Traffic heading north on York St. in Toronto on Sept. 19, 2022.Fred Lum/The Globe and Mail
Two events this week, in big cities 90 minutes’ flight apart, offer a vivid, depressing contrast.
Scene one: New York City received approval from the Biden government to launch the country’s first-ever congestion pricing scheme. Highway tolls are common in the U.S., but this is something else: starting next year, drivers will face a stiff fee to enter Manhattan, for the express purpose of thinning the city’s famously dense traffic.
New York is only following in the footsteps of other great cities around the world. Singapore, Stockholm and London have all had road pricing schemes in place for years. Why? Because they work: traffic levels on average declined 10 to 30 per cent after implementation; traffic speeds increased by a similar amount.
Scene two: Toronto held an election for mayor. The city has some of the worst traffic in North America, at enormous cost to the local economy – whether in delayed deliveries, missed appointments, or just time wasted in traffic that could have been used more productively.
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Yet the “solutions” proposed by the candidates were invariably the same old non-solutions that have never worked. These range from the favoured remedies of the right (more roads! fewer bike lanes!) to the favoured remedies of the left (more transit! more bike lanes!) to a variety of wonky, techno-managerial solutions (synchronized traffic lights! artificial intelligence! or my favourite: appoint a traffic czar!).
What is common to each of these approaches is that they try to fix the problem – sluggish traffic flows – in the most direct and obvious way: by making the traffic move faster. More roads, plus fewer cars on them, equals faster flows, right? Wrong.
The problem is known as “induced demand.” Make the existing volume of cars go faster, by whatever means, and people’s first response is to drive more. Why? It may seem as if you don’t pay to use the roads at present, but in fact you do. Only the price is expressed not in dollars and cents, but in time: the time spent stuck in traffic.
Reduce the time-price of using the roads, then, and you simply increase the demand. Build more roads, and the roads quickly fill up as before. Build more transit – get people out of their cars! – and you’re inviting the remaining drivers to drive more.
Rationing road use by time is a pretty dumb approach when you think about it. Essentially it hands the roads over to the people who least need them: the ones who value their time so cheaply that they don’t mind sitting in traffic for hours and hours. The problem is that the people who place a higher value on their time – couriers, ambulance drivers, parents schlepping their kids to daycare – are stuck in the same traffic with, or rather behind, them.
Enter road pricing. The money-price may be higher, but the time-price is much lower. The roads return more value to society – because more people can actually use them, and because more of those are the people who value them most.
We understand this intuitively in most other situations. We use prices, rather than breadlines, to ration food; prices, rather than blackouts, to ration electricity. Indeed, we already charge people to park on the roads. But whether a car is moving or stationary, it’s still taking up the same amount of road space. So why price one and not the other?
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Historically, the answer was simple: because tolls are difficult and costly to collect. But that’s no longer the case. Electronic-tolling technology makes it possible to collect them at near zero marginal cost, frictionlessly – even to vary the charge with the level of traffic, a process known as “dynamic pricing.”
That last bit is important. Even tolls, at least of the “ring toll” sort New York has planned, are subject to induced demand. Yes, the toll means people who drive into Manhattan will do so less often. But the folks who live inside the ring, finding the streets a little less clogged, may respond by driving more.
How to fix that? Apply the toll, not just at the gates, but on every road, throughout the city. A simple form of this is the “mileage tax” some jurisdictions (e.g. the Netherlands) have begun to implement.
But this is too crude. Congestion isn’t about how many cars are on the roads, or how many miles people drive, in total. It’s a function of particular times and places: the bottlenecks that arise when a bunch of people show up at the same place at the same time. Only dynamic pricing addresses that fully.
Still, baby steps. Ring tolls and mileage taxes are imperfect solutions, but they’re a start. If New York – if the Americans – can wrap their minds around road pricing, why can’t we?