Tag Archives: Congestion pricing

Congestion Pricing Questions

Congestion pricing for freeway capacity is a hot topic. The basic implementation of price-managed lanes known as high-occupancy toll (HOT) lanes has been rolled out in many cities, including the new lanes on the Capitol Beltway in Virginia and the retrofit of existing HOV lanes on the 110 and the 10. These lanes operate on a simple principle: when traffic increases in the lane, prices (tolls) are increased to decrease the number of people using the lane and prevent congestion.

Beyond that, though, a wide range of people have called for congestion pricing on all lanes of freeways. This ranges from libertarians who favor user fees, like Randal O’Toole, to urbanists that want to decrease the amount of driving by increasing costs, to cities and states that see potential revenues.

Theoretically, it is easy to extend the concept of HOT lanes to the entire freeway. However, it seems to me that to do so, you have to make a major simplifying assumption about your freeway network – that there are no capacity mismatches. What does that mean? It’s probably easiest to show by way of a few examples. Note that traffic jams on freeways do not necessarily indicate there’s a problem on the road at that location; rather, they are often acting as a queue of cars, pointing towards a downstream bottleneck. There are also questions for long distance trips.

The Off-Ramp Strangler: The 10 at Cloverfield

On weekday mornings, the 10 westbound into Santa Monica backs up starting at the Cloverfield/26th off-ramp. There’s a lot of employment in the area around the future Olympic/26th Expo Line station, and the local streets can’t handle the traffic volumes at peak times. The off-ramp acts as storage for cars waiting to distribute themselves on the local street network, and when the off-ramp gets full, cars start queuing up on the mainline of the freeway.

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If you’re managing an HOT lane, it’s pretty easy to keep that lane flowing at a reasonable speed. You’d just charge a higher toll for the lane up to Cloverfield, and then a lower toll beyond that. The general purpose lanes act as a spillway, soaking up whatever traffic comes out of the HOT lane.

What would happen in practice if the whole freeway was tolled? Some people will try to change their travel patterns by leaving earlier or later, which is the real intent of congestion pricing. However, some people will just hop out onto the free local street network. If you charge an arm and a leg to get from Bundy to Cloverfield, maybe I decide to get off at National, Overland, or Bundy. That moves the queue of cars trying to get to office parks in Santa Monica off of the freeway and onto the arterial grid.

Disastrous Lane Drop: The 5 at Norwalk Narrows

Everyone in LA has probably experienced this at some point: you’re cruising north on the 5 in Orange County, enjoying some of the world’s finest freeway engineering, and then boom! You pass the 91 and you slam (figuratively, we hope) into gridlock on the three-lane section of the 5 through Santa Fe Springs and Norwalk. This is one of the last unreconstructed 1950s-era freeways in LA. It’s being widened as we speak, but it’s a great example of a capacity mismatch between adjacent sections of a freeway mainline.

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If you’ve got a managed HOT lane here (and the Orange County section is clearly designed for that possibility), you can keep it flowing by charging a punitive toll through the Norwalk Narrows. If the entire freeway is tolled, you’d have to charge very high tolls to keep things moving on the three-lane section – so high, that you might not be able to charge anything on the five-lane section to the south. That results in a very cheap section leading into a very expensive section.

Again, the incentive is going to be for people to use the cheap section of the freeway, and then bail out onto the free local arterial grid.

Alternatives with Issues: The 405 vs North-South Arterials

This one isn’t quite so much about a freeway capacity mismatch as it is about the amount of existing congestion on local arterials.

Northbound congestion on the 405 has several causes. For one, the prolonged steep grade approaching Sepulveda Pass degrades vehicle performance, resulting in some vehicles slowing down. At the top of the pass, you have an intense weaving section leading up to the busiest interchange in the country, the 405 and the 101. Further upstream, you simply have a lot of traffic from Westside employment centers entering the freeway between the 10 and Wilshire to head home to the Valley.

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Contrary to popular conceptions of LA, the north-south arterials on the Westside are significantly underpowered. Sepulveda is the only true through arterial between Lincoln and Robertson; the rest – Bundy-Centinella, Sawtelle, Barrington-McLaughlin, Westwood-Overland, Beverly-Beverwil-Castle Heights – are Frankenroads, incomplete, cobbled together from various parts, and not even two lanes in each direction. This contributes to a major lack of north-south mobility on the Westside.

If the 405 were tolled to maintain higher speeds, some traffic would shift to this free ragtag network of north-south arterials. Again, this might be an undesired side effect of tolling all freeway capacity.

Long-Distance Trips

Existing HOT lanes, like the express lanes on the 110 and the 10, are managed dynamically: prices are adjusted to respond to real-time traffic conditions. If the lane starts to get congested, prices are increased to reduce the number of drivers that decide to enter. Pricing information is conveyed to drivers using variable message signs. If you’re already in the lane, the price you saw when you entered is honored for your destination.

This works well for a managed HOT lane in isolation; no one knows what the toll will be when they enter the freeway, so the general purpose lanes just soak up whatever traffic doesn’t want to use the HOT lane. With a network of HOT lanes, this will still work pretty well. The number of destinations you can reasonably indicate on a VMS sign is limited, but you’d always have the option to leave when you reach the next tolling section. Let’s say you’re in the HOT lane on the 10 east and you hop on the 5 south to go visit the mouse, and you don’t like the prices. No problem, you just take the free lanes.

If the entire freeway is dynamically tolled, this starts to fall apart. What do I do if I get on a freeway and I’m not willing to pay the going price? For short trips, you could check before you leave, but for long trips, it would be an issue. If you get on the 101 in Woodland Hills and you’re going to Anaheim, what happens if you get on the 5 and the toll is more than you’re willing to pay? Do you take arterials? Do you just get off and park somewhere, waiting for prices to go down?

Private Parts

Now, you may have been chomping at the bit as you read this post, thinking that there are technological solutions to these problems: use congestion pricing on the arterials as well as the freeways, and quote people a price for their entire trip before they start it.

Those ideas are certainly theoretically possible. However, they may prove politically impossible, for some very good reasons.

Tolling arterial capacity, using existing electronic tolling methods, would prove unreasonably costly. It would more or less require turning every traffic light into a tolling location. It would require trying to communicate toll rates on a block by block basis. Both of these would be impractical. You could do it without any roadside equipment by requiring every vehicle to be equipped with GPS, and having the vehicle’s on-board equipment report the GPS data to a central facility for calculation of tolls.

Getting a price quote for a trip before you take it is something we’re all familiar with for things like flying, ferries, tours, and so on. In the case of flying, the details of your travel are reported to the government in advance. However, flying is something most people do rarely. Requiring advance requests for auto travel fees would bring that level of oversight into people’s everyday lives.

To be blunt, I don’t think many people would be comfortable with having to tell the government where they’re going before they leave, and I don’t think many people want their movements being tracked by GPS. If you don’t like the NSA recording your phone calls and reading your emails, you should be worried about the prospect of having the government follow your whereabouts. While this would obviously still leave walking, biking, and transit as options for anonymous travel, it would be an imposition on people’s right to freedom of movement.

Conclusion

This isn’t to say we should give up on the idea of tolling highway capacity. I would be curious to see research on detailed modeling of a real road network (freeways and arterials) under these scenarios. For example, what would happen on the Westside if the 405 and the 10 were dynamically tolled but the arterials were still free? Regarding privacy, would people be more comfortable if the advance price was obtained through a third-party intermediary (such a car-sharing service) that could make the reservation with the system in the corporation’s name?

In the meantime, a more realistic option than real-time dynamic pricing might be managing freeway capacity the way that street parking is managed in downtown LA. In that model, utilization of street parking is monitored, and then prices at different times of day are adjusted up or down to try to optimize utilization. For freeways, a schedule of prices could be published and updated every month, so that users would be able to determine prices before they leave.  For example, say that in August 2014 it costs $0.25 to go from La Cienega to Robertson on the 10 on weekdays at 12:30pm, and the level of congestion is still too high. The rate for September would be increased to $0.30 or $0.35.

In the case of capacity mismatches, it might be desirable to deliberately underprice freeway capacity so that the amount of traffic diverted to arterials isn’t too large. Many people would rather have a queue of cars on the freeway, leaving arterials a little less congested and available for things like local trips and emergency vehicles.

Congestion pricing has great potential to improve mobility in urban regions. But the devil’s in the details, and we don’t have them worked out just yet.

Should We Worry About Highway Subsidies?

I touched on this issue way back when I wrote about the gas tax, but I’d like to expand the thought.

One of the most common criticisms of auto infrastructure from transit and smart growth activists is that drivers don’t pay the full cost of roads – the gas tax and other associated fees have not been increased enough to keep pace with spending new construction and backlogged maintenance. Much of the money spent on highways comes from property taxes, which you pay regardless of if or how much you drive. Counter to this, you have folks like Randal O’Toole, who note that no transit agency in the country covers even its operating costs with fare revenues, let alone capital costs. Transit agencies don’t pay property taxes, but they run buses over roads paid for by those taxes. In addition, the federal government and many states have dedicated part of their gas tax revenues to transit, meaning that drivers subsidize transit.

Still Not User Fees

As I said in my post on the gas tax, I don’t see how transit activists can win under the “user fee” framework. Some, like Cap’n Transit, claim that transit would make money if drivers were forced to pay the full cost of driving. However, given typical farebox recovery ratios on US transit systems (about 25%-50%), I don’t see how that could happen. Assuming farebox recovery is currently 50%, an agency would have to either double the number of people on each vehicle, double the amount of money extracted from each rider, cut unit operating costs in half, or some combination of the three. (Note that just doubling ridership doesn’t cut it if you have to run additional vehicles, since that costs money.)

Realistically, it seems to me that a scenario in which a transit agency has 100% farebox recovery is a scenario in which low ridership routes are eliminated, low ridership stops are eliminated, off-peak service is reduced, and peak service fares are higher. Now, maybe you’re fine with that scenario, but you should back up, read your Jarrett Walker, and ask yourself what you’re actually trying to do with your transit service. Are you ok balancing the transit agency’s books by raising fares on people too poor to afford cars? Are you ok with stranding people who live on low volume routes? Are you ok telling your city’s late-night crowd to suck it up and pay for a cab?

Generally, though, the agency is being asked to provide some minimal level of service to all parts of the region, for some minimum span of service, regardless of profitability. In that context, it’s not consistent to expect the agency to be profitable. There are also many benefits that accrue to society as a whole that the agency can’t capture – for example, if someone chooses to ride transit instead of driving, there are benefits to air quality from less congestion. In that sense, we aren’t “subsidizing” transit, we’re making an investment in the public domain that ought to produce future public benefits exceeding the cost.

And here’s the thing: many of the same arguments apply to roads.

For example, implementing tolls or increasing the gas tax is only progressive at the crudest level of analysis. In general, transit riders are poorer than drivers, but there is huge variability within drivers. Within the driving population, these taxes might be regressive, since wealthier drivers can afford to live closer to work. Like low volume transit routes, it is expensive per capita to provide arterial roadways to rural areas, but we’ve decided that in our society everyone deserves some base services. We also expect roads to produce benefits to society that aren’t directly captured by the government agency in charge of roads – for example, when rubber-tire internal-combustion trucks became available, there was a large reduction in the amount of horse poop lying in city streets. (The memories have faded, so we don’t often think of the horse poop benefits of trucks nowadays.)

Public Services Framework

In fact, both roads and transit could be considered public services like police and public schools, and we certainly don’t expect the police department or elementary schools to fund themselves entirely from user fees.

In that case, why charge drivers anything for road use (or why charge patrons anything to ride transit)? There are two reasons to charge for public goods:

  • Negative externalities (in this case, mostly air pollution and GHG emissions)
  • Overuse (in this case, congestion)

With this framework, the gas tax serves both purposes: it imposes a base usage fee that discourages people from driving for no reason, and it taxes people in proportion to the amount of pollution they create. The gas tax should probably be increased nationally because of the high costs of air pollution and GHG emissions. Some states or metro areas might consider a further increase as a base congestion charge. Managed toll lanes, like exist on the 91 and the 110, should be implemented on a larger scale to help deal with congestion during peak periods.

Another nice feature of this framework is that it’s perfectly logical to charge drivers more than it costs to maintain the road if demand is very high. The surplus can be used to fund other parts of the transportation system. For example, New York charges very high tolls on the Hudson River bridges and dedicates the surplus to transit operations. It’s also reasonable under this system to charge wealthy Acela patrons more than it costs to run those trains, and subsidize other services.

It always seems like a pretty cynical argument to me when I hear transit activists argue that “drivers should pay the full cost of roads”. Under a counterfactual where highway user fees generated more than enough money to cover maintenance of existing roads, would they be arguing that the rest of the fees should be used on roadway expansion capital projects? Of course not. Taking roads and transit to be public services results in a more consistent argument.

What About Overbuilding?

Part of the argument is that if drivers had to pay the full cost of roads, we’d build less roads. True, and valid if your preexisting goal is building less roads. By the same token, if transit riders had to pay the full cost of transit, we’d be building fewer trophy streetcars and suburban LRT lines.

Overinvestment and misallocation of resources is a classic problem of public services. Cities with useless streetcars are no different than rural towns whose police equip themselves with tanks or cities that say they’re going to supply every student with an iPad. In other words, there is no substitute for good governance. While you certainly could curtail some of the abuses by going to a user-fee system, remember the compromises that go with that. Other countries have shown that competent public governance is possible.

However, the more I think about it, the more I’m in favor of getting the federal government out of the capital projects side of things. Our mainline freeway and rail networks are complete, and the federal government seems to make a lot of poor investment choices now that most of the good capital projects are complete. There’s definitely an equity case for some federal involvement in helping out poor states and cities with operating costs and vehicle procurement, and the federal government should help states and cities out by using its low interest rate to borrow, but should the feds be involving themselves in things like Portland’s streetcar extension or the 69 freeway? Probably not.

Are Roads a Public Good?

You could make an internally consistent argument that drivers should pay the full cost of roads if you think that roads are not public goods.

I’m not buying that argument for arterials and neighborhood streets, since having two competing road networks in a city would be a huge waste of land, like having competing gas or electric companies. If arterials and streets were privately owned, they’d have to be regulated like a utility, and you’re right back to the issue of competent governance.

The argument is believable in the case of limited access tollways, where it’s easy to control access at onramps and offramps, and easy to manage demand through variable tolls. If public arterials are available, no one needs to use the freeway. However, I think there are practical limits to that model as well, which I’ll address in a separate post.

The Right Argument for Tolls

Aaron M. Renn, aka The Urbanophile, has an article out today about the need for tolling in Rhode Island. There’s no doubt that things in the Ocean State need some work; I was on the 195 recently and saw some terrifying levels of spalling concrete like that seen in the picture of the Warren Ave overpass. Renn pitches tolls for facilities like the Sakonnet River Bridge, and VMTs, which he calls de facto tolls.

I’ve written before about how VMTs do not make sense and do not actually solve any of the stated problems, so I don’t have anything to add there.

However, the issue of traditional tolling is another good one to discuss, and I think Renn’s article runs into trouble there. First, while tolls solve the problem of inadequate funding, they do not solve the other major issues that Renn identifies: corruption and incompetence. Toll money can be wasted just as easily as gas tax money; it does not force the state to stop deferring maintenance. There is no substitute for building competent governing institutions, and evidence would suggest Rhode Island has a ways to go with that.

Beyond that, though, Renn uses the same faulty user fee logic that I wrote about in the context of VMTs. Renn says that “it’s intuitively fair for those who use something to pay for it”, an argument frequently heard from progressive writers who don’t care for cars. As I said, this is a disastrous line of reasoning for progressive causes, since transit users don’t pay for the entire cost of transit either. We don’t provide roads “for free” any more than we provide bus service or public education for free.

There is a logical framework with which you can make an internally consistent argument that highway users should pay the entire cost of highways, but transit users shouldn’t pay the entire cost of transit. If you think that highways are not public goods, but transit is a public good, then you’re good to go. But if roads are not public goods, then there’s no reason for the public sector to supply roads at all, and the solution would be to just privatize roadways. That argument seems plausible regarding limited-access highways, but certainly not with respect to local roads and bridges.

If you think that roads are public goods, there are still arguments in favor of tolling. I think there are two, one solid and one marginal. The solid argument for tolling is congestion charging as a way of capacity management. Congestion is a negative externality of driving, and drivers should pay for it. Unlike VMTs, congestion charges account for a negative externality that cannot be properly captured by the gas tax.

The marginal argument for tolling is that users of expensive facilities, like bridges and tunnels, should pay more. This is a marginal argument because it partly relies on the faulty user fee framework. People who have children that require special education use more expensive school facilities, but we do not make them pay additional school tax. The strength of tolls for expensive facilities is that it forces local users to pay for the facility, instead of allowing them to fleece distant taxpayers who may not be paying attention, which provides an incentive to control costs. Note that this is also partly a substitute for competent governing institutions.

So again, like the gas tax, there are good reasons for tolling, but you should always think twice about the user fee approach.