Congestion charging: The options

By Felix Salmon
June 1, 2010
Ryan Avent weighs in on my Wired article about congestion pricing with a question I'm going to be putting to some experts on the subject tomorrow. I've invited Reihan Salam, John Avlon, and Skymeter CEO Kamal Hassan to chat with Charles Komanoff in the swanky Reuters TV studio overlooking Times Square; the video should be up online later this week.

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Ryan Avent weighs in on my Wired article about congestion pricing with a question I’m going to be putting to some experts on the subject tomorrow. I’ve invited Reihan Salam, John Avlon, and Skymeter CEO Kamal Hassan to chat with Charles Komanoff in the swanky Reuters TV studio overlooking Times Square; the video should be up online later this week.

Ryan’s point I think will echo with Reihan, and indeed with Komanoff’s patron Ted Kheel: they all think there’s a lot to be said for a single flat congestion charge, set at $16, which would allow all transit — not just buses but subways too — to be free. Komanoff’s plan, which has many different fees per mode of transport, depending on the time of day and the day of the week, is hard for people — including legislators — to understand:

Any charge is going to be sent through the policy grinder en route to enactment, and so it doesn’t make a ton of sense to fine tune pricing before that process. [And] for now, these prices have to be processed by human drivers, who are going to want simplicity and certainty. That $16 to get into the city is easy to understand and plan around.

My feeling is that there’s a barbell solution here, and that the Komanoff plan lies somewhere in the unhappy middle. There are definitely problems with a crude flat congestion fee, including the fact that at many times of the day and week there really isn’t much congestion to mitigate. (Even Ryan, at the end of his post, starts talking about introducing an off-peak charge.) On top of that are the problems associated with making subways free at peak times: they’re crowded enough as it is, and although today’s peak-time riders are pretty price-inelastic, ridership would surely increase by some significant amount if the fare was brought down to zero.

At the other end of the spectrum is a Skymeter solution, which is granular not only on the time-of-day question but also on question of which exact part of the city you’re congesting. Komanoff’s plan makes no distinction between a car driving up Avenue D, on the one hand, and a car driving around Times Square, on the other; that’s silly. It also makes no distinction between a car driving in the CBD for 5 minutes and a car driving around the CBD for 5 hours. That’s even sillier. Those failures are failures of technology, and can be solved by Skymeter at a stroke.

If you’re going to set up a complex system, then, I think the Skymeter system is the way to go. And if you’re going to set up a simple congestion charge, then there’s a strong case for making it as simple as possible.

At tomorrow’s discussion, I’m looking forward to talking to four people with different answers to this question. Hassan thinks the complex Skymeter system is the way to go; Komanoff prefers his middle-of-the-barbell plan; Salam is fond of keeping things as simple as possible and just having one flat fee; and Avlon thinks there shouldn’t be any congestion charge at all. Should be a fun talk!

One comment

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Potential peak-time riders are more price-inelastic in terms of their inability to not take the subway than in terms of their ability to not take the subway at the hight of rush hour. To some extent the crowds will push people with more flexible schedules to less crowded times, but not as much as ideal. If you decide to include a small charge to ride the subway at peak times, you lose less (as long as the turnstiles are still there) from charging $1 versus making it free than you do with a bus, where “free” versus “stopping while people, one at a time, put their card into the machine” is a bigger cost in time and convenience and so on.

I think charging $16 at 3AM isn’t likely to fly, though. The tolls on the tunnels and bridges are about half that, and only one way; at least when congestion is at its lowest, I think you’re going to have trouble selling a charge substantially above $10.

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