Then and Now

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Then and Now

• The Evolution of Congestion Pricing in
  Transportation
• Where We Stand Today
• Martin Wachs, Director
• Institute of Transportation Studies
• University of California, Berkeley

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Critical Question for the Symposium

• QUESTION Has road pricing finally entered, or
  is it at last about to enter, the main stream of
  transportation planning policy?
• ANSWER Not quite yet but on the verge
• Road pricing at a critical juncture in both North
  America and Europe

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The Idea is 83 Years Old

• A. C. Pigou proposed road pricing in 1920
• Frank Knight elaborated in 1924
• Similar forms of pricing used in other
  applications than roads for decades

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Pigou on Congestion Pricing in 1920   Suppose
there are two roads, ABD and ACD both leading
from A to D. If left to itself, traffic would be
so distributed that the trouble involved in
driving a representative cart along each of the
two roads would be equal. But, in some
circumstances, it would be possible, by shifting
a few carts from route B to route C, greatly to
lessen the trouble of driving by those still left
on B, while only slightly increasing the trouble
of driving along C. In these circumstances a
rightly chosen measure of differential taxation
against road B would create an artificial
situation superior to the natural one. But the
measure of differentiation must be rightly
chosen.  
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The Timing is Interesting

• 1920s was period of fastest growth of
  automobiles
• Major needs in Europe and USA for intercity roads
• Oregon adopted hypothecated (earmarked) motor
  fuel tax in 1918
• Legislatures PREFERRED tolls, but they were
  defeated on practical grounds

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Motor Fuel Tax was Adopted as Second Best Solution

• Whether hypothecated (USA) or not (Europe)
• Tolls were seen to be superior and more flexible
• Tolls were put off until collection mechanisms
  could be perfected

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For Eight Decades

• Economists offered arguments for congestion
  pricing based mostly on efficient management of
  investments in roadsbut.
• Fuel taxes produced adequate revenue
• Costs and complexity of collecting tolls
  continued to be issuesand.

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For Eight Decades

• Political opposition to paying for road use
  through BOTH taxes and tolls
• Equity is always politically more difficult than
  efficiency, and equity is the issue most widely
  raised
• This opposition is still an issue..butat least
  in North America..

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Some Major Factors have Changed

• Revenue is falling from traditional method of
  taxing motor fuels..revenue need may be more
  important in practical terms than efficiency
  goals of pricing
• Propulsion technology is reducing the long term
  viability of fuel taxes as a surrogate for tolls

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Some Major Factors Have Changed

• Electronic toll collection can now reduce cost
  and complexity of toll collection
• Opposition to and cost of new capacity expansion
  have grown, making efficiency more important
• Opposition persists to paying tolls on roads
  already paid for by fuel taxes

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Back to the Future?

• Underlying issues are similar to 1920s
• revenue shortages
• User fees seem reasonable appropriate
• But now..tolls easier to collect, electronically
• Fuel tax promises to be less useful in the future

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When are New Policies Adopted?

• When their benefits are narrowly focused and
  their costs broadly distributed
• When there are many different interests
  supporting their adoption and few opposing them
• Technology, revenue needs, may now be changing
  this calculation

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Curbing Gridlock Study

• TRB study committee of 15 experts
• Aided by many authors and a symposium like this
  one
• Recommendations guardedly optimistic but not
  enthusiastic

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Findings from Curbing Gridlock Study Report of
1994    Congestion pricing would cause some
motorists to change their behavior        
Congestion pricing would result in a net benefit
to society         Congestion pricing
is technically feasible        
Institutional issues are complex but can be
resolved         All income groups can come
out ahead given an appropriate
distribution of revenues
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Findings from Curbing Gridlock Study Report of
1994           Some motorists would
lose         Congestion pricing would reduce air
pollution and save energy         The political
feasibility of congestion pricing is
uncertain         Evaluation of early projects
is crucial
A An incremental approach is
appropriate
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Study Recommendations

• Some aimed at federal policy
• Some aimed at states
• Some aimed at research
• Summarized in Resource Paper
• Most important outcome may have been support for
  the federal pilot program, which was reauthorized
  in TEA-21

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Progress in Past Decade

• Facility pricing in the USA vs. area pricing in
  Europe
• HOT lanesSR 91, I-15 and growing
• Proving efficiency and effectiveness of
  electronic toll collectionalso building public
  acceptance of tolls
• Prospects growing in many metro areas

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What Does the Future Hold?

• Few North American applications for area pricing
• More applications to facilities
• Most applications will be on new capacity
• Specialized facilities HOT lanes, bridges,
  bottlenecks, truck-only lanes

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What Does the Future Hold?

• Revenue use critical to perception of equity
• decline of motor fuel basis of road user fees is
  inevitable congestion pricing is not
• Prospects are improving

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