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Reason Foundation

Forbes

What the Traffic Will Bear

Want the fast lane? Pay for it

Robert Poole
May 10, 2004

Driving on the nation's highways has nearly doubled over the past two decades, while road capacity has increased only 5%. No wonder we're stuck in traffic. Yet we can cut down on congestion by building more roads and imposing tolls. Sure, you're probably having a road-rage moment at the prospect of forking out billions in taxes and tolls. But this can work without broad taxes if we shift to a market-based toll system.

Two innovations point the way. The first is technology that permits fully automated toll collection at highway speeds. This is usually done via dashboard-mounted electronic toll tags read by an overhead gantry at 65 miles per hour. Your toll charge is deducted from a prepaid account. If you don't want an account, video equipment can read your license plate and send you a monthly bill.

That technology makes possible the other innovation: market pricing for roadways used to bring demand and supply into balance at rush hour. Nearly a decade of experience on two California express-lane projects, one in Orange County and the other in San Diego, has shown that we can prevent overload by finely tuned pricing, limiting traffic to what the roadway can bear.

Drivers in California can buy a 65mph trip in a limited access lane at rush hour, if they value it highly enough. At the busiest times the price can exceed $6 to go 10 miles. That may seem expensive, but saving 20 minutes can be worth it, even to people of modest means, like a working mother racing to pick up her child from day care before a late fee of $20 kicks in. By installing a toll tag on your dashboard, you get congestion insurance—the knowledge that on those days and at those times when you really need to get somewhere on time, you have an alternative to the gridlocked freeway.

Addressing congestion this way deals with both the demand for and the supply of roadway space. Charging a market price sends a signal to commuters that roadway space is a scarce and valuable commodity at rush hour. Faced with this information, some will pay the price and travel just as before, but others may decide to wait until later in the day when the price is lower (or zero) or take mass transit. That reduces rush-hour demand on roadway space.

The premium price chargeable at rush hour creates a revenue stream that can be used to issue bonds (as with conventional toll roads) that can pay for some or all of the cost of building the new high-price express lanes. This is exactly what happens in other networked utilities, like electricity or telecommunications, when demand runs ahead of supply. It only seems novel in this situation because government has run highways on a non-market basis for so long.

The logic of this approach implies that if we could, we should shift the entire highway system to market pricing, but that is not politically feasible. Drivers pay user taxes dedicated to transportation, so they staunchly oppose being asked to pay tolls in addition to gas taxes. But as the benefits of voluntary new congestion-relief lanes have been demonstrated in California, highway user groups have been warming up to the idea, supporting the recent congressional bills to add electronically tolled fast lanes to interstate highways.

Indeed, the good news is that the two California express-lane projects have sparked nationwide interest. Many cities, from Atlanta, Denver and Houston to Miami and Minneapolis, are converting or building roadways for use as market-priced express lanes, with electronic variable pricing. Generally, higher-occupancy vehicles (including transit buses) will continue to use the special lanes at no charge. Both houses of Congress have endorsed the idea of adding priced lanes for another six years to congested interstates as part of the reauthorization of the federal transportation program.

Over the next two decades we may see entire networks of value-priced express lanes added to congested urban expressways. And a portion of these lanes would be reserved for express bus service. Although we may not be able to build our way out of congestion, we can price our way out of it.

Robert W. Poole Jr. is director of transportation studies and founder of the Reason Foundation.


Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy


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