Putting a Price on Mobility

Congestion tolls on Virginia highways would reduce the rush hour crunch

Debates about tolling our highways traditionally focus on the potential revenues they’ll raise and how the money will be spent once it is raised. While this is an important piece of the overall equation, it falls short of detailing the full benefit tolling can bring.

To begin, we must understand that a toll is no different from any other service charge we pay. It is nothing more than a price. Second, technology is moving us rapidly away from the traditional toll collection model with long lines of commuters waiting to pay their toll – Smart Pass and EZ Pass systems are already utilized by many of the Commonwealth’s toll road users today. However, cutting-edge technologies enable us to monitor traffic flows and make real-time price adjustments based on those flows. A simple concept – as demand increases, so does price and vice versa.

As consumers, we’re generally willing to pay a little more for something that is a little better. The same is true for the added convenience or virtual guarantee of being on time or not sitting in traffic.

Following that line of thinking, one of the most often overlooked benefits of tolling is that it encourages economic thinking. Variable pricing enables us to put a price on time – allowing those who are willing to pay to avoid congestion. If we can appropriately price the cost an urban driver puts on the system during rush hour, the incentives for that driver change significantly. Faced with options, that driver will either pay the cost, find someone to share the cost by carpooling, commute during non-peak hours, find other means to get to work by bus or train, or arrange to telecommute.

Congestion will decrease almost immediately. Economic factors and decision making will lead to greater use of each option above – at a minimum, some drivers will no longer commute alone in their car during rush hour.

A recent national road pricing study in the United Kingdom produced a stunning conclusion – using road pricing to achieve just a four percent reduction in traffic reduces congestion by 50 percent. Thus, not many people need to use toll roads in order to significantly reduce congestion on today’s main thoroughfares.

One of the biggest arguments against tolling or road pricing is that it isn’t “fair” because the lanes would be open only to those who can afford to use them. This argument is flawed because users of the “pay” road free up space on the “free” road, thus reducing congestion and improving the average speed for non-payers. Indeed, two variable pricing projects in California show that pricing really keeps traffic flowing. The priced lanes on SR-91 carry twice as many vehicles per lane as the unpriced lanes at speeds 3 to 4 times faster. In addition, the free lanes are experiencing shorter commute times and less congestion than before. A classic win-win. We don’t object to different levels of service for other commodities including our airlines and rail service, and there is no reason to believe would with toll roads.

Pricing, however, is itself more equitable. Those who use the network during peak periods should pay more than those who do not. This is the same type of pricing we use for telecommunications, electricity, movies, time-share vacation homes, airline tickets, and virtually any other business that experiences higher demand periods.

There is no justifiable reason why highways are any different. Why should a driver on Sunday pay the same charge to use the toll road as a commuter driving to work at 8:00 a.m. on Monday morning? The third most overlooked benefit of road pricing is that it creates customers and encourages innovation. Toll authorities in America tend to be more customer-focused because their revenues are directly tied to the number of drivers using their facility. While VDOT has made dramatic strides and improvements in its operations, the agency falls well short of being labeled customer centric.

We must not lose sight of the purpose of our transportation network. It is to move people in the most efficient and effective manner possible. Pricing as a model must be part of the future solution to our transportation needs. Americans are always willing to pay more for quality or convenience.

We’re willing to pay upwards of $5.00 for Starbucks even though our offices provide free coffee. The US Postal Service will deliver a letter for 37 cents, but we are willing to pay $15 for guaranteed service by FedEx and UPS.

Our highways should be no different. Drivers will pay to get where they’re going in a shorter period of time when it is convenient to do so.

Geoffrey F. Segal is the director of government reform at Reason Foundation.

Geoffrey Segal is the director of privatization and government reform at Reason Foundation, a nonprofit think tank advancing free minds and free markets. He is also editor of Reason's Privatization Watch.

Segal recently served as an advisor to Florida Gov. Jeb Bush's Center for Efficient Government. In addition, his counsel has recently been sought out by Gov. Mark Sanford and Indiana Gov. Mitch Daniels, where he is working with the Government Efficiency and Financial Planning group inside the Office of Management and Budget. Segal is also an advisor to the Cost Cutting Caucus in the Virginia House of Delegates.

Segal is a highly skilled policy analyst with a strong, diversified background in policy research and project analysis focusing on public-private partnerships, competition, government efficiency, government spending and waste, transparency, accountability, and government performance.

Segal has worked closely with legislators in California, New York, Florida, Indiana, Virginia, Pennsylvania, Georgia, Illinois, Oregon, Kentucky, Ohio, Washington D.C., Colorado, Minnesota, Maryland, Maine, North and South Carolina, Hawaii, Arizona, and Texas in efforts to reduce government spending, improve government performance, and enhance accountability in government programs.

Segal has testified to the United States Senate and numerous state legislatures and agencies. He has written dozens of articles for leading publications including Investor's Business Daily, Atlanta Journal-Constitution, Indianapolis Star, Orange County Register, Los Angeles Daily News, and New York Sun. Segal is also a contributing editor to Budget & Tax News. A frequent guest on television and radio, he has appeared on Fox News Channel's "Your World with Neil Cavuto" as well as CNBC's "Closing Bell w/Maria Bartiromo" and "Power Lunch."

Segal earned a B.A. in Political Science at Arizona State University and a Master of Public Policy from Pepperdine University.