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Congestion Pricing — A Primer: Overview

Frequently Asked Questions

How does electronic tolling work?

Drivers typically put small electronic tags, called transponders, on the windshield inside their cars. In conjunction with using the transponder, they open an account with a toll operator. Tolls are then collected as the tag is read at normal highway speeds by electronic scanners suspended from gantries above the highway. Motorists ensure that adequate funding is available in their accounts by linking their accounts to their credit card accounts or through a quick call, a trip to a kiosk or office, or a visit to a Web site. Tags may emit a signal warning consumers when their account is running low, or they may be informed through messages beamed to them as they go by a toll collection point.

How does dynamic pricing work?

With dynamic pricing, tolls are continually adjusted according to traffic conditions to maintain a free-flowing level of traffic. Under this system, prices increase when the tolled lane(s) get relatively full and decrease when the tolled lane(s) get less full. The current price is displayed on electronic signs prior to the beginning of the tolled section. This system is more complex and less predictable than using a fixed-price table, but its flexibility helps to consistently maintain the optimal traffic flow. Motorists are usually guaranteed that they will not be charged more than a pre-set maximum price under any circumstances.

How do out-of-town motorists who don't have a transponder pay?

This is handled in several ways. Of course, clear signage is used to show drivers which lane(s) or route to use to avoid the toll. This prevents most of these kinds of problems. Some systems allow drivers to pay via credit card after the fact by calling a toll-free line. Some project sponsors simply let drivers use the tolled lane(s) at no charge the first few times. For instance, a letter may be sent to non-paying drivers identified based on matching a photo of license plates with State vehicle registration databases. The letter would explain that if the driver wants to continue to use the facility, he or she should get a tag or risk a fine, but that initial usage is being allowed at no cost. The operator of an all-electronic toll facility in Toronto, Canada, simply bills such motorists for the cost of the toll plus an administrative fee. Through these kinds of steps, the chances of tourists, occasional visitors, or inadvertent users being penalized are minimized.

Wouldn't electronic tolling invade a motorist's privacy?

All of the operating pricing projects in the United States and more than 250 other toll facilities across the country use electronic toll collection (ETC). Tolling agencies have devised a method to protect the public's privacy by linking the transponder and the driver's personal information with a generic, internal account number that does not reveal the driver's identity and that is not disclosed to other organizations. In addition, a motorist can open an anonymous pre-paid account if he or she so chooses.

The German TollCollect system fits each registered vehicle with a GPS unit that gathers data about its usage. The GPS unit can then be interrogated to generate a bill. Once the bill is paid, the usage data is erased from TollCollect's systems; thus, there is no central record of the vehicle's movements. The enforcement approach is similarly privacy friendly: roadside cameras check the vehicle's registration against the billing database as it passes, and so long as there are no overdue bills or police warrants, the data is erased before it even makes it to the central system.

How much is the charge?

Prices will vary from project to project because of supply and demand, as well as other regional factors. If all lanes on an existing toll-free facility are priced, charges will be much lower, because there will be more "supply" of premium free-flowing traffic lanes, thus lowering the market-based price that must be charged to fully utilize the available capacity. Some projects do use a pre-set schedule of tolls. This has the advantage of being predictable and simple. With dynamic pricing, the toll fee is adjusted in real time until optimal traffic flow is achieved. For example, the express lane fees for an 8-mile section in San Diego typically range from $1 to $4.

Isn't pricing inequitable toward low-income motorists?

Results from surveys conducted for projects in operation show that drivers of all income levels use priced express lanes. Although many low-income users don't choose to use the tolled facility every day, they support having the option. For instance, a low-income parent racing to avoid the financial penalty associated with being late for pick-up at a daycare facility or for work, is often pleased to have the option of paying a fee to bypass gridlock in the regular lanes. In fact, a high level of support for San Diego's HOT lanes comes from the lowest income users (70 percent support). Moreover, when pricing is coupled with transit investment, it helps rather than harms the poor, because low-income bus riders benefit significantly from toll-financed transit improvements.

A well-designed value-pricing plan can be less burdensome to low-income citizens than current systems that are based on regressive taxes, such as car registration fees, sales taxes, and the gas tax. A recent study by Lisa Schweitzer and Brian Taylor10 found that using sales taxes to fund roadways shifts some of the costs of driving from drivers to consumers at large, and in the process disproportionately favors the more affluent at the expense of the poor.

Finally, with congestion pricing, toll discounts or credits can be provided to low-income individuals. For example, a proposal for pricing the San Francisco–Oakland Bay Bridge included life-line discounts for low-income motorists, alleviating concerns about affordability. The bridge also currently provides free service for carpool vehicles during rush hours. In New York, a cordon-pricing scheme that was under consideration in 2008 included income supplements for low-income motorists.

Isn't congestion pricing "double taxation"?

Some argue that congestion tolls constitute a double tax because revenue from motor fuel taxes, other user fees, and general taxes have already paid for the costs of constructing roads. However, congestion tolls pay for a different set of costs, namely the economic costs of delay, pollution, and lost productivity due to congestion. The delays that vehicles impose on one another on congested highways temporarily balance demand and supply but only by deterring travelers (and shipments) whose time may be more valuable, while wasting large amounts of others' time. In addition, according to a 2005 study by the Ontario College of Family Physicians, congestion has significant health consequences. These include arthritis, asthma, back pain, high blood pressure, increased frequency of illness, headaches, stress, road rage, absenteeism, reduced job satisfaction, and overall life satisfaction.

Despite the magnitude of these costs imposed on others by rush-hour vehicle users, they are currently not charged for these costs. Thus, separate congestion charges are appropriate. Gas taxes paid by a motorist amount to just 2 cents per mile driven. To avoid the claim of "double taxation," gas taxes already paid can be tallied separately and reimbursed to the driver, as is already done for toll-road users in a few States.

Table. Bar graph showing the percentage of Minneapolis consumers surveyed who approve of allowing single-occupant drivers to use the carpool lanes for a fee.
Table. Bar graph showing the percentage of Minneapolis consumers surveyed who approve of allowing single-occupant drivers to use the carpool lanes for a fee. Consumers where surveyed in the Fall of 2004, Fall of 2005, and the Spring of 2006. The graph shows that lower-income consumers ranged from 62%-64%, mid-income consumers ranged from 60%-63%, and higher-income consumers ranged from 63%-71%.

Percentage of Minneapolis consumers surveyed who approve of allowing single-occupant drivers to use the carpool lane for a fee.

Won't adjacent free roads get more congested due to diverted traffic?

It is true that when toll rates are raised on toll ways, some drivers do divert to alternative toll-free routes. However, introduction of congestion tolls during rush hours will be accompanied by expansion of transit capacity and improved availability of carpooling options; thus, some solo drivers will use transit or carpool rather than divert to free roadways. Others may divert to off-peak or peak shoulder hours to take advantage of toll-free service or lower toll rates.

Rush-hour toll revenues may be used to pay for freeway widening or active traffic management, including, for example, expansion of peak-period capacity by using shoulders as travel lanes during rush hours.11 This will allow the expanded freeway to carry even more traffic, reducing traffic on parallel free arterials.

Do people have flexibility to change the time when they travel?

On average, over half of peak-period drivers in metropolitan areas are not commuting.12 In other words, there is far more schedule flexibility than commonly understood. Moreover, the rise of the Internet, personal digital assistants and telecommuting are providing employees with unprecedented flexibility to work outside the four corners of their offices. Giving people the option and incentive to shift trip times even 30–45 minutes can significantly reduce congestion. It is expected that some employers would respond to congestion pricing by offering employees more work-schedule options.

Will the public accept congestion pricing?

Public opinion surveys taken prior to implementation of congestion pricing have found that populations are about 70% opposed to congestion pricing. However, after congestion pricing is implemented and operating, rejection slips to about 30%. A study of public opinion surveys undertaken throughout the United States over the past few years found that, if people are convinced that more funding is needed for transportation, they prefer tolls to taxes.13 With tolls, they see a direct relationship between what they pay and the service they get and feel reassured that their dollars are not being siphoned off for purposes unrelated to their travel.

Will congestion pricing lead to privatization of highways?

By creating a revenue stream, congestion pricing may make public–private partnerships an option that states and local governments could consider. However, public agencies can and do operate many toll roads in the United States, and the London, Stockholm, and Singapore pricing projects are run by public agencies with contractual services provided by the private sector. Thus, public agencies could build, finance, and operate congestion-pricing projects. Privatization is not essential for successful pricing projects.

Won't congestion pricing involve high costs for implementation and operation?

Although costs for administration, collection of tolls, and enforcement are higher for congestion pricing relative to other ways of generating revenue, the costs of the technology and telecommunications have been dropping over the past 20 years and are expected to drop further in the future. More important, however, these costs must not be compared with costs for other means to generate the same amount of revenue. Because the primary purpose of congestion pricing is to reduce congestion and improve mobility, the more appropriate comparison is with other means of accomplishing the same level of mobility improvement. For example, adding a lane on a freeway to reduce congestion may cost as much as $15 million per lane mile in metropolitan areas. The same amount of congestion relief may be achieved at much lower cost with congestion pricing.

What effect will congestion pricing have on the quality of the environment?

Better environment has been one of the primary objectives of the Stockholm cordon congestion-pricing program. London took advantage of the reduced traffic volumes and reduced the amount of road space allocated for vehicles in order to increase pedestrian and bicycling amenities.

Stockholm, London, and Singapore all measured significant air quality improvements as a result of pricing. As noted by the Environmental Defense Fund, London reduced emissions of particulate matter and nitrogen oxides by 12 percent and fossil fuel consumption and carbon dioxide emissions by 20 percent in its central business district. Singapore's congestion pricing scheme prevents the emission of an estimated 175,000 lb of carbon dioxide each day, and Stockholm's congestion-pricing system has led to a 10–14 percent drop in carbon dioxide emissions in its central area. In addition, the indirect effect of public transportation expansion, made possible by the congestion charge revenues, has the potential to reduce all pollutants and sustain reductions over time.