Archive for the ‘Congestion Pricing’ Category

No free lunches

November 3, 2009

ChicagoSkyway

Photo by Andrew Ciscel

There have been lots of good items on the ICC recently, mostly dealing with the ICC’s proposed tolling scheme.  The City Fix DC looks at the rates:

The answer that’s been in the news lately is tolling. Tolls are planned for the Intercounty Connector (ICC), an 18.8-mile highway under construction between Gaithersburg and Laurel. To cover the road’s $2.56 billion construction cost, the Maryland Transportation Authority’s board has proposed rush-hour tolls of $.25 – $.35 per mile for 2-axle vehicles from 6:00 to 9:00 a.m. and 4:00 to 7:00 p.m. on weekdays.  Off-peak rates for 2-axle vehicles would range from $.20 to $.30 per mile.  The price tag would be around $11 roundtrip for the many drivers expected to use the ICC to commute between I-95 and I-270.  The ICC tolling plan is getting a lot of press for proposing some of the highest rates in the country.

The City Fix notes that “on paper, the argument for road tolling is strong,” but doesn’t really address what kind of roads are being tolled, and at what rates.    The ICC’s basic problem is that the tolls for that road are trying to finance the same road.  Instead of tolling the congested roads around the ICC, using that toll to both manage traffic and raise revenue for more capacity, they’re leaving the congested routes free while tolling the new roads that have very little congestion.

In essence, they’re tolling the wrong road.

This isn’t a new revelation.  In the Baltimore Sun, Michael Dresser says it was always meant to be like this:

Richard Landon of District Heights showed up to testify against any tolling. “We as taxpayers have already paid our share of taxes,” he said.

Actually, we haven’t.

At least, we haven’t paid enough to build a $2.6 billion, six-lane highway through suburban Washington. The toll road vs. freeway issue was decided during the Ehrlich administration with the acquiescence of the General Assembly. Neither wanted to put their necks on the line to raise gas taxes, which haven’t gone up since the early 1990s, to build the road as a freeway. It was either toll road or no road.

No free lunch.

The fact is that very few potential road links have the tolling potential to totally pay for themselves.  Those kinds of roads are the key infrastructure we’ve traditionally paid for with tolls – key bridges and tunnels, for example – but that doesn’t really include second-tier suburban beltway links.  We know this, yet we continue to punt the political football of actually paying for stuff.

This isn’t to say tolling is the wrong idea – it’s the right idea, but being used in the wrong place.  Chris Bradford noted during NYC’s discussion of congestion pricing the stripped-down economic logic of using congestion tolls as a means of measuring demand for more capacity and then financing it:

But congestion pricing does more than relieve congestion.  Congestion pricing tells us when a road needs more capacity.  Additional capacity costs money, and drivers are willing to pay only so much for it.  That “so much” is exactly equal to the price they are willing to pay to avoid congestion. When the revenue collected by congestion pricing is low — too low to finance new capacity — we know we have enough capacity.  Drivers aren’t willing to pay for more, so building it would be wasteful.

On the other hand, If a properly priced road starts generating “too much” revenue — enough to cover the cost of expanding capacity — then it’s time to figure out how to add the capacity users are willing to pay for.

Instead of putting congestion pricing in place on the beltway and then determining if a) demand is there for the ICC and/or HOT lanes (since those lanes represent additional capacity); and b) if toll revenue is sufficient to pay for those expansions, we’ve instead gone ahead and will build the new lanes anyway, under the veneer that we can pay for them with tolls only on the new portions.

This doesn’t just apply to freeways, either.  This works for any congested area.

Viewed properly, then, transit is simply a means for adding capacity.  (Yes, I’m well aware of other arguments for transit, but I’m concentrating on the one that ought to appeal to the economics-inclined.)

The logic of congestion pricing, then, is that the old capacity is supposed to finance the construction and operation of the new capacity.  Or to put it in the charged language that dominates transit debates, the old capacity is supposed to subsidize the new capacity.  Indeed, if users had to pay “cost” for the new capacity, then too few would switch from the old road.  That makes no sense because it creates the wrong incentives.

This does not mean the new capacity — whether road or transit — should be free.  It should be congestion-priced, too.  And as time goes by, the revenue raised thereby might cover the cost of operation and, in turn, finance even more capacity.  But until that transpires, we shouldn’t insist that new capacity pay for itself.

Bold is mine.  Insisting and expecting that we can get something for nothing because it will “pay for itself” isn’t a real solution.  Road tolling programs need to be able to toll roads that are currently free to users, and they need to approach the issue through the lens of the entire transportation system.

Advertisements

Cities Getting the Shaft

July 14, 2009

I’ve got a couple of articles I’ve been meaning to write about for a couple of days.

First, the New York Times has a nice piece on how cities are losing out on their fair share of the stimulus money.

“If we’re trying to recover the nation’s economy, we should be focusing where the economy is, which is in these large areas,” said Robert Puentes, a senior fellow at the Brookings Institution’s Metropolitan Policy Program, which advocates more targeted spending. “But states take this peanut-butter approach, taking the dollars and spreading them around very thinly, rather than taking the dollars and concentrating them where the most complex transportation problems are.”

The 100 largest metropolitan areas also contribute three-quarters of the nation’s economic activity, and one consequence of that is monumental traffic jams. A study of congestion in urban areas released Wednesday by the Texas Transportation Institute found that traffic jams in 2007 cost urban Americans 2.8 billion gallons of wasted gas and 4.2 billion hours of lost time.

Ryan Avent also chimes in:

It’s absolutely crucial that the new transportation bill do more to focus spending at the metropolitan level. And indeed, this is one of the goals of the Oberstar transportation bill. As that is unlikely to get anywhere in this legislative session, it would be nice if in filling the highway trust fund’s budget gap the Congress tacked on a reform giving states an incentive to use federal money where the people are — for the sake of short and long term economic performance.

I don’t have anything to add other than to emphasize the importance of keeping our cities humming along.  They are the economic engine.  I will again emphasize my thought that we can kill a couple birds with one stone here – given the simultaneous needs to increase transportation funding and reform the way we distribute those funds, as well as the stimulative effects such spending will have.

To Toll or not to Toll, that is the question.

Chris Bradford offers a nice summary of a great back and forth between Yonah Freemark and Ryan Avent on the need and desirability for tolling congested roadways.  Chris summarizes the dispute well, documenting Ryan’s desire to reduce congestion and Yonah’s concern about such charges being regressive.  However, Chris raises several key points:

Second, tolls encourage a number of shifts.  Yes, shifts to transit, which seems to be Yonah’s main concern, at least when the transit system is underdeveloped.  But they encourage other shifts, too.  Shifts to other routes and shifts to other times.   Commuters are the least likely to be nudged to other routes or times.  The most sensitive are those who use congested roads for local trips.  Take the soccer mom who hops in the SUV and enters a congested highway to get to the grocery store a mile down the road.  She imposes enormous costs on others.  Tolls make her internalize those costs and nudge her to use the local streets.

This is a crucial element that’s often overlooked.  Performance pricing, whether for congestion or parking or transit usage, will encourage mode shifts, temporal shifts, and spatial shifts.  It’s vitally important to consider all three potential shifts and plan for them accordingly.

Green Spaces in DC

My friend and colleague Mike Lydon forwarded me a great page from the National Building Museum’s Green Building exhibit.  The site has nice little videos on several DC neighborhoods, emphasizing their green aspects.  The videos include profiles of Dupont Circle, U Street, Columbia Heights, and (soon) Barracks Row.

Links – Stimulus Package

July 5, 2009

Paul Krugman takes note of Joe Biden’s recently souring perceptions of the economy, as well as the fact that it appears another stimulus package would be a nice boost right about now:

But never mind the hoocoodanodes and ayatollahyaseaux. What’s important now is that we don’t compound the understimulus mistake by adopting what Biden seems to be proposing — namely, a wait and see approach. Fiscal stimulus takes time. If we wait to see whether round one did the trick, round two won’t have much chance of doing a lot of good before late 2010 or beyond.

So, we have to spend money right now.  Hmmmmm.  If only we had something in this country that needed lots and lots of money…

There’s a power drain out there at the NSA.  Apparently those code-breaking supercomputers require a whole lot of juice.  Aside from the security reasons for decentralizing operations like this (which is certainly not a new idea amongst the Feds), it’s an interesting idea to think about the consequences of decentralizing more ‘abstract’ facilities like data centers while still opening the door for centralization of personnel and employment.

They put a price on congestion in New York.  Charles Kamonoff pegs it at $160 per trip.  Felix Salmon’s early conclusion:

Komanoff’s still working on this spreadsheet, but tHe main message is pretty clear — that smart congestion charging would be great news for New York, and probably for most other dense cities as well.

AC chimes in as well:

The basic point is sound:  we severely underestimate how many people we delay when we enter a congested network of roads.  If you’ve ever tried to make the trip crosstown Manhattan in the middle of the day, you understand just how much delay one driver can cause.

Komanoff recommends congestion pricing.  A good idea.  But he also proposes making buses free, which is a bad idea (and one floated in Austin occasionally).

I tend to agree that completely free transit is a bad idea.  We have congestion on our system in DC as it is at the peak hours.  There’s something to be said for the psychology behind charging a nominal fee for a service.