Guidebook for State, Regional, and Local Governments on Addressing Potential Equity Impacts of Road Pricing

5.0 Evaluating Equity at the Project Level

The equity measurement procedures and methods described in Section 5.0 can be used by agencies at all levels of government (State, regional, and local). Proactive agencies consider equity impacts at project initiation and become aware of potential and actual project impacts as part of project planning. In contrast, reactive agencies consider equity impacts after concerns are raised by stakeholders that the project has negative equity impacts and that equity should be addressed. Both proactive and reactive agencies should determine who is affected and measure potential impacts. Both will adopt the same evaluation methodologies to their projects. The illustrative scenarios presented at the end of Section 5.0 provide examples of how an agency approaches equity evaluation proactively or reactively.

5.1 Procedure for Evaluating Equity at the Project Level

Agencies may find it helpful to evaluate the equity impacts of pricing projects on an ongoing basis during the design of the project. To evaluate equity impacts of any road pricing project, the first step is to define the specific kinds of equity (Section 3.0) that should be analyzed: the unique combinations of the four characteristics described previously.

The following procedure is a starting point for agencies desiring to assess equity impacts:

• Determine the stakeholder groups that could potentially be affected by a given project.
• Catalog the known concerns of the major stakeholder groups that will be affected, and make best guesses as to which kinds of equity will matter to them. Choose only the top few kinds for each stakeholder group.
• Internally, use modeling to determine impacts on the types of equity chosen for analysis. Modeling techniques may include the following:
  • Transportation modeling
  • Financial modeling
  • Environmental modeling.
• Design mitigation strategies (such as those described in Section 6) to mitigate significant equity impacts.
• Hold stakeholder outreach meetings to explain the project. Explain how the project creates a net social benefit, and explain the mitigation strategies to those who would perceive harm. After the stakeholders understand the system, ask for their remaining concerns about the project. Stakeholders should be engaged early in the process, but not before the first efforts at alleviating equity concerns are incorporated into the project design.
• Based on stakeholder concerns from the meeting, consider whether further mitigation strategies are warranted.
• Continue to work with stakeholder groups throughout project implementation to ensure that no new equity concerns arise.

5.2 Evaluating the Impacts of Road Pricing Projects – Qualitative and Quantitative Techniques

There seems to be little consensus among experts on what methodologies to use to measure the cost and benefits of road pricing initiatives. Appropriate evaluation methodologies can vary based upon the specific equity measure desired, data availability, and agency staff expertise in conducting equity analyses for road pricing projects. This guidebook provides instructions to help standardize processes for all State and local agencies to use in evaluating equity.

Evaluation methodologies can be categorized as qualitative or quantitative. Qualitative evaluation methods can be used as an initial step towards quantitative evaluation, but quantitative measures should be used to measure actual impacts. The following text provides brief summaries of several potential evaluation methods.

Identification of Beneficiaries and Those Potentially Negatively Impacted – Qualitative Evaluation

Table 5-1 provides example road pricing beneficiaries and those potentially negatively impacted. As shown, an initial catalog of who directly benefits or dis-benefits (i.e., receives harm) from a road pricing project helps to illustrate project impacts. Once these are identified, a quantitative analysis of the size of the benefits and dis-benefits can be made. A general agency goal, beyond "do no additional harm" is that the aggregated benefits of a project outweigh the aggregated dis-benefits.

Table 5-1: Example Road Pricing Beneficiaries and Those Potentially Negatively Impacted

Direct Beneficiaries	Potentially Negatively Impacted
Wealthier motorists who value their travel time savings more than their toll costs Bus and rideshare travelers who enjoy improved service due to reduced congestion and economies of scale Recipients of toll revenues Local and regional communities who enjoy a better quality of life, less noise pollution, and emissions	Lower income motorists who pay the toll because they have no travel alternative, but don't value their time savings more than the toll costs Motorists who shift to other routes to avoid a toll Road users on un-tolled roads who experience increased congestion Motorists who forego trips due to tolls Motorists who shift to transit and rideshare modes due to tolls (although service improvements due to economies of scale may make some of these net beneficiaries)
Note: Contents adapted from original. Source: Gomez-Ibanez, Jose, “The Political Economy of Highway Tolls and Congestion Pricing,” Journal of Transport Economics and Policy, Vol. 46, No. 3, July 1992, pp. 343-360. Repeated in Litman, Todd, “Using Road Pricing Revenue: Economic Efficiency and Equity Considerations,” May 2011. Found at http://www.vtpi.org/revenue.pdf. Accessed January 18, 2012

Before and After Road Pricing Equity Impacts

A simpler way to measure equity impacts is to measure equity impacts before a road pricing scheme is implemented and then to measure the impacts after a scheme is implemented. As with all evaluation, there are advantages to measuring the actual project implementation and impacts, but there may be reasons why we want to predict the impact of projects that are only in the planning stages. For the scientifically rigorous before-and-after and cross-sectional studies to measure the equity implications of evolving financing mechanisms in order to provide a robust basis for future decisionmaking, the report states that the studies should:

• Track short- and long-term behavioral shifts in response to the evolving mechanisms
• Conduct verifiable analyses to ensure the validity and transferability of results
• Avoid preconceived notions and oversimplification.⁹

Direct and Indirect Road Pricing Cost and Benefit Calculations

Weinstein and Sciara suggest considering both direct and indirect cost and benefit calculations in evaluating the equity of road pricing projects.¹⁰    They suggest that tolls are regressive but that there are many socially acceptable government fees like garbage collection fees, community college tuition, and fees to use public swimming pools. They suggest considering the evidence from existing HOT lanes that some low-income people do use the lanes indicating that they feel the benefits are greater than the cost of the toll. Many priced managed lane users are only occasional users—for certain occasions the toll is a price that most people can afford. They suggest the following indirect benefits—that the reallocation of revenues to enhance transit or match carpools or provide other transportation services may provide all corridor users including lower income travelers with enhanced and faster transportation options. Another benefit suggested earlier in the guidebook is that some HOT lanes have reduced the travel times on the general purpose lanes, providing a benefit to all corridor users. Weinstein and Sciara finally suggest that the benefit and cost calculations also need to consider indirect costs like transponder deposits and acquisition.

GIS Analysis of Who is Affected by a Road Pricing Project

The FHWA/TxDOT paper referred to in Section 4.0 suggests using Geographical Information Systems (GIS) to determine which residential areas may benefit from the faster travel times of a road pricing project.¹¹ As described earlier, the travel times from each regional neighborhood to typical destinations using the priced and substitutable unpriced roadways should be calculated to determine the potential benefits and impacts of the priced facility. GIS may also help identify which residential areas are adjacent to a road pricing project and which areas may have increased noise from the faster traveling vehicles on a priced roadway. These noise-related dis-benefits may be offset by the air quality reductions resulting from faster moving vehicles.

Econometric Analysis with Survey Data

One way to quantitatively assess the impacts of a road pricing project is to obtain both demographic and travel behavior data of potential and actual project users. An econometric analysis can then be performed to determine which variables contribute to the choice of using a priced lane. Econometric analyses may also be used to determine the frequency of using a priced option. Demographics include income, gender, vehicle ownership rates, and household size. Travel behavior includes origin and destination at a minimum, but may also include attitudes towards pricing and how travel times, travel time reliability, number of signals, and type of roadway impact route choice decisions.

A number of papers in the literature perform econometric analyses related to road pricing, but the ones that specifically address equity are limited. A recent project at the University of Washington used non-project-specific regional data for their analysis including the 2007 American Community Survey, the Washington Population Survey for 2004 and 2006, and the Puget Sound Regional Council’s 2006 Household Activities Survey. The paper found that the ACS provided the best demographic data but they needed to integrate the ACS data with the Household Activity survey data for travel routes of poor and non-poor households.¹²  The researchers used the data to determine the percentage of income used in paying tolls for two different scenarios: a network of tolled roadways and one priced bridge (SR 520 which initiated tolls in December 2011).

Burris and Hannay performed the more-common analysis of acquiring demographic and travel behavior data from project-specific survey data; in this case, a survey of Houston QuickRide enrollees.¹³   The analyses determined that priced roadway usage did not vary significantly by income, occupation, age, or household size. Similarly, frequency of usage did not vary significantly; however, QuickRide enrollees were found to have significantly higher incomes and were significantly younger than drivers on the adjacent general purpose lanes. Burris and Hannay suggest that the ability or interest of low-income individuals to enroll in the program is an equity concern but that as long as the occupants of the QuickRide program valued their time at more than $3 an hour, the program had a net benefit.

Road Pricing Versus Alternative Non-Tolled Projects and Remediation Strategies

In addition to the proposed road pricing project, alternative projects should be identified. An understanding of the base conditions without the road pricing project is also needed. After this step, the agency can start measuring the additional benefits or dis-benefits of the road pricing project compared to not implementing the road pricing project. It may be, for example, that certain geographic areas are adversely affected by a roadway whether or not the roadway is tolled.

As the groups that are affected are identified, remediation strategies should be considered for addressing potential equity impacts. Several of these remediation strategies including toll design, toll discounts, and revenue redistribution are presented in Section 6.0.

5.3 Evaluating Equity at the Project Level – Illustrative Examples

For each of the two scenarios described in Section 2.0, an illustrative example of how to evaluate the equity impact of a pricing project is offered below.

Scenario 1: Agencies considering implementing roadway congestion pricing strategies for the first time

Potential Evaluation Method: Direct and Indirect Cost and Benefit Calculation Description: The tolling agency in county X should attempt to calculate direct and indirect costs and benefits of potential users and non-users in the priced managed lane corridor. Direct costs include the expected tolls to be paid. Indirect costs include transponder acquisition and deposit, obtaining information about travel time differences between the priced and general purpose lanes. Direct benefits include travel time savings for both the priced managed lane users and general purpose lane users. Indirect benefits include not having to travel in a carpool to use the faster lane and improved air quality due to the higher speed of the general purpose lanes.

Scenario 2: Agencies considering road pricing expansion along their network

Potential Evaluation Method: Econometric Analysis with Project-Specific Survey Description: With the experience of priced managed lanes in the region, the tolling agency in city Y can survey users (both priced managed lane users and general purpose lane users) of the corridor and the proposed toll corridors. The survey can result in demographic data including income, household size, occupation, age and gender and travel behavior data of typical origin, typical destination, priced managed lane HOT lane usage frequency, commuting frequency, and attitudes about priced managed lanes and pricing. With this data, the agency can determine what factors impact priced managed lane usage frequency and assess how the expanded tolled roadways may be utilized.