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MBA: Congestion Pricing

In the fifth chapter of "Moving Beyond the Automobile," we demystify the concept of congestion pricing in just five short minutes. Here you'll learn why putting a price on scarce road space makes economic sense and how it benefits many different modes of surface transportation.

In London, which successfully implemented congestion pricing in 2003, drivers now get to their jobs faster, transit users have improved service, cyclists have better infrastructure, and pedestrians have more public space. More people have access to the central city, and when they get there, the streets are safer and more enjoyable. While the politics of implementing congestion pricing are difficult, cities looking to tame traffic and compete in the 21st century can't afford to ignore a transportation solution that addresses so many problems at once.

Streetfilms would like to thank The Fund for the Environment & Urban Life for making this series possible.


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“Gridlock Sam” Schwartz:  [00:13] Congestion pricing was invented here in New York City.  William Vickery in the 1950’s, an economics professor who later went on to win the Nobel Prize for economics, came up with this concept that one of the most precious resources in a city is space, and that space needs to be priced, just like we price theatre tickets, we price the airlines during the holiday season or hotel rooms, the same we should price Fifth Avenue’s space.  So congestion pricing is a way of setting a price so that we can achieve a level of service.  Stockholm has congestion pricing.  Guttenberg is about to do it in 2013.  Singapore has been doing it for over 35 years now.  We go to London and we see that they’ve introduced congestion pricing.

 

Lucinda Turner:  [01:02] The main purpose of congestion charging is to reduce traffic and congestion.  So in cities like London, road space is a really scarce resource and we’ve got lots of competing demands for that space, we’ve got cars, freight, buses, taxis, pedestrians, cyclists.  We also want to use space for public squares, street cafés, things like that.  So congestion charging is a means of allocating that limited space whereby motorists who want to drive on the roads within the zone pay a charge.  Everyday if they want to drive in the zone they pay £8 and it applies Monday to Friday, 7am to 6pm.  Since the introduction of congestion charging we’ve seen traffic in the zone reduce by about 20%.  In practice, that means about 90,000 fewer vehicles in the zone everyday.  In 2008/9 there was about £150 million in net revenue the charging scheme raised.  By law we have to use that money to put back into the transport system.  And that was used for investment in buses, in cycling facilities, in walking, in maintenance.

 

“Gridlock Sam” Schwartz:  [02:06] The people that are in their cars are moving faster, and the people that are in the subways are getting some kind of revenue stream that assists them in getting to their destinations faster.  We’re using less of the planet, lower carbon footprints, the air quality is better.  We’re all better off. 

 

Tom Vanderbilt:  [02:24] An economist would say you have a certain amount of a good, how are you going to distribute that good?  You can ration it by price or by queue.  If you sort of under price something, you’re going to have a queue.  When a store like Costco has these sort of like Thanksgiving flat TV specials where there’s a flat TV for $200, what happens?  You have a line of people at the door in the morning because it’s under priced TV’s.  I think roads are sort of the same way.  We give away road space for essentially nothing in this country.  We have some of the lowest fuel taxes in the world, they don’t pay for themselves.  And it’s no surprise that the result of that is our queues.  We could choose to distribute that space differently through pricing.  You wouldn’t expect to fly home at Christmas and pay the same for flying in the middle of sort of September.  When there’s peak demand in other areas of life, you pay more.  The roads we sort of just give it all away and then we’re surprised. 

 

Lucinda Turner:  [03:15] Congestion charging helps to encourage people out of their cars and onto other modes of transport such as public transport or cycling.  And our monitoring shows that about 70% of people are affected by the charge have actually switched to other modes.  When charging was introduced, we saw an increase of about a third in the numbers of people coming into Central London by bus during charging hours.  About half of this is directly attributable to congestion charging. 

 

Anne Korin:  [03:41] At the end of the day it’s about the value of your time, your time has a value.  If it’s leisure time, if it’s work time, and being able to pay to get home faster, pay to get to work faster, pay to meet your friends faster, whatever it is that you’re going to do we should have the ability to do that.  So road pricing let’s us do that.  First of all we have an infrastructure problem in this country.  Secondly we have a deficit problem.  Third, oil prices are going up.  So this is kind of a perfect storm of concern.  I think on the left and on the right there’s starting to be a realisation that we need to find solutions that make sense to fiscal conservatives, to environmentalists, to security folks, to people that are looking at this from a transportation angle or an energy angle, and it really can move us forward in terms of opening a more competitive market among transportation modes. 

 

“Gridlock Sam” Schwartz:  [04:28] Let’s face it, the supply and demand curve for gasoline has always been related to the size of the middle class.  Well folks, we’re going to see a quintupling of the middle class with the Chinese middle class coming online, the Russian and Eastern Bloc countries coming online, that supply/demand curve means that that demand is growing.  Any world city that wants to compete in the 21st and is thinking about the 22nd Century needs to think about congestion pricing.   

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Transcription Sponsored by: Transcript Divas Transcription Services

Clarence Eckerson, Jr. has been making fantastical transportation media in NYC since the late 1990s. He's never had a driver's license and never will.

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  • Rob

    I think that variable rate congestion pricing is an extremely valuable tool, and far superior to strategies focused on fuel tax increases; however, the manner in which it is implemented requires serious consideration, of course.

    In my view, in order to minimize or offset potential equity impacts associated with roadway pricing strategies there must be a high capacity, affordable, and reliable transit alternative to driving on the priced facility. The transit alternative can't simply be express bus masquerading as BRT operating in mixed-traffic on a new HOT/HOV lane, but rather a legitimate alternative to driving that is part of a broader transit system. The alternative must be made available either prior to implementing pricing or at the same time. Rather than building new HOT/HOV lanes, we should price all existing lanes.

    Unless and until we have implemented pricing in combination with new or improved "real" transit, we should not even consider highway add-a-lane projects; not even to "solve bottlenecks." We can't possibly know how much capacity is really needed until the combination is implemented - it may well be that we don't need additional capacity, but rather a 21st century perspective on solving the problem.

  • http://www.livablestreets.com/people/jamie jamie

    That reminds me ... I need to toot the horn in favor of congestion pricing for weekday evenings, outbound only as a pilot in the SFCTA's Transportation Plan survey at http://www.sfcta.org/rtp .... we only have until March 24th to get our ideas into the box for consideration!

    Still reading this? Go now to http://www.sfcta.org/rtp and start entering your livable streets wish list!

  • Streetsman

    To pick up on what Rob said - yes, a lot of the political challenge seemed to me to be related to the lack of driving alternatives in certain areas. Perhaps there could have been exemptions for taxpaying NYC residents whose private, non-commercial vehicles are registered to primary home addresses in NYC neighborhoods that are distant from viable transit options (specifics TBD). Then the objective would be to use the fees to fund service to those areas and then eventually removing the exemption, further reducing core congestion. But the fee coming before the service improvements was asking people in eastern Queens and Brooklyn for a level of trust in the MTA - something that, understandably, few were willing to do.

  • Madeline

    Isn't congestion pricing obvious solution to the Caltrain fiscal crisis? It's not like we're forging new ground here, it already works in London - and San Francisco's natural geography has already done 3/4ths of the work for us. Raise the costs of the bridges and implement the same camera payment system London has for San Mateo. Make a law that says ALL proceeds must be split between Muni, BART and Caltrain.

    If people are paying ~$13/day to come into London (and overall congestion is only reduced by 20%), shouldn't we be able to do at least $10/day? With 1.9 MILLION daily trips into San Francisco (Source: SamTrans, San Francisco County Transportation Authority), even if San Francisco experienced a 20% drop in daily car commutes (a positive thing!), that would still mean $15.2/million A DAY for public transportation in San Francisco. And FYI, if this all went towards Caltrain, this would solve their deficit in TWO DAYS.

    ...and that's not even counting the even more palatable income source:
    http://burritojustice.com/2011/03/08/a-modest-proposal-beer-train/

    ;)

  • D R Sanchez

    it strikes me that relying on the market goes against equity concerns. and unfortunately income/wealth in the US has a long tie to race/ethnic discrimination. is this on the radar at all? what is the experience, from a social equity perspective, in other cities that have congestion pricing?

  • Stephen Bauman

    The more I look at congestion pricing the less convinced I become of its promise. London's example is not the success it's advertised to be.

    It has not reduced congestion over the long term. Traffic volumes have been reduced by 20% and have stayed reduced. Congestion initially dropped 30%. It has since increased so that after 7 years it is worse than before congestion pricing was implemented.

    The initial results were too good. Congestion was down even at times when traffic volumes were the same as before congestion pricing went into effect. Something other than reduced traffic flows was causing decreased congestion.

    London compressed about 5 years worth of street and infrastructure repairs during the year before congestion pricing was implemented. London streets were in A-1 condition, when congestion pricing was implemented. They then declined with time. Congestion increased with the decline in street repair.

    Congestion pricing is also a very inefficient way to raise funds. The administrative overhead is large. Congestion pricing would be outlawed as a charity because of its huge overhead. Too little of its charging fees are returned to the transportation system.

    NYC CBD traffic volumes peaked in 1984. Today's traffic volumes are already 25% below those volumes. There have been cordon counts since the 1970's. There is no reliable long term data on congestion for NYC. It's all anecdotal. I don't know of hard evidence that traffic is more congested now than in the past. If congestion is indeed bad with volumes down 25%, I'd look to traffic management as the cause and not to increased volume.

  • Clarence Eckerson, Jr.

    D R Sanchez - there are equity concerns of course, but if the charges are indeed returned to the system for better mass transit, cleaner trains, more frequent service, then the lowest income folks will benefit most of all.

    For example, in NYC we have seen a continued raiding for NYS mass transit funding - this keeps MTA fares going up, routes slashed, service continues to get nibbled away.  If we had a dedicated funding source there would be far better service.

  • zach

    Awesome. Are these all going to be edited into some kind of movie?

    Gridlock Sam brings it into the mainstream.

  • http://mdahmus.monkeysystems.com/blog/ M1EK

    There is one and only one metro area in the USA that could implement congestion pricing and see an improvement in conditions - that being New York City.

    In any other metro, businesses would just decamp to suburban office parks at the first sign of their employees (more likely executives) getting upset at having to pay to drive.

    This is not a viable tool in the toolbox here in the USA. Good rail lines (not streetcars running in shared traffic, but light rail in its own lane at a bare minimum) can incent people to leave their cars at home; focus on that. 

  • v

    M1EK - Though I am often inclined to go with carrots instead of sticks, I think that both are needed when it comes to getting dangerous/polluting vehicles out of city centers. Also, our current political environment isn't exactly making new rail lines easy to fund.

  • Clarence Eckerson, Jr.

    Zach

    We are making the full series available on DVD at the close of the series.  Many communities/advocacy groups are planning on purchasing a DVD and hosting a showing in their city by showing all of them, or many of the ones in the series.

    You can pre-order the DVD above or wait until the final film comes out and come back for more details.

  • Suzanne

    What Rob said.

    Also, it seems more like a matter of political will than anything else. There are plenty of options available in the toolbox - a *REAL* BRT (doesn't cost that much) and a viable, safe network of bike lanes (which costs even less) combined with an effective mass transit system that's NOT constantly being raided to plug in the holes in Albany's budget. The only thing holding us back seems to be nothing more than a small but wealthy, politically connected and unbelievably short-sighted minority.

    There's absolutely no way adding lanes for cars is going to do anything other than encourage more traffic and congestion. I don't really know what the problem is in London (it certain works beautifully in Stockholm). That should be looked into, but I'm sure the fact that there are fewer cars in the city "centre" is all to the good.

  • http://district5diary.blogspot.com/ Rob Anderson

    A couple of years ago the SF Chamber of Commerce asked about congestion pricing in a poll, and 61% opposed the idea. I don't think the people of SF will ever allow City Hall to make them pay to drive downtown in their own city. Not going to happen. It's just a fantasy of the anti-car movement.
    http://www.sfchamber.com/newspolicy/policy/special/sfcc_citybeat_poll09.pdf

  • http://trafikklogistikk.com Knut Bøe

    Pricing is simple, it works, but it does not solve all the problems, and it favours welloff people who once again can pay their way through the system. No; the idea of the priority system of Trafficlogistics has to be developed, this is the way forward. Please see: http://trafikklogistikk.com a folder explaining what TL is.
    regards Knut

  • Rob

    The United Parcel Service President expressed support at a house committee hearing for pricing strategies in exchange for value - value being defined as improvement in flow of goods, and thereby more than offsetting reductions in operating costs.

    The question is one of value. Value can't be captured if peak-period drivers are not provided with a high capacity, affordable, and reliable alternative to driving. Prcing and *real* transit has to be done at the same time.

    Just sayin'

  • http://mdahmus.monkeysystems.com/blog/ M1EK

    v, it's still far easier to fund a rail line than it is to stop a business from relocating to a crappy suburban office park - again, outside NY and maybe SF (but even in SF they could and do decamp to places like San Jose).

  • Rob

    I support pricng precisely because I like cars and driving open roads; many people that vote against pricing don't understand it and/or pricing is proposed without a complementary and viable, i.e., high-capacity, reliable, and affordable alternative to driving.

  • Ines Alveano

    People change opinion, even though they don't know why... Jonas Eliasson. TedX  http://www.ted.com/talks/jonas_eliasson_how_to_solve_traffic_jams.html