Streetsblog Capitol Hill

In 1951, Milton Friedman coauthored a paper on road pricing. It would be a mere footnote in both Friedman’s career and in the intellectual history of road pricing, if not for one sci-fi flourish: The authors propose painting radioactive material alongside expressways, so that road operators can charge drivers using car-mounted geiger counters. Obviously, this suggestion was never heeded, but it says something about the economics profession’s hunger for pricing roads that a future Nobel laureate would set his imagination to Bradbury mode to advance the cause. Ken Livingstone, mayor of London, later credited Friedman with inspiring London’s pathbreaking congestion charge.

Since the 1920′s, economists have nurtured an elaborate theory of road pricing rules, but until recently, it has never been very practical to price roads on a per-mile, time-variable basis. The time and money wasted collecting the money weren’t worth it. The digital revolution, however, has recently given us E-ZPass, online bill-pay, database computing, and even plate-reading cameras. Putting a price on roads that varies according to demand, or “congestion pricing,” is suddenly practical.

To economists, the problem with congestion is that some drivers are harming other people to get something they don’t even need. It’s like if you were slightly hungry but you ate a starving child’s Thanksgiving dinner. For a congested road, an extra car harms travelers already on the road by slowing down their cars and buses. I’ve illustrated this time cost with the following cartoon:

Of course, it’s all right to consume other people’s time if your benefit from driving is sufficiently large. We just want to make sure your trip is “worth it,” and the way our society makes this determination in the division of other resources is by charging money.

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As Deron Lovaas said this morning on NRDC’s Switchboard blog, “If recent events are any indicator, it might take Congress a while to agree on a policy that will put our underfunded, inefficient, oil-dependent transportation program on the right track.”

It's working in San Francisco. Now USDOT can help expand dynamic pricing to other cities around the country. Image: SFMTA.

Well now, that’s an understatement.

Between the uncertainty of the supercommittee and the bicameral bickering over the size and length of a bill, the only thing we can be sure of is that we’re heading toward yet another extension of SAFETEA-LU when it expires at the end of next month – if the two parties can agree to even that. Negotiations broke down over a whole lot less recently, when Congress let the FAA shut down over a measly couple million bucks.

But even if it’s a while before we see legislation passed that enacts new policies, there’s a lot the USDOT can do with existing authority to make smarter transportation investments that reduce congestion and carbon emissions. NRDC has documented them in a new report, “Federal Actions to Reduce Energy Use in Transportation” [PDF].

• Dynamic pricing. Fifteen states are participating in the DOTs Value Pilot Pricing Program, which allows states more flexibility in levying tolls and other pricing measures. San Francisco’s innovative new parking pricing system is a fruit of this program. Other variable pricing measures, like congestion pricing, could also help reduce fuel use and pollution, says Lovaas.
• Realism. USDOT should enforce the fiscal constraints of regional long-range transportation plans, being upfront about realistic costs. Lovaas says this will address a “pet peeve” of his and force states to reconsider “costly highway projects that have been on the books forever.”
• Transit benefits. Without further authority, USDOT could expand and promote the transit benefit program, which allows companies to give employees $240 per month in tax-free transit and vanpool benefits. Lovaas says the program is currently run by the IRS without any DOT involvement, and is vastly undersubscribed.

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We hear it all the time: The road lobby insists that the only way to reduce mind-numbing traffic congestion on the roads they built is to build new roads. Federal funding gives huge blank checks to state DOTs, which tend to prioritize road building over transit, bridge maintenance or anything else. But mounting evidence suggests that building new roads won’t do anything to alleviate congestion.

In a paper to be published soon in the American Economic Review, two University of Toronto professors have added to the body of evidence showing that highway and road expansion increases traffic by increasing demand. On the flip side, they show that transit expansion doesn’t help cure congestion either.

We’ll spare you the calculus in the report. Here’s the upshot: “Roads cause traffic.”

Duranton and Turner: If you build it, you will sit in traffic on it. Photo: Arch and the Environment

Professors Gilles Duranton and Matthew Turner analyzed travel data from hundreds of metro areas in the U.S., resulting in what they call the most comprehensive dataset  ever assembled on the traffic impacts of road construction. They write:

For interstate highways in metropolitan areas we find that VKT [vehicle kilometers traveled] increases one for one with interstate highways, confirming the “fundamental law of highway congestion” suggested by Anthony Downs (1962; 1992). We also uncover suggestive evidence that this law may extend beyond interstate highways to a broad class of major urban roads, a “fundamental law of road congestion”. These results suggest that increased provision of interstate highways and major urban roads is unlikely to relieve congestion of these roads.

Duranton and Turner say building more roads results in more driving for a number of reasons: People drive more when there are more roads to drive on, commercial driving and trucking increases with the number of roads, and, to a lesser extent, people migrate to areas with lots of roads. Given that new capacity just increases driving, they find that “a new lane kilometer of roadway diverts little traffic from other roads.”

Given the huge amount of time consumed by driving (the average American household spent nearly three hours per day in a car in 2001), the authors note that “the costs of congestion are large.” Considering the economic value of time spent doing anything but sitting in bumper-to-bumper traffic, that becomes an economic problem of the first order.

“Transportation accounts for about one dollar in five that Americans spend,” Turner said in an interview with Streetsblog. “The interstate highway system eats up on the order of two dollars of every $100 of every market transaction in the United States. That’s a huge part of the economy and a huge part of people’s lives. Understanding how that works is really important; you don’t want to make mistakes on something that important. You don’t want to build roads and have them not deliver the effects that you expect them to.”

The implications for this research are significant, especially as Congress considers whether to integrate performance measures into federal transportation spending decisions. These findings make a strong case that Congress should not allocate too many scarce resources to road expansion when that’s not a real solution for congestion.

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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.

Today, U.S. taxpayers see the cost of oil wars in the Middle East taken out of every paycheck, all to feed America’s driving habit. A new proposal for more transparent pricing would shift that burden to the automobile drivers themselves by imposing a new oil security fee at the pump.

That’s just one of the recommendations in Taking the Wheel: Achieving a Competitive Transportation Sector Through Mobility Choice, a new report by the Mobility Choice Coalition. [PDF] The coalition brings together fiscal conservatives, environmentalists, and national security interests to propose transportation reforms that would reduce oil dependence.

Unlike many similar reports, the Mobility Choice study doesn’t put emissions reductions front and center. They’re more interested in fiscal restraint and national security – well-timed considerations for our current political climate.

Read more…

However the Virginia off-year gubernatorial race ends up -- and at the moment it looks as though Republican Bob McDonnell will reclaim the governor's mansion for the GOP after years of Democratic dominance -- the media will frame the story as a referendum on the policies of national Democrats.

Virginian rivals Creigh Deeds (D, at right) and Bob McDonnell (R, at left) (Photo: News Advance)

And to an extent, this may be right; Democratic voters are worn out from last year's presidential campaign and anxious to see real legislative progress, while Republican voters are increasingly fired up.

But there are real policy issues at stake in the race, of which transportation is among the most important. The state of Virginia has been among the country's fastest growing in recent years, and growth has concentrated in its metropolitan areas, particularly the northern suburbs outside Washington D.C. and the Hampton Roads area around Norfolk.

The state has grown by upwards of 10 percent since the 2000 Census -- by more than 800,000 people -- and most of that growth has taken place in the D.C. suburbs, the Norfolk area, and Richmond.

Meanwhile, infrastructure has not remotely kept pace. Virginia's gas tax rate is lower than most of its neighbors', and few of the state's roads are tolled. Consequently, funding has remained in short supply for most of the last decade, and the state's politics have focused on how to raise additional revenue without increasing taxes -- an unacceptable strategy in the Republican-controlled House of Delegates.

What this has meant is a series of ludicrous, roundabout means for bringing in money. Virginia tried imposing "abusive driver fees" of up to $3,000 per infraction, but the legislature ultimately repealed the measure in response to public outcry. The legislature later tried delegating the authority to tax to regional bodies, like the Northern Virginia Transportation Authority, but this was ultimately deemed unconstitutional.

Meanwhile, congestion in the Washington area has grown [PDF] by more than in any other metropolitan area in the country.

And so the 2009 gubernatorial election between McDonnell and Democrat Creigh Deeds has focused in no small part on how the candidates intend to address this ongoing crisis. The Washington Post's endorsement of Deeds paid special attention to the issue:

Urbanists often find themselves falling into a pattern of thinking that boils down to the dictum that what's good for drivers must be bad for walkability, and sustainability, and all the things that they prize about well-designed cities. Drivers seem to believe this too, which is interesting because it often isn't true.

What's good for the driver in the middle is also good for public health. (Photo: FHWA)

Take performance parking. Both urbanists (and drivers) seem to believe that it's good (or bad), because it makes parking more expensive, which is bad (or good) for drivers. But this assumes that a free parking system, where open spots are almost never available, is desirable for drivers.

That's like saying that a store that gives away bread for free -- and which subsequently never has any bread -- is good for people who like eating bread.

For the most part, thinking about congestion pricing follows this same rule. Urbanists tend to like it because it makes driving more costly and raises revenue for transit infrastructure. Drivers tend to oppose it, because they don't want to pay more to drive. In fact, congestion pricing would be good for people who really want to drive and good for people who'd like to have an alternative to driving.

This message has been slow to sink in, but the fact that drivers may benefit from congestion pricing may be beginning to resonate with urbanists. Unfortunately -- and so powerful is the what's-bad-for-drivers-is-good-for-cities mentality -- the absorption of this message has caused some urbanists to conclude that they've been wrong all along, and that congestion pricing really is bad. If drivers might benefit, it must be the case that cities, and the earth, will not.

So writes the New Yorker's David Owen, in an extremely misguided piece in the Wall Street Journal.

By requiring car drivers to pay a fee to drive in a city at peak hours, congestion pricing reduces traffic and raises money that can be used to support public transit—both worthy goals.

Yet congestion pricing has dubious environmental value. Traffic jams, if they’re managed well, can actually be good for the environment. They maintain a level of frustration that turns drivers into subway riders or pedestrians.

He is saying that congestion pricing is a bad idea, because traffic encourages drivers to switch to transit or otherwise get off the roads. But this misses the point that congestion pricing works by ... encouraging drivers to switch to transit or otherwise get off the roads. And as a bonus, it creates revenue which can be used to build more transit alternatives for frustrated drivers.

Owen seems to be arguing that the primary effect of congestion pricing may be to spread driving out over a longer period of time rather rather than to encourage a shift away from driving. But of course, the primary effect of congestion might also be to spread driving out over a longer period of time rather than to encourage a shift away from driving, particularly in places that don’t have good transit systems (which makes the revenue question all the more salient).

The argument doesn't make sense, and it doesn't appear to be supported by actual experience with congestion pricing schemes, as Charles Komanoff points out here. In London, better driving conditions after the adoption of a congestion pricing regime encouraged some drivers to take additional trips, but that increase didn't come close to offsetting the drop in vehicle trips induced by the cordon charge.

As difficult as it may be for all involved to accept, congestion pricing manages to benefit transit riders and drivers. Commutes are faster and emissions are reduced. But the benefits don't stop there.

A new economics paper by Janet Currie and Reed Walker explores what happened to neighborhoods near congested highway toll plazas after those plazas were replaced by the E-ZPass electronic tolling system. Here's the abstract (paragraph breaks mine):

Yesterday, Freakonomics linked to a new piece of research [PDF] on congestion that I'd been musing over for a few days. Let me quote the abstract here (paragraph break and emphasis mine):

We investigate the relationship between interstate highways and highway vehicle kilometers traveled (vkt) in us cities. We find that vkt increases proportionately to highways and identify three important sources for this extra vkt: an increase in driving by current residents; an increase in transportation intensive production activity; and an inflow of new residents.

The provision of public transportation has no impact on vkt. We also estimate the aggregate city level demand for vkt and find it to be very elastic. We conclude that an increased provision of roads or public transit is unlikely to relieve congestion and that the current provision of roads exceeds the optimum given the absence of congestion pricing.

The first inclination of most urbanists, when confronted with something like this, is probably to bristle and conclude that the authors are nuts. Transit can't relieve congestion? What would happen to New York or Washington if transit systems were shut down for a day? There would be chaos!

Photo by derang0.

When a transit system is built, two things happen to area roadways. Some subset of drivers will find that commuting by transit is faster, or cheaper, or more convenient (or all three) than driving and will switch to transit. If that were where things ended, then transit construction would indeed reduce congestion.

But there is a knock-on effect. When drivers switch to transit, roads become less congested, and driving therefore becomes more attractive. Drivers who were previously commuting at off-peak times to avoid congestion will switch to peak times, and drivers who were otherwise adapting to congestion by working at home some days or taking longer, alternative routes will adjust their behavior as well.

The end result will be ... a return to road congestion. This may not happen immediately. When new capacity of any sort -- roads or rails -- is built, there may be a time period during which traffic flows more freely, but ultimately settlement and transportation patterns will adjust until roads are again congested.

This happens because roads are under-priced (and often free). If drivers don't have to pay to use scarce road space, and don't have to pay to cover the cost of congestion their driving imposes on others, then drivers will use the road until it is congested. Because the government isn't using price to ration demand (as is done with most consumer goods), demand will rise until the cost of lost time rations demand, and pushes drivers to take other routes or modes.

I don't think there's any point in denying this. Read more...

Early this week, I noticed a number of my favorite bloggers linking to this Elisabeth Rosenthal essay at Environment 360, on the mysterious greenness of European nations. The average American, as it happens, produces about twice as much carbon dioxide each year as your typical resident of Western Europe.

Rosenthal attributes much of this difference to behavioral factors relating, it seems, to Europeans' unique tolerance of inconvenience. She writes:

But even as an American, if you go live in a nice apartment in Rome, as I did a few years back, your carbon footprint effortlessly plummets. It’s not that the Italians care more about the environment; I’d say they don’t. But the normal Italian poshy apartment in Rome doesn’t have a clothes dryer or an air conditioner or microwave or limitless hot water. The heat doesn’t turn on each fall until you’ve spent a couple of chilly weeks living in sweaters. The fridge is tiny. The average car is small. The Fiat 500 gets twice as much gas mileage as any hybrid SUV. And it’s not considered suffering. It’s living the dolce vita.

She later adds:

Also, in Europe, the construction of most cities preceded the invention of cars. The centuries-old streets in London or Barcelona or Rome simply can’t accommodate much traffic — it’s really a pain, but you learn to live with it. In contrast, most American cities, think Atlanta and Dallas, were designed for people with wheels.

What makes this particularly remarkable is that she opens the essay by discussing an experience she has in Stockholm, in which she insists on taking a taxi from the airport, which ends up being much slower and more expensive than the train.

Brad Plumer frames the piece as a fascinating read in light of the "lifestyle taboo," writing:

It's not considered the height of political savvy here in the United States to point out that European lifestyles are greener than our own. Don't expect that line in an Obama speech anytime soon. Too many facets of European life—the cramped apartments, the clotheslines for drying laundry—would likely strike suburbanites as inconvenient, burdensome, or even downright primitive...

Rosenthal wonders whether similar measures could fly in the United States: "I believe most people are pretty adaptable and that some of the necessary shifts in lifestyle are about changing habits, not giving up comfort or convenience." Maybe so, but this sort of talk still tends to be taboo in mainstream U.S. green circles. Josh Patashnik wrote a terrific piece for TNR last year on Arnold Schwarzenegger's brand of "pain-free environmentalism" in California—it's all just peachy to talk about swapping out coal-fired plants for solar-thermal stations, but ixnay on trying to rein in suburban growth or coax people into smaller homes.

I see several problems with Rosenthal's essay and with Brad's framing of it. One is that it's not really correct to attribute the huge gap in per capita emissions between America and Western Europe to the charming European habit of drying their clothes on clotheslines.

As Brad notes, power sources play a major role, whether one is talking about greater use of natural gas, the French nuclear industry, or Iceland's geothermal capacity.

Climate is extremely important. Western Europe is fairly temperate relative to much of America (and especially compared to the dirtiest parts of the country). In the same way, Californians are much greener than Texans, thanks to the moderate conditions along the heavily populated Pacific coast, which reduce the number of days on which home heating or cooling is needed.

But there are lifestyle issues involved, particularly where transportation and land use are concerned. Read more...

On Monday, Elana Schor highlighted a recent column from occasionally right New York Times columnist Tom Friedman, who once again rolled out one of his favorite policy prescriptions -- an increased gas tax. Friedman wrote:

Tom Friedman (Photo: IvyGate)

According to the energy economist Phil Verleger, a $1 tax on gasoline and diesel fuel would raise about $140 billion a year. If I had that money, I’d devote 45 cents of each dollar to pay down the deficit and satisfy the debt hawks, 45 cents to pay for new health care and 10 cents to cushion the burden of such a tax on the poor and on those who need to drive long distances. 

The first and most obvious thing to point out is that it's far more likely that Tom Friedman's mustache will be elected president than it is that Congress will approve a five-fold increase in the federal gas tax, even one phased in over a decade or more.

There is a reason that gas taxes have not been increased in 15 years: expensive gasoline in America is incredibly politically unpopular, and not without reason. Increases in gasoline prices are painful for American households, precisely because the nation is so dependent on driving.

That's the tricky part. Prices need to be higher to reduce dependence on gasoline, but that very dependence makes price increases political suicide. What is needed is either an extremely gradual increase in gas taxes (on the order of the rate of inflation plus 1 percent per year), or increases in market prices (for which politicians will still be blamed), or an indirect levy of some kind that will act to reduce consumption.

A second point is that a $1 per gallon tax on gasoline and diesel fuel won't raise $140 billion a year for very long. Why? Because consumers respond to price shifts, and they respond a lot to large price shifts.

In 2007, the average, inflation-adjusted price of a barrel of oil was about $67 per barrel, and Americans consumed about 20.7 million barrels of oil per day. In 2008, the price of oil averaged about $91 per barrel (which translates into a gas price increase of about 60 cents per gallon), and consumption fell by more than 1 million barrels per day, to the lowest level since 1998.

The price goes up and consumption goes down, reducing the revenue one earns from the increase in price. What's more, the short-run demand response will often be mild relative to the long-run response.

Faced with an increase in the price of gas, households can't do all that much in the short term to respond. They may cut out unnecessary errands, or carpool, and if they live in an area with good transit access, they'll likely increase transit ridership.

But because of the household location decisions made in recent decades, most households will have few ways to reduce gasoline usage immediately. Consumption will fall, but not by much.

If months pass and the increase persists, then responses will grow more dramatic. Households will trade in gas-guzzlers for more efficient vehicles or buy bicycles. Consumption declines will increase.

And if increases are expected to be permanent, the long-run responses will be significant. Households may begin to choose home or job locations that minimize driving or that allow for use of transit, walking, or biking. Communities may begin designing themselves differently and increasing transit service.

And ultimately, consumption may fall to near zero.

That doesn't mean that driving will fall to zero. Read more...