Impacts of Congestion Pricing on Low-Income Populations
U.S. Department of Transportation
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List of Acronyms and Abbreviations
CRD – Congestion Reduction Demonstrations
Table of Contents
The perception of negative equity impacts associated with pricing implementation has often plagued congestion pricing projects. It has been argued that pricing roadways limits the options available to low-income travelers while simultaneously increasing the number of options available to high-income users. Significant research into the income-equity impacts of congestion pricing projects over the last several years has shown that well-designed pricing schemes can help mitigate such impacts and ensure greater options for all travelers, regardless of their income category. Further, several recent efforts by agencies to measure and respond to impacts on low-income communities affected by pricing implementation provide real-life examples of tools and measures utilized to address these concerns. This white paper documents examples of mitigation strategies implemented by agencies to analyze and measure the impacts of their pricing projects on low-income users of the transportation system.
The following case studies are presented in this white paper:
The environmental justice analyses conducted by the agencies sponsoring the projects and proposals included an evaluation of the potential impacts of tolling on low-income populations. The case studies review the tools and approaches used for the analysis of impacts and the results of the analysis. They also document successful strategies used by the agencies to mitigate the projected adverse impacts. This white paper summarizes takeaways from the examples and strategies that future project managers can employ to evaluate and mitigate potential impacts on low-income users of priced-managed roadways.
The U.S. Department of Transportation's 2016 Value Pricing Pilot Program (VPPP) report to Congress documented results from several congestion pricing programs implemented through the VPPP as well as through follow-on initiatives such as the Congestion Reduction Demonstration (CRD), Urban Partnership Agreement (UPA), and Express Lanes Demonstration Programs. One of the key findings of the report was that equity impacts resulting from the congestion pricing deployments have been minimal, yet remain a concern for the public. Overall, the UPA/CRD projects did not have any negative equity impacts and, instead, succeeded in expanding travel options through transit improvements and by expanding the range of parking pricing and convenience options available to drivers. Nevertheless, the report states surveys at several sites indicate a persistent perception of unfairness related to congestion pricing efforts.
The Federal Highway Administration (FHWA) has several published resources that address equity in congestion pricing, including a white paper (Low-Income Equity Concerns of U.S. Road Pricing Initiatives), a fact sheet on Environmental Justice and Tolling: A Review of Tolling and Potential Impacts to Environmental Justice Populations, an Environmental Justice Emerging Trends and Best Practices Guidebook, and a one-page brief (Congestion Pricing Equity), along with a compendium of frequently asked questions.1 According to the one-page brief, well-planned congestion pricing schemes:
While these resources are a helpful starting point, each pricing proposal is unique in the geographic and demographic context in which it is situated. Transportation agencies evaluating congestion pricing scenarios are required to consider the potential negative impacts each scheme may have on various populations. Such analysis is important to allay public concerns related to income equity, as well as to meet Federal, State, local, and regional requirements. While the focus of this study is on impacts to low-income populations, the Federal environmental justice requirement, as authorized by Executive Order 12898 (described on page 4), mandates Federal actions to address disproportionately high and adverse impacts on minority populations and low-income populations, which includes an analysis of potential impacts and implementation of measures to alleviate adverse impacts. In addition to Federal requirements, certain States and regions have laws requiring assessment and mitigation of negative impacts on low-income communities. The authorizing legislation to develop and operate high-occupancy toll lanes on I-10 and I-110 in California, State Bill 1422, directed the Los Angeles County Metropolitan Transportation Authority to assess the impacts of the program on low income commuters and to provide mitigation to those impacted commuters. The mitigation measures suggested by the bill included reduced toll charges and toll credits for transit users based on income eligibility.2 The North Central Texas Council of Governments' congestion management plans also include consideration of the location of low-income populations in the evaluation of several congestion management strategies as a criterion for project eligibility and selection.3
Despite a number of successful priced-managed lane projects, transportation agencies continue to need tools to measure the potential impacts of pricing when considering pricing implementation. Understanding potential negative impacts up front will allow agencies to address environmental justice requirements while proactively addressing constituents' concerns related to pricing. It would also ultimately lead to the design of a congestion pricing scheme that is equitable to all the transportation users in a region.
Executive Order 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, which was issued in 1994, brought attention to environmental and health consequences of government action on minority and low-income communities.4 It directed all Federal agencies to make "achieving environmental justice part of its mission by identifying and addressing, as appropriate, any disproportionately high and adverse human health or environmental effects of its programs, policies, and activities on minority populations and low-income populations." This requirement applies to all projects requiring Federal approval that have minority or low-income populations in their study area.
In response, FHWA's original environmental justice Order 6640.23 was signed by the Administrator in December 1998. The Order was updated in 2012, and the current directive is FHWA Order 6640.23A. The Technical Advisory accompanying this order provides guidance for documenting the potential social, economic, and environmental impacts considered in the selection and implementation of highway projects. The case study locations included in this white paper conducted environmental justice analyses in accordance with this FHWA requirement.
In 2010, as part of the Congestion Reduction Demonstration (CRD) Program, Los Angeles County Metropolitan Transportation Authority (LA Metro) undertook a demonstration project to convert two interstate carpool lanes on I-10 and I-110 to high-occupancy toll (HOT) lanes or "express lanes." The pilot also represented the first toll projects in Los Angeles. I-10 and I-110 are two of the busiest highways in the LA Metro area, with I-10 being the main east-west highway through downtown Los Angeles, and I-110 extending from central Los Angeles due south to the port. In 2010, mixed-flow lanes on I-10 and I-110 carried approximately 1,400 to 1,500 vehicles per lane, and high-occupancy vehicle (HOV) lanes carried approximately 1,500 to 1600 vehicles per lane during the typical morning rush hour. As such, the facilities were operating at or near capacity at the time of implementation of the demonstration project.
As part of the project, LA Metro, in accordance with State law (SB 1422, 2008) and the Federal Executive Order 12898 requirement, analyzed the impact of the congestion pricing demonstration project on low-income commuters in the area (Low-Income Assessment).5 The following sections summarize the framework for this evaluation, the key findings of the analysis, and the mitigation measures undertaken by LA Metro.
Framework for Evaluation of Equity Impacts
Taylor and Norton (2010) proposed a framework for equity along three dimensions:6
In accordance with the authorizing statute, the analysis conducted by LA Metro focused on group equity impacts of the proposed Express Lanes project. The group equity dimension involves ensuring that low-income commuters, as a group, are not disadvantaged by express lane implementation or, if they are, that mitigation is provided. Other relevant considerations included:
Using this framework, the study identified groups that would be better off and ones that could be worse off under the Express Lanes project at a high level.
Defining "Low Income"
LA Metro used a couple of guiding principles to define "low income." Chief among these was the threshold used by the authorizing legislation's (SB 1422) stipulation for low-income toll credits for certain specified State and local aid programs. This was taken as the lower threshold of the income cut-off (i.e., LA Metro's level defining low income had to be no lower than that specified in these programs). Programs and thresholds examined for setting the low income threshold for this analysis included:7
The ultimate threshold for the definition of "low income" for this analysis was set at an amount higher than most guiding programs and surveys.
Estimating Low-Income Populations
LA Metro's environmental justice analysis used the regional travel demand model to determine overall choices of the regionís commuters. The toll level was analyzed using an economic model. The toll optimization model was set to optimize (i.e., minimize) the cost of travel time in each corridor against maximizing revenue. Using these two models, the behavior of low-income commuters, when faced with the option of paying a toll to use express lanes, was inferred.
In the absence of a direct methodology to estimate the income levels of the users of the express lanes corridor, LA Metro used four different approaches and data sources. The data sources included census-based data on commuting modes by income group, a commuter survey conducted by Southern California Association of Governments, and income levels indicated on a license-plate survey conducted as part of a CRD project. The final source of data on low-income commuters came from the travel model built for the project. The morning peak trip origins were overlaid with the demographic data on a traffic analysis zone (TAZ) level to determine the potential number of trips originating from TAZs with a high share of low-income populations. The analysis evaluated the benefits and limitations of each of these data sources. For instance, the approach of overlaying the travel model TAZ with income distribution data was determined to suffer from an "ecological fallacy," which is defined as drawing conclusions about individuals in an area on the basis of overall characteristics in that area. The estimates from a license plate survey regarding percentage of low-income users of I-10 and I-110 were eventually used as representative of future commuting patterns by that income group.
Effects of Express Lanes on Low-Income Drivers
This analysis found that low-income solo drivers would be unlikely to choose to use the express lanes on a regular basis, but that there might be urgent situations where they would choose to use them. This analysis was based on the premise that a driver will choose to pay the toll on any occasion, based on his or her value of time at that instance. While value-of-time estimates are used for economic analysis, they do not reflect the instantaneous value of time for any person, much less the intrinsic value of any person's time to himself or to others. The report argued that, under specific circumstance (e.g., when running late for work or for pick-up at a day care), a low-income person may exhibit a substantially higher value of time. A combination of higher instantaneous value of time (as low as 120 percent of wage rate) coupled with a toll credit was sufficient to lead low-income drivers to choose to pay the toll in the model.
The analysis also found that low-income households, prevalent in Los Angeles, are less likely to have either a credit card or bank account (i.e., they are "unbanked")—an essential requirement to have greater transponder penetration. Hence, a successful tolling system in Puerto Rico, which has a large proportion of unbanked residents, was examined as a possible model.
Toll Policy Recommendations
The Low-Income Assessment Report made toll policy and performance measure recommendations to accommodate the needs of LA Metro’s low-income commuters. The policy recommendations included:
The report recommended and reported the following measures to help mitigate impacts on low-income commuters:
The report evaluated the potential costs and benefits of two credit schemes, if implemented based on a projection of low-income commuter share. The analysis found that the projected corridor revenues would be sufficient to pay for the potential demand for toll and transit credits, should both measures be implemented. Moreover, when the value of travel time savings is considered, the project has an overall net social benefit.
Performance Measures Recommendations
The report also made recommendations for performance measures to ensure that public policy goals with regard to low-income commuters are met. The performance measures recommended included:
Impact and Outcomes of Los Angeles County Metropolitan Transportation Authority's Low-Income Policies
LA Metro went on to implement both the transit credit and toll credit programs, as recommended in the Low Income Assessment Report. These two programs were rolled out as:
The LA Metro Express Lanes became the first toll operation in the country to offer a plan for low-income commuters. The analysis of impacts, including the benefit-cost analysis based on projections of usage of the low-income credit schemes, provided a financially sound plan to go ahead with the proposed strategies. Further, these programs were bolstered by efforts to measure the performance of the Low-Income Assistance Plan as part of regular monitoring and management of the HOT lanes program. More information about the plans can be found on the LA Metro website: www.metroexpresslanes.net/.
As predicted by the Low-Income Assessment Report, despite the implementation of the Low-Income Assistance Plan, the I-10 and I-110 HOT lanes are a net revenue generator. The HOT lanes continued beyond the demonstration period, and LA Metro initiated a Net Toll Revenue Re-Investment Grant Program funded by the excess toll revenues. The program's goal is to increase mobility options in the region using a multimodal approach. County and city authorities and transit operators can apply for funding to support projects within the I-10 and I-110 corridors that have been identified in the Long Range Transportation Plan and that align with LA Metro's goals for a more sustainable multimodal countywide transportation system.8 The objective of the grant program is to increase mobility through a series of integrated strategies (e.g., transit operations, transportation demand management, transportation systems management, active transportation, and capital investments) on the I-10 and I-110 corridors.
Through policies such as the Low-Income Assistance Plan, the Transit Rewards Program, and the Net Toll Revenue Re-Investment Grant Program, LA Metro ensured that the pricing proposal was both equitable and affordable to low-income commuters. Furthermore, excess toll revenues are invested back into the communities, thus improving transportation options across modes. The resulting improved operations, while benefitting the entire community, particularly benefit low-income populations that are disproportionately reliant on the transit system. As such, through a careful analysis and projection of potential equity impacts and implementation of strategies to mitigate potentially negative effects, LA Metro was able to alleviate adverse outcomes for low-income populations while ensuring that accessibility options were enhanced for all commuters across the board.
In July 2015, the Texas Department of Transportation (TxDOT) and Central Texas Regional Mobility Authority (CTRMA) published a Community Impact Assessment Technical Report on the proposed 183 North Mobility Project in Travis and Williamson Counties in Austin, Texas. The proposed project would include the construction of two variably priced express toll lanes in each direction from State Highway (SH)45/Ranch-to-Market (RM) 620 south in Williamson County to Loop 1 (MoPac) in Travis County and in the center median of US Highway 183. The proposed express lanes would charge a variable toll to users opting to drive on the facility. Bicycle and pedestrian accommodations are also proposed as part of the project.
As part of the Community Impact Assessment Technical Report, CTRMA undertook a study to satisfy the environmental justice requirement of EO 12989. The report points out that both minority and low-income populations exist within the study area. Block Group 1 in Williamson County contains 60.7 percent minority residents. The median household income for residents in Block Group 3 in the study area portion of Travis County is $17,386, which is close to the 2009 Federal poverty level. Therefore, the majority in these two block groups are low-income residents. The report included a detailed analysis of low-income population impacts and proposed mitigation measures to alleviate some adverse effects. The report also made a case for how the proposed project would be beneficial to all users regardless of income category.
Estimating Low-Income Populations and Impacts
Populations in the study area, disadvantaged both by income criteria and those belonging to minority groups, were identified based on Department of Health and Human Service guidelines. The populations in question were estimated based on census tract data.
To determine potential impacts of the proposed project, a stated preference survey was administered and model estimation and scenario testing were conducted to understand how motorists would respond to alternative tolling arrangements. The Capital Area Metropolitan Planning Organization (CAMPO) regional travel model was used to conduct the environmental justice analysis. In the CAMPO model, specific TAZs were assigned as environmental justice TAZs based upon the following criteria:
Several data sources were used to identify environmental justice TAZs, including 2005 Bureau of Economic Analysis data, 2008 and 2009 Census Bureau poverty data, and 2005 ethnicity data based on 2000 census data ethnicity ratios applied to 2005 population data.
All trips originating from the environmental justice TAZs were assumed to be by low-income or minority commuters. Simplifying the assumption made it easier to use the model to estimate trips originating in the study area. The model's Trip Generation step did consider a household's income level as a factor for trip generation as statistics to account for the fact that higher income households tend to make more trips.
Economic Impact to Low-Income Populations
A sketch-level quantitative analysis was conducted to estimate the potential economic impact of introducing tolls on commuters of various income levels. The premise of the analysis was that the economic impact of choosing to travel on toll roads or lanes may be greater for low-income individuals because the toll cost is a greater proportion of their income than it is for users with a higher income. The analysis assumed an average of 250 trips per year per household and calculated the annual toll cost as a percentage of median household income in Travis and Williamson Counties. Percentage of poverty-level income at those toll rates was also calculated. A similar analysis was also conducted for trips on both US Highway 183 and directional connector ramps at both ends of the project.
As expected, this analysis reveals that, for the same number of annual trips, a low-income (poverty-level income) household will incur a toll cost that is a greater percentage of its annual income that a median income household.
CTRMA identified several factors that would mitigate tolling impacts on low-income commuters on US 183:
Thus, the study demonstrated that, regardless of race or socioeconomic status, the proposed project would benefit all residents alike within the study area by increasing mobility along the project limits for both drivers and transit users, providing a reliable route for transit, and facilitating reliable emergency response.
Regional Mitigation Policies
CTRMA has instituted the following policies to ensure equitable implementation of tolling across all of its facilities:
The CAMPO Regional Transportation Plan also puts forth policies that minimize negative impacts by considering environmental justice populations, especially low-income travelers, when setting toll rates and collection methods. TxDOT and CTRMA provide multiple options for rate discounts and for payment methods, including pay-by-mail, making it possible for those who do not have a credit card to use the toll roads as well. For example, a traveler does not need a credit card to purchase and maintain a transponder. Further, allowing sufficient time to pay a toll bill before accruing additional costs also benefits those without the means for prompt payment.
CAMPO also provides some guidelines to implementing tolling. For example, the CAMPO 2035 Regional Transportation Plan states that providing the same or more non-toll capacity in the corridor than currently exists ensures viable non-toll alternatives that provide better service to environmental justice populations. Also, limiting the use of surplus toll revenue to the same corridor as the tolled facility allows further improvement to those corridors and provides benefits to corridor residents.
The case studies described in this white paper provide a best-practices approach to conducting environmental justice analyses as they relate to identifying and addressing adverse impacts on minority and low-income populations. While each project is unique in terms of proposed design and the demographic context, there are some basic components of good analytical approaches that aim to not only satisfy legislative requirements but also the concerns of constituents and other stakeholders with regard to income equity aspects of road pricing proposals. It is important to note here that at the time of writing of this paper, the National Cooperative Highway Research Program (NCHRP) is in the process of conducting research to develop a toolbox that practitioners can use to evaluate and address environmental justice issues that arise when implementing tolls or rate changes. The research effort, entitled "Environmental Justice Analysis when Considering Toll Implementation or Rate Changes," will include:
While there can be several approaches to analyze environmental justice impacts based on project needs and legislative requirements, a good analysis should aim to include the following components:
Agencies looking to implement priced-managed lanes need to be cognizant about both the potential for genuine adverse impacts on low-income populations as well as the gap in public education leading to a rejection of road pricing as inherently inequitable. As such, the outreach and public education campaigns should outline the potential benefits of priced-managed lanes to low-income populations and demonstrate an understanding of potential dis-benefits. The following can help inform both a public outreach scheme as well as mitigation strategies in this regard:
1 Federal Highway Administration, "Urban Partnership Agreement Low-Income Equity Concerns of U.S. Road Pricing Initiatives" Web page. Available at: https://ops.fhwa.dot.gov/congestionpricing/resources/lwincequityrpi/index.htm [Return to note]
2 California Senate Bill Number SB 1422, as amended, "High-occupancy toll (HOT)
4 Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, Executive Order 12898, February 11, 1994, Federal Register Volume 59, Number. Available at: https://www.archives.gov/files/federal-register/executive-orders/pdf/12898.pdf. [Return to note]
8 Los Angeles County Metropolitan Transportation Authority, "ExpressLanes Net Toll Revenue Re-Investment Grant Program" Web page. Available at: https://www.metro.net/projects/expresslanes/projectsprograms/. [Return to note]
United States Department of Transportation - Federal Highway Administration