Travel Demand Management > Congestion Pricing                    Printer-friendly version

What Is It?

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 (HOVs or 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.

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.

Potential travel impacts:

• A change in the time of travel: shift of peak to off-peak traffic with a consequent reduction of peak period traffic and a potential reduction of total traffic.
  
• A shift in mode: from automobile to alternative travel modes.
  
• A shift in routes: to untolled roads or less tolled roads.
  
• Linked trips: more combination of activities on a single trip
  
• A change in destination of trips
  
• 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.

Benefits

• Reduction of peak-period and total congestion.
  
  
• 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.

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.

Equity

The equity of congestion pricing depends on how the collected revenues are redistributed to travelers and on whether travel alternatives are available. (Giulano 1994; Litman 1996). Congestion pricing will only be inequitable and regressive if low-income drivers are not adequately compensated for the higher tolls. Under the right redistribution policy most people across income groups can be made better off (whether one chooses to wait in congestion or pay to save time).

Implementation Challenges

Most technological components for congestion pricing (electronic toll collection systems) have been tested and demonstrated throughout the world and are ready for widespread deployment. The main challenge to the implementation of congestion pricing is opposition from groups who consider themselves worse off once pricing is established. Given the equity concerns with congestion pricing and the fact that this concept is new to most travelers, an incremental approach seems appropriate. By extension, one of the big lessons learned from many of the congestion pricing projects is that marketing, public education and involvement with the project, and transparency in terms of toll revenue redistribution are essential to gain wide support for the project.

• United States: San Diego: I-15 FasTrak, Orange County SR91, Houston I-10 QuickRide.
  
  
• 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.
  
  
• Asia: Singapore, Seoul, Hong Kong
  
  
• Europe: Stuttgart, Germany; Trondheim, Norway.

Author: Lauren Smith