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Effective Approaches for Advancing Congestion Pricing in a Metropolitan Region

2. Benefits from Using Congestion Pricing to Support Regional Goals

Congestion pricing strategies can support regional goals by providing two direct benefits: improving multimodal system performance and generating revenues for transportation investments. These impacts, in turn, provide the opportunity to support multiple planning goals, including improving economic competitiveness; supporting environmental quality (e.g., air quality), energy efficiency, and sustainability (e.g., reducing fuel consumption and greenhouse gas emissions); enhancing travel options and livability; and supporting a state of good repair for infrastructure.

Improving Multimodal Transportation System Performance

Traffic congestion in urban areas, at ports, and other areas (e.g., beach vacation destinations, special event locations), creates travel delays that lead to real economic costs for regions, decreased reliability, and increased pollutant and greenhouse gas emissions, in turn leading to public health impacts. Many people feel the effects of congestion, including vehicle occupants and transit riders who must endure time stuck in traffic and businesses that are impacted due to congestion-related delays affecting their distribution of goods.

Congestion pricing can potentially improve the performance of the transportation system across modes in the following ways:

  • Managing Traffic Congestion. Congestion pricing can be an effective tool to manage travel demand. By pricing travel to more accurately account for its full costs, congestion pricing provides incentives for travelers to shift some trips to off-peak times, less-congested routes, or alternative modes; to combine trips; or even to eliminate some trips altogether. Pricing, therefore, can prevent a breakdown of traffic flow and help maintain vehicle throughput during peak periods.
  • Providing a Faster, More Reliable Travel Time Option. Some pricing options, such as managed lanes with congestion pricing, can help to guarantee a faster, more reliable travel time for those who pay to use the priced lanes, and can result in improved transit on-time performance. By converting an under-utilized HOV lane to a HOT lane that attracts increased traffic volumes, traffic on the general use lanes may also be improved. Conversely, converting an over-utilized HOV lane to a HOT lane may disincentivize its use, smoothing traffic on the managed lanes segment of the roadway.

Evaluation results from implemented projects show how different types of congestion pricing strategies can improve transportation system performance and provide additional travel options. Even a small reduction in traffic may significantly improve system performance and reliability for transit and personal motor vehicles, as shown in the examples highlighted throughout the remainder of this section.

Speed and Travel Time Improvements Resulting from Different Forms of Congestion Pricing

  • High-occupancy toll (HOT) lanes: Evaluations of HOT lanes on I-15 in San Diego and Katy Freeway in Houston show 11-20 minute travel time savings for HOT lane users. The variably priced Miami I-95 Express Lanes have improved speeds not only for express lane users but also for those in the general use lanes.
  • Variable pricing based on time of day or congestion levels: An off-peak toll discount program in Lee County, Florida showed that 71 percent of drivers shifted their time of travel at least once a week to take advantage of the off-peak discounts. When the Port Authority of New York and New Jersey began charging variable tolls based on time of day on its bridges and tunnels, time savings of up to 20 minutes were observed at certain locations.
  • Cordon pricing in London, Stockholm, and Singapore: Compared to pre-charging levels, the number of vehicles entering the charging zone dropped by 24 percent after the implementation of electronic congestion pricing in Singapore, by 14 percent after pricing was introduced in the western part of London, and by 20 percent in Stockholm. Average travel speeds increased by 28-30 percent in both Singapore and London.

Source: TRB Report 686, "Road Pricing: Public Perceptions and Program Development," Transportation Research Board, 2011.

Generating Revenues for Transportation Investments

It is widely recognized that one of the greatest challenges in the coming years will be preserving, operating, and enhancing the Nation's transportation system in an era of limited funding, expanding needs, and increasing costs. Increasingly, there is recognition that traditional fuel taxes are inadequate to meet revenue needs because tax rates have not kept pace with inflation, improvements in vehicle fuel economy are diminishing their value, and investment needs continue to grow.

Congestion pricing is a potential funding source for highway infrastructure improvements and for on-going highway maintenance, operations, and management, transit services, and other related investments. For instance, excess revenues remaining from funding operating costs of HOT lane projects in Miami, San Diego, Minneapolis, and Los Angeles are being used to fund transit improvements, ridesharing programs, traffic management using ITS, or travel demand management programs in the HOT lane corridors. The State of Washington expects the recently implemented variable pricing on the SR 520 bridge connecting Seattle to Redmond to contribute funds toward constructing the new the bridge. Revenues from the pricing will be combined with traditional Federal and State funds. Revenues from cordon pricing in London, Singapore, and Stockholm have been used in part to fund regional transit improvements in each of these cities.

Apart from the ability to raise revenues directly, congestion pricing also offers the opportunity to involve the private sector in financing the capital costs of new lanes/facilities because of the potential to generate returns. For example, managed lanes on I-635 (LBJ Freeway) and North Tarrant Express in Dallas and Fort Worth are being constructed with 60-70 percent private sector funding. In Virginia, a private sector consortium has entered into a public-private partnership with the Commonwealth of Virginia to build four new HOT lanes on the Capital Beltway, funding about 60 percent of project costs through private equity, loans, and bonds that will be paid for by the tolls levied on motorists who choose to use the new HOT lanes.

The extent to which the revenues from congestion pricing can support transportation needs on a regional level will depend on the scale and type of proposed pricing projects. Regional or broad-based pricing, such as regional networks of priced facilities proposed in the San Francisco Bay and Puget Sound areas will be more suited for this purpose than individual projects like a single HOT lane. Some MPOs that are including pricing strategies in their metropolitan transportation plans to meet transportation investment needs include the North Central Texas Council of Governments (NCTCOG) for the Dallas region, the Puget Sound Regional Council for the Seattle region, the Metropolitan Council for the Minneapolis/St. Paul Twin Cities region, and the New York Metropolitan Transportation Council (NYMTC) for the New York region.

Using Congestion Pricing to Support Long Range Funding Needs in the Seattle Region

PSRC has included congestion pricing as a key element of its Transportation 2040 Plan with a financing plan that suggests a long-term shift in how transportation improvements are funded, with greater reliance on congestion pricing.

The plan states that over time, sources of transportation funding in the region could include high-occupancy toll (HOT) lanes, facility and bridge tolls, highway system tolls, charges for vehicle miles traveled (VMT), and other pricing approaches that replace the gas tax while funding and managing the transportation system. The plan calls for full highway system tolls by approximately 2030.

Supporting Economic Competitiveness / Freight Movement

Congestion pricing can lead to improved economic competitiveness by supporting reliable and timely access to employment centers, educational opportunities, services, and other basic worker needs as well as improved business access to markets. It may also reduce the economic costs of congestion-related delays, which, according to the Texas Transportation Institute's 2010 Annual Urban Mobility Report, stood at $115 billion in the form of 4.8 billion lost hours and 3.9 billion gallons of wasted fuel nationwide.

Congestion affects the productivity of not only workers, but also businesses, who are constrained by time-bound schedules for the delivery of goods. These effects are critical in industries that rely on time-sensitive shipments or those that rely on freight movement as a significant portion of their supply chain costs. Congestion and reduced reliability on the transportation network therefore affect the accessibility, operations, productivity, and competitiveness of the Nation's businesses across virtually all economic sectors. Giving motorists the option to pay for a congestion-free ride provides greater choice for travelers and reduces the overall costs of congestion by allowing high-value and time-sensitive trips to occur with faster travel times than trips where travel time is of less importance. In addition, it maximizes economic return on existing investment by optimizing use of the transportation infrastructure.

Linking Congestion Pricing to Economic Development in Los Angeles

The Southern California Association of Governments (SCAG) has linked its congestion pricing proposals to an economic development strategy for the region. Its analysis shows that an annual delay of 10 percent leads to a decrease in employment and gross regional product. With the adoption of the last regional transportation plan in 2008, the MPO Board approved an extensive study of congestion pricing options that can be integrated into the plan, called the Travel Choices Study. The key goals of the study are to increase productivity, improve air quality, increase revenues to meet shortfalls in funding, and to reduce congestion as an economic development strategy.

Two slides depicting the economic impacts of increasing mobility through decreasing travel time delay and anticipated job growth due to reductions in delay.
Southern California Association of Governments (SCAG)

Supporting Environmental Quality, Energy Efficiency, and Sustainability

Motor vehicles are a significant cause of air pollution that harm human health, including carbon monoxide, particulate matter, and ozone precursors (hydrocarbons and nitrogen oxides), as well as carbon dioxide and other greenhouse gases (GHGs) that contribute to climate change. Moreover, areas with current or past air quality problems must demonstrate through the transportation conformity process that their long-range plans do not impede the ability to attain or maintain air quality standards. Congestion pricing strategies can support environmental quality through both reduced fuel consumption and decreased pollution and greenhouse gas emissions, as explained below.

  • Reducing VMT. By charging a price for road use, pricing can encourage road users to take transit, walk, bike, carpool, or telework rather than driving alone during peak periods. This would result in a reduction in VMT, emissions, and fuel consumption.
  • Improving traffic flow. Traffic congestion can lead to increased emissions due to excessive starts, stops, and idling. By improving traffic flow, congestion pricing can help to improve localized and regional air quality. For instance, an emissions analysis for the planned San Francisco Bay Area HOT lane network showed a 10 percent reduction in particulate matter emissions and 7 percent reduction in carbon dioxide emissions compared to the existing HOV networks.
  • Providing funding to support transit and other options. Road and parking pricing revenues can be used to support improvements in transit services, bicycle and pedestrian infrastructure, or other options, which in turn can reduce automobile-based travel.

Enhancing Travel Options, Transit, Livability, and Sustainability

Livability in transportation is about improving quality of life by creating travel choices within more balanced multimodal transportation networks while supporting and enhancing communities. The concept of livability was given greater clarity and definition through the six livability principles established by the Sustainable Communities Partnership between the U.S. DOT, EPA, and HUD (see text box). The ways in which pricing enhances economic competitiveness have already been discussed above. Pricing can support livability in other ways as well by:

  • Providing more transportation choices. Congestion pricing can improve the speed and reliability of express bus services, making them more attractive to commuters while reducing operating costs, and can facilitate deployment of bus-rapid-transit (BRT) operations in major corridors (such as the US-36 Express Lanes project planned in Colorado). For example, the Miami I-95 Express Lanes were created specifically to meet the goal of encouraging the use of transit and carpooling. Moreover, revenues from congestion pricing also can be used to enhance transit system capacity, ridesharing programs, and amenities for pedestrians and bicyclists.
    Indirectly, pricing strategies, including parking pricing, can make downtown or congested areas more hospitable to pedestrians, bikers, and transit users by reducing vehicle travel. In London, when congestion pricing was first introduced in 2003, excess waiting times for buses decreased over 30 percent, and bus speeds improved by 6 percent in the charging zone. This improvement, along with significant bus capacity enhancements, resulted in a 37 percent increase in the number of bus passengers entering the charging zone after congestion charging was introduced.2 Moreover, by reducing downtown traffic congestion, cordon pricing can enhance the walkability of an area as well as its ability to accommodate bikes and transit vehicles.
  • Supporting existing communities. Pricing can help preserve existing communities by optimizing the efficient use of existing infrastructure and preventing or delaying the need for capacity building that could significantly alter community character. According to one study, building new highway infrastructure can lead to decentralization and increased sprawl, while management of existing infrastructure improves the vitality of existing communities.3 Congestion pricing can also lead to a reduction in the number of traffic accidents, as occurred in London.4

Potential Fuel Consumption Benefits of Managed Lanes

Slide depicts a graph showing a comparison of fuel consumption by speed for GP lanes with HOV, GP lanes with express lanes, express lanes, and HOV lanes. Fuel consumption for GP lanes with HOV or express lanes improves fuel consumption by 40 percent and Express Lanes and HOV lanes improve fuel consumption by 30 percent for I-10 Eastbound in Los Angeles County at PM Peak travel speeds.
Southern California Association of Governments (SCAG)

An analysis of express lanes in Southern California suggests that the lanes could improve vehicle fuel economy both in the express lanes (by lowering speeds compared to having them operate as HOV lanes) and in the general purpose lanes (by increasing speeds).

Source: Metro ExpressLanes Concept of Operations, 2009, LACMTA

Supporting a State of Good Repair

Congestion pricing generates funds that can be used to maintain existing infrastructure in a state of good repair. Because maintenance of existing transportation infrastructure is often a significant portion of total transportation funding needs, revenues generated from congestion pricing can help to support maintenance and preservation of existing transportation infrastructure.

Designing Congestion Pricing Strategies to Achieve Regional Benefits

The benefits of congestion pricing strategies and the extent to which they help support regional goals depend on both the type of pricing strategy and on how revenues are used. Different forms of congestion pricing will have different impacts and may be used to support different goals. For instance, construction of new highway capacity, even with variably priced toll roads, may not yield emissions reductions if it facilitates longer distance travel. However, options, such as pricing existing facilities and parking pricing are likely to result in more significant shifts in travel behaviors in ways that reduce vehicle travel and have emissions benefits. Targeted investments in managed lanes also may help to alleviate unnecessary delay and pollution. The benefits also depend in part on whether revenue from pricing is used to fund transit, bicycle, and pedestrian infrastructure or road improvements. For instance, the city of Austin, Texas, established a parking benefits district by metering on-street parking and dedicating the net revenues to infrastructure improvements in the neighborhood that promote walking, cycling, and transit use, such as sidewalk enhancements and the addition of bicycle lanes.

The Partnership for Sustainable Communities Six Livability Principles:

1. Provide more transportation choices

2. Promote equitable, affordable housing

3. Enhance economic competitiveness

4. Support existing communities

5. Coordinate policies and leverage investment

6. Value communities and neighborhoods

Source: U.S. EPA, "HUD-DOT-EPA Partnership for Sustainable Communities." Available at

By developing consensus on regional goals and objectives, regional congestion pricing strategies can be designed to help support these goals. For instance, in the Minneapolis/St. Paul region, congestion pricing was implemented initially both to achieve better utilization of HOV lanes by conversion to HOT lanes and to provide more options for travelers. In Southern California, a key goal for congestion pricing has been to reduce congestion in order to improve economic competitiveness. In the Seattle region, PSRC's Transportation 2040 plan includes pricing on a regional level as part of an overall strategy to support sustainability and reduce greenhouse gas emissions while simultaneously addressing revenue needs. In the Dallas region, air quality improvement, congestion management, and the need to raise funds for maintenance have all been key issues. Given growth in the Dallas region's population and the limited funding available, the region has recognized that tolling is the most viable way to provide new capacity, leading to the development of public-private-partnerships (PPPs) to fund managed lane projects. The regional goals that were discussed at the workshops, for which congestion pricing is being considered in a wide range of regions, are listed in the Appendix (table 1).