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Income-Based Equity Impacts of Congestion Pricing—A Primer

Evidence From VPP Program Projects

The perception that value pricing is “unfair” to low- and perhaps even middle-income drivers has been a concern for many VPP program projects. Since the inception of the VPP program, equity has been a key issue of interest, with particular attention given to mitigating possible adverse effects of projects on low-income drivers. Project experiences are summarized in FHWA’s report on lessons learned from the program (KT Analytics and Cambridge Systematics, Inc., 2008). Project experience has shown, particularly for the most common projects funded under the early phases of the program (e.g., HOT lanes), that the perception of unfairness may be exaggerated. Data from the various cities that have implemented projects or have projects underway are discussed below. Most of the data have been obtained from projects involving “partial” pricing on one or more lanes of a freeway facility. Equity impacts relating to income have not been evaluated in the case of “full facility” pricing projects, such as those implemented on tollways and tolled water crossings. Overall, the perception that congestion pricing is an inequitable way of responding to the problem of traffic congestion does not appear to be borne out by experience.

Experience From “Partial” Pricing Projects

Graph. A bar graph showing the public acceptance of the I-15 high-occupancy toll lanes by income group and ethnicity. There is wide support for value-pricing concepts, which are viewed as "buying time" for a premium level of service.  The graph shows that 70% of all ethnicities agree, 70% of white people agree, 85% of Hispanic people agree, and approximately 78% of Asian people agree. Approximately 81% of people with an income <$40,000, 77% of people with an income $40,000-$70,000 and 69% of people with an income$70,000-$100,000 agree. 70% of people with an income of $100,000+ agree.

Public acceptance of I-15 high-occupancy toll lanes by income group and ethnicity. There is wide support for value-pricing concepts, which are viewed as "buying time" for a premium level of service.

San Diego, CA

For the I-15 HOT lanes in San Diego, CA, user and stakeholder concerns about the potential elitist character of the project arose in the first year but diminished with time as users across income groups used the facility. By the final evaluation, such concerns were minimal. In the case of the planned expansion and extension of the I-15 HOT lanes, a telephone survey of all facility users of I-15 found that most consider the extension fair to regular-lane users (71 percent approval) and to HOT-lane users (75 percent approval). There were very few differences in attitudes about the fairness of the lanes based on ethnicity or income; however, half of respondents felt that tolling solo drivers was an unfair double taxation. HOT-lane users paying tolls were less likely to feel that way than were other corridor users.

When considering the statement, “People who drive alone should be able to use the I-15 express lanes for a fee,” 80 percent of the lowest income motorists using the I-15 corridor agreed with it, and low-income users were more likely to support the statement than were the highest income users.

Users of San Diego’s I-15 HOT lanes were more likely to have higher incomes than were drivers in regular lanes, but lower income drivers sometimes did use the HOT lanes. I-15 drivers showed a broad approval of the HOT-lane program and felt that it was fair and had reduced congestion. Equity issues are addressed by dedicating the HOT-lane revenues to bus service in the corridor. I-15 was the first project to demonstrate that implementing tolls as a demand-management measure can play a major role in paying for transit and reducing the negative impact of this strategy on low-income individuals.

Denver, CO

For the I-25/US-36 HOT lanes in Denver, CO, public outreach leading to implementation of HOT lanes did not uncover critical concerns regarding equity or other social impacts, nor have such concerns arisen since implementation.

Minneapolis, MN

Graph. A bar graph showing users of I-394 MnPass high-occupancy toll lanes as a percentage of Minneapolis, MN, population. 79% of the higher income population use the lanes, 70% of the middle-income population use the lanes, and 55% of the lower income population use the lanes.

Users of I-394 MnPass high-occupancy toll lanes as a percentage of Minneapolis, MN, population.

On I-394 in Minneapolis, MN, the first attempt at implementing HOT lanes in1997 met resistance in large part because of public belief that only high-income users would benefit. A second attempt approximately 9 years later succeeded in part because advocates made the case that all income groups value time savings and reliability for certain trips. Worsening congestion and a shortage of transportation funds were also important to the success of the second attempt, according to evaluators. Surveys of corridor users found a relatively small difference in income between those who do and those who do not own transponders: 25 percent of owners had annual incomes of $50,000 or less compared with 32 percent of non-owners. However, concerns about equity have not been significant since start up.

Patterson and Levinson (2008) stated that “the [HOT] lanes are Lexus Lanes in the sense that increased income predicts increases in three of the four metrics used to measure direct benefit….
Individuals with higher incomes receive more direct benefits from the lane than those with lower incomes.” However, according to the University of Minnesota and NuStats (2005), HOT-lane usage with MnPass was reported across all income levels, including by 79 percent of high-income respondents, 70 percent of middle-income respondents, and 55 percent of low-income respondents.

Graph. A bar graph showing the percentage of Minneapolis, MN, consumers surveyed who approve of allowing single-occupant drivers to use the carpool lanes for a fee. Of the lower income consumers, 62% of those surveyed in Fall 2004 approved, 62% of those surveyed in Fall 2005 approved, and 64% of those surveyed in Spring 2006 approved. Of the middle-income consumers, 63% of those surveyed in Fall 2004 approved, 60% of those surveyed in Fall 2005 approved, and 61% of those surveyed in Spring 2006 approved. Of the higher income consumers, 63% of those surveyed in Fall 2004 approved, 71% of those surveyed in Fall 2005 approved, and 71% of those surveyed in Spring 2006 approved.

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

Patterson and Levinson (2008) sought to determine whether the higher levels of MnPass use found among wealthier drivers was attributable to their residential location (specifically along the managed-lanes corridor) or to their income. Both factors were found to be significant. The highest income motorists paid the most (in average and total tolls) and received the most benefit.

Patterson and Levinson (2008) cited specific equity benefits of managed lanes:

  • Vehicle shifts away from general-purpose lanes lead to improved travel conditions on such lanes,
  • A high-quality transit alternative is generally part of a managed-lanes project,
  • Unused transponders may be considered to provide high-value travel-time insurance to their owners, and
  • When social benefits are paid for by those who choose to drive, situational equity is generally improved.

Approximately 65 percent of respondents to a survey conducted in spring 2006, a year after initial implementation, thought that HOT lanes were a good idea. Support for the lanes was also found to be high across income levels, including by 71 percent of high-income respondents, 61 percent of middle-income respondents, and 64 percent of low-income respondents.

Houston, TX

Chart. A pie chart showing annual household income of SR-91 peak-period travelers in 1999. 37% of peak-period travelers earned $60-$100K annually, 23% earned $40-$60K annually, 19% earned <$40K, and 21% earned >$100K.

Annual household income of SR-91 peak-period travelers in 1999.

For the I-10 and US-290 HOT lanes in Houston, TX, focus groups held during project planning did not find concerns about social equity among either corridor users or the public at large. The general reaction was that all would benefit if congestion were reduced. There also have been no equity concerns raised during operations. It should be noted, however, that these HOT lanes are somewhat different from other examples, that is, single-occupant vehicles are not permitted in the HOT lanes—tolls are used to manage two-person carpool demand. Burris et al. (2007) found that even in the lowest income group, over two-thirds of respondents were interested in paying to use the HOT lanes.

Seattle, WA

For SR-167 HOT lanes in Seattle, WA, evaluators found through outreach efforts that low-income drivers are as supportive of the HOT lanes as are drivers from other income groups.

Orange County, CA

SR-91 in Orange County, CA, was the first project to implement congestion pricing on new lanes and until 2008 was the only operating example of congestion pricing on new lanes. FHWA’s A Guide for HOT Lane Development report (FHWA, 2005) provides data from studies of SR-91 express toll lanes in California. At any given time, about one-quarter of the vehicles in toll lanes are driven by high-income individuals, whereas the remaining cars are driven by low- and middle-income individuals. It is estimated that 19 percent of the peak-period users of the SR-91 express lanes make less than $40,000 a year, and 42 percent make less than $60,000 a year. Low-income drivers do use the express lanes and are as likely to approve of the lanes as drivers with higher incomes. In fact, over half of commuters with household incomes less than $25,000 a year approved of providing toll lanes.

An evaluation of the SR-91 express lanes (Sullivan, 2000) found a “moderate” income effect, with the percentage of trips on the express lanes for the lowest and highest income groups (20 percent and 50 percent) staying the same over the 3-year evaluation period. Evaluators also found that the use of express lanes increased over time for both those who carpooled and solo drivers across all incomes. Low-income and moderate-income travelers appeared to be more selective and used the tolled route for less than half of their trips.

When prices rose, people in the lowest income group did not reduce their travel, but people of moderate income did. This suggests that people with lower incomes have less flexibility in the time they travel (Kuehn, 2008), or that low-income individuals have very high values for reliable travel when they need it.

Experience From “Full Facility” Pricing Projects

Lee County, FL

In Florida, proposals to raise peak-period tolls on Lee County’s bridges were rejected as inequitable to those with inflexible schedules and led to a program of reduced off-peak tolls instead. Income equity was not raised as an issue in planning or in evaluation focus groups and surveys.

New York, NY

The Port Authority of New York and New Jersey did not uncover major equity issues in planning for variable tolls, nor did they evaluate equity effects after program implementation.

Planning Studies Conducted Under the VPP Program

Studies funded under the VPP program have included innovative approaches designed specifically to address equity issues. The authors of one study evaluated the equity impacts of a regional value pricing program, which are discussed below.

Fast and Intertwined Regular (FAIR) Lanes

This approach was studied in Alameda County, CA, and involved providing toll credits to qualified low-income users on the basis of their monitored usage of free regular lanes located adjacent to HOT lanes. Accumulated credits allowed for periodic free use of the HOT lanes by these motorists.

“FAST Miles”

The FAST Miles approach being studied in Minneapolis would allocate a fixed amount of toll credits to all area motorists, similar to the limited number of free peak-period minutes allocated by cell phone companies to their customers. Total credits allocated to all motorists would be limited by the peak-period capacity available on the roadway system. This would ensure that demand would not exceed supply of road space (i.e., roadway capacity) and guarantee congestion-free travel for all motorists in exchange for use of their free credits to “pay” for roadway use.

Network of Variably Priced Lanes in the Washington, DC, Metropolitan Area

An analysis was performed for three scenarios involving a network of priced lanes (National Capital Region Transportation Planning Board, 2008). With respect to transit, because transit service was added between the base case and the scenarios, only gains in accessibility were noted. With regard to highways, one scenario had no losses in accessibility; thus, no population group experienced losses. The pattern of losses and gains for the other two scenarios were very similar, with no one population group receiving a large share of the benefit and no one population group shouldering a disproportionate share of the losses. Gains and losses in accessibility to jobs by highways across population groups for one scenario is presented in the figure “Demographic assessment of the change in accessibility to jobs by highways,” and the distribution of gains in accessibility to jobs by transit for the same scenario is presented in the figure “Demographic assessment of the change in accessibility to jobs by transit.”

Chart. Demographic assessment of the change in accessibility to jobs by highways.  Of the general population, 7.6% experienced loss, 80.3% experienced minimal impact, and 12.1% experienced moderate gain. Among African Americans, 7.5% experienced loss, 83.6% experienced minimal impact, and 8.9% experienced moderate gain. Among Asians, 6.9% experienced loss, 77.9% experienced minimal impact, and 15.2% experienced moderate gain. Among Hispanics/Latinos, 13.0% experienced loss, 70.8% experienced minimal impact, and 16.2% experienced moderate gain. Among low-income drivers, 11.6% experienced loss, 76.8% experienced minimal impact, and 11.6% experienced moderate gain. Among disabled drivers, 8.9 % experienced loss, 80.0% experienced minimal impact, and 11.2% experienced moderate gain.

Demographic assessment of the change in accessibility to jobs by highways.

Chart. Demographic assessment of the change in accessibility to jobs by transit. Of the general population, 80.8% experienced minimal impact, and 19.2% experienced moderate gain. Among African Americans, 74.5% experienced minimal impact, and 25.5% experienced moderate gain. Among Asians, 77.0% experienced minimal impact, and 23.0% experienced moderate gain. Among Hispanics/Latinos, 82.4% experienced minimal impact, and 17.6% experienced moderate gain. Among low-income drivers, 77.0% experienced minimal impact, and 23.0% experienced moderate gain. Among disabled drivers, 79.5% experienced minimal impact, and 20.5% experienced moderate gain.

Demographic assessment of the change in accessibility to jobs by transit.

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