Congestion pricing

There is a consensus among economists that congestion pricing in crowded transportation networks, and subsequent use of the proceeds to lower other taxes, makes citizens on average better off.

According to the economic theory behind congestion pricing, the objective of this policy is the use of the price mechanism to make users more aware of the costs that they impose upon one another when consuming during the peak demand, and that they should pay for the additional congestion they create, thus encouraging the redistribution of the demand in space or in time,[8][9] or shifting it to the consumption of a substitute public good; for example, switching from private transport to public transport.

Congestion pricing has been widely used by telephone and electric utilities, metros, railways and autobus services,[10] and has been proposed for charging internet access.

[16][17] Nobel-laureate William Vickrey is considered by some to be the father of congestion pricing, as he first proposed adding a distance- or time-based fare system for the New York City Subway in 1952.

Singapore upgraded its system in 1998,[30] and similar pricing schemes were implemented in Rome in 2001,[31] London in 2003 with extensions in 2007; Stockholm in 2006, as a seven-month trial, and then on a permanent basis.

[42] In an effort to improve the pricing mechanism, and, to introduce real-time variable pricing,[43] Singapore's LTA together with IBM, ran a pilot from December 2006 to April 2007, with a traffic estimation and prediction tool (TrEPS), which uses historical traffic data and real-time feeds with flow conditions from several sources, in order to predict the levels of congestion up to an hour in advance.

[44][45] In 2010 the Land Transport Authority began exploring the potential of Global Navigation Satellite System as a technological option for a second generation ERP.

LTA objective is to evaluate if the latest technologies available in the market today are accurate and effective enough for use as a congestion charging tool, especially taking into consideration the dense urban environment in Singapore.

[63][64] Around Europe several relatively small cities, such as Durham, England;[65] Znojmo, Czech Republic;[66] Riga, Latvia;[67] and Valletta, Malta,[68][69] have implemented congestion pricing to reduce traffic crowding, parking problems and pollution, particularly during the peak tourism season.

[87] A comprehensive transport investment package for Manchester, which included the congestion pricing element, was released for further public consultation and was to be subject of a referendum in December 2008.

[90] The five projects under this initiative are Golden Gate Bridge in San Francisco,[91] State Route 520 serving downtown Seattle and communities to its east,[92] Interstate 95 between Miami and Ft. Lauderdale,[93] Interstate 35W serving downtown Minneapolis,[94] and a variable rate parking meter system in Chicago plus Metro ExpressLanes in Los Angeles County, which replaced New York City after it left the program in 2008.

[106][107][108] The Federal Highway Administration gave its final approval on June 26, 2023, allowing the MTA to begin setting toll rates for the proposed congestion zone.

The local government has implemented already several policies to address air quality and congestion, such as a driving restriction scheme based upon the last digits on their license plates.

[119] In May 2016, the Beijing city legislature announced it will consider to start levying traffic congestion charges by 2020 as part of a package of measures to reform the vehicle quota system.

[120] In January 2012, the federal government of Brazil enacted the Urban Mobility Law that authorizes municipalities to implement congestion pricing to reduce traffic flows.

[122][123][124] In April 2012, one of the committees of the São Paulo city council approved a bill to introduce congestion pricing within the same area as the existing road space rationing (Portuguese: Rodízio veicular) by the last digit of the license plate, which has been in force 1996.

[127][128] São Paulo's strategic urban development plan "SP 2040", approved in November 2012, proposes the implementation of congestion pricing by 2025, when the density of metro and bus corridors is expected to reach 1.25 km/km2.

Between 2004 and 2005, Santiago de Chile implemented the first 100% non-stop urban toll for a freeway passing through a downtown area,[132] charging by the distance traveled.

Though initially intended only to raise revenues to finance road infrastructure, the urban toll ring at Oslo created an unintended congestion pricing effect, as traffic decreased by around 5%.

[138] As of November 2015[update], Norwegian authorities have implemented urban charging schemes that operates both on the motorways and for access into downtown areas in five additional cities or municipalities: Haugesund, Kristiansand, Namsos, Stavanger, and Tønsberg.

[144] Congestion pricing in the form of variable tolls by time-of-the-day have also been implemented in bridges and tunnels providing access to the central business districts of several major cities.

[147][148] Since March 2008, qualified low-emission automobiles with a fuel economy of at least 45 miles per gallon are eligible to receive a Port Authority Green Pass, which allows for a 50% discount during off-peak hours as compared to the regular full toll.

[160] In May 2023, the Metropolitan Transportation Authority (MTA) finalized and published the Environmental Assessment (EA) of the congestion program which included a public comment period of 30 days, ending on June 12, 2023.

Even the transport economists who advocate congestion pricing have anticipated several practical limitations, concerns and controversial issues regarding the actual implementation of this policy.

The primary obstacle is that except for professors of transportation economics and a cadre of vocal environmentalists, few people are in favor of considerably higher charges for peak-period travel.

Metropolitan area or city residents, or the taxpayers, would be issued mobility rights or congestion credits, and would have the option of using these for themselves, or trading or selling them to anyone willing to continue traveling by automobile beyond their personal quota.

[171][172] Some concerns have also been expressed regarding the effects of cordon area congestion pricing on economic activity and land use,[173] as the benefits are usually evaluated from the urban transportation perspective only.

The scheme gave users two choices: (1) transit by order of arrival on a first-come first-served basis, as the canal historically has operated or (2) booked service for a fee—a congestion charge.

[197] The highest toll for high priority passage paid through the Transit Slot Auction was US$220,300 charged on a tanker in August 2006,[198] bypassing a 90-ship queue awaiting the end of maintenance works on the Gatun locks, thus avoiding a seven-day delay.

[200][201][202] The first scheme was started in 1968 when higher landing fees for peak-hour use by aircraft with 25 seats or fewer at Newark, Kennedy, and LaGuardia airports in New York City.