Saturday, April 28, 2007

New York's "Congestion Pricing" - Good or Bad?

There are some interesting details to the proposed plan (see my previous post, "Using Pricing to Solve a Problem") to charge drivers $8 ($21 for trucks) to enter certain parts of Manhattan. In general, I hold that congestion pricing plans are a good thing. After learning of some of the details of the plan recently proposed by Mayor Bloomberg of New York, I wonder if this particular implementation will do more harm than good (if you don't won't to read all the quotes, skip to the bottom):

"The mayor calls it a 'congestion fee.' In fact, it’s a tax and a penalty for using a motor vehicle. The revenue would go to mass transit, not to roads and bridges.


"Instead of using it to improve the roads and bridges used by drivers, Bloomberg each year would transfer hundreds of millions of dollars paid by drivers into financing more mass transit, which is already heavily subsidized by drivers and the general taxpayer. Overall, the plan would help support about a $50-billion expansion of NYC’s huge transit system.

"The plan hopes to capitalize on the media’s efforts to stampede the public into fear of global warming; it’s touted as environmental protection, hoping to disguise its true nature as a major new tax.


"Because the NYC plan would require an intricate, Big-Brother monitoring system to track each vehicle’s movements, just building the high-tech infrastructure is estimated to cost an initial $225 million, and the federal government is already being suggested as the source for that money.


"Rising fuel prices already provide free-market disincentives for drivers, but if they switch to mass transit, there will be fewer drivers left to subsidize that transit — thus the $8-per-day fee to make up the difference and keep the subsidies growing.

"We’re already hearing angry outcries from those who would be hurt by this fee. But imagine the even larger outcry if Mayor Bloomberg had proposed funding the mass-transit expansion by raising the fares on the subway and buses.

"What’s called the 'farebox recovery rate' covers about half the New York system’s annual operating costs — and none of the capital expenses — leading to an annual deficit in the billion-dollar neighborhood. Even so, riders there pay a larger share than in any other transit system in America. The average system recovers about 25 percent of its operating expense from fares, but none of its capital costs. And New York’s mass transit users wouldn’t be the ones paying for this $50-billion capital expansion.

"Traffic congestion is a serious problem. The U.S. Transportation Department has suggested various approaches that include 'value pricing,' whereby users of toll roads would pay higher rates during peak periods.

"However, true value pricing typically would use the extra fees to improve roads and bridges to handle the traffic. Bloomberg’s proposal instead would take the money paid by autos and trucks and send it to further subsidize mass transit."

It seems that a case could be made that this isn't an example of congestion pricing at all - but rather simply another tax on one segment of the population to subsidize activities of another segment. After all, the purpose of a congestion pricing scheme is to decrease the amount of congestion either (1) by reducing the total amount of traffic or (2) by establishing a schema under which the traffic would be more evenly distributed across different routes or times of day.

This plan does not appear to do either - there appears to be no incentive to drive at one time of day as opposed to another (except, of course, congestion, which is already present). So much for (2). As for (1), this plan could reduce the amount of car traffic on Manhattan streets. Where is that traffic going to go, though? Probably onto the mass transit system. Thus, New York will be trading one type of traffic congestion for another, unless, of course, the New York mass transit system has a lot of unused capacity during peaks hours that no one knows about.

Also, as the article points out, if this shift of traffic towards the mass transit system were to happen, it would cause another problem: there would be fewer people paying into the subsidization of the system (because fewer people would be paying the $8 fee), but more people would be riding, which would drive up operating costs, which would necessitate tax or fee increases (possibly on the people who are still driving on the streets).

I would contend, then, that this is not an actual congestion pricing plan:
  1. It will not achieve the goal of such plans.
  2. It does not conform to the generally accepted framework for a congestion plan in its proposed means of execution.
  3. It may not even be intended as a congestion plan, even though it is presented as one.
  4. Even if it is intended to be such a plan, intention alone is not sufficient for a plan to qualify as a congestion pricing plan - after all, simply because I intend a crime to be a good thing does not mean that it is one.

1 Comment:

Little Blue PD said...

We all have to wonder what Bloomberg is really thinking of with this congestion pricing tax scheme. Maybe he mostly just wants a new tax. Just wrap it up in 'concern for the environment', and people can just demonize those who oppose it.

If he cares so much about traffic jams, congestion and air pollution, why does he let Park Avenue be blocked off? Why doesn't he do anything about that?

Pershing Square Restaurant blocks Park Avenue going South at 42nd St. for 12 hours a day/6 months of the year! This Causes Massive Congestion & Air Pollution!

But apparently it does not bother NYC's Nanny-in-Chief Mike "Congestion Pricing Tax" Bloomberg? Check out the map!

Check it out!


Little Blue PD


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