Why Congestion Pricing Is So Difficult: the Equity Problem of a Slam Dunk Urban Policy

a policy that simultaneously reduces congestion and raises revenues should be a slam dunk but it isn't why congestion pricing is so difficult to implement coming your way this is city nerd weekly content on cities and transportation viewers suggested topics always welcome down in the comments and congestion pricing is a topic that's been on my list since the beginning of the channel but i've kind of been procrastinating on it because it's such a complex topic and i just didn't really know where to start so what i'm going to do is what i always do which is kind of peel it apart and focus on the math there are all kinds of interesting aspects i'm not going to talk about today like what you spend the revenues on how public opinion tends to shift in favor once it gets implemented and all the different ways it can be implemented instead today i'm just going to focus on a single use case which i think is the best one which is congestion pricing as a way to address climate change by reducing vehicle miles traveled and congestion so i think most of my viewers will agree that reducing the amount of driving has climate benefits even if we're talking about electric cars the electricity that keeps the battery charged often comes from fossil fuel sources but everyone may not agree that reducing or eliminating congestion is a worthwhile policy goal i mean i've heard it said that congestion is itself a sign of a healthy and vibrant city but really congestion is a classic tragedy of the commons when everyone tries to drive at peak hour we're all trying to do what we believe is in our own self-interest but the result is more delay more frustration and really just abject chaos think of it this way what if you operated a golf course but instead of accepting reservations and scheduling groups of four to go off the first tee every 10 minutes you just made it a free-for-all and you had people show up whenever they felt like it and just flooded the course with golfers it would be complete anarchy nobody would ever operate a golf course this way but it's how we operate our transportation system there are more benefits to eliminating congestion than i'm gonna get into here but one i want everyone to think about is buses get stuck in the same congestion cars do i mean unless you build expensive contentious bus only lanes but with a good congestion pricing scheme would you even need bus only lanes just something to think about so there are all kinds of objections to congestion pricing you'll hear like it's just a new tax on something i've always gotten for free or i don't trust the public sector to manage anything like this in a competent way or even in a way that isn't corrupt i mean trust in bureaucracy has to be close to an all-time low and that's not even a left-right thing but on its technical merits pricing does seem to be a win-win it reduces congestion by right-sizing the amount of traffic relative to the roadway system you have and it generates revenue that you can use to improve other travel options so here's what i want to talk about today and it is what i think is the number one stumbling block for pricing and why it hasn't really been implemented in north america at all it's the criticism that congestion pricing is regressive that is it disproportionately impacts lower income people and benefits higher income people let's go back to a scenario i drew up for my video on how congestion is a non-linear phenomenon in the video i shared a hypothetical scenario of a left turn phase at a signal where signal cycle failure is occurring when the demand for the movement is 150 vehicles an hour but if the demand is scaled back to 120 vehicles an hour then there's no cycle failure all the vehicles are served during the cycles when they arrive so there's no additional delay if you haven't watched the video i do encourage you to check it out because it does really go to the heart of what makes congestion pricing work so let's extrapolate this to a system level but keep it simplified let's say that if a city's transportation system has 15 000 vehicles on it the network is congested and each vehicle averages 20 minutes of additional delay but if the system only has 12 000 vehicles on it we've eliminated signal cycle failure everywhere everything runs smoothly and there's no additional delay from congestion so here's where pricing comes in to get the system to run efficiently we want to remove one out of every five cars from the network and to do that we're gonna charge drivers eight dollars you can think of this as being a cordon scheme like london or stockholm or singapore but there are lots of ways to do this maybe for a future video so let's look at five representative vehicles on the network we'll talk about how 20 minutes of delay affects them and how they might respond to an eight dollar charge first we've got a delivery truck that carries a load of microprocessors from a chip manufacturing plant to the airport to put on a flight to taiwan every day the manufacturing plant's entire production chain depends on getting this multi-million dollar shipment to the airport every day and the cost of that additional 20 minutes every day is well in excess of say 10 000 so if you offer them those 20 minutes for eight dollars it's the deal of the century this is an extreme case but the general idea is going to be true for a lot of freight movement the benefit of the time they get back is going to far outweigh whatever the congestion charge is let's say our other four vehicles are people commuting to work for this we have to talk about value of time in this sort of analysis typically an individual's value of time is a function of whatever their imputed hourly wage is so without getting into a whole lot of detail let's say we have a doctor who values their time at a hundred fifty dollars an hour an accountant who values their time at forty five dollars an hour a teacher at thirty dollars an hour and a minimum wage service worker and let's say that's 15 an hour so a simple way to figure out how much that 20 minutes is worth to each person is to prorate the hourly number and compare that to the price being offered when you do this it's easy to see that everyone comes out ahead on this proposition some more than others but not our minimum wage worker in reality the calculation is a lot more complicated and it depends on the options you have available for replacing that car trip for example if our teacher has a transit trip available that's only five minutes longer than the car trip they might shift modes rather than pay the eight dollar charge if the minimum wage workers best replacement is a transit trip that's an hour longer they might just suck it up and pay the eight dollars it's kind of like i don't know baseball analytics it's all about value over replacement but regardless of how we do the calculation should be pretty clear that freight comes out light years ahead higher income people come out way ahead middle-income people mostly come out even or better but the people on the lower economic rungs come out worse so is congestion pricing regressive well yeah i think it's fair to say the costs and benefits of pricing are not distributed evenly and the largest benefits do accrue to people who are already well off financially welcome to capitalism so should we abandon congestion pricing because it's regressive well lots of things in life are regressive the fact that the price of a head of iceberg lettuce is the same for everyone is also regressive one way of tackling this is well we can administer a convoluted administratively burdensome suite of exemptions to make sure every industry or demographic that could possibly be harmed by pricing gets made whole it's a slippery slope though the whole point of a congestion pricing scheme is to broadcast a clear price signal when you drive at a certain time or in a certain geography so instead of setting up a bunch of exemptions my thing is just design a tax credit something that's applied progressively brand it as a green transportation dividend or something but just give money to the people who would otherwise come out worse and if they want to use it to pay for congestion charges they can do that and if they want to pocket it and use a different option like taking transit or riding their e-bike or whatever they can do that too anyway i have a lot of viewers in the new york area let me know what you think about the current plans for rolling this thing out i think it's targeted for late 2023 knock on wood i'm going to talk about some of the other ways we can view the value proposition of congestion pricing in a minute but first just a reminder to drop a like on the video subscribe if you're new check out the patreon if you're interested in supporting the channel more directly i did post bonus material for the patrons last week just something to think about sub count check the channel now has enough subscribers to fill kauffman stadium home of the kansas city royals look to me there aren't any bad baseball stadiums once you get inside the stadium but look at this thing it's like the very definition of a parking crater where did people go to pre-function or i don't know celebrate after a big win i mean i guess there's a denny's and a taco bell although honestly i don't know if i expected more from kansas city so i've showed you a very simplified way of applying the value of time to illustrate the equity problem that goes to the heart of why congestion pricing is so difficult as always when it comes to traffic though the way things play out in an actual city with an actual transportation network is much more complicated in the earlier example i focused on computers and like microprocessors but of course there are way more trip types than that in transportation modeling work trips and freight movement are big pieces of the overall traffic volume but you want to account for other trips households generate too so yeah maybe there's someone driving to work at an accounting firm but there's also someone driving to the grocery store there's someone driving to the gym there's someone driving their kids to school there's someone who's driving their pregnant spouse who just went into labor to the hospital and there's someone side hustling for like grubhub or ubereats who's driving to pick up a burger and fries from a restaurant and then delivering it to someone who lives like a quarter of a mile away i assume you're gonna have higher willingness to pay for some of those trips than others but can someone even explain the doordash business model to me they're literally using up capacity on our unpriced transportation system to deliver food that you could probably just walk to also fries just aren't really very good more than like 10 minutes after they come out of the fryer like if you've ever worked in a restaurant you know how hard the kitchen works to get plates out and how annoyed the cooks get if a plate sits in the window for more than like 60 seconds i just don't get it anyway here's the punch line in this hypothetical all these trips are generated by the same household but the household is going to value them all differently getting someone to the hospital is pretty high value and delivering soggy fries is maybe not i talked in my cost of driving video about how a lot of the marginal costs of driving are intentionally obscured in fact all the trips i just talked about could be perceived as essentially free if the trips don't involve a stop at the gas station well a congestion charge is an opportunity to have a strong price signal for every trip so everyone can make a rational decision on whether a trip even makes sense to make by car and really revisit how they think about accomplishing daily activities and yeah it is fair to say congestion pricing is intrinsically regressive but the solutions to that really aren't that difficult especially compared to the problems that arise from a default unpriced transportation system okay that's all i've got thanks for joining today and thanks to all the folks who are supporting the channel on patreon keep the great topic suggestions coming we'll be back with a new episode next week and i'll see you then

Channel: CityNerd

Views: 57,930

Keywords: urbanism, urbanist, urban, tolling, pricing, congestion pricing, congestion pricing london, congestion pricing singapore, congestion pricing nyc, congestion pricing stockholm, congestion tax, stockholm congestion tax, traffic congestion problems and solutions, traffic congestion, traffic congestion explained

Id: 26pl4ce9vTA

Length: 12min 53sec (773 seconds)

Published: Wed May 25 2022