The Rocky Road to Real Congestion Pricing: Lessons from Georgia

An critically important story is unfolding in Atlanta, Georgia where the newly opened High-Occupancy Toll (HOT) lanes (converted from High Occupancy Vehicle lanes) are facing a significant technical and political test. The Georgia I-85 Express Lanes are priced to ensure free flow travel 24 hours a day, seven days a week, and the way the toll authority is achieving that is through dynamic pricing–prices that change in real time based on the level of congestion. Unfortunately, the HOT lanes have had a rocky start.

The problem isn’t that the HOT lanes are too congestion. Rather, it’s that they are practically empty! The toll authority priced the lanes too high, frustrating drivers unwilling to pay the high price and sitting in the “free” lanes mired in congestion. The governor responded by requiring he toll authority to drop its price to encourage more solo drivers to jump into the HOT lanes.

It turns out, the mathmatical formulas used to set the price (algorithyms) weren’t calibrated properly. The technical folks misjudged the likelihood drivers would move from the congested unpriced lanes to the uncongested HOT lanes. As a result, few were taking advantage of the HOT lanes, and most drivers were opting to sit in more congested regular lanes.

As reports, the toll authority was already adjusting the pricing downward to encourage greater use. Nevertheless, the governor still jumped in to address the brewing political backlash. The HOT Lanes are working much more smoothly and efficiently now.

Whether the political maelstrom this has created effects the long-term political viability of the hot lanes has yet to be seen.

For more, read Reason transportation analyst Baruch Feigenbaum’s excellent oped in the Atlanta Journal-Constitution (10/17/2011).

Also, Peter Samuels has an extensive reporting at here and here.

Samuel R. Staley, Ph.D. is a senior research fellow at Reason Foundation and managing director of the DeVoe L. Moore Center at Florida State University in Tallahassee where he teaches graduate and undergraduate courses in urban planning, regulation, and urban economics. Prior to joining Florida State, Staley was director of urban growth and land-use policy for Reason Foundation where he helped establish its urban policy program in 1997.