Greenbacks Über Gridlock
REACH Task Force Shows L.A. How to Save Billions
in Smog and Congestion Costs
by Ward Elliott
Professor of Government
Claremont McKenna College
In recent years, air pollution and congestion have cost the average household in the Los Angeles Basin about $4,000 a year -- about $16 per workday. Since 1990 the average household in the South Coast Basin has lost four 40-hour workweeks a year to traffic delay. By 2010, if official models are right, smog costs could stay the same or decline, but congestion costs will rise to $2,850 a year per household, roughly $11 per workday. The average household in the Basin would then lose ten workweeks a year in traffic delay. California smog control planners have run low on cost- effective conventional controls for smog and congestion. In 1997, after two years of deliberation and $1.5 million worth of study, Reduce Emissions and Congestion on Highways (REACH), a blue-ribbon California policy Task Force, unanimously recommended that full-scale emissions charges and congestion charges be studied and developed for the long run, and HOT (high-occupancy/toll) lane demonstration projects for the short run. Subsequently both recommendations were unanimously adopted by the Southern California Association of Governments, the area's regional planning agency. This article represents the author's analysis of the Task Force's studies and findings.
REACH's models suggest that a combination of high-resolution emissions charges averaging a penny or so a mile, and congestion charges of 10-30-cents per peak-traffic mile could produce smog reductions worth more than $200 million a year. Depending on coverage and modeling assumptions, congestion charges could also save up to three or four billion dollars a year by reducing travel delays. This could save the average household in the Basin about $2-3 per workday, $6-700 per work year. See Appendix. In the process, it appears that some of the combinations would generate more than enough revenues to replace all 1991 transportation taxes, fares and fees, or, alternatively, to replace two-thirds of 1991 property or sales taxes. 90 percent or more of the benefits would be from congestion relief.
Until the late 1990's emission, and especially congestion charges have not been popular with the general public, but, if the models and the Task Force's attitude surveys are right, adopting some combination of the two seems to be a "no-brainer" compared to all other alternatives, including doing nothing.
Southern Californians have been struggling for more than 50 years to control smog and congestion. On smog they have been gaining, but they still have a long way to go. The Los Angeles Air Basin has long had the worst air and heaviest pollution costs in the country.
For many years, smog cost estimates for the South Coast Air Basin have tended to range between $10,000 and $20,000 per ton; so have the South Coast Air Quality Management District's (SCAQMD's) cost cutoffs for regulatory pollution controls (See Appendix Fourteen of longer, more documented version available from the author on request). The South Coast (Los Angeles Basin) Air Quality Management District's estimates still seem to be in this range, but more recent USEPA estimates are much higher (Appendix Fourteen of longer version). The REACH Task Force's Strategy Committee, which did not have access to the USEPA estimates (because they had not been published), used estimates of $9,000 per ton of Volatile Organic Compounds (VOC), $10,000 per ton of Oxides of Nitrogen (NOx), and $21,000 per ton of Particulate Matter (PM10), based primarily on cost cutoffs in the 1994 South Coast Air Quality Management Plan. Regulatory cost cutoffs in the 1999 AQMP, the most recent, are somewhat higher, but these older estimates, though necessarily tentative, still seem as serviceable as any others available. If every ton of VOC, NOx, SOx, and PM10 in the Task Force's 1993 baseline inventory did $10,000 worth of damage, total 1993 smog costs in the Basin would have been about $11.5 billion a year, or about $2,200 per household per year. Under these assumptions, smog costs would be about six dollars per household per calendar day, six cents per average vehicle mile traveled. By several different reckonings, about 80 percent of the damage costs from mobile sources in the South Coast Basin were from ozone and its precursors (See Appendix).
As for congestion, Southern California was already in the slow lane when the Task Force met -- and it has been getting much slower if measured by the growing traffic density on city streets and freeways, and somewhat slower if measured by trends in average trip time. Average travel time to work in the Basin, after holding steady for many years (Meyer, 1994; Gordon and Richardson, 1994), started rising in the mid-1980's, increasing from 23.6 minutes in 1980 to 26.4 minutes in 1990 (L.A. Times, Nov. 27, 1996, p. A5 c. 4). Before, during, and, no doubt after this slight increase, the commuting public managed to offset much of the catastrophic, density-based gridlock projected by transportation professionals by moving farther into the suburbs, often drawing jobs with them. Some may continue this sprawling process in the future -- as long as there is room for them to do so.
But, for a sizeable minority of 1990's commuters, maybe a third, commuting already involved billions of dollars worth of delay, and most planners expect the situation to get steadily worse. Measured by traffic density, Los Angeles has had the worst congestion in the country for more than fifteen years. In 1991, according to Cameron (1994), the average household in the Southern California Association of Governments (SCAG) area lost the equivalent of four 40-hour workweeks a year to congestion delay of private autos only -- plus more weeks if you count delay for commercial traffic. At an assumed time value of $6.80 per person hour, the resultant costs in delay and lost productivity have been estimated at about $7.7 billion for 1991 -- $9.4 billion, if you also count the extra cost in fuel, maintenance, and accidents (Calculated from 1996 SCAG Draft RTIP, Table II-12, for cars, and, for all traffic, 1991 TRIPS Origin and Destination Survey, summarized in Cameron, 1994, p. 7; SCAG, 1988, Table B-5, cited, Cameron, 1994, p. 8, n. 22; see Hanks and Lomax, 1990).
These imply 1990's congestion costs on the order of $26 million per calendar day, and of nine cents per average mile, 23 cents per peak-hour vehicle mile, and two cents per off-peak mile, assuming that 36% of the VMT and 85% of the congestion delay take place during peak hours. For the average household in the Basin, total congestion costs in recent years would be about $1,800 per year, $7 per workday. Half of the congestion is recurrent, half varies with weather and "incidents," (though "non-recurrent" congestion is still overwhelmingly concentrated in peak hours) and could be somewhat harder than recurrent congestion to control with economic incentives of the type discussed here. But recurrent congestion alone cost the average family in the Basin $900 a year in the 1990's, and "non-recurrent" peak-hour congestion another $630 or so. Both could be substantially reduced with congestion charges.
By 2010, most studies project two- to threefold increases in auto traffic delay even if tens of billions of dollars worth of additional roads and rail lines are built by cash-strapped Los Angeles and Orange Counties (Wilbur Smith Associates, 1996, p. 8; SCAG 1996 Draft RTIP, Table II-12). If the new facilities are not built, traffic delay would increase by three- or fourfold. (SCAG 1996 Draft RTIP, Table II-12). The average round-trip commute -- now about 53 minutes -- could easily be an hour and a half longer a few years later in this century. If auto delays increase by, say, threefold, the average household, which now loses the equivalent of four workweeks a year to traffic delay would lose 12 workweeks a year to traffic delay, a loss exceeding $3,200 a year with no allowance for additional fuel, maintenance, accident costs, or time loss costs for commercial traffic.
These numbers are approximate because planning documents do not always make it clear whether they are counting calendar days or workdays, private traffic only, or all traffic, freeways only, or all roads, how they define peak hours, and so on. Many of these conversion problems, and some field-expedient ways of coping with them, are discussed in the notes to the Appendix. There is much room for debate about the projections -- whether and when the tens of billions of dollars of assumed expansion will take place, and whether people will continue to find ways to sprawl and adjust their way out of the worst forms of gridlock. And, as we have seen, there always has been much room for debate about smog costs.
It is one thing to acknowledge that there is room for debate at the margins, but quite another to ignore the massive, undeniable problems at the core. By the best available midrange estimates, the average household in the Los Angeles Basin seems to lose about $4,000 a year in life, health time, and productivity, and no one thinks that the losses, due to congestion at least, will decrease in the foreseeable future. These losses are not far from what the average household now pays in yearly property and sales taxes combined, but with one big difference. You do get something back for your taxes. But you get nothing at all back for your lost hours of time, life, health, and productivity.
With such high stakes, it is not surprising that the SCAG, the SCAQMD, and an industry consortium called COALESCE set up a 75-person community task force to Reduce Emissions and Congestion on Highways (REACH), and that the task force spent two years of research and deliberation, and a million and a half dollars of research funds, looking for better ways to reduce this heavy burden.
The Task Force considered a wide range of incentive alternatives, ranging from simple, low-resolution ones like gas taxes or dirty-car ownership fees, to more complex, high-resolution ones like time- and place-specific congestion charges and emissions charges based on each vehicle's actual emissions characteristics (see below). In the end, it recommended the highest-resolution strategies available -- emissions charges and congestion charges -- for mid- and long-term implementation throughout the Basin. It also recommended HOT lanes, a high-resolution congestion-charge variant, for early study and adoption in selected corridors (REACH Task Force, 1997, pp. 3-4).
II. Why resolution matters
Strong incentives and tight targeting of harmful behavior are much more likely to change the behavior fairly and efficiently than weak incentives and loose targeting. The REACH Task Force was not the first group to do a serious comparative study of smog and congestion reduction strategies for Southern California. Caltech's Environmental Quality Lab did some pioneering studies in the 1960's (Caltech EQL, 1972). The California Transportation Commission did a multi-volume study in the 1970's (Eckert, 1979; Elliott, 1986). The South Coast AQMD Advisory Committee, with the help of three major conferences co-sponsored by the AQMD, the California Air Resources Board, and UCLA, and paralleled by a blue-ribbon study panel of environmentalists organized by the Coalition for Clean Air, spent most of the early 1980's studying economic-incentive strategies to control congestion and smog. Among the outcomes were RECLAIM, the AQMD's tradable emissions permit market; California Assembly Bill 680, authorizing what is now the Route 91 HOT-lane project; and provisions in the Federal Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) and the Clean Air Act Amendments of 1990 encouraging the use of pricing incentives for transportation and smog control. In 1994 the National Research Council's Transportation Research Board published a two-volume study of congestion charges (NRC, 1994), and the Environmental Defense Fund published an analysis of strategies for unsnarling traffic in Southern California (Cameron, 1994). Since then, the California Air Resources Board has commissioned a very ambitious study of transportation pricing strategies for California, advance copies of which (CARB, 1995) were made available to the REACH Task Force.
More often than not the study groups started out with a strong bias in favor of simple, low-resolution strategies (such as taxing dirty cars or setting up a clean-air trust fund) which looked politically palatable at first glance. But in every case they wound up recommending more complex, high-resolution strategies (such as emissions or congestion charges) which seemed much less palatable at first glance, but offered far more long-run workability at lower cost. The REACH Task Force followed just this course, leaving many lower-resolution strategies -- flat gas taxes; flat VMT (vehicle-miles-traveled) charges; parking charges; dirty car sales or ownership charges, and Rule 2202, the South Coast AQMD's employer rideshare mandate -- on the cutting room floor. It settled ultimately on emission and congestion charges as the most inviting strategies for further action because these are tightly targeted on the most harmful behavior and don't put unnecessary burdens on harmless behavior. Even a mid-resolution strategy of emissions-weighted, pay-at-the-pump imputed VMT charge, though carefully researched and evaluated by consultants Wilbur Smith Associates (WSA), did not make it to the Task Force's final recommendations because its charges could not be made time-specific, and, hence, could offer almost no help in congestion relief.
III. Smog and congestion impacts of different congestion- and emission-charge strategies
The Appendix compares estimated yields and costs of 16 different congestion- and emission-charge strategies under assumptions described in Section I above. Their cost and yield estimates are drawn from three sources: (1) the Wilbur Smith Associates/Comsis studies performed for the REACH Task Force, applying congestion charges to freeways only; (2) the author's extrapolations of WSA estimates to include surface streets, as well as freeways; and (3) estimates by Elizabeth Deakin and Grieg Harvey for the California Air Resources Board (CARB) (CARB, 1995; see also Cameron, 1994, Harvey, 1994). For further details, request the longer version of this article.
The WSA estimates modeled traffic specifically on every freeway, but globally on surface streets, none of which were charged in the model. The Deakin-Harvey estimates modeled traffic globally for all roads in the Basin but, unlike WSA, applied congestion charges both to freeways and surface streets. Thus, the two basic models, WSA and Deakin-Harvey, had contrasting strengths and weaknesses. WSA looked stronger and more detailed on freeways, but weaker on surface streets, and weaker in its inability to model for charges on surface streets. Deakin-Harvey was broader, much less detailed about freeways, much more detailed about impacts on different economic classes, and able to model globally for charges on surface streets. Deakin and especially Harvey were reticent about their modeling assumptions, and Harvey died shortly after the Task Force shut down, leaving many loose ends. But some of the missing assumptions could be gleaned from earlier, more explicit Harvey studies, such as Harvey, 1994, and Cameron, 1994. Others have been borrowed or adapted from WSA and other sources. The notes to the Appendix discuss a number of such borrowings and adaptations, attempting to make the two studies as comparable with each other, and with available planning documents, such as the AQMP and the SCAG RTIP, as circumstances would permit. Though the comparisons and adaptations are far from perfect, the two main studies are generally consistent with each other and with the planning documents. They and the two landmark 1994 studies, by Cameron and by the Transportation Research Board, put transportation planners far ahead of where they were prior to 1994. They do present a valuable, coherent, instructive set of approximations of the most probable impacts of emissions, congestion, and mileage charges of varying levels.
The Appendix gives an overview of all the impacts, costs and yields, with most impacts presented both in percentage variation from baseline and in dollar values. These are: $9,000 per average ton for TOG; $10,000 per average ton for NOx; $21,000 per average ton for PM10; and $6.80 per average person hour for travel time. Readers are free to experiment with different figures, but these are as close to the "going rates" as are likely to be found, and they are, for the most part, the same rates currently in use for regulatory cost cutoffs (See Section I above).
Figure 1: Gross Smog Reduction Benefits, 2010, Selected Strategies
Figure 1 (above) breaks out the estimated smog reduction yields of seven of the 16 strategies. A penny-per-average-mile emissions charge, variable by the emission level of each car, is about as high as the current "going rate" cost cutoffs for industrial polluters. By itself it would control more than $100 million worth of smog per workyear. So would a 15/30-cents a-mile peak-hour congestion charge on all roads, also by itself, assuming the charges had the same impact on surface streets as WSA calculated for freeways (See Appendix). A lower, freeways-only congestion charge would control just under $100 million worth of smog per workyear. Conclusion: either reasonable, "going-rate" emissions charges or reasonable congestion charges could cut smog damage by at least about $100 million a workyear. Deakin and Harvey say the control yield could be more than twice that figure for a 1-cent/mile emissions charge (Appendix), but let us leave that aside for the moment and suppose that $100 million is a conservative, round-number guess for the yield of either strategy by itself.
Figure 1 also says that a combination of reasonable-rate emissions charges and congestion charges would produce at least $200 million worth of annual smog savings, and maybe well over $300 million. $200 million is about equal to the officially-estimated control yield of mandatory ridesharing.
Figure 2 (below) is in some ways the most plainly revealing of pertinent tradeoffs. See Glossary, below, for full definitions of the various strategies. WSA means 'Wilbur Smith Associates." EM1 means "first emissions-charge variant." CP1 means "first congestion pricing variant," freeways only. WE means "Ward Elliott." CP3+ means "third WSA congestion-pricing variant, extended to surface streets." D-H Mod Combo means "Deakin-Harvey 'moderate-impact' combination." ET means $12.5 billion worth of "enhanced transit."
Figure 2: Gross Smog, Congestion Benefits, 2010, Selected Strategies
|Figure 2: The three modeled congestion-charge alternatives that cover freeways and surface streets could save billions of dollars a year in smog and congestion costs. In dollar value, at least 90% of the savings would be congestion costs. Even a penny-a-mile charge, aimed solely at smog, would save four times as much cost from congestion as it would save in costs from smog alone.
Figure 2 compares the yields of the same seven strategies as Figure 1, but with congestion-control benefits included, as well as emission-control benefits. Two features stand out:
(1) none of the official WSA scenarios listed -- neither the reasonable, penny-a-mile emissions charge, which affects all roads, but is not time-specific, nor any of the congestion-charge combination scenarios, which are time-specific but affect freeways only -- has much effect on speed.
(2) the two scenarios combining reasonable penny-a-mile emissions charges with reasonable 10-30-cents-per-peak-mile systemwide congestion charges show enormous time savings, about 15 times greater in dollar value (at $6.80 per person hour per Section 1 above) than the very sizeable smog savings (at $9,000 to $21,000 per ton per Section 1) also produced. The lower estimate, WE CP3+, EM1, would save 680 million person hours a year, the higher, D-H mod, would save 950 million person hours a year (calculated from the Appendix). A third scenario, with 15-30-cents systemwide congestion charges, but no emissions charge at all, equals the WSA penny-a-mile emissions charge in smog reduction and produces 30 times as much savings from congestion relief. In each case, the higher figure (e.g., 30 cents a mile) is the charge for currently crowded links, the lower (10 cents a mile) is a "balancing" charge to keep traffic in charged crowded links from simply shifting to uncrowded links.
Why the three billion-dollar difference in benefits between comprehensive, high-resolution and partial, low-resolution strategies? The short answers are that reasonable emissions charges are too broad and diffuse, too low-resolution, and too low to divert much peak-hour traffic; and that freeways-only congestion charges are too narrow to increase speeds systemwide. Penny-a-mile-average emission charges are too loosely targeted to affect congestion. They fall lightly on all mileage, rather than heavily on the peak-hour 36% of the mileage which produces 85% of the delay. Freeways-only peak-hour congestion charges, by contrast, are targeted tightly enough to increase speeds on freeways drastically, by as much as a third. But, since surface streets are not charged in the official WSA models, only half of the diversion is to ride-sharing and off-peak hours. The other half is to surface streets, where traffic runs at 14 mph, on average, three or four times slower than on freeways. Even if the extra traffic does not slow down existing surface-street speeds, as WSA's model improbably assumed, the projected slowdown of the diverted traffic equaled or exceeded the speedup of traffic on priced freeways. Where the charge was close to optimal for freeways -- that is, about equal to the 20-30 cents per peak mile average delay cost actually imposed per peak-hour vehicle mile -- the slowdown from diversion to surface streets more than counterbalanced the speed up on the freeways and the systemwide average speed actually declined!
Conversely, very light freeways-only congestion charges made a small enough diversion to surface streets that average systemwide speed remained about the same. See WSA Travel and Emissions Modelling Summary, Final Draft, Dec. 12, 1996, Table 5. Thus, two combinations of "reasonable" emissions charges with low, freeways-only congestion charges, did make substantial emissions reductions without slowing down the system. (WSA Travel and Emissions Modelling Summary, Final Draft, Dec. 12, 1996, Table 7.) These were the combinations most favored by WSA and recommended by the Task Force's Strategy Subcommittee. They would make a worthwhile improvement over the baseline, cutting smog emissions by 5-15% without reducing average speed systemwide.
V. Congestion charges should ultimately apply to every crowded or crowdable road, including surface streets.
But freeways-only charges could not save the three or four billion dollars of travel time projected in the three scenarios in the Appendix and Figure 2 with a systemwide congestion-charge component, thanks to the massive, self-defeating exemption of surface streets from charges in all WSA model runs. WSA was sophisticated enough to foresee diversion from charged, crowded freeways segments to uncharged, uncrowded freeway segments. They appropriately added "balancing" charges to the uncrowded freeway segments, thereby preventing harmful diversion and keeping them uncrowded. But they did not add balancing charges to prevent harmful diversion to surface streets, and, hence, cancelled out most of the time savings from charging freeways. There were two reasons for this: WSA's model was not coded for surface streets and could not model for surface-street charges even if asked to; and the Task Force's higher-ups expressly ruled surface streets out of the model. They argued that surface streets were outside of SCAG's jurisdiction and that congestion charges on surface streets were not only technically impossible to simulate with WSA models, but also politically unthinkable.
Congestion-charge advocates on the Task Force objected to this exclusion and asked for at least an educated guess as to what would happen if surface streets were also charged. They argued that congestion charges make sense only if they are not self-cancelling; that they are no more unthinkable for surface streets than for freeways, either politically or technically; that they have been successfully used in Singapore for 20 years; and that SCAG should not act as though the public's need for knowledge of smog and congestion impacts stopped at the edge of SCAG's political jurisdiction. WSA, however, declared it impossible to make an educated guess about systemwide charge impacts without destroying their professional reputation, leaving congestion-charge advocates with three options: rely on Deakin-Harvey's estimates; make estimates of their own; or forget the whole thing.
The congestion-charge advocates chose the first two options. Under the assumptions of the Appendix, Deakin-Harvey estimated that a 15 cents/peak-hour mile charge for all roads would control $138 million worth of smog per workyear (the same as WSA's 1-cent/mile emission charge), plus $3.3 billion worth of traffic delay. Our extrapolations of WSA estimates assumed that adding the same charges to surface streets as those that WSA modeled for freeways would produce roughly the same percentage of "good" diversions (to ridesharing, offpeak hours, or trips foregone) systemwide, but not the "bad" net diversion to surface streets.
Added systems costs would not be prohibitive, maybe five cents per average trip, rather than three. Such costs are negligible compared to the dollar or so worth of time per p.m. peak-hour trip which congestion charges could save. See notes to the Appendix, Sections 4 and 5. Under these assumptions, a systemwide 15/30-cents/peak-mile congestion charge would control $136 million worth of smog (again the same as WSA's 1-cent emission charge), plus $4 billion worth of traffic delay. The optimal combination from this perspective would be what appears in Figure 2 as WE (i.e., Ward Elliott) CP3+, EM1, a 15/30-cents congestion charge for all roads, combined with a 1-cent per average mile emissions charge proportional to each vehicle's actual emission rates. This would control $374 million worth of smog per workyear, plus $4.6 billion worth of traffic delay. The strategy, after deducting systems costs, would save the average household in the Basin $714 per workyear in health, property, time, and productivity costs (Appendix, column 14). It would yield $1,094 per household in net revenue, just enough to cover all of what they paid for gas taxes, vehicle registration fees, and transit fares at 1991 rates ($1,038 per household), or, alternatively, more than half of what they were paying for property or sales taxes ($1,700-1,900 per household, calculated from the Appendix).
These estimates could and should be further refined, but both the Elliott estimates and the Deakin-Harvey estimates strongly suggest that massive savings -- several billion dollars in time benefits, along with several hundred millions in smog benefits, plus billions of dollars of extra revenues -- could be realized by an all-roads congestion charge and a 1-cent emissions charge. The same combination with freeways-only congestion charges would yield two or three times lower smog benefits and negligible net time benefits. This was not just true of projections for the year 2010; it was also true of Deakin-Harvey's baseline modeling year, 1991. See D-H's 10¢/peak mile scenario, in the Appendix. If the models and assumptions are true, the average household was losing about $700 in preventable smog and congestion costs every work year, in 1991, and has continued to do so for almost a decade of dithering over pricing policy. We shall never get it back. If these estimates are half-right, or even a tenth-right, the costs of inaction on emission, and, especially, on congestion charges have already far outweighed the costs of action. The Task Force's recommendation to "develop a strategy to implement mid- and long-term, fair and equitable region-wide congestion and emission [fees]" was a prudent, minimal acknowledgement of these costs, and should have been a significant step toward reducing them.
VI. Phasing in with HOT lanes
No one thought then that Los Angeles could duplicate Singapore's feat, more than 20 years previously, of adopting optimal road pricing overnight, even though it immediately cut traffic in Singapore's central business district by 40 percent and made it one of the most accessible in the world. Singapore was small, disciplined, unified, tolerant of heavy government exactions for owning and using cars, and very far away. The South Coast Basin was and is large, sprawling, decentralized, not so disciplined as Singapore, and intolerant of government exactions, especially those affecting mobility. Road pricing may look good to experts and study committees, but many skeptical people in the general public would have to be persuaded before it can become a reality on the roads here. Settling on a long-range goal was the Task Force's first step. Settling on a way to get there was the second.
The Task Force's Strategy Committee, and, briefly, the Task Force itself, debated between two phase-in strategies. The first alternative was a strategy of low emission charges for everyone, perhaps to be ratcheted up in the future, depending on public acceptance. The second was a strategy of HOT-lane (i.e., high-occupancy/toll) pilot projects, like that on the Riverside Freeway (SR 91). On this then-just-opened project, new fast lanes were paid for by user fees of up to 25 cents a mile during peak hours, but (at the time) were also open free to HOV-3's, vehicles with three or more occupants. The Task Force settled firmly on the second alternative, HOT lanes, recommending an unspecified number of additional HOT-lane projects by 1999. SCAG endorsed two HOT-lane projects in its Draft 1998 Regional Transportation Plan (SCAG, 1998, p. I-21), one for California SR-14 in Los Angeles County, one for Federal I-15 in Riverside County. Neither of these has materialized, however.
The initial attraction of the universal smog-charge strategy was that most Task Force members, and most respondents to Task Force surveys of the general public, were twice as concerned about smog as they were about congestion. They wanted to make greater smog control the immediate, as well as the ultimate goal of the Task Force. But this approach had three fatal drawbacks. It would not work without a full-blown, Basinwide collection and enforcement infrastructure, which we didn't and don't have. It would have no noticeable effect on smog till it was not only full-scale, but full-price. And, even at full price, it would have had no congestion-control benefits. In practice, it would have been much more like a tax than like an air-cleaner or a road-clearer; the public would have recognized it as such; and the idea would have been dead on arrival.
HOT lanes, by contrast, were already working for congestion purposes (their smog consequences are still not clear) on a small scale at full price. They offered immediate, tangible rewards in faster access, not only to users of the reserved fast lanes, but also to users of the non-reserved lanes, who get the fast-lane users out of their way. They had already become an instant hit with all kinds of users of the SR 91 (Riverside Freeway) project, saving all users up to 17-27 minutes of delay (one-way, as of June, 1997), and fast-lane users up to 13 additional minutes of delay on a ten-mile stretch of formerly jammed bottleneck (Sullivan, 1998, p. 3). They since have drawn 60-80% approval from commuters using the link (Sullivan, 1998, p. 7). Subsequently, they also become an instant hit on the I-15 (San Diego Freeway) in San Diego County. Add-a-lane HOT lanes were favored in most of the Task Force's focus groups, and by most respondents to the Task Force's surveys of public attitudes, provided the revenues would be rebated to the public or spent wisely for their advantage.
Experts at the time were cautious about drawing conclusions from the I-15 project, which was still on the drawing boards, and even the then up-and-running SR 91 project. They expected that it would take a year or two for its final use patterns to get settled, and that more polls and traffic surveys would be needed before any firm judgements could be made. The I-15, after some initial adjustments, appears to be an unqualified success. The toll lanes of the SR 91 have likewise been an unqualified success. But the free lanes, after dramatic initial success, have been badly gummed up by the growth of traffic, and especially by the opening of the Eastern Toll Road link, which lacked a connector to the SR 91 toll lanes. These problems could be fixed by yet further widening, pricing the free lanes, or both, but both of these have been stymied by problems of co-ordinating the state freeway link with the two unrelated toll links. After a series of controversial maneuvers, neither the state nor the SR 91 private operator, the California Private Transportation Company, feels free to make the necessary changes under the terms of existing law and CPTC's franchise (1).
It should be noted that both of the extant California HOT lanes are add-a-lane expansions to existing links. The REACH Task Force also considered take-a-lane HOT lanes and thought them worthy of future study. HOT lanes require available unused space on HOV lanes to work, and some SCAG experts believe that HOV lanes in the Basin (mostly HOV-2 lanes) are almost full, running at 60-90% of capacity. If so, little unused space will be available till some HOV-2 lanes overload and are forced to move to HOV-3's.
Nevertheless, both in theory and in practice so far, HOT lanes still look like something which actually does speed up traffic and which the public likes, both on and off the corridor served -- just as congestion-charge advocates predicted two decades ago when HOT lanes and congestion charges were considered politically unthinkable. If the public continues to like HOT lanes, it will probably ask for more, get them, and move toward larger-scale congestion pricing by creating an infrastructure corridor-by-corridor.
How far should HOT lanes be taken? The maximum answer, consistent with, but not required by the Task Force's examine-and-develop recommendation, would be all the way to full-scale congestion charges, as fast as the system's infrastructure can be built. It would shorten the long, punishing wait to save the billions of dollars of annual lost time and health, and it would avoid many of the hybrid start-up problems of projects like the SR 91. A more cautious, and perhaps more appropriate, answer, also consistent with the Task Force's recommendation, might be: as far and as fast as people want to take them. This is also a hedge against uncertainties as to how crowded the roads might actually be in 2010 (Meyer, 1994; Gordon and Richardson, 1994). If SCAG's forecasts are correct, and average peak-hour speed basinwide is reduced to 11 miles per hour, it is hard to imagine people wanting to put up with it. How many people in New Jersey would dream of taking Route 1, which is "free," when they can get to Delaware two hours faster by paying a toll and taking the Jersey Turnpike? How many of them would be happier if someone could make the Turnpike's "Lexus Lanes" disappear? How many users of the SR 91, now saving an hour a day of commuting time, would actually want the much-criticized project to go away? How many of them, along with their gridlocked friends and relatives, would not wish for a few more HOT lanes along their path? Once people get a taste of life in the fast lane, they may well want a lot more of it, and a lot less of life in the slow lane. As one might guess from the section on pricing surface streets, the more lanes that are priced to speed them up, the more traffic is likely to be diverted to non-priced lanes, slowing them down. This will increase the incentive to price the crowded, underpriced slow lanes also, in order to speed them up. The differences between the most cautious answer and the maximum answer may turn out to be much smaller in the long run than they might seem in the short.
VII. Equity considerations
What about the inevitable equity objections: does road pricing mean "Lexus Lanes" which will "price the poor off the road?" Certainly, no project perceived as unfair is likely to find a popular base of support. The short answer is "no more than $20 close-in parking lots price the poor onto $3 parking lots six blocks away." Few consider such familiar price allocations unfair. Nobody calls them "Lexus Lots."
The longer answer starts from basic principles. There is no one-size-fits-all definition of fairness, but the Task Force invoked five principles of equity:
(1) beneficiaries pay costs: those who benefit from an action should normally pay their proportional share of the costs the action imposes on others;
(2) users get to choose: systems where individual users get a variety of choices are normally preferable to systems which do not offer choices;
(3) inter-regional or inter-group equity: one region or group should not normally be required to pay for another region or group's costs, except to the extent that it caused them;
(4) take good care of the poorest: where a social burden is imposed, it should not normally be imposed more heavily on the poor than the rich; and
(5) lighten the biggest, broadest burdens first: mitigating large damages to the many should normally take precedence over mitigating smaller damages to the few.
Despite loose talk about "Lexus Lanes," HOT lanes present few equity problems that are not presented by other things we take for granted, like differentially priced close-in or far-out parking lots or cellular and ordinary phones. People get to choose, use, and pay for the level of service they want; cheaper alternatives are available; nobody loses anything from the new option; and many come out way ahead. A full-scale system of emissions and congestion charges, if we had one, would be more problematical because it would cut back on some existing options -- albeit far less drastically than the gridlock it would prevent. But even a full-scale system would be an improvement over the present system by most of the five equity measures. Under the present system, users and taxpayers pay into general funds and trust funds; resource allocation is political, not economic; regressive cross-subsidization of rich groups by poor is the norm; many peak-hour users get only two choices: slow and slower; and billions of dollars of avoidable time losses continue every year while policy-makers worry about getting much less costly details worked out. Emissions and congestion charges would settle the cost of use much more squarely on users; give them more choice; clear away regressive cross-subsidies; and give people back some of the weeks of time and days of life they now lose, preventably, to crowded roads and bad air.
Table 1, adapted from the REACH Task Force final report, may help illustrate some of these points.
Salient Base Case Demographic Variables for Understanding Equity Impacts
Median p/c income
Share of income
Share of Peak VMT
Share of delay cost
Share of p.m. transit%
Pre-1984 veh. VMT%
|Source: TRIPS, 1991 Origin & Destination Survey
Cited in Cameron (1994), p. I
Wilbur Smith Associates, "Estimated Annual Transportation Costs
and Benefits per Capita," May 22, 1996
The chief lesson of Table 1 is that congestion is not a problem which every class inflicts equally on every other class, far less a problem inflicted on the rich by the poor. It is overwhelmingly a problem inflicted by the nonpoor on each other. The richest quintile is three or four times more likely than the poorest to be on the road at peak hours. It suffers 26 times as much loss from traffic delay, partly from being much heavier users, partly from having higher time values. Surprisingly, the same could also be true for vehicular smog, at least as measured by miles driven in old cars -- only in this case the rich polluters inflict their smog not just other well-to-do road users, but on everybody in the Basin who breathes. The richest two quintiles each drive almost twice as many miles in pre-1984 vehicles as the poorest quintile. Surprisingly also, transit use is almost equally divided among all five quintiles.
The existing system of road financing is triply regressive. Taxpayers generally, a poorer class, support road users generally, a richer class, with municipal services like fire, police, courts, ambulances, and emergency rooms benefiting road users. Road users generally, a poorer class, support peak-hour road users by paying with their fuel taxes for roads generally sized to accommodate peak-hour users. And five out of the six taxes supporting the existing highway system are themselves regressive (Giuliano, 1994, p. 260).
Winners and Losers From Full-Scale Congestion Charges.
Percentages of adult public
driving congested roads at peak
equal or better off with congestion charges
worse off with congestion charges
|Source: calculated from Genevieve Giuliano, "Equity and Fairness Considerations of Congestion Pricing," 1994; see Elliott, 1995
Table 2 begins to summarize, and proper transportation policy should also reflect, a number of points about driving patterns in the South Coast Basin. These are:
1. Not everybody drives. One household in ten in the Los Angeles Basin does not have a car. Most of this fraction is poor and would benefit, on balance, from anything like congestion charges which gives buses and carpools better access.
2. Not everybody who drives drives at peak hour. Although nine out of ten households have a car, only three out of five surveyed voters commute to work. The other two are retired, unemployed, homemakers, or students. This 40% would be little affected by congestion charges, which would divert some peak traffic to off-peak hours.
3. Not everybody who drives at peak hour picks a congested route. Of the three in five surveyed voters who do commute, two say they do not suffer seriously from congestion -- yet. This 40% would be modestly affected by congestion charges, which would divert some traffic from more congested to less congested routes.
4. Relatively few of the 20% of surveyed voters who do drive crowded routes at peak hours are poor. As we have seen both from Table 1, and from Table 2, peak-hour congestion is overwhelmingly a problem that the non-poor inflict on each other.
5. Only a small fraction of the few poor who do drive crowded routes would lose from congestion charges. Harvey calculates, as one would expect, that the poor are more likely to be priced out of their single-occupancy car than the rich (Harvey, 1994, p. 109). But Giuliano finds, perhaps to some people's surprise, that, when the value of their time is considered, average-distance (10-mile each way) drivers, both poor and middle-income, who pay the charge and keep driving, come out slightly ahead of where they would have been without the charge. Anyone who switches to transit or short-distance carpool likewise comes out ahead, even if the carpool has to pay full congestion charges. Poor people whose long-distance (25-mile) carpool commute becomes fully charged come out slightly behind -- which, however, is easily fixable by exempting 3-person carpools from some or all congestion charges.
The only Giuliano category that loses heavily from congestion charges, and whose losses cannot be easily fixed, are long-distance middle-income (and presumably low-income, though these are not calculated separately) commuters who do not switch to bus or carpool, but persist in driving a crowded 25-mile peak-hour route, twice a day, every mile of it fully charged. These would come up a stiff $854 a year poorer with congestion charges than without. However, they are a very small percentage of commuters -- probably less than five percent of a.m.-peak direct-to-work commuters (computed from Peter Gordon 1990 NPTS summary). Less than a quarter of them -- that is, less than one percent of a.m.-peak direct commuters -- could be considered poor. This tiny, overwhelmingly nonpoor five percent imposes much more than its share of delay (and smog) costs on other drivers -- and gets to do it free under the present system. Not everyone would be shocked to see such people strongly incentivized to carpool, bus, move closer to work -- or pay something for their choice to do none of these things. Giuliano's calculations cover about two-thirds of peak-hour drivers: the half that drive ten miles or less, and the 15 percent or so who drive 25 miles or more each way. That leaves out a third of peak-hour drivers who drive between ten and 25 miles. Wherever Giuliano shows short-distance commuters to gain, and long-distance commuters to lose, Table 2 assumes that half of the middle third will be winners, half losers.
These back-of-the-envelope calculations will not be the last word on the subject, but the evidence at hand overwhelmingly suggests that the list of likely losers from congestion charges will be surprisingly short and nonpoor -- and justly chargeable for their own social costs -- compared to the list of losers from not having congestion charges. Are we better off with one or two percent of the public losing $850 a year for their own wasteful behavior, or with every household in the Basin losing $900 a year mostly because of other people's wasteful behavior?
6. Pay for what you get is well accepted for other necessities. It is true that congestion charges would be regressive, in the sense of charging the poor a higher fraction of their wealth than the rich for the same benefits. But this is no more true of congestion charges than it is of anything where you get what you pay for -- water, gas, electricity, and groceries, for example. Most people, poor people included, would be horrified if we charged the same artificially low prices for these as we do for roads at peak hour, correctly guessing that people would waste them, just as we now waste our time, our roads, and our health.
7. Congestion charges are much less regressive than the existing system. The system now in use, as we have seen, is triply regressive. Taxpayers generally, a poorer class, now subsidize road users, a richer class. Road users generally, a poorer class, subsidize peak-hour commuters, a richer class. Five out of the six taxes supporting the existing highway system are themselves regressive (Giuliano, 1994, p. 260). Asking people to pay for what they get would be not only more efficient, but also less regressive than any of these foundations of the existing system.
8. If necessary, losers can be compensated. If necessary, where all else fails, the tiny fraction of the poorest or most deserving losers could be compensated with cash or a lifeline access permit. Such compensation, if used at all, should be used sparingly, because its effect would be to expand the compensated class and to undermine somewhat the benefits going to the three-quarters of poor and nonpoor who would come out equal or ahead. But the compensable class, even if it triples, would still be small, and the cash or lifeline subsidy to the few would be far preferable to what we have now -- a universal, open-ended license for everybody to inflict upwards of $900 worth of delay and pollution on everyone else. This delay, by the way, hurts the poor not only directly by health damage and traffic delay, but also indirectly by stifling productivity in the Basin and driving investment and jobs to other less gridlocked areas.
9. Even the poor need a fast lane now and then. Poor people have to meet deadlines, and they don't consider their time worthless. Sometimes, when they are rushing to get to work, catch a bus, pick up a child, or get to the hospital, they value their time very highly and would pay a lot to get into a fast lane. Usage of the SR91 toll lanes is only weakly correlated to income. The present system denies poor people the time-saving choice, and the denial can be just as hard on them as it is on the rich. Bottom line: congestion charges are perfectly in keeping with most people's sense of fairness, more so than the system we have now. They do not require a revolution of moral consciousness.
10. At the rate we are going, we don't have to cross most of the bridges till we get to them. There are many uncertainties involved in a move toward the fast lane, most of them outweighed by the growing certainty that we are losing our shirts while stuck in the slow lane, and many of them resolvable only by actual experience with congestion charges. It has taken us twenty years longer than Singapore to think seriously about making the move. It will take more years, perhaps many more years, of phase-in to make the actual move. At our deliberate pace there is room for trial and error; not every question has to be fully answered in advance.
11. Dithering over little equity questions postpones coping with big ones. What is true on average is not true in every individual case. Some poor people are bound to suffer from changes in incentive structures, even changes that make most poor people better off. It would not be unreasonable to look for ways to ease the impacts of new incentives on such people, nor to start with the least regressive available strategies, such as add-a-lane HOT lanes. What would be unreasonable, once you realize that the average household, which is neither rich nor poor, suffers thousands of dollars of direct damage a year from smog and congestion, is to delay getting it fixed till you can guarantee that every last dollar of cost to every last person harmed by the change will be fully recompensed. Equity says that if there is a pound of cost from changing to a new system, and a ton of cost from not changing to the new system, it's fair and prudent to consider the pound, but not fair or prudent to ignore the ton.
VIII. Impact on truckers
Impact on truckers, though it is barely mentioned in the congestion-charge literature, is probably more important than impact on the poor -- because (1) there probably are more peak-hour truckers than there are low-income drivers; (2) trucks will cause up to 80% of the projected growth in some corridors; (3) the truckers are much more organized than low-income drivers, and their voice is more likely to be heard in the state legislature; and (4) truckers' role in creating and supporting jobs, and supplying goods and services, is far larger and more consequential to the poor (to say nothing of the non-poor) in general than is commuting by a small number of poor individuals. Modern, just-in-time manufacturing already relies heavily on free access by truck. It will probably rely even more so in the future.
Trucks are not likely to be much affected by start-up HOT lanes unless, as seems improbable now, they are permitted to buy onto them. To the extent that start-up, add-a-lane HOT lanes speed up general lanes, they would come out a bit ahead. If and when the charge system approaches full scale, and every available lane is a HOT lane, wholesale exclusion of trucks will no longer make sense. They will need available access to at least some of the lanes at peak hours, and they should pay for it, just like everyone else. How much? I don't have a study of it, but three times as much per mile might be a plausible guess, since trucks are bigger and cause much more congestion, both recurrent and non-recurrent, than cars. They also cost more to own and operate, maybe $100 an hour with driver, and their drivers are not strangers to deadlines. If they could pay, say, a $15 congestion charge and thereby save 15 minutes, they would save $25 worth of operating time and come out $10 ahead, maybe more when the deadline is really tight. If this were a typical situation (as it probably would be), and the whole of the bargain, truckers should be demanding congestion charges now to get themselves into the fast lane.
However, it may not be the whole of the bargain. Any time the talk turns to user fees, it could turn also to other use impacts which truckers would rather not have on the agenda, such as charges for road wear and for nonrecurrent congestion imposed by accidents. Many think trucks are disproportionately responsible for both of these and are not paying their full share of the costs (Small, et al., 1989). The same could be said of a modern, particulates-dominated estimate of smog costs. Small and Kazimi, for example, reckon smog costs per mile at 3 cents a mile for cars, 53 cents per mile for heavy diesel trucks (1995, p. 25. But see Appendices One and Fourteen of the longer version for reasons to believe PM10 costs from trucks may be exaggerated). To the extent that these are so, truckers could lose, as well as gain, from a comprehensive application of the pay-for-what-you-use principle. A closer study of the congestion issues, including nonrecurrent, could help sort some of these questions out. Pending such studies, it seems more likely than not that full-scale congestion charges, by themselves, would be a boon to truckers. SCAG is currently contracting for feasibility studies for truck-only toll lanes on several of the truck-impacted highways.
IX. What to do with the revenues?
Spending the proceeds is not a big problem with start-up HOT lanes. The revenues from the Route 91 HOT lanes will pay for building them, and, we hope, for a deserved profit to the entrepreneur who builds them. HOT lanes to be built in the future could likewise absorb years of revenue to pay for their construction. But the closer the system gets to full scale the closer we will be to what both WSA and Deakin-Harvey say could be a $3-billion annual stream of revenue. How might it be spent?
The most detailed recommendation is that of UC Irvine economist Kenneth Small. In 1993 he proposed the following spending package for $3 billion: 23 percent of it on a $10-a-month employee commuting allowance; 10-18 percent each on fuel tax reduction (5 cents); sales and property tax reductions (for their transportation subsidies); highway improvements; transit improvements; and transportation services in business centers (Small, 1992, 1993).
One could do worse than recommend the Small package wholesale, though detailed recommendations made years in advance of need also have a downside, that times will change and render them obsolete. A more flexible set of guidelines, generally consistent with the Small recommendations, is that provided by the Task Force. Pricing revenues should be used for:
1. Building and operating the priced facility
2. Improving the transportation system, especially on corridors priced or affected by pricing (congestion fee revenues)
3. Improving air quality (emissions fee revenues)
4. Mitigating equity impacts to individuals and to regional economies
5. Providing return to individuals (e.g., tax rebates, tax cuts, tax credits, cash rebates) and/or to local governments. As we have seen in Section IV above, some systems could more than cover the per-household costs of all current gas taxes, user fees, and fares.
These hardly guarantee that the revenues will never be wasted, and some of them probably will be. But it is hard to imagine any more complete waste than that of people's time and health that takes place under the current system.
Major Mobile-Source Strategies Compared by Yield, 2010 (PDF, 261 KB)
California Air Resources Board (CARB). 1995.
Transportation Pricing Strategies for California: An Assessment of Congestion, Emissions, Energy, and Equity Impacts. By Deakin, Elizabeth, and Harvey, Greig..
Draft Report to the California Air Resources Board and the TCM Working Group, Berkeley, CA.
Caltech Environmental Quality Lab (EQL). 1972.
Smog: A Report to the People. Pasadena, CA: Caltech EQL.
Cameron, Michael W. 1994.
"Efficiency and Fairness on the Road: Strategies for Unsnarling Traffic in Southern California." Oakland: Environmental Defense Fund.
Dahlgren, Joy. 1995.
"HOV Lanes: Are They the Best Way to Reduce Congestion and Air Pollution?" 18 ITS Review 4, February.
Elliott, Ward. 1975.
"The Los Angeles Affliction: Suggestions for a Cure," The Public Interest, Winter.
Elliott, Ward. 1976.
"Road Use Charges and Jitneys: Some Thoughts on How to Introduce Them to Los Angeles." Claremont, CA: CMC Rose Institute.
Elliott, Ward. 1986.
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Elliott, Ward. 1992.
"Peak-Hour Road Charges for Southern California: Has Their Hour Come Round at Last?" 46 Transportation Quarterly 517.
Elliott, Ward. 1992a.
"Letter to Mary Nichols on Impact Weighting," CMC, Claremont, CA: June 21.
Elliott, Ward. 1994.
"Greenbacks Über Gridlock: The L.A. Freeway Solution." The Washington Post, April 17, p. 5, c. 1.
Elliott, Ward. 1995.
Letter to Mark Brucker on smog costs. Claremont McKenna College, August 24.
Fielding, Gordon J. 1994.
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Fielding, Gordon J. and Klein, Daniel B. 1995.
"Hot Lanes: How High Occupancy Vehicle Lanes Can Be Used to Introduce Congestion Pricing to a Skeptical Public." 18 ITS Review 2, February.
Giuliano, Genevieve. 1994.
"Equity and Fairness Considerations of Congestion Pricing." in NRC, 1994, v. 2.
Gordon, Peter, and Richardson, Harry W. 1994.
"Congestion Trends in Metropolitan Areas." in NRC, 1994, v. 2.
Guensler, Randall, and Sperling, Daniel. 1994.
"Congestion Pricing and Motor Vehicle Emissions: An Initial Review." in NRC, 1994, v. 2.
Hall, Jane, et al. 1989.
Economic Assessment of the Health Benefits from Improvements in Air Quality in the South Coast Basin. Fullerton, CA: California State University Fullerton Foundation.
Hanks, J.W., and Lomax, T.J. 1990.
Roadway Congestion in Major Urbanized Areas, 1982-1988 (Revised, 1991). College Station, TX: Texas Transportation Institute.
Harvey, Greig. 1994.
"Transportation Pricing and Travel Behavior." in NRC, 1994, v. 2.
Kain, John. 1994.
"Impacts of Congestion Pricing on Transit and Carpool Demand and Supply." in NRC, 1994, v. 2.
Meyer, Michael. 1994.
"Alternative Methods for Measuring Congestion Levels." in NRC, 1994, v. 2.
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Curbing Gridlock: Peak-Period Fees To Relieve Traffic Congestion. Washington DC: National Research Council, Transportation Research Board, Committee for Study on Urban Congestion Pricing, National Academy Press. 2 vol.
Pietrzyk, Michael. 1994.
"Electronic Toll Collection Systems." in NRC, 1994, v. 2.
Poole, Robert, Jr. 1992.
Congestion Pricing for Southern California: Using Market Pricing to Reduce Congestion and Emissions. Los Angeles: Reason Foundation.
Poole, Robert Jr. 1992a.
"Introducing Congestion Pricing on a New Toll Road." in Poole, 1992.
REACH Task Force. 1996.
"Draft Final Report and Recommendations for Regional Market-Based Transportation Pricing." November 13.
REACH Task Force. 1997.
"Final Report and Recommendations for Regional Market-Based Transportation Pricing." January 22.
Shoup, Donald C. 1994.
"Cashing Out Employer-Paid Parking: A Precedent for Congestion Pricing?" in NRC, 1994, v. 2.
Small, Kenneth, et al. 1989.
Road Work: A New Highway Pricing & Investment Policy. Washington DC: Brookings
Small, Kenneth A. 1992.
"Using the Revenues from Congestion Pricing: A Southern California Case Study." in Poole, 1992.
Small, Kenneth A. 1993.
"Congestion Pricing: New Life for an Old Idea?" Access No. 2, p. 11, Spring.
Small, Kenneth A., and Kazimi, Camilla. 1995.
"On the Costs of Air Pollution from Motor Vehicles," 29 J. of Transport Economics and Policy 7 (January).
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"Congestion in the Los Angeles Region: Costs Under Future Mobility Strategies." Los Angeles: SCAG.
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Sullivan, Edward. 1996.
"Technical Report #3: Evaluating the Impacts of the SR 91 Variable-Toll Express Lane Facility." San Luis Obispo, CA: November.
Sullivan, Edward. 1998.
"Evaluating the Impacts of the SR 91 Variable-Toll Express Lane Facility: Final Report" available online at http://ceenve.calpoly.edu/sullivan/sr91/sr91.htm
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WSA EM1, 1-cent/mile: Wilbur Smith Associates (WSA) estimates of impacts of emissions-weighted vehicle miles traveled (VMT) charge, all roads, average charge: 1 cent per mile. EM2, EM3: same as EM1, but with 2 and 3-cent/mile charges.
WSA CP1, freeway only: WSA estimates of impacts of 5-10 cents/peak mile congestion charges, freeways only.
WE CP3+, all roads: WSA freeways-only 15-30-cents/peak mile congestion charge impacts extrapolated to all roads.
D-H Mod-Impact Combination: Deakin-Harvey "moderate-impact" combination of 15 cents/peak mile congestion charge, all roads; 1-cent/mi emissions charge; $1/day parking charge; 50-cent/gallon fuel surcharge.
WSA CP2, EM1: 10-20-cents/peak mile congestion charge, freeways only, 1-cemt /average mile emission charge, all roads.
WSA CP2, EM1, ET: Same as above, but with $12.5 billion worth of extra "enhanced" transit.
WE CP3+, EM1: WSA 15-30-cents/peak mile congestion charge, extrapolated to all roads, 1-cent/average mile emission charge, all roads.
- The SR 91 link was one of a number of bottlenecks in Southern California roads for which no public improvement funds were available in the 1980's. Rather than tolerate further clogging, the state turned to private toll-road investors like the California Private Transportation Corporation, which built and runs the SR 91 project, to do the improvements and charge for access. CPTC has not publicized its reasons for picking the SR 91 link, but it would be surprising if they didn't pick the most profitable-looking project they could find, that is, whatever available bottleneck seemed most likely to become the worst one with the most expected congestion to relieve.
What their projections were, and whether they were correct, we do not know. CPTC guards its business secrets closely. But we do know that traffic in the corridor has continued to increase; that the SR 91 link is still a bottleneck which, after a sharp initial drop in delay and accidents, has continued to clog up more and more at rush hour (Sullivan, 1998). Since the opening of the Eastern Toll Road (another Orange County private toll facility which dumps traffic onto the tolled 91 segment but unfortunately has no direct connection to its toll lanes themselves), high-speed merging from adjacent links has slowed traffic and sharply increased accidents in the non-reserved lanes. Yet further widening of the segment, and/or pricing of the free lanes, could speed the traffic, cut the accidents, and make political and economic sense from the public's viewpoint. Unlike the cash-strapped 1980's and early 1990's, California had ample public funding to do the widening by the end of the 1990's. But this time Caltrans's new director, Jose Medina, threatened with a $100-million lawsuit, signed a controversial agreement to honor a no-build clause in the original agreement with CPTC, which would otherwise have lost half its toll-lane revenue to users of the proposed new free lanes. To secure the needed investment in private improvements to the link in the 1990's, the state in effect relinquished for 15 years its right to add needed public investments to the same corridor in the 21st century. To maintain free flow in the toll lanes, CPTC raised its toll rates five times between 1995 and 2000; it also dropped the HOV qualifier, and the lane is no longer technically a HOT lane. In practice the change has made little difference, since HOV occupants can still split the cost of the toll, reducing costs per passenger. Whoever runs the facility in the future is expected to keep on raising rates incrementally, as long as demand continues to increase.
While these events were playing out, in the late 1990's, amid improbable and unproven rumors that it was losing money on the project, CPTC was secretly negotiating to sell its operations to a nonprofit successor called NewTrac for $274 million. NewTrac, organized by a coalition of Orange and Riverside County businesspeople, was to be funded by tax-exempt bonds offered by the California Infrastructure and Development Bank, a bank created to offer alternative funding for public-benefit projects. CPTC would have made an enormous immediate profit of $74 to $90 million from the transfer and been assured of retaining the operating contract, on an exclusive, no-bid basis, for 15 years. But, thanks to its tax-exempt funding, NewTrac was expected to be self-supporting, even after the massive payout to CPTC. This cozy arrangement for CPTC had some economic advantages from the state's perspective, but the huge windfall for CPTC, and the substitution of tax-exempt funding for private, on a facility where the state did not share any of the revenues, prompted many shifts in the political wind and the ultimate scrapping (as of this writing) of the proposal. James van Loben Sels, Caltrans Director under the outgoing Pete Wilson administration, hesitantly recommended approval, but he was overruled by his boss, Wilson Transportation Secretary Dean Dunphy. Dunphy counseled CPTC to take the matter up with the next administration. They did, and the succeeding Gray Davis administration's Caltrans Director, Jose Medina (the same one who honored the no-build agreement), quickly approved the deal -- but he, too, was resoundingly overruled, amid calls for legislative hearings and investigations, when its terms became public knowledge. Despite all the commotion over the project's corporate structure, financing, and tie-ins with other transportation links, the toll lanes themselves have continued to operate flawlessly.
- Perhaps the first lesson is that there are many things we don't know and need to find out. REACH's modeling left some major gaps, all of them having to do with giving the models higher resolution. We need to know more about pricing surface streets; pricing trucks and buses; reconciling WSA's findings with those of Deakin-Harvey; and how to use full-cost accounting systematically and consistently to make all the costs and benefits of the various strategies commensurable. None of these gaps, however, are large enough to obscure the lessons from what the models did show.