What is congestion pricing?

Congestion is killing us, but there’s a solution. As far back as 2005, traffic congestion resulted in 2.9 billion gallons of wasted fuel and 4.2 billion hours of lost time stuck in traffic, monetized that year at $78 billion, according a report from the Federal Highway Administration (FHWA).

While traffic levels decreased during the pandemic, reports show the numbers are rising back up.

Congestion pricing may be the key to managing this problem, decreasing traffic jams, quickening travel time, and improving the environment. It’s an idea economists love and that could unite the political left and right—or split traditional political alliances. In the Washington region, thinking about congestion pricing is in the early stages, but might be the next big transportation push.

What is congestion pricing, anyway?

Congestion pricing uses market principles often applied by utilities to charge consumers for something that’s long been given away free—road space. When demand is low, charges are low or nonexistent. As with any scarce resource, though, when demand is high, charges go up. In fact, we already pay for scarce road space, but in time rather than money. Sitting in traffic might seem to be an individual burden, but congestion imposes an extra toll on all of us who have to breathe unhealthy air, and on the climate.

To counter this, the FHWA report argues that “demand-management pricing, which we freely use and apply to every other utility, is needed for transportation.” The alternative method of adding new lanes costs some $10 to 15 million per lane mile in urban areas and only “encourages more drivers to use the expanded highway.” Pricing existing capacity, on the other hand, actually leads to freer flow of traffic.

Yet, some argue that congestion charging can be a regressive instrument that charges those who can’t afford it as much as everyone else. Two ways to counteract this are investing money collected back into public transit and walkability—which also helps the environment—and discounts to low-income people, as discussed by the FHWA report and other sources.

How might congestion pricing work?

The FHWA outlines four versions of congestion pricing. Right now, the most hotly discussed is a cordon, a charge for entering the central city at peak times. Such a scheme has been successfully implemented in Singapore, Stockholm, Milan, Gothenburg, and London. New York City is on the verge of implementing a cordon charge and Washington, DC is studying it. (Disclosure: In 2019, the DC Council awarded funding to DC Sustainable Transportation, an organization that Greater Greater Washington manages, to administer the study. In keeping with our editorial policy, those staff members did not review this story in advance.)

A different congestion pricing scheme is already at work on the Beltway, variably priced lanes. The Virginia HOT lanes charge solo drivers depending on traffic demand and have spurred sharp political debate. Express tolls are another form of variably priced lane, one that does not give free service to high occupancy vehicles.

Variable tolls are an additional type of congestion pricing, one that changes flat rates on existing tolls for roads and bridges, increasing them during peak hours. According to the FHWA, a related method being tested in Oregon, is area-wide per-mile charges on all roadways that would replace or supplement the gas tax, and would include higher charges in congested areas at peak times.

New technology makes implementing any of these schemes easier. When Singapore introduced cordon-based congestion charges in 1975, it simply collected fees along the way, but in 1998 the system became fully automated. Since then, new technology, such as special tags read by overhead antennas or smart-phone charges, and cameras scanning license plates, make it increasingly easy to implement complex and variable charges.

Implementing the difficult

Congestion charges are controversial partly because they are new and different, partly because they charge for a resource long allocated and perceived by many as “free,” and partly because they can be seen as money-making schemes. It thus takes the right combination of circumstances and leadership to pass and implement a congestion pricing plan. The New York City plan, for instance, “is specifically and intentionally intended to address the crisis of the city’s deteriorating subway system,” says a report from the Eno Center for Transportation.

Prior to being introduced, congestion charging is often at its most unpopular. Yet once it gets going—with the cordon version, at least—perceptions flip rapidly and congestion charging gains enormous public support.

In 2003, London’s introduction of congestion pricing received international attention. Because congestion had become simply unbearable, London’s mayor, Ken Livingston, a member of the Labour Party, endorsed a scheme with “roots in the work of conservative economists like Milton Friedman and the Thatcherite right,” explains Gabrielle Gurley in the American Prospect. Despite initial opposition, at the end of the first year “about 40 percent of London residents supported the program while 31 percent opposed it,” largely because congestion had shrunk by 30%. Furthermore, according to the FHWA, “Bus delays in central London dropped by 50 percent after the pricing scheme was introduced.”

However, the most equitable version of congestion pricing—discounts for low-income individuals—might face political opposition, making it even harder for an initially unpopular scheme to pass. The wealthy “have immense political power to resist,” congestion charging, “and well-off suburbs are centers of political opposition,” says Gurley.

Given political headwinds, perhaps the best way to introduce congestion pricing is with a pilot project that allows road users to experience their actual impact. This was the case in Stockholm, where “a seven-month pilot installation spurred a dramatic increase in public support,” according to the Eno Center report.

Given initial resistance, it takes a combination of strong leadership and dire circumstances to implement cordon charging, but, if done with an eye on equity and the environment, the results can be well worth it. Congestion pricing can become a part of daily life that’s even harder to reverse than it was to implement.

This article is part of a limited series exploring congestion pricing, made possible with funding from Bloomberg Philanthropies and the American Cities Climate Challenge. Greater Greater Washington’s editorial department maintains editorial control and independence in accordance with our editorial policy. As such, editorial copy is not shared with grantors in advance, and they have no oversight over content. Our journalists follow the ethics guidelines of the Society of Professional Journalists.