Congestion Pricing — A Primer: Overview

The Congestion Problem

Costs of Traffic Congestion

Growing congestion in the U.S. transportation network poses a substantial threat to the U.S.economy and to the quality of life of millions of Americans.

Each year, Americans are paying billions of dollars in terms of lost time and productivity, air pollution, and wasted energy. The Texas Transportation Institute's (TTI's) latest survey of mobility in America'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 traffic. The cost of this delay and wasted fuel totaled $78 billion in 2005, more than quadruple the comparable cost figure in 1982. TTI's Urban Mobility Report also notes that congestion causes the average peak period traveler to spend an extra 38 hours of travel time and consume an additional 26 gallons of fuel, amounting to a cost of $710 per traveler.¹

These estimates do not even include the environmental degradation and economic productivity losses caused by traffic congestion and were prepared at a time when fuel prices were considerably lower than they are today.

Alarming Trends

Traffic congestion levels have increased in every area since 1982. Congestion occurs on more roads more frequently and for longer periods throughout the day, resulting in greater amounts of required travel time than before. Congestion levels have risen in all urban-area size categories, indicating that even small areas are unable to keep pace with rising demand.

For example, on the basis of current trends, a medium-sized city should expect its congestion in 10 years to be as bad, or worse than, what is currently experienced by a large city. The rate of congestion growth has been greater in rural areas than in urban areas, portending increased congestion in communities of all sizes.

Causes of Congestion

At its most fundamental level, highway congestion is caused by the lack of a mechanism to efficiently manage use of capacity. When searching for a solution to the congestion problem, most people immediately think of adding a new lane to an overburdened highway. Construction costs for adding lanes in urban areas average $10–$15 million per lane mile.² In general, the funding for this type of construction comes from taxes that drivers pay when buying gas for their vehicles. Overall, funds generated from gas taxes on an added lane during rush hours amount to only $60,000 a year (based on 10,000 vehicles per day during rush hours, paying fuel taxes amounting to about 2 cents per mile). This amount is grossly insufficient to pay for the lane addition.

The bargain price paid by motorists for use of an expensive new capacity encourages more drivers to use the expanded highway. Introducing congestion pricing on highway facilities discourages overuse during rush hours by motivating people to travel by other modes, such as carpools or transit, or by traveling at other times of the day.