June 2, 2009
Policymakers need to address equity concerns early when implementing congestion pricing to improve traffic flow, as each situation is unique and must be evaluated on a case-by-case basis, according to a study issued today by the RAND Corporation.
Transportation policymakers often look to congestion pricing — charging drivers more to travel particular routes at peak travel times — as a way to reduce traffic gridlock and raise money for transportation projects. However, because these policies impose a cost on something that previously was not priced, critics often suggest that it will harm lower-income drivers who will be forced to pay additional costs or be "priced off" the roads.
"There is no single answer to the question of whether congestion pricing is equitable," said Thomas Light, co-author of the study and an associate economist with RAND, a nonprofit research organization. "The answer depends on how equity is defined and measured. It also depends on how congestion pricing is implemented and the characteristics of the region where it is put into practice."
The study was supported by a grant from the Environmental Defense Fund, a national environmental group.
"The research shows that equity issues can and must be addressed early on when designing a congestion pricing project," said Kathryn Phillips, who directs transportation advocacy in California for the Environmental Defense Fund. "A well-designed congestion pricing project can deliver clean air and less gridlock to everyone."
The RAND study evaluated alternative ways of defining and measuring equity and how such approaches interact with alternative forms of pricing, as well as the context in which congestion pricing is imposed. Light and study co-author Liisa Ecola reviewed dozens of studies and found that often congestion pricing results in most lower-income people paying less in taxes to fund transportation, although some proportion of the group may pay more.
For example, one analysis found that if a road construction bond was paid off with toll revenues rather than sales taxes, people in the lowest-income group would pay less overall, while some in the group (those who frequently used the road) would pay more.
Light and Ecola say congestion pricing can be either regressive or progressive. But if regions use revenues in ways that benefit low-income individuals, congestion pricing is more likely to be progressive. If the toll revenues are used in other ways, then it can be regressive or progressive depending on local conditions and the specific details of the congestion pricing policy.
Even if low-income groups and others who are transportation disadvantaged benefit as a whole from congestion pricing, there will always be some individuals who will be made worse off. However, many of these people also are disadvantaged by the status quo, Light said, because they are hampered by both the existing traffic congestion and the taxes collected to fund transportation.
Policymakers should consider the distribution of residents, job opportunities, schools, places of worship and other destinations when considering congestion pricing. Cordon pricing, where drivers pay a fee to enter a particular area, can be progressive, regressive or neutral, depending where low-income drivers live, according to the RAND study.
High-occupancy toll (HOT) lanes, the most common form of congestion pricing in the United States, tend to raise fewer equity concerns since drivers have a choice of either using a set of toll lanes or using parallel free lanes. Although drivers with higher incomes tend to use the tolled lanes more, studies have not shown that lower-income drivers are left worse off, in part because they may benefit from improved traffic flow in the free lanes.
Researchers found little or no literature on environmental justice impacts, long-term land use impacts, equity issues of building new roads with congestion pricing revenue, or how adding congestion pricing to existing transportation finance mechanisms would change the equity implications overall.
The study recommends that transportation planners should consider measuring and assessing equity concerns early in the planning process when considering congestion pricing. Once a plan is developed, the RAND study recommends the approach be tested through modeling. Programs that have been implemented should be periodically monitored to make sure they remain equitable over time as populations and travel patterns shift.
The study, "Equity and Congestion Pricing: A Review of the Evidence," is available at www.rand.org.
The Environmental Defense Fund (EDF) is a leading national nonprofit organization representing more than 500,000 members. Since 1967, EDF has linked science, economics and law to create innovative, equitable and cost-effective solutions to society's most urgent environmental problems.
The study was conducted by the Transportation, Space, and Technology program within RAND Infrastructure, Safety and Environment. The mission of ISE is to improve the development, operation, use and protection of society's essential physical assets and natural resources and to enhance the related social assets of safety and security of individuals in transit and in their workplaces and communities.