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What is congestion pricing?

Congestion pricing is a policy that seeks to reduce the number of cars and trucks coming into or moving about a city by assessing fees during certain peak hours of travel.

Annual traffic delay per person in the U.S. more than tripled from 1982 (11 hours) to 1999 (36 hours), according to the Texas Transportation Institute. "Traffic [congestion] costs American taxpayers and drivers an estimated $78 billion annually in lost wages and gasoline. Time-of-day pricing could make a serious dent in this waste. The technology is available, in the form of electronic toll collection and license plate photo identification. But sometimes politics are way behind the science" (Schoenberger, 2002).

The success of London's program begun in 2003 suggests that congestion pricing may become more politically feasible elsewhere. Motorists driving in central London on weekdays between 7:00 a.m. and 6:00 p.m. are required to pay £8. Exemptions include motorcycles, licensed taxis, vehicles used by disabled people, some alternative fuel vehicles, buses, and emergency vehicles. Area residents receive a 90 percent discount for their vehicles (Litman, 2006). Visit Transport for London's Web site at http://www.tfl.gov.uk/roadusers/congestioncharging/ for program details.

Congestion pricing is the brainchild of late Nobel economics laureate William Vickrey, a Columbia University professor who applied supply-demand principles to road use. Singapore reduced downtown traffic by 40 percent after beginning to charge drivers for peak time access in 1975. France's highway A1 charges a higher toll on Sunday evenings for drivers returning to Paris. Drivers in Fort Myers, Florida, pay 50 percent less if they use two bridges connecting the suburbs to downtown just before and just after off-peak hours. New York City's Mayor Michael Bloomberg on Earth Day 2007 proposed charging $8 a day for cars and $21 for trucks as they enter or leave Manhattan south of 86th Street. Cars that begin a trip within that zone would be charged $4 a day.

Many cities in the U.S. already charge higher rates to transit users during peak hours. Most people accept peak demand pricing imposed by airlines, resorts, movie theaters, and phone companies; some consumers voluntarily use energy at off-peak hours in exchange for discounted rates. The conundrum is that most roadways are in the public domain, paid for with public dollars. Therefore, any successful congestion pricing program will likely use discounts rather than fees, and use the money collected to improve transportation systems that include responsive public transit and bicycling and walking facilities that balance the transportation load and give people more and safer transportation choices.

The Federal Highway Administration's primer on congestion pricing is found at http://ops.fhwa.dot.gov/publications/congestionpricing/index.htm. FHWA is conducting a $10 million congestion-pricing pilot program.

References

Litman, T. "London Congestion Pricing: Implications for Other Cities." Victoria Transport Policy Institute, 2006, available online at http://www.vtpi.org/london.pdf.

Schoenberger, C.R. "Stop and Go." Forbes.com, May 13, 2002, available online at http://www.forbes.com/forbes/2002/0513/080.html.