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Once the problem of congestion is seen in an economic light-at the times and places of greatest demand, roadway space is underpriced-the sensible solution, no matter how difficult to make popular, is obvious: put a price on peak-hour use of this scarce resource. With nearly every other resource we have found pricing to be an admirable way of smoothly parceling out goods and services among competing users. But with few exceptions decisionmakers remain oblivious to the merits of pricing as a way of reducing congestion.
And it’s not as though no one has been trying to point them in that direction. The pricing approach has been recommended by economists for more than 20 years. William Vickrey of Columbia University, in a 1963 article in the American Economic Review, argued that “in no other major area are pricing practices so irrational, so out of date, and so conducive to waste as in urban transportation.’’ Vickrey noted that private firms commonly charge different amounts for peak and off-peak services (examples: resort hotels, theaters, airlines), and that this principle could be applied to road- ways.
If potential drivers faced not just their own time-costs but prices reflecting the actual costs of their decisions, they would have an informed basis for deciding whether the benefits of a given trip warranted using a central expressway at rush hour. Some automobile trips would be rescheduled, others rerouted, and some forgone altogether as car users found that alternative transit modes were a better buy. And with concrete knowledge of the benefits of various services-evidenced, as in any other market, by what people are willing to pay for alternatives-decisionmakers could establish rational spending priorities for maintenance and new construction and, assuming mass transit were priced-in line with its costs, could guide future investments in alternative transit modes.
Since Vickrey took up the subject, roadway pricing has drawn keen interest from economists at Harvard, Chicago, UCLA, Stanford, and other academic centers. Writers in professional and scholarly publications like the Journal of Transport Economics and Policy have been debating the best means of implementing pricing for several years, having long since agreed on the necessity of such an approach. The Washington, D.C.-based Urban Institute has published nearly a score of studies, dating back to 1973, taking up various aspects of pricing as a solution to congestion.
Yet the steadily mounting theoretical support for roadway pricing has led to no significant applications in this country. This seems especially curious in view of the eagerness with which authorities have pumped billions of tax dollars into poorly conceived boondoggles like BART, which rested on little or no theoretical foundation.
In the few cases where pricing proposals have been put to transit bureaucracies, they have managed to squelch them through Catch-22 reasoning: congestion pricing is only an idle theory, they say, because it has never been applied; and it can never be applied, because it is only an idle theory. This argument not only relies on faulty logic; it conveniently ignores a conclusive demonstration of the utility of pricing in a city half-way around the globe.
Roadway pricing during the morning rush hour has been in effect in Singapore since 1975. A bustling metropolis of 2.2 million people and a quarter of a million cars, Singapore was plagued by chronic congestion in its downtown area when officials there decided to try a pricing system seven years ago. Access to the central city between 7:30 and 10:15 A.M was restricted to vehicles displaying special stickers, priced at about $1.67per day. The response was swift and dramatic. A study conducted by the World Bank reveals that the number of autos using the congested zone at rush hour dropped by 65 percent, reducing overall traffic by 40 percent.
What about the people for whom it was not worth $1.67 to drive in that time and place? Many rescheduled their trips, spreading roadway demand over a wider time span. Cars carrying at least four people were exempt from the charge, and the number of such car pools doubled after congestion pricing went into effect. Others formed smaller car pools to spread the cost of the fee over several riders. The city also encouraged commuters to switch to bus service by setting up park-and-ride shuttle services at various outlying posts.
The results in Singapore surpassed even the most optimistic predictions. But could rush-hour pricing work in America to relieve congestion on urban expressways? Skeptics reply that this isn’t Singapore; Americans love their cars, and a pay-as-you-drive plan wouldn’t achieve anything but political unpopularity here.
Back in 1973 the experts said that the American people wouldn’t respond to rising gasoline prices, either. Only government rationing would get them to cut back on the use of this increasingly scarce resource. But an “amazing” thing happened on the way to the gas pumps:
between 1973 and 1978, the annual increase in gas consumption slowed from 5 percent to 3 percent, and by 1979 consumption was actually falling, a trend that continues today. These figures, it has been found, represent not only a switch to more fuel-efficient cars but
fewer and shorter automobile trips. “The experts” have had to eat humble pie.
Another criticism has been that the technology applied in Singapore-daily or monthly stickers-is too primitive for the United States. Congestion costs in American cities change rapidly with respect to time and place, and the pricing mechanism should be flexible enough to match these changes. Ideally, roadway prices should be continuously variable, so that a vehicle entering a roadway segment would be charged according to how crowded the road is. At a minimum, prices should vary with the congestion that is characteristic of particular roads or road segments and times. Because Singapore did not use such a flexible system, it is sometimes assumed that none exists.
In fact, the literature on roadway pricing is replete with more sophisticated methods of chargi.ig users. Coming up with a workable scheme is probably the least significant obstacle to road pricing. Even a licensing scheme can be made more sophisticated than Singapore’s. In any such arrangement, drivers must purchase in advance and display a sticker in order to travel in congested priced zones. With variations in the color, number and letter codes, and shape, such stickers could allow differential pricing for various typical levels of congestion associated with different zones and times of day.