As a general rule, road pricing isn’t popular. But that’s not because it doesn’t work. The problem is that it works too well, and people don’t like the idea of driving less and paying for roads (that currently have a zero marginal cost).
Here’s a recent study by Robert Bain and Deny Sullivan that looked at just how well it can work. In it, they examine 76 data points from 16 countries, including roads, bridges, tunnels, and cordons (areas).
The question: What happens to demand once the marginal cost of using a road goes from $0 to some cost greater than zero? (As part of this, they also looked at whether the road or bridge in question has viable alternatives.)
The results:
The median traffic reduction was 25%. But the interquartile range was -17% to -44%. This is all very significant. Said differently, the traffic impact in nearly a quarter of the examples was -45% or more. So almost a halving of traffic congestion.
These reductions are obviously a function of the cost of using each road, but regardless, the overarching takeaway remains the same: You may not like or want road pricing, but it totally works.
In Google's guide to its maps, there is a section on live traffic congestion, and in it, this image is used:
In 2019, London implemented something known as an Ultra-Low Emission Zone (or ULEZ). The intent was to reduce the number of older and higher-polluting vehicles entering and driving around the city.
It works like this: If you have a vehicle that does not meet the ULEZ emission standards, you need to pay a daily charge of £12.50. This applies all day every day (except Christmas) and it is in addition to London's congestion charge.
It's also done entirely through license plate cameras. If you enter the zone, don't have an approved plate, and don't pay the charge within a few days, you get sent a fine. The result is that London's ULEZ is now the largest clean air zone in the world (at least according to London).
It also achieved its intended purpose. In 2017, only 39% of cars entering London would have met the ULEZ emission standards. Today the number is over 95%. Meaning, most people don't actually pay the charge.
At the same time, nitrogen dioxide levels in the zone have more than halved, improving overall health outcomes. It's a perfect example of taxing the things you want less of. What's also interesting is that there were positive second-order consequences.
Vehicle traffic as a whole declined by about 9% in the first year, with no evidence of displacement to other areas. And according to this research study, it actually encouraged more kids to walk and take other forms of "active transport" to and from school.
Seems like a no brainer to me.
As a general rule, road pricing isn’t popular. But that’s not because it doesn’t work. The problem is that it works too well, and people don’t like the idea of driving less and paying for roads (that currently have a zero marginal cost).
Here’s a recent study by Robert Bain and Deny Sullivan that looked at just how well it can work. In it, they examine 76 data points from 16 countries, including roads, bridges, tunnels, and cordons (areas).
The question: What happens to demand once the marginal cost of using a road goes from $0 to some cost greater than zero? (As part of this, they also looked at whether the road or bridge in question has viable alternatives.)
The results:
The median traffic reduction was 25%. But the interquartile range was -17% to -44%. This is all very significant. Said differently, the traffic impact in nearly a quarter of the examples was -45% or more. So almost a halving of traffic congestion.
These reductions are obviously a function of the cost of using each road, but regardless, the overarching takeaway remains the same: You may not like or want road pricing, but it totally works.
In Google's guide to its maps, there is a section on live traffic congestion, and in it, this image is used:
In 2019, London implemented something known as an Ultra-Low Emission Zone (or ULEZ). The intent was to reduce the number of older and higher-polluting vehicles entering and driving around the city.
It works like this: If you have a vehicle that does not meet the ULEZ emission standards, you need to pay a daily charge of £12.50. This applies all day every day (except Christmas) and it is in addition to London's congestion charge.
It's also done entirely through license plate cameras. If you enter the zone, don't have an approved plate, and don't pay the charge within a few days, you get sent a fine. The result is that London's ULEZ is now the largest clean air zone in the world (at least according to London).
It also achieved its intended purpose. In 2017, only 39% of cars entering London would have met the ULEZ emission standards. Today the number is over 95%. Meaning, most people don't actually pay the charge.
At the same time, nitrogen dioxide levels in the zone have more than halved, improving overall health outcomes. It's a perfect example of taxing the things you want less of. What's also interesting is that there were positive second-order consequences.
Vehicle traffic as a whole declined by about 9% in the first year, with no evidence of displacement to other areas. And according to this research study, it actually encouraged more kids to walk and take other forms of "active transport" to and from school.
Seems like a no brainer to me.
It is a map of the Toronto region, and not surprisingly, it is showing traffic congestion on the 401 highway. But what's interesting about this image is that there's no traffic at all on the 407 express toll route. (This is the green highway running generally parallel and north of the 401, for those of you who aren't familiar with Toronto.)
This is, of course, accurate. A 2019 study by the Canadian Centre for Economic Analysis called the Economic Impacts of Highway 407 found that, at the time, an average of 413,000 drivers were using the 407 highway each weekday. And of these trips, more than 85% of vehicles were travelling at or above 100 km/h. This translates into a traffic congestion index of almost zero.
During this same time, the highway 401 through Toronto showed that about 85% of vehicles were travelling below 50 km/h. Meaning, lots of congestion. This also had a significant impact on collision and fatality rates. On the 407, both were about half of what they were on the 401. (I couldn't find any more decent data, but if you have it, please share it in the comments.)
The reason for these differences is simple: the 407 charges for congestion. Here are the current per kilometer weekday rates for light vehicles travelling westbound:
Naturally, there are people who think the 407 is too expensive and that it shouldn't have been privatized. But the reality is that it works; really well in fact. And this is the only method that has been proven to reliably combat congestion. We can go ahead and spend a gazillion dollars building a new tunnel under the 401, and double the number of lanes (it's already 18 lanes at its widest point), but we already know that it won't solve our congestion problem.
Either we price roads and congestion, or we don't. But if we don't, then we need to be brutally honest with ourselves about the economic trade off that we are making: free/underpriced roads = traffic congestion, and accurately priced roads and congestion = less traffic. The choice is ours. But know, there's no such thing as a free lunch.
It is a map of the Toronto region, and not surprisingly, it is showing traffic congestion on the 401 highway. But what's interesting about this image is that there's no traffic at all on the 407 express toll route. (This is the green highway running generally parallel and north of the 401, for those of you who aren't familiar with Toronto.)
This is, of course, accurate. A 2019 study by the Canadian Centre for Economic Analysis called the Economic Impacts of Highway 407 found that, at the time, an average of 413,000 drivers were using the 407 highway each weekday. And of these trips, more than 85% of vehicles were travelling at or above 100 km/h. This translates into a traffic congestion index of almost zero.
During this same time, the highway 401 through Toronto showed that about 85% of vehicles were travelling below 50 km/h. Meaning, lots of congestion. This also had a significant impact on collision and fatality rates. On the 407, both were about half of what they were on the 401. (I couldn't find any more decent data, but if you have it, please share it in the comments.)
The reason for these differences is simple: the 407 charges for congestion. Here are the current per kilometer weekday rates for light vehicles travelling westbound:
Naturally, there are people who think the 407 is too expensive and that it shouldn't have been privatized. But the reality is that it works; really well in fact. And this is the only method that has been proven to reliably combat congestion. We can go ahead and spend a gazillion dollars building a new tunnel under the 401, and double the number of lanes (it's already 18 lanes at its widest point), but we already know that it won't solve our congestion problem.
Either we price roads and congestion, or we don't. But if we don't, then we need to be brutally honest with ourselves about the economic trade off that we are making: free/underpriced roads = traffic congestion, and accurately priced roads and congestion = less traffic. The choice is ours. But know, there's no such thing as a free lunch.
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