Congestion pricing in NYC

This article from the New York Times generally roots for congestion pricing in NYC. As someone who rides a bike to work, I tend to agree, though I am concerned that there would be a hit on some modest-income people who need a car to get to work or who live in areas that are designed for the car and are not efficient for bus service due to low population densities. If this scheme is going to work, it must be accompanied by a major roll-out of new public transit options.

What’s the Toll? It Depends on the Time of Day

By DANIEL GROSS

FOR the small group of economists and policy wonks interested in applying supply-and-demand theories to the thorny problems of gridlock and ever-longer commutes, the $2.9 trillion fiscal 2008 budget released by President Bush on Monday contained some excellent news: $130 million in grants to finance construction of so-called congestion pricing systems.

Congestion pricing — the concept of charging higher fees to consumers for a good or a service at times of heavy use — is well established in businesses like hotels, long-distance phone service and air travel. And while London and Stockholm have successfully enacted plans that levy fees on drivers who want to enter traffic-clogged city streets, the United States has been slow to apply the concept on the roads. When Mayor Michael R. Bloomberg proposed last year that New York look into congestion pricing as a means of unclogging the city’s famously clogged roadways, he was roundly criticized.

Actually, congestion pricing was born and bred in New York City. William Vickrey, the longtime Columbia University economist and 1996 Nobel laureate, is viewed as the father of the concept. In 1959, long before E-ZPass was a twinkle in a planner’s eye, Mr. Vickrey proposed that cities could reduce traffic by using electronic systems to charge drivers for the privilege of nosing their sedans into urban grids.

Advances in technology and the successful experiments in Europe and the United States lead many economists to view the present as an ideal time to apply the theory to traffic control. Since February 2003, when London introduced a system that charged a fee to motorists entering the central city on weekdays, “congestion has been reduced noticeably,” said Edward L. Glaeser, professor of economics at Harvard. “People are using the roads less, and there have been remarkable upticks in speeds.”

Beyond that, congestion pricing holds out the possibility of harnessing people’s innate economic rationality and self-interest in order to promote a series of public goods. Every time a driver turns onto the Henry Hudson Parkway, she slows down the travel speed of all the other drivers, imposing a cost — or, as economists say, a negative externality — on countless fellow citizens. …

There are a few congestion-pricing experiments in the United States today. On a portion of California Route 91, in Orange County, drivers can choose between the free road and the less-traveled pay-per-drive adjacent lanes, in which tolls vary throughout the day and throughout the week. Driving eastbound in the express lanes at 4 p.m. Thursday costs $9.25, compared with $1.85 at noon the same day. To the south, in San Diego, on an eight-mile stretch of Interstate 15, high-occupancy toll, or H.O.T., lanes can be used by individual motorists willing to pay fees that vary throughout the day, depending on traffic conditions.

Some number of travelers will always be willing to pay a price to save several minutes, while others would rather save a few dollars and take the chance of being stuck in traffic. “People are willing to pay for that time savings, and the price can be adjusted in such a way that you keep the lanes pretty full but don’t become overloaded,” said Kenneth Small, research professor of economics at the University of California, Irvine. “You can almost always drive in the express lanes without slowing down, free flow.” In San Diego, the price of using the H.O.T. lanes can change every six minutes.

The greater willingness of drivers and policy makers to consider congestion pricing is a recognition that building more roads will never be a solution to traffic problems.

“In many areas, it’s extremely hard to find places to expand capacity,” said Clifford Winston, an economist at the Brookings Institution in Washington.

Today, variations of congestion pricing are in effect on stretches of highway in Houston, Minneapolis and Denver. The success of experiments and the new funding lead advocates like Mr. Winston to conclude that “these H.O.T. lanes are just the tip of the iceberg.”