Mar 14, 2019

Congestion Pricing: cities around the world are succeeding & failing

Mahmood Rahmani

Senior Software Engineer

Will NYC be the first city in the US to institute congestion pricing? In an event that has become as much a midwinter staple as Staten Island Chuck checking for his shadow, New York is once again debating the pros and cons of instituting congestion pricing on the Manhattan Core. Under the current proposal, any vehicle entering the southern half of Manhattan would be charged a fee.

Congestion Pricing: cities around the world are succeeding & failing

Advocates cite the success of similar systems in cities like London, Stockholm and Singapore, where traffic speeds and public transit funding have increased while health issues relating to motor vehicle emissions have declined. Critics point to issues ranging from privacy concerns to unequal treatment based on income.

While New York would be the first US city to adopt congestion pricing, most Americans are familiar with a similar concept: toll roads. In a more advanced system, some California interstates offer “pay-per-drive” lanes, the price of which changes in response to demand to ensure the free flow of traffic, running adjacent to the “free” lanes. And San Francisco uses dynamic pricing for public on-street parking, adjusting the meter fee as necessary in an attempt to keep one spot on each block open.

Arguments in favor of congestion pricing

Not only does congestion pricing lower traffic volumes significantly in the congestion zone, improving the reliability of driving time, it also makes on-street parking more readily available. In particular, these advantages are a boon to freight companies, drivers for which are often on tight schedules and, without congestion charges, are often forced to double-park to unload, both a safety hazard and a magnet for costly tickets.

From an economic perspective, it makes users pay for their full costs of driving—not only the direct costs, such as road maintenance, but also externalities, the effects a person’s decision to drive has on other people. Commonly cited externalities include crashes with humans and other vehicles, time lost in traffic, and environmental & health problems.

Arguments against congestion pricing

Those against congestion pricing have an arsenal of arguments at their command. Unfortunately for those who desire reform, any of these fears can make the idea politically unpalatable—even if other cities’ experiences have shown them to be unfounded.

A concern for privacy is a central argument against camera-based congestion pricing. A few months before Hong Kong’s pilot program ended in the 1980s, Great Britain and China agreed to the terms of the territory’s return to Chinese control. Many citizens feared that the cameras used to capture license plate information would be used to ill effect by the Chinese government once the handover had occurred—one of many reasons the plan was scuttled.

Furthermore, congestion pricing doesn’t work unless sufficient alternatives are available. These needs can be addressed by additional public transit service, particularly buses, and new park-and-ride lots outside the congestion zone. Even in transit-rich London, the government determined it could not expand the congestion zone south or east due to lower levels of public transit service in those areas.

Congestion Pricing: cities around the world are succeeding & failing

Detractors also point to high overhead costs in London, which spends half of its system’s revenue on operating costs. Other cities, however, have much lower rates, like Stockholm (7%) and Singapore (16%); New York’s operating costs are projected to take up about one-third of revenue.

Other arguments might sound good as sound bites, but fail to pass muster in practice. Congestion pricing has not been shown to increase traffic just outside the congestion zone, as drivers search for parking before taking public transit to their destinations. Similarly, it does not punish lower-income residents, because relatively few drivers in congestion zones, either with or without charging, fall into this economic bracket; in fact, reduced congestion and increased bus service benefit everyone, regardless of their mode of transport.

Alternatives to congestion pricing are available—and work

Cities have other options for reducing congestion beyond instituting congestion pricing. One example is Sydney, which charges an annual fee for private parking spots in dense neighborhoods; exceptions include people with mobility permits, religious establishments and residents who park on or adjacent to their property. The program raises A$100 million (approximately US$72 million) each year for the city’s public transport fund.

It also addresses some of the arguments raised by critics of congestion pricing. For example, as there is no need for camera infrastructure, privacy concerns are dramatically reduced—as are the overhead costs of installation and maintenance.

Mahmood Rahmani

Senior Software Engineer