CONGESTION PRICING                                               

What Is It?

“Congestion pricing” is also known as “value pricing,” “peak-period pricing,” time-of-day pricing,” and “variable pricing.”  To avoid the word “toll,” transportation experts and politicians have coined various terms for the same concept.

Congestion pricing charges motorists a toll for using a particular stretch of highway or bridge or for entering a particular area ("cordon tolls" for access to urban areas). It is a market or demand-based strategy designed to encourage a shift of peak period trips to: a. off-peak periods; b. to routes away from congested facilities or c. to alternative modes (High Occupancy Vehicles or public transit) during the peak demand periods.
Congestion pricing proposes to monetarize and internalize the transportation and environmental costs (delay, pollution, accidents) associated with congestion, costs that are largely unaccounted for in the current transportation system.
Variable pricing, Lane Charging (including HOT or FAIR lanes), and Cordon Tolls are three main forms of congestion pricing.
A distinction should be drawn between tolls to fund roadways ("road pricing") and tolls to reduce congestion (congestion pricing or value pricing) as these have different objectives and impacts. See our Telecommunications Diagram on congestion pricing for more information.

Benefits

• Reduction of peak-period and total congestion.  As certain roadways are priced, drivers will be more likely to combine multiple destinations into one trip, share vehicles, change their destination, and shift routes to untolled or less-tolled roads.  T
• Road savings: Reduction in the need for new construction to serve the peak period demand. · Parking savings if total car trips are reduced.
• Enhancement of transportation choices: congestion pricing increases transportation choices by offering additional options to travelers. On an unpriced highway, the traveler essentially has two options: drive in congestion or ride a bus that will also be delayed by congestion. On a priced highway or one that has High Occupancy Toll (HOT) lanes, the traveler actually has three options: a. drive free in congestion b. ride a bus or take a carpool in the tolled lane without paying a toll(s) or c. drive alone on the HOT lane(s) and pay a toll. This allows consumers to choose the travel option that best suits their needs.
• Safety: reduced congestion may enhance road safety by reducing accidents. Here the results are mixed because, while crashes are more common under congested conditions, crashes that occur on less congested roads are more severe due to higher speeds.
• Reduced emissions of pollutants and greenhouse gases and reduced energy consumption. Reduced congestion will reduce emissions of hydrocarbons, carbon monoxide, and carbon dioxide and will reduce fuel consumption. If overall trips are reduced, emissions of nitrogen oxides will also be reduced.
• Land use: in the long-run land use patterns could be affected, in ways that are still unclear. Some argue that it would discourage sprawl; others believe it would increase decentralization.
  
• For the time being, research results in the U.S. seem to indicate mostly shifts in travel time, routes and modest shifts to HOVs. The results in Europe and Asia also indicate shifts in travel time, routes, and more important, shifts to HOVs and a small percentage shift to transit. This is likely due to more widespread transit systems in Europe and Asia.

Costs

• Toll collections infrastructure, staffing and enforcement
• Inconvenience to motorists: mainly the time required to pay the tolls.
• Financial costs to consumers for paying the toll: this last element is actually not a cost but an economic transfer from the travelers to the toll authority. How this transfer affects the consumer ultimately depends on how much she or he values the time savings and how the revenues are used.

System Description

There are three main congestion pricing systems:

1. Variable tolls are placed on existing and new toll roads, bridges, and tunnels.  The tolls rise and fall depending on traffic levels;
2. Lane charging tolls are electronically collected via transmitter from drivers in added or converted highway lanes.  Lane charging includes High Occupancy Toll (HOT) lane charging.  HOT lanes are converted from high-occupancy vehicle (HOV) lanes, and allow low-occupancy vehicles for a fee. 
3. Cordon tolls charge a price for entering and driving in an impacted, urban area. 

Most congestion pricing strategies use electronic toll collection technology.  Please see the electronic toll collection section of this website for more information on how electronic toll collection works. 

As an overview, program-participating vehicles are equipped with radio frequency identification tags (RFID) tags and transmitters.  Some new electronic toll collection systems do not need on-board transmitters.  When driving through a former toll plaza or below an open road gantry, the RFID tags communicate with RFID readers.  Electronic toll collection allows drivers to be charged without slowing down or stopping.  This is true for variable toll, lane charging, and cordon toll charging systems. 

The collected information is relayed to a computer system which connects the toll with the appropriate vehicle, registered credit card or pre-paid account, and owner.  Charges may vary depending on vehicle size and make.  High-occupancy, hybrid, natural gas, or electric vehicles are usually not charged a toll, or receive a discounted rate. 

Cameras capture license plate images of vehicles’ that are not equipped with RFID tags.  These images are later reviewed by humans or run through a computer system, depending on the available technology.  Bills are sent out by a customer service division. 

The basics of all modern, successful congestion pricing schemes generally include the following components:  transmitters, radio frequency identification (RFID) tags, RFID readers, and a customer service/enforcement department. 

HOT lanes require some Highway Patrol enforcement, as there are not currently reliable and affordable automatic systems for detecting the number of people in a vehicle.  More successful congestion pricing strategies work with government and industry to implement better transportation alternatives.

Variable tolls, lane charging, and cordon pricing are the three main types of congestion pricing, and are addressed in the full report.  Mileage-based user charges and parking pricing are also sometimes considered examples of congestion pricing.  Further explanation of these types of driving deterrents will be added to Traffic Demand Management. 

Implementation

Congestion pricing is a demand management strategy, and it is implemented on existing roadways to reduce the need to add roadway capacity. Its success depends on a host of variables such as the project objectives, marketing strategies, user acceptance, and whether there are workable travel alternatives or alternate routes.
While it is often difficult to isolate the range of travel impacts of an isolated congestion pricing project, success can nonetheless be measured in terms of reduced congestion delay, improved transportation alternatives, and avoided roadway costs.  Congestion pricing has been found to be most effective when people have travel alternatives, alternate routes, alternate departure times, transit, or ridesharing.
While analyzing results, one should keep in mind that they may be affected by events not directly related to the project (such as construction on a nearby freeway) or by a planning process that does not take into account the full range of issues related to congestion projects.

After initial implementation costs, many non-American projects pay for themselves and more.  In Singapore, only 12% of the revenue generated is needed to pay administration costs. Norway generates 5 times the revenue required to maintain the toll system.
Congestion pricing schemes are generally implemented by highway agencies or local authorities. Sometimes other levels of government are involved in the approval process (for example, in the U.S., federal law restricts tolling on the Interstate Highway System). Several examples of implementation show the federal government as a main funder via grants. 

Increasingly, both state and federal governments are seeking to form public-private partnerships (PPP) to fund large transportation projects, including congestion pricing projects.  See the congestion pricing full report for more information.

Summary of Implementation Cases Categorized by Geographic Location

North America
United States: California:  San Diego (1996) I-15 FasTrak; Orange County (1995) State Route 91 Express Lanes;
Florida: Lee County (1998-expansion in 2003) Cape Coral and Midpoint Bridges; Broward County (2003) Sawgrass Expressway
Texas:  Houston (1998) Katy Freeway and 290
New Jersey:  New Jersey Turnpike
New York: Westchester County, NY (Tappan Zee Bridge over the Hudson River)
New York and New Jersey (2001) George Washington Bridge, Lincoln Tunnel, Holland Tunnel, Goethals Bridge, Outerbridge Crossing, and Bayonne Bridge.
Minnesota:  Minneapolis (2005) I-394 MnPASS
Colorado:  Denver (2005) US 36 and Pecos or I-25 north of US 36;
Utah:  I-15 Express Lane Pilot Project - Salt Lake and Utah County (September 2006)
**In the U.S. there are no congestion pricing cases where free lanes are transformed into toll lanes. All the projects are either transformations of underutilized HOV lanes into HOT lanes or toll reductions during off-peak periods when tolls were already in existence.
Canada: Toronto (1997) Highway 407
Asia: Singapore (1975) Several central business areas; Seoul, South Korea (1996) two key tunnels connecting north and south Seoul; Hong Kong (1993, 1997—failed implementation attempts)
Australia:  Melbourne (1999) Several Major Freeway arteries in North and West Melbourne called “CityLink”
Europe: Bergen, Norway (1986); Stuttgart, Germany (1998); Trondheim, Oslo, Stavanger, Norway (1991); Paris, France (1992); Rome, Italy (2002); London, England (2003); Stockholm, Sweden (2006);

Author: Lauren Smith, 2003 Marika Benko, 2007