Tag: road pricing

• Pigovian transport pricing in Switzerland

  A Pigovian tax is a tax on market activities that produce some kind of negative externality for society. The basic idea behind the tax is to try and use it to correct something that is happening, but that isn’t all that desirable. Examples of negative externalities might include things like pollution and traffic congestion.

  Traffic congestion is a bad thing, which is why I have long been a supporter of road pricing. We know how to do this. It has been proven to work in countless cities, including Singapore, London, Stockholm, as well as many others. But in most cases, there isn’t the political will. That has certainly been the case here in Toronto.

  Maybe this post will help.

  A recent study by ETH Zurich, the University of Basel, and ZHAW has looked at the effects of Pigovian pricing on mobility within Switzerland. The study included 3,700 participants and spanned both French and German-speaking parts of the country.

  The way the study works is pretty simple. They took thousands of people, gave them a transportation allowance (in Swiss francs), and then assigned costs to the various mobility options. These costs were intended to be commensurate with their amount of negative societal impact.

  Driving, for example, came at a cost of 0.1 Swiss francs per kilometer. Whereas participants actually earned money for walking, since you could fairly easily argue that walking produces a net benefit to society. At the end of the four-week experiment, participants were allowed to pocket whatever money was left in their transportation wallet. So in theory there was an incentive to spend less.

  What the researchers were trying to do was simulate Pigovian transport pricing and give people a more direct understanding of the societal costs associated with how they move around. And based on their results, it looks to have worked.

  

  What the results show is that when you start pricing transport in this way, all mobility declines slightly (the “all modes” line). But that the biggest hit is, not surprisingly, driving. Car use declined by almost 5%, whereas walking, biking, and using public transit all increased. (The price elasticity of demand for car travel was found to be similar to when the cost of gas increases — people drive a bit less.)

  The authors go on to argue that longer-term Pigovian pricing is likely to produce an even greater impact on mobility, as people would likely adjust and start making bigger decisions about where and how they live. That seems plausible to me.

  For a full copy of the study, click here.

  2021.10.08

• There is no such thing as a free lunch

  Inclusionary zoning has been on my mind this week and so I thought I would revisit some of my old posts on the topic. I wrote about it here, here, here, here, here, and probably in a bunch of other places that I am forgetting right now. A number of these posts go as far back as 2015-2016.

  As well-intended as inclusionary zoning may be, I have never been able to get my head around it. There are lots of cities with inclusionary zoning polices in place and what history generally tells us is that it tends to reduce overall housing supply and increase market rents/prices.

  This makes intuitive sense when you consider that inclusionary zoning is in effect a tax on new development. And one of the only things I remember from my economics classes is that it’s generally good practice to tax the things we want less of. You know, things like cigarettes and carbon.

  This is why I have also been a strong supporter of road pricing over the years on this blog. Traffic congestion is bad (demand also happens to be relatively inelastic). So tax it and redirect the funds toward transit.

  Housing supply, on the other hand, isn’t bad. It’s pretty good and fairly useful. So in my simple mind, I don’t know why we would want to apply a tax to it instead of figuring out way to simultaneously encourage and incent the supply of new affordable housing. Here’s one idea.

  2021.05.14

• Vancouver is probably getting transport pricing

  Earlier this month, Vancouver City Council approved a plan that will have staff developing a “transport pricing” strategy for the city’s core. (Transport pricing is just another term for road pricing or congestion pricing.) The plan is for staff to go away and work on this and then report back to Council with a pricing strategy sometime in 2022. At that point Council will look to approve the plan and it will all get implemented by 2025. Or at least that’s the plan. I remain somewhat skeptical because Vancouver certainly isn’t the first Canadian city to look at pricing its roads and congestion. Toronto has tried and failed. And so if Vancouver does end up doing this, they’ll likely be the first city in the country.

  So why are they doing this, or least trying to do this? Well, if you’re a regular reader of this blog you’ll know that I’ve been a supporter of road pricing for many years. Lots of old posts over here. But in the case of Vancouver, their stated goals are really as follows: 1) They want to reduce congestion and encourage people to use other forms of mobility; 2) they want to reduce carbon emissions by 50% by 2030; and 3) they want another revenue stream that can be used to fund things like transit and active transport. Put differently, it’s about pricing/taxing the things that we want less of and then using that money to pay for the things we want more of.

  Some of you might be wondering whether this is a good idea at a time when the centralizing pull of cities is being called into question. But I think it’s important to keep in mind that Vancouver thinks it needs at least five years to implement its transport pricing. We’ll be living through the roaring twenties by then. I am also a firm believer that cities are going to snap back significantly faster than most people think.

  2020.11.23

• The resilient city and road pricing

  Joe Berridge’s recent opinion piece in the Globe and Mail is a good reminder — in the face of a whole lot of uncertainty — about the resiliency of our cities.

  Those previous decades saw a surge of people and jobs locating downtown, with consequent escalation in rents and prices of offices and housing. Why? Partly demographic, as the well-educated children of the baby boom reached adulthood, and partly lifestyle and work style. Young people go to big cities not just to work and live, but for sex, style, money and power. For ambition and anonymity. And for risk. All in the petri dish of downtown density. These drives have always been as powerful as their subsequent search for suburban security and community.

  The structure of the modern megalopolis is not an accident – the dramatic rise of tech employment, two-earner families, the decline of manufacturing, the later date of marriage, smaller households, lifestyle consumerism, teamwork cultures, serial re-education and training – none of these societal trends looks to be diminished by COVID-19. All of them seem to prefer high-density, high-interaction environments.

  For those of us in Toronto, it’s also important to remember just how quickly this city region was growing pre-COVID-19. That is unlikely to change on the other side of this.

  

  But Berridge does also point out some of the potential fallouts from this pandemic. The economics of urban transit, for example, could remain a problem for quite some time. This will strain public purses. (Car usage rebounded quickly, but transit ridership has not.)

  We are also likely to see increased traffic congestion as a result of people eschewing transit (and probably a bunch of other factors). Like Berridge, I am a supporter of road/congestion pricing, and have been writing about that on this blog for many years.

  The best things to tax/price are things that are generally viewed as bad and where demand is largely inelastic. That is, even if you increase the price, many or most people will probably still do it anyway. Think of things like smoking.

  Up until now, Toronto hasn’t had the moxie to make difficult (political) decisions like this one. Perhaps this pandemic will leave us no other choice.

  2020.10.04

• Manhattan is getting a congestion pricing zone

  About a year ago I wrote about how NYC is considering a congestion charge on vehicles entering Manhattan below 60th street. Well it looks like that plan could be adopted as early as April 1 (however the fees won’t start until 2021).

  Here’s a map of the proposed congestion pricing zone from the NY Times:

  

  I have written extensively on road pricing over the years and so I won’t repeat myself here today. Suffice to say that I think creating a sustainable funding source for transit and other mobility options is a positive step forward.

  2019.03.29

• How road pricing impacts income groups

  The Pembina Institute has just published this report looking at the impact that road pricing could have on the various income groups across the Greater Toronto and Hamilton Area. One of the common arguments against road pricing is that it disproportionately impacts lower income folks.

  The study specifically looks at the proposal that Toronto put forward in 2016 to apply a flat congestion charge of $2 on the two highways leading into downtown. The proposal was ultimately rejected by the province, but I thought it was a step in the right direction. In my opinion, a dynamic road pricing model, similar to what is used in Singapore, would be preferable.

  The report concludes by arguing that road/mobility pricing is destined to become a tool in this region if we are serious about managing congestion. However, they also note that it must coincide with a strong and sustained investment in transit. And I would agree with that. That’s one of the reasons why you do this – to fund transit.

  To download a PDF of the report, click here.

  2018.11.29

• A picture of dynamic road pricing

  Below is a photo of Interstate 95 near Miami, which, for the record, I myself did not take while driving.

  

  The two empty lanes that you see are the “Express Lanes.” The price for using these lanes varies based on demand.

  During periods of low demand, the toll could be around $0.20 per mile. 

  During periods of high demand, such as during rush hour, it might be $1 per mile. 

  And during unusually heavy periods, like when there’s an accident, it could be more.

  We used these lanes while driving around the Miami area on this trip. The pricing always seemed reasonable and the lanes were never congested.

  I think the above picture is a good demonstration of how dynamic road pricing can be used alleviate traffic congestion.

  That’s why many cities, such as Portland, are exploring it as a solution. I wish Toronto would do the same.

  2018.08.08

• Portland is considering whether to solve traffic congestion

  

  Chris Hagerbaumer is the deputy director of the Oregon Environmental Council. She recently delivered the below testimony on “variable traffic-based tolls”, a form of road pricing. This is something we have talked a lot about here on the blog. 

  Oregon is currently looking at implementing this on two freeways in Portland, which is why Chris delivered this testimony. And as many of you know, I am very much in support of this demand management approach. So here you are: why congestion pricing makes sense for Portland (taken from City Observatory).

  ——————————————————–

  The question in front of you is: how do we actually solve congestion, solve it in a way that is the least cost to the taxpayer, and in a way that doesn’t result in more pollution. When we add more supply (in other words, build more roads) we end up exactly where we started when it comes to congestion (due to induced demand), we spend billions of taxpayer dollars (much of which comes from drivers who aren’t the ones demanding more road space), we harm surrounding communities as highways encroach into neighborhoods, and we pollute the air and heat up the planet.

  Induced demand is the fact that when you add freeway capacity it induces longer trips, more sprawl and more driving. Traffic is like a gas, expanding to fit whatever space there is. In one infamous example, Texas spent nearly $2.8 billion expanding Katy Freeway to 26 lanes and congestion has actually worsened.

  Building new roads is a supply-side solution that simply doesn’t work.

  An effective, least-cost, environmentally sound way to address congestion is the proposal before you: congestion pricing to manage demand. Drivers pay an automated fee to enter highly congested roads at peak hours; in return, they travel smoothly and reliably, getting where they need to go on time. Prices are set at the lowest possible level to free up just enough road space to eliminate bottlenecks.

  When you eliminate bottlenecks and get traffic flowing freely, you have—in essence—added capacity. You no longer need to add new lanes, you save taxpayers a bundle, and you reduce dangerous auto and truck exhaust.

  Congestion pricing is a demand management solution that’s proven to work and does so in cities around the world. Drivers opposed congestion pricing at first: no one wants to pay more. But that opposition of 60% or more turned into support of 60% or more after congestion pricing was implemented. People’s opposition turned to support because they now get that it works—they experience the value.

  Equitable application of congestion pricing absolutely requires mitigating diversion to local streets. But note that congestion pricing actually pulls many drivers who were already cutting through local roads back to the highway because those drivers who were stuck in traffic now have an option to get where they need to go, on time, for a small price.

  Equitable application of congestion pricing also requires significantly increasing transit service and other travel options in the corridor and considering other means to make the system work for low-income commuters who must drive during peak hours, such as targeted discounts or exemptions.

  We think of highways as free and we think of driving as freedom, but by investing almost solely in infrastructure for cars over most of the 20th century and into the 21st century, we created a transportation system that is costly not only for our pocketbooks, but for our very health and wellbeing and our region’s economic prosperity, a transportation system that contributes to the existential risk of runaway climate change.

  You have an opportunity to make a decision that will lead to less time stuck in traffic, healthier air, and more economic prosperity for the region and state. We hope you embrace that opportunity.

  Photo by Zach Savinar on Unsplash
  

  2018.07.31

• Road pricing for whom?

  

  New York City is considering a congestion charge for drivers entering Manhattan below 60th street. It is part of Governor Cuomo’s Fix NYC plan. But we all know how difficult these things are to implement.

  Last month, Felix Salmon wrote a piece in Wired where he argued that our cities are dying of traffic congestion and that the cause is ride-hailing services like Uber and Lyft. The solution: A tax on ride-hailing services.

  The article elicited a few reactions, including this one by Charles Komanoff over at Streetblogs and this one by Joe Cortright over at City Observatory. Joe’s message: “The problem isn’t the ride-hailed vehicles, it’s the under-priced street.” 

  Precisely.

  Felix later followed-up with a post on his blog where he clarified that the reason he loves this idea – of taxing ride-hailing companies, not riders – is that it’s far more politically palatable than a blanket tax on all cars. I don’t disagree.

  Which is why I think my idea is something which is eminently politically possible, in contrast to congestion pricing, which has been implemented exactly nowhere in the USA.

  Americans love their cars, and they love the freedom that cars represent, and they hate the idea that they should be taxed for driving their cars. Tolls on roads and bridges are bad enough, but a fee just to drive in to a city?

  That said, I’m with Charles and Joe. 

  Last year, it was reported that roughly 25% of all Uber trips in New York City were UberPool trips. I’m not sure what the number is today, but these are people who are car pooling to get around. That’s generally considered to be a positive thing.

  Are these really the trips we want to be discouraging (and singling out) with a charge simply because we don’t have the moxie to do what is right and makes rational sense?

  Photo by Austin Scherbarth on Unsplash

  2018.03.06

• Stockholm’s congestion charge reduced car traffic by 20%

  Stockholm has a congestion charge that is used to reduce traffic volumes in the center of the city. Toronto does not. We looked at it, actually fairly recently, but then we lost our nerve.

  Stockholm’s congestion charge was first implemented on a trial basis starting in January 2006. Trials and pilots have become a common way to actually create positive change. Otherwise the status quo bias may simply be too strong.

  When Stockholm started the trial back in 2006, public support was very low. Maybe 30%. But as soon as it was implemented, car trips dropped overnight by 20%. Once people saw the benefits, support grew – hitting around 70% by 2011.

  Here is a brief Street Films video with Stockholm’s Director of Transport, Jonas Eliasson, talking about their experience with congestion pricing. If you can’t see the video below, click here.

  [vimeo 244771087 w=640 h=360]

  2017.11.29