At the risk of sounding obvious, pricing is fundamental to the functioning of markets. It determines profitability, it allocates resources, and it influences customer behavior, among other things. Take the example of electricity pricing.
In Ontario, we use something called time-of-use (TOU) pricing. What that means is that electricity rates vary according to the time of the day and the time of the year. In the summer, the expensive peak usage period is the afternoon (because of air conditioning) and in the winter it's the morning and early evening (because of heating and lighting when people are generally not at work).
What this pricing strategy does is incentivize customers to change their consumption behaviours. Instead of doing laundry during a peak period, maybe you set a timer and have it run during a low-peak period. In other words, it helps to flatten the demand curve. This is valuable for utility providers because peak periods are more expensive to supply and they also create the risk of brownouts and blackouts. So you worry about peak demand.
With this in mind, let's now switch and talk about highway congestion. The parallels are almost identical, and yet, most highways are free to use, which means we do absolutely nothing to manage peak demand. Instead, we encourage the equivalent of brownouts where demand greatly exceeds supply, traffic crawls, and roads become practically unusable. Why is that? Why should highways be viewed any differently?
In the case of highways, there are even alternatives such as transit (thought not always, of course). But if you need electricity from a monopolistic utility provider, you're paying whatever rates they charge. As you might expect, the answer is not technical or economic. We know with 100% certainty that pricing congestion will reduce it. The reason we don't do it is political. Free roads are preferred to functioning roads.
Okay, so the official title is Chief Congestion Officer.
But whatever. What's important is that the City of Toronto is apparently close to hiring a human that will become the so-called "congestion lead". This will be, in their words, a senior strategic cross-divisional leadership role that reviews programs and projects, and then works to minimize traffic congestion (this is among other things).
Translation: Construction is causing too much congestion so let's make sure we're better at managing what happens on Toronto's streets. Fine. Nobody is going to argue against being too coordinated. But there are at least two problems with the overall framing of this position.
Firstly, it is likely that this czar will go after things like construction lane closures. Maybe the city will make them harder to get and/or maybe they'll increase the occupancy fees they charge. (Reminder: Developers pay cities lots of money to occupy public streets.)
Regardless of what is done, it's important to keep in mind that there's a trade-off here. Any time you make construction more difficult, you add costs. And when construction costs are added, they have to go somewhere. Typically that means they get passed on to buyers and renters. So depending on how hard this czar goes after road closures, we could be indirectly increasing the cost of new housing.
Pick your poison.
But the even bigger problem with this new role is this: It presupposes that if only we did X, Y, and Z, we could solve traffic congestion. This is a fallacy. It's not going to happen. Of course, I'm not saying that better coordination wouldn't improve traffic flows; I'm saying that we're ignoring the root problem.
The Greater Toronto Area has a population of nearly 7 million people, and there’s simply no conceivable way we could all drive around everywhere and still have free-flowing traffic. It’s impossible — no matter how well we coordinate roadwork or how many people with whistles we plant at major intersections during rush hour.
The only way to solve this problem is to embrace a multi-modal approach to urban mobility. And so rather than a "traffic czar" narrowly focused on car congestion, what we really need is a "mobility czar" focused more broadly on moving the most number of people as efficiently as possible — across all modes of transport.
This is not the solution that many people want to hear — because it will mean a break from the status quo — but we already know that it works. Really well in fact.
Nationwide across the US, transit ridership is only at about 70% of where it was in 2019 before the pandemic. But this is not the case in all cities around the world. According to this recent Bloomberg article, Madrid, Hong Kong, and Paris are all above their 2019 ridership levels. Seoul and Shanghai are also close at just over 90%, and London is at 85%.
So this problem of fewer people riding transit seems to be a North and South American phenomenon. Rio de Janeiro is at 73%, Mexico City is at 70%, and San Francisco is somewhere near or at the bottom at 44%. The obvious explanations for this are that Europe and Asia are generally denser and less car-oriented, their return-to-office patterns have been much stronger (less WFH), and their governments probably care more about transit (and spend more money on it).
Broadly speaking, I think this is all true, but I'd love to know more precisely what's driving these differences. Because it's not exactly obvious. Consider, for example, Paris and London. Paris is at 103% of its 2019 levels, whereas London is only at 85%. Why is that? Both cities share a lot of similarities. They have a river that weaves through the middle, they're dense, they have lots of trains, and both are alpha global cities.
So why the delta? What exactly is Paris doing that is encouraging more transit usage?
Charts via Bloomberg