What Good is Congestion Pricing?

Alice Rivlin and Benjamin Orr are recommending the nation move to a system in which vehicle miles traveled are tolled, with a toll that varies by congestion level. They suggest it be tested in a major metropolitan area first — Washington. What would this look like?

The system might work like this: Vehicles would be fitted with a GPS device to record distance traveled, time and location of travel, and type of vehicle. This data would be sorted into various toll categories, and the device would wirelessly upload the totals to the gas pump when the motorist refueled. The pump would significantly discount the gas tax and add the appropriate road-use fees to the fuel bill. To further protect privacy, only category totals would be communicated to the governing agency via the pump. Tourists and others lacking the transponder would pay the full gas tax. Travel outside the area would not be recorded.

Resources for the Future calculated that the charges under a similar policy for the Washington area would average 9.3 cents per mile. They estimated an 11 percent reduction in VMT, 19 percent less emissions of volatile organic compounds and 17 percent less carbon monoxide. The estimated social welfare benefits (reduced congestion, pollution, accidents, etc.) of this reduction in driving were estimated at the equivalent of $1.1 billion — even before the revenues were disbursed.

There are some Congresspersons out there who seem to like the idea of a VMT tax, so maybe this has a greater than zero chance of being adopted.


2 Responses to “What Good is Congestion Pricing?”

  1. low-tech cyclist Says:

    Like in the carbon tax v. cap-and-trade debate, I’m loathe to attempt changes that don’t look remotely politically feasible. And congestion pricing is going to be perceived as sufficiently new, strange, and radical that I don’t see how it gets off the ground.

    A simpler way of charging for driving in urban areas is to charge somewhat close to what the market will bear for street parking. People don’t think parking meters are new and strange, after all. And more advanced parking systems can charge differentially based on time of day.

    We could also levy taxes on private parking lots and garages.

    Maybe this wouldn’t raise nearly as much money as congestion pricing, but it would be better off to start off with what people know, than jump into something that they don’t.

  2. Ben Ross Says:

    Another way of putting the previous comment. We already have a congestion tax, it’s just that it’s negative. It comes in the form of parking subsidies (mostly via zoning rules - not just minimum parking requirements, but also rules under which square footage devoted to parking are not deducted from the amount of building allowed on a lot). Just getting this congestion tax to zero would be a very big increase.

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