Research Suggests Significant Benefits, but Some Challenges, to Implementing Congestion Pricing

In theory, using congestion pricing has the potential to enhance economic  efficiency, as well as provide other benefits, such as providing market  signals that can guide capital investment decisions, and generating  revenue to help fund such investment directly from users of the system. In theory, these surcharges could help reduce congestion  and the demand for road space at peak periods by providing incentives for  travelers to share rides, use transit, and travel at less congested (generally  off-peak) times or on less congested routes. Fast and  Intertwined Regular (FAIR) lanes is a recent proposal that is another  variation of value pricing. Challenges to Implementing Congestion Pricing Include Legal Restrictions and Concerns about Fairness and Equity

One challenge in implementing congestion pricing for transportation  systems is that, at present, greater use of pricing is limited by statutory  restrictions. Another challenge involves effectively addressing concerns raised about  equity and fairness. Because of this issue, political opposition to using this  approach to address mobility challenges has been substantial. More generally, there is  often opposition to paying a charge to use something that was formerly  provided “free.”

	Existing Projects Show That Benefits Can Result, and Some Evidence Suggests That Implementation Challenges Can Be Mitigated

A number of existing congestion-pricing transportation projects, both here  and abroad, show that pricing can influence travelers’ behavior to the  point of reducing congestion and thus increasing economic efficiency. In addition,  congestion-pricing mechanisms, in general, have demonstrated that they  can generate revenue sufficient to fund their operation and, in some cases,  fund investment in transportation alternatives. In addition, some projects were able to  shift demand on congested infrastructure to less congested time periods. However, existing projects also contain a few examples of  situations in which the revenues generated from congestion pricing have  been used to benefit other transportation alternatives. That is, drivers at  peak periods may not have readily available alternatives to commute at  different times, use a different mode of transportation, or take another  route, and therefore have little choice but to use the bridge during the  peak period, or the price of the congestion toll was set too low to  influence the demand of those users. However, there is also some evidence that pricing can increase  congestion on alternative routes. Other pilot projects in Houston and San  Diego have also demonstrated public satisfaction. FAIR lanes, as previously discussed,  and which have been proposed in New York, would credit users of the  adjoining lanes, using revenues generated by the toll lanes, allowing those  users to use the toll lanes on another day for a reduced or no charge. Some proposed projects, such as FAIR  lanes, which use revenues generated to compensate other users of the  transportation system, could help alleviate some of the fairness and equity  concerns that have been raised. Experts suggest and some projects  demonstrate that public opposition to congestion pricing will lessen as  these projects show that equity and fairness concerns can be mitigated. However, if congestion pricing is to be more widely applied to  transportation systems, the Congress will need to ease statutory  restrictions on the use of congestion-pricing applications on  transportation systems.
Why GAO Did This Study

The nation's transportation systems have become increasingly congested, and pressure on them is expected to grow substantially in the future. Most transportation experts think a multifaceted approach is needed to address congestion and improve mobility. One potential tool is congestion pricing, that is, charging users a toll, fee, or surcharge for using transportation infrastructure during certain peak periods of travel. Pilot projects to test this approach are currently under way in the United States and the technique has been used more extensively abroad. Interest in the usefulness of congestion pricing has been growing, as evidenced by several recent proposals. However, there have also been concerns raised about the fairness of such practices to some users of transportation systems. GAO was asked to identify (1) the potential benefits that can be expected from pricing congested transportation systems, approaches to using congestion pricing in transportation systems, and the implementation challenges that such pricing policies pose, and (2) examples of projects in which pricing of congested transportation systems has been applied to date, and what these examples reveal about potential benefits or challenges to implementation. This statement is based on prior GAO reports and other publicly available reports.

What GAO Found

Congestion pricing can potentially reduce congestion by providing incentives for drivers to shift trips to off-peak periods, use less congested routes, or use alternative modes, thereby spreading out demand for available transportation infrastructure. Congestion pricing also has the potential to create other benefits, such as generating revenue to help fund transportation investment. Possible challenges to implementing congestion pricing include current statutory restrictions limiting the use of congestion pricing, and concerns about equity and fairness across income groups. In theory, equity and fairness concerns could be mitigated depending on how the revenues that are generated are used. Evidence from projects both here and abroad shows this approach can reduce congestion. Such projects have also shown they can generate sufficient revenue to fund operations--and sometimes fund other transportation investment as well. However, projects were not necessarily able to demonstrate benefits for the full range of transportation users. For example, those who were able to use the special freeway lane saw a decrease in travel time. But, in some cases, there was little systemwide reduction in travel times, and congestion increased on alternative routes. Nonetheless, there is some evidence that equity and fairness concerns can be mitigated. Some projects have shown substantial usage by low-income groups, and other projects have used revenues generated to subsidize low-cost transportation options. In addition, some recent proposals for refining congestion-pricing techniques have incorporated further strategies for overcoming equity concerns. For example, the Fast and Intertwined Regular (FAIR) lanes proposal in New York suggests crediting users of the non-tolled lanes to partially pay for them to use public transportation, or to use the express lanes on other days.