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Reason Foundation

Surface Transportation Innovations #22

Topics include: how congestion harms urban economies; trucking re-regulation in Congress; HOV enforcement; and other breaking news stories.

Robert Poole
April 1, 2005

In this issue:

How Congestion Harms Urban Economies

By now, everyone is familiar with the annual Urban Mobility Reports produced by the Texas Transportation Institute. The latest one (September 2004) estimated the annual cost to motorists of being stuck in traffic in the largest 85 urban areas at $63 billion. But that is simply the cost of individuals' wasted time and wasted fuel. What about other costs of congestion?

I was pleased to discover a detailed 2001 report on this subject from the National Cooperative Highway Research Program. NCHRP Report 463, "Economic Implications of Congestion," seeks to provide a comprehensive overview of how urban traffic congestion affects producers of economic goods in terms of their costs, productivity, and output. Congestion interferes with just-in-time inventory systems, increasing inventory costs. It reduces worker availability and raises payroll costs (firms in highly congested areas end up paying more to attract skilled workers). It shrinks the market area for a firm's products, and similarly reduces the range of job opportunities for workers. But how large are these effects?

The research team (led by Glen Weisbrod of Economic Development Research Group, Donald Vary of Cambridge Systematics, and George Treyz of Regional Economic Models) developed several models and collected what data they could find to run the models, using Chicago and Philadelphia as case-study areas. Unlike the TTI reports, it does not end up with a simple "congestion costs businesses in Chicago $X million per year" finding. Because the issue is so complex, the models somewhat speculative, and data not always available (e.g., details of urban truck trips), the report is useful more as a way of understanding these additional impacts of congestion than as a way of obtaining overall numbers. And instead of attempting to say that congestion today costs $X million, they attempted to model the change in business costs that would result from various congestion-reduction scenarios.

For example, their first scenario postulated a 10% reduction in travel times throughout the metro area. How much difference would this make to the delivery of business products and services by truck (work-to-work trips)? Their model shows an annual cost reduction of $980 million in Chicago and $240 million in Philadelphia for this scenario. More limited congestion-reduction scenarios (for specific corridors or areas) showed smaller cost reductions. A second set of exercises looked into labor market access. The modeling here takes into account higher compensation costs needed to attract workers in congested areas, costs of travel time variability, and reduced productivity due to access to a smaller pool of skilled labor. Once again using the scenario of a 10% reduction in travel times, the results for Chicago and Philadelphia were annual savings of $350 million and $200 million, respectively.

There is far more in this 60-page report than I can summarize here, and I highly recommend it to everyone interested in urban traffic congestion. It can be purchased in hard copy from the Transportation Research Board or downloaded here.

Truck Re-Regulation in House Bill

One of the great successes of the Carter era was transportation deregulation. Airlines were freed from CAB regulation in 1978 and railroads and trucking from ICC regulation in 1980. Trucking deregulation led to a large increase in companies and an explosion of competition, slashing freight rates and saving shippers (and hence consumers) tens of billions of dollars per year.

One of the key features of trucking regulation was federal control of shipping rates. Alas, the surface transportation bill passed by the House in March would stick the government's nose into shipping rates for the first time in 25 years. It would require motor carriers, brokers, and freight forwarders to impose a fuel surcharge whenever fuel prices passed a benchmark level, to be set initially at $1.10 per gallon. The complex statutory formula takes three pages of text to define. It was slipped into the bill, without debate, by Rep. Roy Blunt (R, MO), at the behest of the Owner-Operator Independent Drivers Association, which has long advocated such a measure. Shipping industry leaders fear that Blunt's counterpart, Sen. Kit Bond (R, MO) will put a similar provision into the Senate bill currently being drafted. OOIDA is headquartered in Missouri.

The independent truckers complain that their members pay for fuel out of their pockets but often don't get reimbursed for it. But why shouldn't this be worked out in the marketplace like other issues? There's a nationwide truck driver shortage these days, which is prompting some truckload carriers, such as Barr-Nunn, to offer full reimbursement for anything a driver pays beyond $1.04 per gallon. That shows the marketplace at work, to address the problem.

Passage of this provision would not kill trucking deregulation, but it would set a terrible precedent for federal intrusion into the economics of shipping. Given the huge annual benefits from deregulation, I'd love to see the White House issue a veto threat on this dangerous provision.

Automated HOV Enforcement? Don't Hold Your Breath

The dirty little secret of HOV lanes is that enforcement of the occupancy requirements is, in many cases, pathetic. Violation rates of 10, 20, and 30% are not that uncommon. Policing HOV lanes is costly and difficult, so it's not surprising that it tends to be pretty lax. So for years researchers have been hoping for some kind of automated enforcement system that could accurately count the number of occupants and report that number to highway authorities.

A comprehensive look at the feasibility of this idea is provided by a December 2004 report from McCormick Rankin Corporation, commissioned by the Ontario Ministry of Transport. "Automated Vehicle Occupancy Monitoring Systems for HOV/HOT Facilities" does a thorough job of reviewing the possible technologies, estimating the costs of what it judges as the most feasible approach, and addressing the difficult policy issues involved in implementation.

Its review of previous research pretty clearly establishes that no form of external camera surveillance is up to the task, whether ordinary video, mid-infrared, or near-infrared. Instead, it focuses on a number of possibilities for in-vehicle occupancy detection�everything from weight sensors on seats to in-vehicle cameras, heartbeat monitors, thermal/infrared sensors, and even fingerprint/biometric recognition. (If you sense major privacy/Big Brother concerns, you're right!) The researchers pin their greatest hopes on the U.S. federal requirement that all new cars sold from 2006 onward must have a system in place to detect the front-passenger-seat occupant, for "smart" air bag purposes.

But even that is a pretty slim reed. First, it would only detect one passenger, when future HOV lanes increasingly will need to up their occupancy requirements to HOV-3 or HOV-4 to prevent the lanes from being filled up and congested. Second, any strategy based on new-vehicle equipage must cope with the fact that it takes about 20 years for 95% of the fleet to be replaced. Third, if such systems (including the communications part) cost several hundred dollars per car (as the report estimates), what sense would it make to mandate outfitting the entire fleet when only a handful of people in a few dozen metro areas use HOV lanes?

The report does its best to make a case, but it ends up illustrating a giant case of the tail wagging the dog. We should NOT redesign the entire vehicle fleet just to patch up a gaping flaw in the nation's experiment with HOV lanes. Rather, as we convert HOV lanes to HOT lanes, and increase the occupancy requirements for free or reduced-fare passage, the sensible approach is to abandon the idea of including casual carpools and "fampools" as eligible users. If the only discounted or free high-occupancy vehicles were employer-certified carpools and vanpools, they could be issued a transponder valid for free or reduced rates only during commuter hours (and it would be up to the employer to monitor compliance). At one stroke, that would eliminate "HOV enforcement" as a separate issue. All enforcement would then be simply toll-enforcement, carried out electronically (Transponder present? Valid account? Adequate balance?). That's a far more sensible way to go.

Vehicle Emissions Will Soon Be a Non-Problem

I can't tell you how many discussions I've had with other transportation professionals in which a proposal that would expand highway capacity is objected to on grounds that it would increase vehicle miles traveled and therefore worsen urban air quality. That thinking was so pounded into us during the 1970s and '80s that it's become almost second-nature. But in the 21st century, it's wrong.

I cite two studies that have crossed my desk in recent months. The first, from the Foundation for Clean Air Progress, is "Ambient Air Quality Trends." It's a careful analysis of EPA data comparing recent measurements of the six criteria pollutants with levels of those substances in 1980 and 1990. As such, it documents the large absolute reductions that have occurred during a time when economic output has increased 164% and vehicle miles traveled have increased 155%. The only pollutant for which progress has been only modest is fine particulates (PM-2.5). Against that factual background, it's dismaying to find that seven out of 10 Americans thinks air quality has either gotten worse or stayed the same since 1970.

But even more encouraging is a forward-looking report by my Reason colleague Joel Schwartz, "No Way Back: Why Air Pollution Will Continue to Decline." Joel reviews what will happen with vehicle emissions over the next 20 years, drawing on modeling of fleet-average emissions done using EPA and the California Air Resources Board mobile-source emissions models. Thanks to ever-tougher new-vehicle standards (already in place) and fleet turnover, vehicle emissions are going down between 5 and 15% a year, while driving is increasing at less than 2% per year. Hence, emissions from motor vehicles will be about 80% below current levels 20 years from now, despite large increases in driving. And don't fret over the large market share for SUVs and pickup trucks; as of 2004, they have to meet the same federal and California emission standards as cars. One of the few things that could slow this welcome progress is some new government mandate that, by making new cars significantly more expensive, would cut the rate of fleet turnover.

When we think about significant new investments in the highway system�e.g. HOT Networks or Toll Truckways�the knee-jerk reaction in some quarters is: You could never get approval for that, due to air quality concerns. But since large projects of this sort, even if approved in principle this year, would not likely open to traffic for another decade, vehicular emissions by then will be much lower than today. We urgently need to modernize the air quality conformity requirements for large transportation projects to catch up with this new reality.

Quotable Quotes

"A number of states are turning in this direction [tolls and public-private partnerships] as they discover that other funds aren't enough to pay for transportation. To be realistic, I think there will have to be more emphasis on this in the future. The user is going to have to pay more. At least if you are paying a toll, you know exactly where it is going. It is going to pay for that facility."

—Roger Snoble, CEO, Los Angeles County Metropolitan Transportation Authority, in Metro Investment Report, February 2005.

"It is time for a new consensus that is based on the realization that we will never get Americans out of their cars. Trying to make the experience worse or more expensive is not only politically unpopular, but it is bound to fail at anything but the margin. It is time we not only accept the fact that in America many people want to live in suburbs and drive cars, but we should also work to solve the problems this creates. We need to develop solutions that let people go where they want faster and more conveniently while at the same time being sure not to exacerbate problems."

—Rob Atkinson, Vice President, Progressive Policy Institute, in An Exchange on Building U.S. Road Capacity.

Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy

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