vvEPA
United States .
Environmental Protection
Agency
Air and Radiation
EPA420-S-98-OO4
July 1998
Office of Mobile Sources
TRAQ Technical Overview
Transportation Air Quality Center
Transportation Control Measures:
Congestion Pricing
EPA's main strategy for addressing the contributions of motor vehicles
to our air quality problems has been to cut the tailpipe emissions for
every mile a vehicle travels. Air quality can also be improved by
changing the way motor vehicles are used—reducing total vehicle miles
traveled at the critical times and places, and reducing the use of highly
polluting operating modes. These alternative approaches, usually
termed Transportation Control Measures (TCMs), have an important
role as both mandatory and optional elements of state plans for
attaining the air quality goals specified in the Clean Air Act. TCMs
encompass a wide variety of goals and methods, from incentives for
increasing vehicle occupancy to shifts in the timing of commuting trips.
This document is one of a series that provides overviews of individual
TCM types, discussing their advantages, disadvantages, and the issues
involved in their implementation.
> Printed on Recycled Paper
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Congestion pricing is a relatively new transportation
control measure (TCM) that is often referred to as "value
pricing." This TCM, which is still in the pilot program
stage of development in the United States operates in one of
two ways. It either provides a disincentive to driving on
highly-used roadways by imposing fees, in congested areas that
vary depending on location, time or vehicle occupancy, or it
offers a priced alternative to a congestion roadway that enables
the motorist to reach his or her destination more quickly.
These fees are intended to reduce congestion and improve air
quality by encouraging people to change their travel patterns by
shifting to off-peak periods, less congested travel routes, higher
_ occupancy vehicles, or a different mpde of transport (e.g.,_
"""' 'public transit^.ffherf are se%rSPcol^tion pricing meaWres
which may be implemented such as variable tolls, high occupancy y^hM^HOV) lane permits,
vehicle miles traveled (VMT) fees, and parking fees. ..^. - - ' '
Contents
O Background
© Costs and Benefits
® Implementation
O Keys to Success
€> Equity Issues
© Recent Examples
9 Sources
0 On-line Resources
1. Background '
Depending on their scope, these
policies may be used in three ways:
facility pricing, regional network
pricing, or cordon pricing, as described
below.
location, time, or vehicle
A. .,. ^JuS^V^ik. *i . *
Facility pricing is a mechanism in which the pricing measure is levied on one or
several roadways that link residential areas to downtown commercial districts.
Fees may be imposed on new or existing roads, but usually it is more politically
acceptable to impose fees on new facilities because people would not view the
policy as taking away a free service. In order for a pricing measure to be
considered an application of facility pricing, the purpose of the measure must be to
reduce congestion. Therefore, many existing toll roads are not appropriate
examples because their purpose is largely to raise revenue. Toll roads may be
viewed as congestion pricing mechanisms if the fees are structured in such a
manner as to influence demand. For example, charging higher fees during peak
hours encourages people to rideshare or switch modes of transportation.
Regional network pricing refers to policies in which people are charged to travel
on a network of similar roads (e.g., highways). Unlike facility pricing, network
pricing applies fees on multiple roads going in many directions. This fee structure
results in a more accurate fee for vehicle use than facility pricing because more of
the trip is included within the boundary of the system. Fees may be collected from
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Congestion Pricing
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a series of toll booths along the network or from entrance and exit ramps on
controlled access facilities.
Although cordon pricing lias been
successfully implemented in such countries as
Singapore, Norway, and England, it has yet to
be implemented in the United States.
Cordon pricing is a
mechanism which
charges vehicles that
enter high-activity
areas such as central
business districts.
Vehicles may enter an
area via different types
of roads. This policy is implemented by identifying congested areas and ;
encircling them with one or more cordons (lines). Then, fees are collected from
people who drive into the encircled region via toll booths, special area permits, or
parking permits. Prices may vary by time of day, so that during typical peak
congestion periods, people will be reluctant to enter the cordoned areas. Although
this pricing measure has been successfully implemented in such countries as
Singapore, Norway, and England, it has yet to be implemented in the United
States. [1]
2. Costs and Benefits
The goal of congestion
pricing policies is to mitigate
congestion and improve air quality.
Because congestion pricing policies
are only in the pilot program stage
of development in the United
States, there is little empirical
evidence on the extent to which VMT and emissions are reduced. Theoretically, however,
emissions will be reduced considerably because VMT and idling will decrease. The imposed fees
will result in people switching from driving single occupancy vehicles (SOVs) to higher
occupancy vehicles or mass transit. There will be fewer total VMT, which directly eliminates
emissions of harmful pollutants!. Fewer VMT during peak periods reduces congestion, which
results in less idling. Idling is known to contribute significantly to carbon dioxide emissions,
smog, and global warming. One study showed that congestion caused an extra 30 million tons of
carbon dioxide to be released into the air in the United States in a recent year. [1]
Besides improving air quality and reducing congestion, other environmental and financial
benefits may result from congestion pricing policies. The environmental benefits are reduced oil
and fuel consumption. According to one study, vehicles idling in heavy traffic waste three
billion gallons of gasoline a year, which is 3 percent of total national gasoline consumption. [1]
The potential financial benefits of congestion pricing include time, money, and vehicle operation
and maintenance costs that will all be saved by each person who takes advantage of mass transit
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Congestion Pricing
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or HOV lanes. Additionally, as more people switch to mass transit, more revenue will be
generated that may be used for transportation improvements. Although implementing congestion
pricing policies is not typically as expensive as other transportation control measures such as
building rail lines, there are important cost considerations. Financial and human resources must
be committed to planning, implementing tolls and HOV fees, and raising public awareness.
Costs depend heavily on how extensive the program is. Facility pricing programs generally cost
significantly less than regional network pricing and cordon pricing because, typically, only one
roadway is affected. If congestion pricing policies successfully encourage people to switch to
mass transit, the generated revenue may make these programs highly cost-effective.
3. Implementation
Among the congestion pricing measures, single facility projects are generally the easiest
type of policy to enact. Some of the reasons that single facility projects are easy to implement
include:
** They are simplest in design and require the least up-front investment of
government resources.
^ They can be easily monitored and evaluated, especially if the facility has few
entrances, exits, and alternate routes.
*»> They are relatively more politically acceptable becaus^fiiey focus on only one
route. Under single facility programs, there may be alternative free routes people
can choose, whereas regional network pricing projects may result" in people being
charged no matter which route*raly use.
Single facility projects are best suited for a corridor connecting residential neighborhoods
with downtown areas. There are, however, at least two disadvantages to this option. Total VMT
may actually increase as a consequence of imposing fees on the most direct route that people
travel. Another potential disadvantage is that people may avoid the fees by continuing to drive
on alternate routes, thereby shifting congestion to these non-priced alternative facilities.
Cordon pricing systems are most effective in business districts or other concentrated
congested areas. Although inner-city congestion may be relieved, this congestion pricing policy
may not reduce traffic on the region's freeway system leading into the city. Another limitation of
the cordon pricing system is that once vehicles pay the fee for entering the area, there is no price
difference for people who drive for a longer period of time than others. Cordon pricing may also
result in the unintended consequence of congestion "spilling over" into streets adjacent to the
cordoned area. Similar to single facility projects, congestion may simply shift from some
roadways to others.
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Congestion Pricing ; .- Page 4
4. Keys to Success
If people are offered, flexibility iii choosing one
mode of transit oVer another, regional network
congestion and improving air quality because it is
Although regional network
pricing is more comprehensive than
facility pricing, it has a greater
potential to eliminate many free
alternative routes. If a viable public
transit system is unavailable, then
regional network pricing would
likely be an unpopular policy. If, however, people are offered flexibility in choosing one mode
of transit over another, this policy may be the most effective in reducing congestion and
improving air quality because it is comprehensive hi scope. Regional networking may supply the
greatest impetus for people to ride in carpools, use public transit, or adjust their travel time in the
face of high tolls. One potential obstacle to implementing this congestion pricing strategy is that
coordination may be needed among county transportation officials if the network of roads
encompasses several jurisdictions.
All three congestion pricing strategies are relatively risky to implement because:
*»• People will be confronted with paying for a service they were accustomed to
receiving free of charge.
**• Convincing legislators and the public that fees are needed to relieve congestion
and improve air quality may be a difficult task, especially if people are willing to
endure congestion rather than pay more money to ameliorate it.
**• Currently, it is not possible to project with great certainty the amount of emissions
reductions that would result from these congestion pricing measures.
The few congestion pricing programs operating hi the U.S. are still in the demonstration
stage, and the evaluation methodologies required to determine emissions reductions from these
measures are still being developed. Implementing these policies is risky because of the
uncertainty of the price elasticity of automobile travel. Although there is not much practical
experience in the U.S., there is evidence that commuter travel demand is relatively inelastic,
meaning that price changes may not induce people to substitute mass transit for driving.
Instituting congestion pricing policies may be more politically appealing if the revenue
generated is used in a manner which directly serves the public's interest. States and
municipalities can use the revenue to offset implementation costs, pacify certain constituents, or
improve transportation infrastructure.
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Congestion Pricing
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5. Equity Issues
Implementing congestion pricing policies may have significant effects on various sectors
of the population. People with low-to-moderate incomes tend to have fixed work schedules and
child care demands that inhibit their ability to change their travel times and therefore avoid new
fees. This income group may benefit in the long run, however, if revenue generated from the
congestion pricing measure is used to construct or improve already existing mass transit systems.
Members of higher income groups may also benefit from congeWibn relief because they tend to
value time savings more than travel cost savings.
Cordon pricing policies may result in an inequitable situation for downtown business if
people choose to avoid fees and shop in the suburbs. Commercial delivery businesses and
companies in the transportation industry that need access to downtown areas may also be
negatively affected.
6. Summary of Recent Examples
Because all congestion pricing
programs in the U.S. are part of a pilot
program initiated by the Federal
government, the effects of the policies
have not been thoroughly evaluated yet.
There is evidence, however, that these
strategies reduce congestion and thereby
improve air quality. [1] The first congestion pricing project in the Unites States was
implemented on California State Route-91 and serves as an example of a single facility project.
The project covers a 10-mile stretch of road that links Riverside County suburbs to business
centers in downtown Los Angeles. The facility was built as a two-way, four-lane HOV road in
the median of an existing freeway. This congestion pricing measure encourages ridesharing by
charging SOVs and HOV-2s up to $2.50 to access the lanes (price varies by congestion
conditions), but allowing HOV-3+ to ride free. After 10 months of operation, 70,000 people
have accounts with the California Private Transportation Corporation (CPTC), the private
company that planned, constructed, and runs the program. Although it is too early to evaluate air
quality improvements, CPTC claims that congestion has been mitigated in the corridor as
evidenced by data that indicate 20 to 25 percent of daily trips on the new part of the freeway are
HOV-3+. ' '
Another example of a congestion pricing project allows single occupancy drivers to buy
access to existing HOV 3+ lanes on an 8.5 mile stretch of California 1-15 located in Northern San
Diego. In the late 1980s, two reversible HOV lanes were built in the median of the freeway, but
an insignificant number of commuters substituted ridesharing for driving in SOVs. In an effort
to increase use on these lanes, SOVs and HOV-2s may now pay $50 per month to access the
lanes. During the second year of operation, the system will be automated so that charges will be
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Congestion Pricing •- - •/ - Pace 6
assessed on a per-trip basis. Because motorists may pay to use faster lanes during rush hours,
this project is considered congestion pricing, but this measure provides less incentive to
rideshare. The San Diego project will benefit all motorists who currently drive in the congested
lanes, because these users will experience time savings on their commute as people "buy-in" to
the nearby lanes. It is estimated that the average driver on the facility will save 10 to 20 minutes
per trip, but overall reductions in VMT and emissions are not likely to be noticeable because
there is little incentive to switch to mass transit.
One of the more successful cordon pricing systems was implemented in Singapore. The
Singapore Area Licensing Scheme was implemented in 1975 to reduce congestion in the central
area during the morning peak period. In 1989, the system was expanded to include the afternoon
peak as well. Twenty-two entry stations are located around the central area of the city where
windshield inspections verify that a vehicle has the required permit. After introduction of the
program, peak vehicle traffic in the central area decreased from 56 percent to 23 percent of all
work trips. In subsequent years, vehicle traffte^was consistently 23 percent lower than pre-
pricing levels. [1] ...
7. Sources
[1] Congestion Pricing: A Transportation Demand Management Strategy, Washington State
Transportation Commission, Olympia, Washington (March 1994).
8. On-line Resources
The Environmental Protection Agency's (EPA) Office of Mobile Sources has established
the TCM Program Information Directory to provide commuters, the transportation industry, state
and local governments, and the public with information about TCM programs that are now
operating across the country. This document and additional information on other TCMs and
TCM programs implemented nationwide can be found at:
http://www .epa.gov/omswww/transp/traqtcms.htm
The EPA's Market Incentives Resource Center (MIRC) Directory of Air Quality
Economic Incentive Programs is an on-line resource which features a compilation of market
incentive program (e.g., transportation pricing, vehicle buy-back, trading programs, etc.)
summaries from around the United States. The MIRC Directory is posted as a link from the
Office of Mobile Sources' home page at:
http://www.epa.gov/OMSWWW/transp/traqmkti.htm
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