In California, traffic congestion worsens every year. The economic and environmental costs that accompany this congestion pose a serious threat to the quality of life for all citizens. Mass transit, road expansion, and other traditional congestion relief programs are expensive, environmentally questionable, and ineffective in alleviating the problem, leaving transportation officials, legislators, and individual drivers to seek innovative solutions.

One such solution is congestion pricing, a policy which charges drivers a variable toll for road use determined by the amount of traffic at that particular time. For example, a toll bridge may charge more during the morning and evening rush hours, or a crowded commuter freeway may offer an optional toll lane for those willing to pay the additional charge. This report examines how existing congestion pricing programs effectively reduce congestion, improve air quality, and generate support from a majority of the citizens they affect. More important, the report reveals that the leading cause of congestion is a mismanagement of the state’s highways, and recommends policies that would lead to a congestion pricing system in California.

Major findings about the costs of congestion include:

• In 1994, drivers in California’s five most congested urban areas lost nearly 4,000 hours due to congestion, and suffered an annual loss of over $14 billion in wasted time and gasoline.

• In 1996, congestion cost the average San Bernardino driver $1,090 (the highest in the nation), the average San Francisco Bay Area driver $950 (third highest in the nation), the average Los Angeles driver $920 (fourth highest in the nation), and the average San Jose driver $750 (fifth highest in the nation).

• In 1995, 75 percent of San Francisco’s rush hour traffic was congested, as was 66.5 percent of Los Angeles’ rush hour traffic, 63.8 percent of San Bernardino and Riverside’s, and 60 percent of San Jose’s.

• Vehicle emissions such as volatile organic compounds (VOCs) and carbon monoxide (the major precursors to urban smog) are 250 percent higher under congested conditions than during free-flowing traffic, directly tying congestion to air quality.

Congestion pricing is effective at reducing congestion because it gives drivers a financial incentive not to drive during peak traffic hours. Just as private industries such as long distance phone companies and airlines vary their rates according to demand (i.e. weekday phone calls cost more than nighttime or weekend calls), variable road pricing would reduce traffic congestion because people would be motivated to either switch modes or routes of travel, drive at different times of day, or carpool. While experience with congestion pricing in the U.S. is limited thus far, the following findings demonstrate how congestion pricing works:

• In Orange County, California, a privately operated variable priced toll road called the SR 91 Express Lanes runs next to a heavily congested commuter highway. Using electronic toll technology, over 25,000 commuters pay to use the Lanes each day, and 62 percent of people living in the area approve of this congestion pricing project.

• In 1993, the Bay Area Congestion Pricing Demonstration Program showed that congestion pricing on the San Francisco-Oakland Bay Bridge would shave an average of 8 minutes off a 20 minute commute, a 40 percent reduction of time for the 35,000 daily commuters who use the bridge

• A 1991 Environmental Defense Fund report estimates that an electronically collected variable fee for vehicle miles traveled throughout the Los Angeles area would reduce total vehicle miles traveled by 4.8 billion annually and reduce reactive organic emissions, carbon monoxide emissions, nitrogen oxide emissions, and carbon dioxide emissions by 8.2 percent, 12.1 percent, 8.4 percent, and 9.2 percent, respectively.

To implement congestion pricing effectively, various reforms should be made at the federal and state levels. These reforms include:

• The devolution of highway funding and highway management from the federal to state level. Not only is federal law too rigid to allow for widespread congestion pricing, but less than 50 percent of the current federal gasoline tax revenues collected are actually spent improving roads or highways, demonstrating that the gasoline tax is not really the “user fee” it is purported to be. Legislators should phase out the federal gasoline tax and allow states the flexibility to fund roads and highways more effectively and efficiently.

• The construction and operation of electronic toll facilities such as those used on the SR 91 Express Lanes. With such technology, localities can collect variable tolls easily and drivers do not have the delay of stopping to manually pay a toll.

• The end of federal restrictions on the privatization of public roads. Not only do private investors have more freed-up capital than the public sector with which to build, maintain, and operate facilities, they are more willing and able to innovate in order to improve both efficiency and service on the road. California has already passed legislation allowing for the private funding and management of state roads and highways, and should push for similar legislation applying to federal highways. Current law prohibits privatization or tolls on the federal highway system.

• A gradual phase out of the California state gas tax and vehicle registration fees. These fees are mislabeled as user fees, and are less efficient and less equitable than congestion fees. As more and more electronic toll facilities are installed, the other fees can be continually reduced until roads are funded by congestion fees alone.

INTRODUCTION

In the U.S.’s largest cities, traffic congestion is a serious problem that grows worse every year. Not only are there more cars on the road today than ever, but people are driving those cars farther and more frequently. As traffic continues to worsen, frustrated drivers, legislators, and policymakers search for solutions. Attempts have included everything from highway expansion, to mass transit, to carpool lanes, yet these traditional responses are increasingly expensive and subject to challenge on environmental grounds. Moreover, all have failed to reduce congestion.

Congestion pricing offers a solution to these problems. This market-based approach treats road use as a commodity which, like all commodities, should be attained at a price. Congestion pricing, therefore, charges drivers for the use of the road according to the amount of demand at a given time. Specifically, drivers pay a fee (or toll) that would rise during peak hours of congestion. For example, a toll bridge that charges a $1 regular toll may charge a $3 toll during morning and evening rush hours. Congestion pricing would reduce congestion because it would give drivers a financial incentive not to drive during peak hours. This, in turn, would make more efficient use of limited road space.

Private industries have used variable rates for years: long distance carriers charge more for daytime telephone calls; theaters provide cheaper movie tickets for matinee shows; and airlines adjust flight fares according to the time of year, week, and even day.

Because pricing has increased efficiency and improved customer service in such industries, a growing number of areas have begun applying this principle to the road. Throughout Asia and Europe, more and more urban areas are successfully using variable road rates to reduce congestion. In the United States, primarily in California, congestion pricing demonstration programs are beginning to both improve traffic conditions and receive public acceptance.

Proponents of congestion pricing cover all segments of the political spectrum. Among them are the Reason Public Policy Institute, a free-market think tank in Los Angeles, California; the Bay Area Council, a regional business association in San Francisco; the Environmental Defense Fund; and most recently, the U.S. Environmental Protection Agency. Why this unlikely broad range of proponents? Because congestion pricing is a promising way to reduce both the economic and environmental costs associated with traffic congestion.

In 1994, the most recent year for which data are available, the 50 largest U.S. cities suffered an estimated total loss of $53 billion due to congestion. Between 1982 and 1994, congestion rose an average of 22 percent in those 50 cities.¹

Over 200 U.S. counties are currently out of compliance with the EPA’s air quality standards for ozone or fine particle matter, and according to the EPA, automobile emissions that contribute to ozone and fine particles are 250 percent higher during congestion than during free flowing traffic.²

The economic benefits of congestion pricing are irrefutable. Congestion pricing would bring about environmental benefits as well, because unlike traditional congestion relief policies such as the construction of new roads, congestion pricing relieves congestion without increasing the total amount of vehicle miles traveled. Yet because the current laws that dictate today’s transportation system are relatively inflexible, reform through variable pricing comes slowly and faces numerous political obstacles.

This report, “The Road Ahead: The Economic and Environmental Benefits of Congestion Pricing,” takes an in depth look at the economic and environmental costs of traffic congestion and explains how a congestion pricing system would work to reduce those costs. The report also shows how areas around the world are successfully using congestion pricing, and reveals how congestion pricing would dramatically improve current road transportation funding and management.

Congestion pricing would particularly benefit California, where congestion is the worst in the nation. In California’s five most congested urban cities, drivers lose nearly 4,000 hours daily due to congestion and over $14 billion annually in wasted time and gasoline.³ Congestion directly contributes to air pollution, which not only poses health threats, but authorizes the EPA to institute regulations on California businesses and individuals in an attempt to improve air quality.

CONGESTION IS GETTING WORSE

Numerous factors cause congestion to continually worsen. Not only are there more cars on the road, but attempts to improve traffic flow so far have failed.

First and foremost, rapid population and job growth cause more cars to be on the road during peak hours.

• The 1991 Census Bureau reports that from 1980 to 1990, American metropolitan areas saw a population increase of 15.3 percent, compared to a nationwide increase of 8.9 percent.⁴

• Employment grew 14.4 percent throughout the nation during the 1980s, and has continued to rise throughout the 1990s.⁵

• For every one percent increase in population, jobs outside the home increased by 1.53 percent from 1980 to 1990. Thus, even areas with low population growth experienced an increase in commuters.⁶

• Not only have jobs and population increased, but individuals are driving their cars more frequently and longer distances.

• The Motor Vehicles Manufacturers Association reports that from 1975 to 1990, the number of miles driven per vehicle increased 14.2 percent.⁷

• The EPA states that this increase combined with population growth has created a 117 percent increase in vehicle miles traveled since 1970.

The Texas Transportation Institute (TTI) conducts regular studies looking at congestion in 50 major cities around the country. As part of these studies, TTI measures the traffic congestion index (TCI) for each of the 50 cities. A TCI is the ratio of daily vehicle miles traveled to available road space. Between 1982 and 1994, the average TCI in these 50 cities rose 22 percent, and in only 2 cities (Houston and Phoenix) did congestion levels decline.⁸

Traditional congestion mitigation programs, such as road construction and mass transit, have proven ineffective. While the growth of transportation demand is inexorable, the ability to build new capacity is highly limited. Not only do financial constraints make it impossible for cities to build enough new roads to accommodate the growth in population and jobs, but the negative environmental impacts of construction and the fact that increased capacity will eventually accommodate even more cars, thereby adding to air pollution, makes this solution unrealistic.

Mass transit programs are not reducing congestion, either. Boston, New York, and Chicago all have complex subway or elevated tram systems, and congestion worsens every year in each of these cities. Both San Francisco and Washington, D.C. have spent billions of dollars to develop premiere passenger rails, yet these two areas have some of the worst cases of congestion in the country.

In San Francisco, the Bay Area Rapid Transit (BART) system has seen a continual increase in passengers, but the number of commuters not using BART has increased even more. From 1985 to 1990, the number of BART passengers grew by 4,738 (an 8 percent increase), but the number of commuters not using BART grew by 209,260 (a 9 percent increase).⁹

THE ECONOMIC COSTS OF CONGESTION

Increasing congestion has serious economic consequences. Individuals suffer losses due to increased personal travel time and higher vehicle operating costs.

• In 1994, TTI reported that congestion in 50 major cities nationwide cost a total of $53 billion in lost time and gasoline.¹¹

• Each day in 1994, congestion cost drivers in these 50 cities an average of 291 hours of delay.

• All 50 cities saw an increase in the amount of lost time due to congestion, with an average increase from 19 hours in 1982 to 34 hours in 1994, a 79 percent increase.¹²

The effects of congestion are even more serious for the average California driver.

• In 1996, the California Department of Transportation (Caltrans) reported that congestion cost the average driver in San Bernardino County $1,090 (the highest in the nation), the average San Francisco Bay area driver $950 (third highest in the nation), the average Los Angeles driver $920 (fourth highest in the nation), and the average San Jose driver $750 (fifth highest in the nation).¹³

• TTI shows that in 1994, the average San Bernardino driver lost 75 hours to congestion, the average San Francisco-Oakland driver lost 65 hours, the average Los Angeles driver lost 63 hours, and the average San Jose driver lost 51 hours.¹⁴

• During 1995, 75 percent of San Francisco’s rush hour traffic was congested, as was 66.5 percent of Los Angeles’ rush hour traffic, 63.8 percent of San Bernardino and Riverside’s, and 60 percent of San Jose’s.¹⁵

Actual individual expenditures may be even higher due to indirect costs stemming from higher accident rates from congestion, additional vehicle wear and tear, and higher insurance rates associated with more congestion-related accidents.

California’s overall economy suffers significantly as well.

• In 1994, congestion cost Los Angeles drivers an annual total of $8.6 billion, San Francisco-Oakland drivers $3 billion, San Bernardino-Riverside drivers $1.07 billion, San Jose drivers $900 million, and San Diego drivers $790 million.¹⁶

• Sunne McPeak, head of the Bay Area Council, claims that costs are even higher and estimates that in the Bay Area alone, congestion costs businesses and individuals $3.5 billion and 90,000 hours each year.¹⁷

• Apple Computer in San Ramon estimates that their company alone lost 13,000 hours and $650,000 to congestion in 1996 due to Bay Area traffic.¹⁸

• Congestion also threatens the future of the California economy. Russell Hancock, Vice President and policy analyst for the Bay Area Council, predicts that “If the current pattern of congestion continues unabated, in 20 years we will have seen a significant flight of capital out of here to places like Austin and Portland.” The Metropolitan Transportation Commission echoes this concern: “Unless the [Bay Area] region changes the way it pays for transportation and the way it uses it, the current economic renaissance will skid to a halt.”¹⁹

ENVIRONMENTAL COSTS OF CONGESTION

Congestion worsens air pollution from vehicle emissions because carbon monoxide, nitrogen oxide, carbon dioxide, and VOC emissions are greater at slower speeds, particularly under 40 mph. Furthermore, emissions are higher when vehicles accelerate, decelerate, or idle, which happens often in congested traffic. The California Air Resources Board estimates that emissions are 250 percent higher under congested conditions than during free-flowing traffic.²⁰ Finally, congestion forces cars to be on the road longer, thus emitting more pollutants.²¹

Even with the same number of cars on the road, a reduction in congestion would reduce pollution. According to a 1991 study by Michael Cameron of the Environmental Defense Fund, if the current level of auto use in Southern California occurred at free-flowing traffic conditions, mobile source emissions would be reduced by approximately 13 percent.

Air quality analysts and policy officials often dismiss the air quality benefits of reducing congestion because traditional congestion relief policies, such as highway expansion, usually cause more pollution due to construction and the fact that new highways eventually will accommodate even more vehicles on the road, thus leading to more emissions. Innovative policies that reduce congestion without construction and increased capacity, however, ensure pollution reduction.²²

CONGESTION PRICING AT WORK

The Federal Highway Administration’s Congestion Pricing Pilot Program defines congestion pricing as “the policy of charging drivers a fee that varies with the level of traffic demand on a roadway.”²³ Congestion occurs because too many cars try to use limited road space at one time. Rush-hour drivers add to the collective costs of congestion, both economic and environmental, but they are not required to pay the full costs they generate. The Bay Area Economic Forum, a public policy organization comprised of business and government leaders dedicated to enhancing the Bay Area’s economy, estimates that every additional driver that enters San Francisco’s congested freeways during peak traffic hours generates one additional hour of delay for all other drivers combined.²⁴

A pricing system internalizes the collective costs of congestion and allows drivers as a whole to use road space more efficiently and effectively. Anthony Downs, an economist at the Brookings Institute, explains:

[P]eak-hour traffic on expressways typically rises above the economically optimal level—that is, the level at which the average total cost per driver (including operating costs, time, and any tolls) equals the average benefit to drivers of using the roadway. When traffic surpasses that level, it slows down even more; so the average benefit falls further while the average total cost rises above it. That misallocates scarce resources—both motorists’ time and capital invested in road capacity. The general welfare of all drivers would be greater if traffic could be limited to the lower level at which the total costs equaled the total benefits. This can be achieved by charging each driver a toll for using that road during peak hours. This monetary price should be set to bring the total cost experienced by each person entering a congested roadway up to the average total cost that person is imposing on both himself and others.²⁵

Private industries have used pricing to address scarcity problems for years. For example, long distance phone companies charge more for calls made during business hours than on weekends, and movie theaters charge more for nighttime movies. Restaurants offer “early bird” specials to attract customers before the rush of the evening crowds. Airlines set ticket prices to regulate demand on a seasonal, weekly, and even daily basis. Trucking and railroad companies reduce transportation fees when their freight load is light so customers will not all try to ship goods at the same time. Such pricing works well to increase efficiency and service through congestion reduction for each of these industries.

A Success Story: The California Private Transportation Company. A prime example of successful congestion pricing is found in Orange County, California. The California Private Transportation Company built and now operates a ten-mile private toll road that runs parallel to the heavily congested State Route 91. The road is administered by an electronic toll system. Commuters have the option of paying a toll to use the road known as the “SR 91 Express Lanes.”

Tolls range from $2.95 during peak hours, to $.75 during non-peak hours. In order to use the electronic tolls, drivers must purchase a transponder debit card that fits in the corner of their windshield. They pay by cash or credit card ahead of time, usually in increments of $50. Each time they drive through the electronic toll lane, sensors subtract the toll amount from their account without the delay of having to stop and manually pay at a toll booth.

When account balances fall to $10, drivers deposit more money into their accounts. Drivers who use the lanes without a transponder card have their license plates automatically photographed and receive fines via mail. Frequent users can also purchase “Express Club” cards that cost an additional $15.00 per month but take $.50 off each trip, regardless of the time of day. Carpools of three or more were at one time exempt from tolls, but as of January 1, 1998, they have to pay half the toll amount of single occupancy vehicles.

The project cost $126 million to design and construct. By the third month of operation, the Express Lanes were covering their operating costs. The company expects that by the end of 1998, revenues from the project will begin to cover debts for the initial project costs as well, and they can begin to make a profit.

So far, drivers have been very responsive. Over 86,000 individuals have purchased transponder cards, and 25,000 commuters opt to pay the toll each day in order to avoid sitting in traffic. Even those drivers who still use the state route benefit because there are 25,000 less cars on the public road.

Public opinion polls conducted by the California Polytechnic Institute in San Luis Obispo report that 65 percent of Express Lane customers view the project favorably, 62 percent of carpoolers who use the Express Lanes for free view it favorably, and 53 percent of drivers who still use the state route view it favorably.²⁶ A similar poll conducted by the REACH Task Force in Los Angeles shows that among drivers throughout Southern California, 62 percent approve of the idea of the Express Lanes (29 percent disapprove and 8 percent express no opinion).²⁷

CONGESTION PRICING AT WORK THROUGHOUT THE WORLD

The SR 91 Express Lanes offer the best example of successful congestion pricing in the United States, although demonstration programs around the country are underway and thus far look promising. Outside the U.S., however, Canada and countries in Asia and Europe have had much success with variable road pricing.

Canada: On June 7, 1997, the 407 Express Toll Route (ETR) opened in Toronto, Ontario. The 36 kilometer electronic toll highway was developed through a public-private partnership between Canadian Highways International Corporation, a private company specializing in highway development, and the Province of Ontario. Toll collection began on October 14, 1997 (prior to this date, road use was free), and drivers have prepaid accounts and use electronic transponder cards similar to those on the SR 91 Express Lanes. On weekday peak periods, road use costs $0.10 per kilometer; nonpeak and weekend daytime use costs $0.07 per kilometer; and nighttime rates are $0.04 per kilometer. So far driver response has exceeded what planners expected. Between 11,000 and 12,000 trips are being taken each hour during morning and evening rush hours, and officials expect that the $929.8 million project will be paid for 25 years from now, 5 years earlier than originally expected. Driver approval is high as well, as the average speed on Highway 407 is about double that of the nearby congested public highways, thus saving drivers considerable time. In fact, the biggest problem that Highway 407 has faced during its first few months of operation has been a shortage of available transponder cards for all the commuters who want them.²⁸

Singapore: In 1975, Singapore implemented the Area License Scheme. Today, the country has expanded that plan to include a toll system that charges drivers the equivalent of U.S. $1.50 to enter the downtown area during peak period congestion. The pricing program, combined with other vehicle fees, has significantly reduced traffic and improved air pollution. In March 1998, the entire system will be automated and tolls may even vary hourly within peak traffic periods to more closely match supply and demand. Singapore plans to implement pricing programs on all its major roadways due to the program’s success.²⁹

Norway: Norway has had success with road pricing in three of its urban centers: Trondheim, Oslo, and Bergen. In 1991, Trondheim—Norway’s third largest city with a population of 140,000—implemented a “toll ring” that surrounds the city’s downtown area. The toll ring has 12 toll stations and uses a total of 35 lanes. Each toll booth operates with an electronic card system, used by 80 percent of drivers entering the city. The other 20 percent use coin machines or magnetic strip cards, which exist at all twelve booths. Rates range from U.S. $0.62 to $1.56, with a peak charge between 6:00 a.m. and 10:00 a.m.

All toll booths are unattended except for two which service tourists and nonlocal drivers. Full video surveillance cameras monitor the booths, although the violation rate is only .3 percent. Each transaction costs only US $0.20, and toll revenues total five times the operating costs and toll plaza capital. Trondheim uses the excess revenues to fund transportation costs, such as road maintenance and mass transit. Since the toll ring began, peak period traffic has declined by 10 percent and non-peak traffic has increased by 9 percent.³⁰

Other International Examples: Congestion pricing is beginning to catch on in other European nations as well. Both Britain and Germany have conducted congestion pricing feasibility studies, and France has implemented a variable toll on the A1 freeway between Paris and Lille. In the program’s first year-and-a-half, a 25 percent toll increase on Sunday afternoons has evoked a 15 percent reduction in congestion as weekend travelers return to Paris.

THE ROLE OF THE PRIVATE SECTOR

If congestion pricing is to catch on in the U.S., the private sector will undoubtedly play a major role. In light of the fact that California currently struggles to maintain existing roads, it may be a long time before it can provide funds for new toll roads and electronic toll facilities (the SR 91 project cost $126 million). Private investors, however, are anything but short on capital. Already, U.S. companies have invested billions into Asian countries looking to upgrade transportation infrastructure. Along with 13 other states, California has already passed legislation that allows for private funding and management of state roads and highways.

Gerald S. Pfeffer, Senior Vice President of the United Infrastructure Company, a partnership of Bechtel Infrastructure Enterprises, Inc. and Kiewit Infrastructure Corporation, explained to the U.S. Senate Subcommittee on Transportation and Infrastructure that such public-private partnerships benefit everyone involved:

They’re good for the public sector, they’re good for private investors, and most of all, they’re good for our nation’s motorists. The creativity, technology, and private capital are available for the right projects. What’s needed is additional enabling legislation to clearly signal the federal government’s commitment to innovative public-private partnerships. By encouraging the states to pursue these partnerships, Congress can trigger billions of dollars of private investment and help solve some of America’s most intractable transport problems, long before public funds could become available.³¹

Privatization offers a good opportunity to implement congestion pricing because the private sector is more willing and able to innovate. Because most of the obstacles to congestion pricing are political, the private sector is affected less by the political process and can more easily implement the policy they believe will work. The SR 91 Express Lanes exemplify this phenomenon.

CURRENT FEDERAL CONGESTION PRICING FUNDING AND POLICY

In 1991, Congress passed the Intermodal Surface Transportation Efficiency Act (ISTEA). The Act implemented a six-year strategy aimed to improve America’s transportation system. Among other things, ISTEA was to reform the highly politicized and inefficient federal highway funding program. As part of this reform, ISTEA authorized a national Congestion Pricing Pilot Program in order to “encourage testing and evaluation of congestion pricing concepts in a variety of settings nationwide, on an experimental, or ‘pilot’ basis.”³²

ISTEA authorized federal funding (up to $25 million annually from 1992 to 1997), a portion of which enabled the Pilot Program to enter into cooperative agreements with up to five state or local governments or other public authorities to establish, maintain, and monitor congestion pricing projects. Up to three of these programs could include tolls on interstate highways, otherwise prohibited by federal law.

Three congestion pricing projects and six pre-project studies are currently under way. In addition, the demonstration program is funding a monitoring and evaluation study of the SR 91 Express Lanes, which should be completed by the end of this year.

San Diego’s “HOT” Lanes. The first implementation project is in Southern California. On December 2, 1996, North San Diego County’s Interstate 15 opened an 8.5 mile stretch of an underutilized carpool lane to single drivers willing to pay a toll. The new lane is referred to as a High Occupancy Toll lane, or HOT lane.³³ A limited number of drivers are allowed to purchase “Express Pass” permits for a monthly fee of $70. The passes are sold on a first-come-first-served basis. As of March 1997, 84 percent of Express Pass permit holders remained in the project. Electronic tolls were implemented at the end of summer 1997, and by 1998, the program will begin using dynamic variable pricing. Dynamic pricing means that instead of planners predetermining the toll rate, the rate will fluctuate according to the amount of traffic actually on the road during that particular time of day. An electronic message board will display the fare to drivers.

Lee County, Florida. The second implementation project is in Lee County, Florida. The Florida Department of Transportation recently contracted with Amtech Corporation, who will provide $3.1 million for electronic toll collection on the Cape Coral, Midpoint, and Sanibel Bridges. The project, known as “Leeway,” will offer a 50 percent toll discount for use during nonpeak traffic hours.

Houston, Texas. The third project is in Houston, Texas. Similar to the program in San Diego, the Texas Department of Transportation (TXDOT) will open HOV lanes on Interstate 10, also called the Katy Freeway, to 2-person carpools for a fee. The “Quickride” HOT lane will use windshield transponders and will charge a $2.00 or $3.00 toll for 2-person carpools. Carpools of 3 or more will continue to use the lanes free of charge. Furthermore, TXDOT is currently determining the details of a $1.1 billion plan to rebuild a 40 mile stretch of the freeway, and additional electronic toll express lanes that would use a variable toll modeled after the SR 91 Express Lanes are part of that plan.

Pre-Project Studies. Pre-implementation studies exist in Sonoma County, California; Los Angeles, California; Portland, Oregon; Boulder, Colorado; and Westchester County, New York; and Minneapolis, Minnesota. The projects vary according to the specific area of implementation. The Federal Highway Administration (FHWA), in conjunction with the Hubert Humphrey Institute at the University of Minnesota, has sponsored six regional workshops on congestion pricing over the past 3 years. The last workshop was held in October 1997, in Portland, Oregon.

The Bay Bridge Congestion Pricing Demonstration Program. An example of political barriers effectively blocking the implementation of congestion pricing occurred in San Francisco. In 1993, California came close to implementing the Bay Area Congestion Pricing Demonstration Program on the San Francisco-Oakland Bay Bridge. The program would have implemented a $3 surcharge during the morning and evening rush hours, and the existing $1 toll would remain at other times of day. Estimates showed that the average commuter would have saved 8 minutes each day off a 20 minute commute, which translates to a 40 percent reduction of lost time for the 35,000 commuters who use the bridge each day.Although the plan was designed by a local task force and took many local concerns into consideration, the California legislature effectively ended the program. Critics felt that low income drivers would not be able to pay the additional tolls (a view later refuted in this paper), while the affluent could “buy their way out” of congestion. Furthermore, without a simultaneous tax reduction, other skeptics saw the proposal as little more than a tax hike, and the program was never implemented.³⁴

A POLITICAL CONTROVERSY

So far, the major impediment to the implementation of congestion pricing has been political controversy. Critics of congestion pricing have made four basic objections to the concept:

1) commuters are not likely to react to a pricing system (i.e. changes in travel prices not likely to have much of an effect on consumer demand),

2) higher tolls disproportionately will affect poorer drivers,

3) congestion pricing is a form of social engineering, and

4) roads are a public good already funded through taxes. A detailed look at each of these objections, however, shows that they are based on incorrect assumptions.

1.) Drivers’ Reaction to a Pricing System

In order for a pricing system to impact consumer behavior in any industry, a certain level of price elasticity must exist. A 1994 Transportation Research Board Special Report shows that travel demand is fairly inelastic. In other words, consumer response to changes in travel prices tends to be sluggish compared to other goods. Short term elasticities show a range of -.1 to -.3. This range means that if, for example, legislators double a bridge toll, traffic demand would decline by 10 to 30 percent.³⁵

While low elasticity at first seems discouraging, statistics from the California Air Resources Board give reason for optimism. As explained in their final report on transportation pricing strategies, although transportation price elasticities are small, they are high enough to make a significant reduction in both traffic congestion and air pollution. For example, in the case of a toll bridge that is congested during peak periods,

increasing the toll from $1 to $2 would raise the total out-of-pocket cost of a 10 mile auto trip by about 50 percent. If the price elasticity of demand is about -.1 to -.2, then the toll increase would reduce the number of auto trips by 5 to 10 percent. For most facilities such a reduction would be sufficient to improve operations from, say, a level of service E (stop and go) to a level of service D (heavy but moving traffic.).³⁶

The belief that elasticity must be high in order to reduce congestion stems from a misunderstanding of the nature of traffic congestion. As explained by a panel of congestion pricing project managers at the 1997 Regional Congestion Pricing Workshop in Tampa, Florida, if only a small percentage of drivers change their behavior, the policy will be successful. The success of existing programs in California, Asia, Europe, and Canada demonstrates this principle.

Furthermore, not all drivers are making time-specific trips. The Metropolitan Transportation Commission reported in 1995 that only 30 percent of trips made during the course of a 24-hour day relate to work, and actual commutes to and from work account for only 20 percent of all trips. While some of the remaining 80 percent are still time specific, such as taking children to and from school, those that are not would have a financial incentive to find an alternative, such as switching modes of transportation, traveling during non-congested times, or eliminating unnecessary trips by doubling up on errands, sharing rides, or changing destinations.³⁷

2.) The Equity Issue

The second and most politically heated objection to congestion pricing is over the issue of equity. Some labor union representatives and elected officials have opposed congestion pricing on the grounds that most of the benefits would go to higher income drivers, who can afford to pay the tolls. They argue that low income drivers who would not be able to pay the extra fees would have to find alternative modes and would be disproportionately forced out of their cars.

California State Senator Bill Lockyer, the pro tem Democrat leader of the California State Senate, expresses this view of congestion pricing: “I think it’s grossly unfair to low and moderate income people. It says, ‘let’s run up prices so only rich people can use the [road].’ I resent the philosophy and will fight to the death against it.”³⁸

Again, this argument misrepresents the situation. The gasoline and sales taxes that currently fund roads are far more regressive than any pricing system, indicating that a system reliant on congestion pricing would actually increase equity on the road.

Moreover, congestion pricing would almost exclusively affect middle and high income individuals due to the fact that a very small percentage of rush hour drivers are poor. In 1990, the Bay Area Congestion Pricing Task Force used Census figures from that year to show that the average income for commuters on the Bay Bridge was $68,000, a number 50 percent higher than the average household income for the area from which they were commuting.) The same data also shows that only 3 percent of daily bridge users fell below 150 percent of the U.S. poverty rate.

Furthermore, to say that congestion fees only benefit higher income drivers assumes that lower income people never have trips to make that they may value enough to pay the higher price. While on a regular basis they may not opt to pay the fee, one cannot assume that they do not want to have the option of a noncongested, smoothly flowing road for high priority trips such as picking children up from daycare or making medical appointments. Instead, a reduction or elimination of current regressive sales and gasoline taxes, as discussed later in this paper, presents greater opportunities to help the low-income population.

In addition, the claim that congestion pricing discriminates against low income drivers is no more convincing than to say that it is discriminatory for movie theaters to charge more for night time movies or for airlines to vary their fares. No one objects to variable pricing in these industries because the industries simply implemented the policies in response to market demand. Because the policies now benefit both the companies and the customers, people see no reason to object.

“LEXUS LANES”

When the SR 91 Express lanes first opened, critics such as California State Senator Tom Hayden (D-Los Angeles) contemptuously nicknamed them “Lexus Lanes,” in reference to the fact that only the rich could afford to pay for the lanes. Preliminary polls conducted by the University of California Polytechnic Institute at San Luis Obispo (Cal Poly) show, however, that a representative cross section of the population uses these lanes. While a greater percentage of high income drivers use the lanes on a more regular basis, lower income drivers do use the lanes more than predicted. When divided into three income categories, frequent users have a higher income distribution than periodic or non-users, but this distribution is due largely to the fact that commuters in general have disproportionately high incomes. Public opinion surveys show that even among drivers who do not use the lanes, 53 percent approve of them, demonstrating that the lanes benefit all segments of the driving population.³⁹

3. Social Engineering

The third major impediment to congestion pricing is the claim that it is social engineering. Some people do not like the idea of using prices to affect a desired pattern of behavior. They view road pricing as coercive and an infringement on their right to use the open road freely.

To the contrary, congestion pricing actually enhances personal freedom and fairness by applying the principles of capitalism to the road. Currently, peak hour road use is subsidized: it is not free. In the case of road expansion, projects are built to satisfy peak-hour drivers, but all drivers must pay for them through gasoline or other taxes. In a 1995 Reason Public Policy Institute report, Randy Pozdena estimates that peak-hour drivers are under-charged by a factor of nine, while off-peak drivers are over-charged by a factor of two.⁴⁰ Implementing a system in which prices reflect the true cost of something is not an infringement on liberty and is not coercive.

Social engineering, in fact, occurs when legislators attempt to make congestion pricing politically acceptable by manipulating the pricing scheme. An example is when planners set congestion prices too low because they are afraid of the equity issue. Prices set too low will not induce enough of a response to effectively reduce congestion or internalize costs.

As explained by Nobel Laureate economist William Vickrey of Columbia University, “Charges should reflect as closely as possible the marginal social cost of each trip in terms of the impacts on others...There is no excuse for charges below marginal social cost. If it be urged that such charges in a particular case would be desired on distributional grounds, there will always be more efficient and equitable ways of effecting such redistribution.”⁴¹

Potentials for Misuse:

To be sure, congestion pricing can be misused. Almost any program that sets road fees high enough to induce a change in traffic behavior will raise a significant amount of money. For example, a 1992 Reason Public Policy Institute study by Kenneth Small used data from the Environmental Defense Fund’s 1991 study to show that a $.15 per vehicle mile fee in congested regions of the Los Angeles area would raise upward of $3 billion.⁴² Using those funds for causes other than transportation funding skews the direct tie between costs and benefits, and congestion pricing loses much of its effectiveness. Thus, careful allocation of congestion pricing revenues is key to successful reform.

4. “It’s Just Another Tax.”

The final and most compelling reason people reject congestion pricing is because they believe that they are already paying for road use. Gasoline taxes, sales taxes, vehicle user fees, and existing tolls add up, and drivers do not want to pay more than they already do. Opponents also argue that roads are a public good and should be free for all to use.

Again, these arguments misrepresent the situation. While drivers currently do pay for road use, they do not absorb the full costs of their activities, as shown by the multibillion dollar economic and environmental externalities of congestion. Directly tying a good’s costs and benefits does not make it less public; it improves the quality of service that good provides to the public (in this case, a less congested roadway).

Comparisons using an advanced travel forecast model called TRIPS (Travel Incentive Planning System) and travel data from a 1991 survey of 15,000 Southern California households demonstrate that in Southern California, drivers received $29.6 billion in benefits for which they did not pay. TRIPS’ estimates show that drivers value the benefits they receive at $78 billion for auto travel and $1.5 billion in public transit, but only had to pay $50.1 billion. A gap of almost $30 billion demonstrates that congestion pricing would not overcharge drivers.⁴³

Moreover, simply because people do not pay upfront in the form of tolls, they still foot the bill for economic and environmental costs described earlier in this paper. Congestion, therefore, is a classic externality with multi-billion dollar costs that should be internalized and paid upfront by drivers. Motorists currently pay for the costs of congestion in the form of lost time. Converting that lost time into money transfers an unrecoverable loss to society (wasted time) into something tangible that can actually benefit society (toll revenues).

While some drivers do not like the idea of user fees on the road, the issue is really not one of charging more for road use. Instead, congestion pricing forces peak-hour drivers to internalize the costs that they currently impose upon society. Simply because drivers do not pay these costs in the form of tolls, the costs do not disappear.

A rational, persuasive response counters each of the four objections to congestion pricing. While congestion pricing is not a panacea for transportation funding and efficiency problems, it addresses many of the problems associated with traffic congestion. Congestion results from poor management of a resource. In this case, the resource is limited road space. A pricing system implements user fees that directly tie costs and benefits, and thus helps efficiently match supply to demand.

Variable pricing is used by almost all private industries facing a “congestion” problem: airlines, phone companies, restaurants, etc. Not only does variable pricing increase efficiency, it increases customer service. Just as variable pricing reduces overbooked flights, busy signals on phone lines, and long waits in restaurants, congestion pricing would reduce traffic on the road.

AIR POLLUTION: A CLASSIC EXTERNALITY

Air pollution, particularly in California, demonstrates the externality problem. Congestion pricing would reduce pollution and bring more counties into compliance with air quality standards without imposing heavier costs or stricter control measures on businesses and non-driving individuals, who currently absorb at least some of the costs of pollution actually caused by drivers.

In addition, the EPA currently gives credits to areas that use market-based strategies to meet air quality goals. When an area is labeled as being in nonattainment with national air quality standards, it must outline an implementation plan that describes how that area plans on improving air quality in order to regain attainment status. The implementation plans must be approved by the EPA, or the EPA can withhold federal highway funds. So far, the EPA has approved implementation plans that include priced parking and emissions trading, and has stated that congestion pricing would meet approval as an effective market-based strategy.⁴⁴

CALIFORNIANS’ PERCEPTIONS OF CONGESTION PRICING

Polling data show that the majority of Californians are open to the idea of congestion pricing. During January, 1996, the REACH Task Force conducted 1700 telephone interviews throughout Southern California. The sample included adults over the age of 16 in Los Angeles, Orange, Riverside, San Bernardino, and Ventura counties. The overall margin of error varied between 2.28 percent and 6.91 percent.⁴⁵

• 51 percent of those polled said that they felt the current tax structure should be changed.⁴⁶

• 58 percent said that fees on roads were a fair way to pay for air quality and transportation programs.⁴⁷

• While 56 percent of participants opposed a base congestion fee, over a quarter of that 56 percent claimed that they opposed the fee because it was “just another tax increase.”⁴⁸

• 14.7 percent of those opposed marked “No reason, I just don’t like the idea” as their reason for opposition.⁴⁹

POSITIVE REFORM FOR ROAD TRANSPORTATION POLICY

Congestion pricing can improve the flow and funding of California’s roads and highways, but the right kind of implementation is key to successful reform. While the demonstration programs that are currently underway exemplify the principle of congestion pricing and provide evidence that it works, they only offer the first step towards real reform.

Widespread reform should begin with the installation of electronic toll booths throughout the state. Unfortunately, because federal tax dollars fund interstate highways, federal law prohibits tolls on the interstate system (unless part of an ISTEA Pilot Program). Most transportation problems, however, including congestion, are primarily local problems. A devolution of transportation funding and management from the federal to state and local levels allows the flexibility and specificity needed to better manage any state’s, particularly California’s, transportation problems.

“TURNBACK”

Transportation devolution has been proposed more than once in both the U.S. Senate and House of Representatives. Most recently, Senator Connie Mack (R-FL) and Representative John Kasich (R-OH) sponsored a bill, TEA-2 or “Turnback,” that would replace ISTEA and gradually phase down the federal gasoline tax to $0.02 per gallon and remove federal restrictions on states’ abilities to raise transportation funding. Kasich explains that “If you let us [the states] keep our money, and get rid of all the federal bureaucracy and federal rules, we’ll actually be able to have more highway construction. We’ll be able to deal more effectively with the transportation needs in our own states.”⁵⁰

California would particularly benefit from transportation devolution. Congestion pricing aside, California is one of 21 “donor” states that currently does not get out of the system what it puts into it. The General Accounting Office (GAO) shows that between 1991 and 1997, California received $12.4 billion in transportation funding. Estimates show that for the same time period, California would have received $16.4 billion under Turnback.⁵¹

While TEA-2 did not pass this session, similar Turnback reforms and proposals will undoubtedly resurface. In the meantime, there is reason for optimism, as both the Clinton Administration and the Senate have included the authorization of 15 new congestion pricing pilot projects (referred to as “value pricing” projects due to the negative connotation associated with the word ‘congestion’) in their versions of the ISTEA’s reauthorization.

GASOLINE TAXES ARE NOT REALLY USER FEES

Once congestion pricing facilities have been established, the real question becomes what to do with the revenues resulting from tolls. The current system, which relies primarily on gasoline taxes, represents a distortion. While most people consider gasoline taxes to be a user fee—meaning drivers pay directly for road use—a look at the allocation of gasoline tax revenues shows that this is not the case. By the time revenues from the gasoline tax have been collected and sifted through Washington, D.C., only a fraction of those revenues actually fund the roads for which drivers were supposedly directly paying.

Currently, the federal government collects about $0.18 a gallon in gasoline taxes.

• In 1994, only $14.5 billion, less than half of the total gasoline tax revenues collected, actually went towards highway improvements.⁵²

Even worse is the fact that the nation’s roads are in dire need of repair.

• By 1995, 26 percent of the nation’s primary highways were in need of improvement in the immediate future to preserve usability.⁵³

• That same year, 80,000 out of the 270,000 bridges in the national highway system were in need of repair.⁵⁴

A full $12.7 billion of 1994 gas tax revenues went into the federal government’s general fund to help balance the national budget. The rest was spent on bureaucratic costs and congressionally mandated projects; such as mass transit, carpooling facilities, or demonstration programs. Projects supported by more powerful members of Congress receive the most funding, and the need to maintain and improve the nation’s highways takes a back seat.

As explained by Peter Samuel, editor and publisher of Toll Roads Newsletter:

Generally, our highways are built and managed by state agencies and offered “free” to the public. Instead of paying for road use directly, motorists provide highway funds through a Byzantine system of license fees, registration charges, gas and diesel taxes, truck charges, special transportation sales taxes, and development district levies. After some of that money has gotten through the various bureaucracies, tax agencies, treasuries, and transportation administrations at different levels of government, after some has been diverted to transit systems and even general government revenues, what is left for roads is political “pork”— allocated by dealmaking between various government actors in Washington, state capitals, and county seats.⁵⁵

Such misuse can best be avoided not by using congestion pricing in addition to the existing funding programs, but in replacement of them.

STATE GASOLINE TAX

California should reduce or phase out the state gas tax and replace it with electronic toll facilities that are being used on Canada’s Express Toll Route 407, the SR 91 Express Lanes, and in a growing number of areas around the country. Currently, the state collects $0.18 per gallon in gasoline taxes, which is about the same amount as the federal government. By reducing the state gas tax and granting waivers allowing more electronic toll facilities to collect variable user fees on California state highways, California could effectively reduce congestion and more efficiently fund roads.

TOLL REBATE PROGRAMS

One possible way to phase in a gas tax reduction is to first begin collecting tolls without a tax cut to see how much revenue is collected. Then part of the revenues could be returned to the drivers at the end of a specified time period in the form of a rebate. Records kept from transponder card purchases and credits could ensure that drivers received a proportionate rebate amount according to how much they had paid in tolls. This sort of rebate program would allow the state to see how many toll facilities were needed, and let driver demand determine toll levels in order to both reduce congestion and finance the roads. Once the system was in place long enough to determine self-sustaining toll levels, the state gas tax could be reduced and the rebate program would no longer be needed.

VEHICLE REGISTRATION FEES

Another possible area of reform is vehicle registration fees. While the fees provide the state with necessary information on cars and their owners, most of the fee goes towards transportation funding. Although also considered a user fee, it actually only raises the fixed cost of owning a vehicle. A true user fee focuses on the variable costs of that vehicle, such as how much and at what times the owner drives it.⁵⁶ The distinction is important because congestion is caused not simply by too many vehicles, but by too many vehicles attempting to use the same roads at the same time. Replacing the registration fee with a true user fee collected through congestion pricing would eliminate unnecessary bureaucracy at the state level, more effectively reduce congestion, and thus improve road service.

SUMMARY OF REFORM ACTIONS

In summary, implementing a state wide congestion pricing program in California basically follows three steps:

• Federal Action: Shift highway funding and management from the federal to state level. Not only is federal law too rigid for widespread congestion pricing, but less than 50 percent of the current federal gasoline tax revenues collected are actually spent improving roads or highways, demonstrating that the gas tax is not the “user fee” it is depicted as. Legislators should phase out the federal gasoline tax and allow states the flexibility to fund roads and highways more effectively and efficiently.

• State and Local Action: Install as many electronic toll facilities as possible (on both existing roads where federal or state waivers can be granted and on new roads such as the SR 91 Express Lanes). The best way to make this happen is to establish contracts with private firms such as those on the SR 91 Express Lanes and Highway 407 in Toronto. Not only do private investors have more capital with which to build, maintain, and operate the facilities, they are more willing and able to innovate in order to improve both efficiency and service on the road.

• State Action: Once congestion pricing has expanded and toll revenues begin to accumulate, begin to phase out so-called user fees such as gasoline taxes and vehicle registration fees and simply allow toll revenues to fund the roads. A temporary rebate program such as the one proposed in Oregon may facilitate the transition to toll funded roads.

SPECIFIC OPPORTUNITIES FOR CONGESTION PRICING IN CALIFORNIA

Bay Area Bridges. California already has numerous toll facilities that could easily adopt variable pricing. While the Bay Bridge Congestion Pricing Demonstration Program failed the first time around, congestion has worsened since then and polls show that 58 percent of people in the Bay Area like the idea. Even more pertinent is the fact that plans to build a new eastern span of the Bay Bridge are currently underway, and planners have stated that raised tolls will have to cover some of the construction costs.

Specifically, the Bay Bridge, as well as the Richmond-San Rafael Bridge, doubled its toll to $2 on January 1, 1998. The increased toll will help finance the new Bay Bridge, and will also provide funds for the seismic strengthening of the other four Bay Area toll bridges. A congestion pricing program that implements a $3 or $4 surcharge would do more than help cover construction costs, it would reduce congestion and air pollution caused by Bridge traffic.

The Carquinez Bridge between Oakland and Sacramento has already implemented electronic tolls, and planners hope to install them on the Richmond-San Rafael, Bay, Antioch, and Benicia-Martinez bridges by spring 1998. Installing variable pricing on these highly congested toll facilities would incur few implementation costs, would reduce time loss caused by traffic, and would help bring the Bay Area back into attainment with the EPA air quality standards.

Los Angeles. Other areas around the state would benefit from more toll facilities as well. Los Angeles, in particular, has some of the worst traffic congestion in the country.

In 1991, the Environmental Defense Fund and the Regional Institute of Southern California outlined a specific plan proposing an Automated Vehicle Identification (AVI or electronic toll) scheme on regional freeways and arterial systems that charged a variable fee that averaged $0.15 per vehicle mile traveled (VMT) during congested road hours. EDF estimated that the plan would reduce VMT’s by 5 percent, or 4.8 billion, each year. The number of trips would decline 3.8 percent, the amount of fuel used would decline 9.2 percent, and reactive organic emissions, carbon monoxide emissions, nitrogen oxide emissions, and carbon dioxide emissions would each decline 8.2 percent, 12.1 percent, 8.4 percent, and 9.2 percent respectively.⁵⁷

Sonoma County. In Sonoma County, the Metropolitan Transportation Commission, Caltrans, and the Sonoma County Transportation Authority are conducting a feasibility study for building two variable-priced toll lanes on the median of State Route 101 between Marin County and Santa Rosa. Using the SR 91 Express Lanes and the toll lanes on Interstate 15 in San Diego as models, pricing structures and fee levels are currently being determined. Also under consideration is the funding source, since construction costs will undoubtedly be high.⁵⁸

CONCLUSION

Congestion constitutes a growing problem with the current transportation system. Because congestion results from a high demand (road use) and a limited supply (road space), the most appropriate proven response is a pricing system. Without prices to reflect the shortage, it is unlikely that congestion will improve.

Economically and environmentally, congestion pricing makes sense. Experience in California and abroad proves that congestion pricing works to both reduce traffic backup and improve air quality. Yet economists and environmentalists cannot change the system alone.

Innovation and bureaucracy do not go hand in hand. As long as highways and transportation are funded by federal bureaucracies and pork barrel politics, the status quo will continue to dominate. The only way to effectively prove that congestion pricing works is to try it, and experimentation seldom happens when authority is delegated to the highest political power. The most effective way, therefore, to enact congestion pricing is to devolve transportation funding and management, privatize whenever possible, and attempt to reform federal law.

California would especially benefit from congestion pricing because of the enormous environmental and economic costs that traffic imposes on the state. While reform at the federal level would provide widespread opportunity for congestion pricing, California can take the initiative and begin reforms on a state level. Already demonstration programs and private sector experimentations have paved the way for further implementation. It is up to legislators in both Sacramento and Washington to sponsor bills, make reforms, and grant waivers that allow congestion pricing to increase options, efficiency, and equity on California roads.promoting individual freedom and personal responsibility, the cornerstones of a fair and free opportunity society. With its reliable and timely research, PRI puts ideas into action, influencing policy makers in the nation’s most populous state and in its capitol. PRI has published the work of more than 200 scholars, including three Nobel Laureates. PRI, a 501(c)(3) non-profit, is funded entirely by voluntary donations.

ENDNOTES

1. David L. Schrank, Shawn Turner, and Timothy J. Lomax. Urban Roadway Congestion—1982-1994. (College Station: Texas Transportation Institute), 1997, vol. 1.

2. California Air Resources Board. The Air Pollution Transportation Linkage. (Sacramento: California Air Resources Board), 1989, p. 4.

3. Schrank, Turner, and Lomax.

4. Anthony Downs. Stuck in Traffic: Coping with Peak-Hour Traffic Congestion. (Washington DC: The Brookings Institute, 1992), 9.

5. Ibid.

6. Ibid.

7. Ibid.

8. Schrank, Turner, and Lomax.

9. Downs, p. 44.

10. California Environmental Protection Agency Air Resources Board Research Division, “Transportation Pricing Strategies for California: An Assessment of Congestion, Emissions, Energy, and Equity Impacts,” November 1996, Contract No. 92-316, p. 3-15.

11. Schrank, Turner, and Lomax.

12. Ibid.

13. “Heavy Traffic.” San Francisco Examiner, February 23, 1997, p. A-14.

14. Shrank, Turner, and Lomax.

15. “Heavy Traffic.” San Francisco Examiner, February 23, 1997, p. A-14.

16. Shrank, Turner, and Lomax.

17. Carla Marinucci. “Summit tackles traffic as a regional problem.” San Francisco Examiner, April 19, 1997, p. A6.

18. Ibid.

19. “All backed up and no place to go.” San Francisco Business Times: Transportation in the Bay Area. September 5-11, 1997, p. 2-A.

20. California Air Resources Board. The Air Pollution Transportation Linkage. ( Sacramento: The California Air Resources Board), 1989, p. 4.

21. Michael Cameron, “Transportation Efficiency: Tackling Southern California’s Air Pollution and Congestion,” The Environmental Defense Fund, 1991, p.8-9.

22. Ibid.

23. David Van Hattum and Maria Zimmerman. Buying Time: A Guidebook for Those Considering Congestion Relief Tolls in Their Communities. (Hubert M. Humphrey Institute of Public Affairs, University of Minnesota) October 1996, p. 2.

24. Bay Area Economic Forum, “Market-Based Solutions to the Transportation Crisis: The Concept,” San Francisco, 1990, p. 7.

25. Downs, p. 49-50.

26. “Congestion Pricing Pilot Program: Overview and Status Report July 1997.” Available: http://www.hhh.umn.edu/Centers/SLP/Conpric/conpric.htm.

27. “REACH Task Force Initial Public Opinion Survey Task 2B: Draft Analysis of Key Findings,” Godbe Research & Analysis and Guerrs & Associates, August-September, 1996, p. 7.

28. Bob Mitchell, “Highway 407 transponders delayed another month.” The Toronto Star, October 22, 1997, p. D6.

29. Ibid.

30. “Congestion Pricing Notes; Spring 1996.” Available: http://www.hhh.umn.edu/centers/SLP/Conpric/conpric.htm.

31. Gerald S. Pfeffer, “Testimony before the Senate Committee on Environment and Public Works Subcommittee on Transportation and Infrastructure,” Federal News Service, March 6, 1997.

32. “Congestion Pricing Pilot Program: FHWA Overview and Status Report; January 1996.” Available: http://www.hhh.umn.edu/Centers/SLP/Conpric/conpric.htm.

33. Gordon J. Fielding and Daniel B. Klein, “High Occupancy/Toll Lanes,” The Reason Foundation, Policy Study #170, November 1993.

34. Stephen Shmanske, “The Bay Bridge Blunder,” CATO Regulation, (Washington D.C.: The CATO Institute) vol. 19 No. 4, 1996. Available: http://www.cato.org/pubs/regulation/reg19n4f.html.

35. Cal EPA Air Resources Board, p. 3-5.

36. Ibid, p. 3-6.

37. The Metropolitan Transportation Commission. “California’s Transportation Future: Paying for What You Get and Getting What You Pay For,” December 1995, p. 6.

38. Donna Hemmila, “All backed up and no place to go,” San Francisco Business Times. September 5-11, 1997, p. 4A.

39. University of California Polytechnic Institute at San Luis Obispo, “Preliminary Findings of the ARDFA SR 91 Study.” Available: http://airship.ardfa.calpoly.edu.

40. Randy Pozdena, “Where the Rubber Meets the Road: Reforming California’s Roadway System,” The Reason Public Policy Institute, Policy Study # 191, August 1995.

41. William Vickrey, “Principles of Efficient Congestion Pricing,” June 8, 1992. Available: http://www.hhh.umn.edu/Centers/SLP/Conpric/conpric.htm.

42. Kenneth Small, “Using the Revenues From Congestion Pricing: A Southern California Case Study,” The Reason Public Policy Institute, Policy Study No. 145, September 1992.

43. Michael Cameron, “Efficiency and Fairness on the Road: Strategies for Unsnarling Traffic in Southern California,” The Environmental Defense Fund, 1994, p. 6-7.

44. EPA Office of Air and Radiation’s Office of Mobile Sources Market Incentive Resource Center. Available: http://www.epa.gov/OMSWWW/market.htm.

45. “REACH Task Force Initial Public Opinion Survey Task 2: Draft Analysis of Key Findings,” p. 1.

46. Winston Harrington and Alan Krupnick, “Public Support for Congestion and Pollution Fee Policies for Motor Vehicles: Survey Results,” Resources for the Future, October 1996, p. 9.

47. Ibid.

48. Ibid.

49. Ibid.

50. Ed Carson, “Road Hogs: Will Congress cut back the transit pork?” Reason, May 1997, p. 49-50.

51. Edward Royce, “Let’s Bring California Gas Taxes Back Home,” The Orange County Registrar, May 211997, p. B8.

52. Chris Galm, “Why our highways need repair,” Consumers’ Research Magazine, No. 11, Vol. 79, November 1996, p. 11.

53. Ibid.

54. Ibid.

55. Peter Samuel, “Highway Aggravation: The Case for Privatizing the Highways,” Policy Analysis No. 23, The Cato Institute, June 27, 1995.

56. John Charles, “Market-based reforms needed to solve transportation finance crisis.” Policy Perspective, The Cascade Policy Institute, No. 1002, August 14, 1997.

57. Cameron, 1991, p. 37.

58. Metropolitan Transportation Commission, SR 101 Variable Pricing Study: Attachment A, p. 13-20.