Thursday, September 20, 2007

Congestion Pricing

There is wide agreement about the high costs of congestion in big American cities. What should be done about it?

On the side of inertia is the former Executive Director of the Port Authority of New York, George J. Marlin (no relation). In a July
blog he says he was once approached by some good-government Manhattanites about introducing peak-pricing tolls on the Hudson River bridge and tunnel crossings. The idea is that tolls would rise at peak hours and fall during off-peak hours, just as they do for commuter train tickets. Marlin dismayed his visitors by advising them that peak-hour pricing is just another tax and he was against it. But if tolls are reduced in non-peak hours to offset the higher revenue from peak-hour tolls, the new pricing can be revenue-neutral. The two people who commented on Marlin's blog - Ed Unneland and Erik Engquist - both agreed with the goo-goos that peak-hour pricing might be better than the alternatives.

I spoke in favor of congestion pricing twice in July - once before a public hearing of Manhattan Community Boards 4, 5 and 6 and once before a hearing of the Borough President of Manhattan, Scott Stringer.
I noted that congestion is a symptom of popularity and therefore a good thing up to a point. In the 19th century, smokestacks were proudly shown on British city postcards as evidence of their prosperity. Better to be congested than to have boarded-up and deserted buildings downtown, as do some upstate NY cities. Hostility to the City’s congestion pricing plan in Albany might stem from upstate congestion envy. Traffic congestion also keeps down the speed of cars to levels where fatalities are less likely in the event of an accident.

The problems with congestion become very serious when traffic slows to speeds of 20 mph or slower. This wastes gas, increases pollution and creates serious stress for people stuck in traffic. Worse, it is dangerous because ambulances, fire engines and police cars can't get through to where they are needed.

Time is money, so we are already paying a tax for congestion - in unpredictable and inefficient ways. One person understood this many years ago, Bill Vickrey, a Columbia professor whom I got to know through the City Club of New York when we were both active members. Bill received the Nobel Prize in Economics in 1996 and looked forward to the increased influence the award would give to his policy prescriptions. Alas, he died within a few days after the announcement of his award, in a car on his way up to a conference of like-minded economists.

Bill was keenly interested in giving advice to policymakers in the City and testified at an economic hearing I organized in 1992 as Chief Economist to the City Comptroller, Liz Holtzman. A summary of his 12 principles of congestion pricing is posted at More of his principles are technologically manageable now than when they were first proposed, and all of them promote an efficient city. When people said that the MTA can't handle the additional burden on the subway system created by those who leave their cars at home or park outside the city, Bill Vickrey answered that the signal system could be upgraded to permit shorter headways between subways and that a skip-stop system for the local trains would shorten travel time without great inconvenience.

The City of New York has won a $354 million grant to implement some of the recommendations for congestion pricing. A State commission is also reviewing other proposals to reduce City congestion and pollution. Their work is important because the existing free-for-all cannot continue. I hope the City and State will take into account the ideas of Bill Vickrey early on in their thinking and implement what is administratively feasible.