 2005, more than quadruple the com- is caused by the lack of a mechanism to efficiently parable cost figure in 1982. TTI’s Urban Mobility manage use of capacity. When searching for a solu- Report also notes that congestion causes the average tion to the congestion problem, most people im- peak period traveler to spend an extra 38 hours of mediately think of adding a new lane to an overbur- travel time and consume an additional 26 gallons of dened highway. Construction costs for adding lanes fuel, amounting to a cost of in urban areas average $10–$15 million per lane $710 per traveler.1 National Costs of Congestion (1) mile.2 In general, the funding for this type of con- These estimates do not even The Texas Transportation Institute es- struction comes from taxes that drivers pay when include the environmental timates the National costs of conges- buying gas for their vehicles. Overall, funds gener- degradation and economic tion to be $78 billion. The lost time ated from gas taxes on an added lane during rush productivity losses caused by and wasted fuel due to congestion hours amount to only $60,000 a year (based on equate to 105 million weeks of vaca- traffic congestion and were 10,000 vehicles per day during rush hours, paying tion and 58 fully loaded supertankers, prepared at a time when fuel fuel taxes amounting to about 2 cents per mile). This respectively. prices were considerably lower amount is grossly insufficient to pay for the lane than they are today. addition. The bargain price paid by motorists for use of an ALARMING TRENDS expensive new capacity encourages more drivers to use the expanded highway. Introducing congestion Traffic congestion levels have increased in every area pricing on highway facilities discourages overuse since 1982. Congestion occurs on more roads more during rush hours by motivating people to travel by frequently and for longer periods throughout the day, other modes, such as carpools or transit, or by trav- resulting in greater amounts of required travel time eling at other times of the day. than before. Congestion levels have risen in all urban- CONGESTION PRICING | 3 What Is Congestion Pricing? Congestion pricing—sometimes called value pric- 2. Variable tolls on entire roadways: Both on toll ing—is a way of harnessing the power of the market roads and bridges, as well as on existing toll-free to reduce the waste associated with traffic conges- facilities during rush hours.