Is Congestion Pricing Right for Car-Happy Los Angeles?

freeway congestion

Image courtesy of DRB62 via flickr

Following its unceremonious defeat at the hands of New York State Assembly, congestion pricing is looking to make a comeback in -- of all places -- car-mad Los Angeles. The large chunk of federal cash NYC's nixing of the deal has freed up, roughly $354 million, would be used to put toll lanes on three freeways, initially. The catch is that existing carpool lanes on these freeways would be converted to toll lanes.The benefits of congestion pricing in cities like London have been evident for a while now: Not only do they significantly reduce traffic (and car emissions) in dense, metropolitan areas, they also encourage commuters to take public transportation. Because such a scheme was perceived as proffering many of the same benefits to NYC, where grinding traffic in midtown forces most off the roads (and onto the city's excellent public transit system), many were dismayed by the State Assembly's failure to ratify the $8 fee.

Its implementation in Los Angeles, however, raises a whole host of other issues -- many of which have pitted firm (and often vocal) advocates of the NYC/London schemes squarely against Mayor Villaraigosa and county officials. A lot of the current brouhaha basically boils down to issues of equity: As Portfolio's Felix Salmon argues, the same arguments don't apply here because congestion pricing in NYC was primarily meant to dissuade wealthier residents from driving into midtown:

This is the big difference between NY and LA. In NY, it's the rich who drive personal vehicles during the working day in midtown: the poor don't. The other big difference is that in New York there are alternatives to driving, including public transport and bicycling. While there are indeed areas of New York City which are not well served by public transport, the residents of those areas generally don't commute to Manhattan.

In New York, congestion pricing forces well-off drivers to pay for - and help ameliorate - the negative externalities which they impose on the population as a whole. On the LA freeways, there's a good chance that it would only serve to exacerbate those negative externalities for most local residents.

Economist Mark Thoma raises many of the same concerns in an incisive post on the subject:

In the past, I've wondered if policies that allow a certain segment of the population to "buy out" of constraints designed to reduce carbon emissions, traffic congestion, etc. will find much popular support. This is an objection to the imposition of toll roads in LA along those lines, i.e. based upon the notion of fairness.

. . .

Economics analysis tells us that using a Pigouvian tax (or its equivalent) to solve these types of problems has desirable properties, and we can use the revenue from the tax to give rebates to lower income households so as to offset the losses from higher prices, tolls, etc., (see here). But when should you trade optimal for feasible?

For example, the connection between rebates given, say, once a year on tax forms and the frequent payment of the tolls, higher gas prices, etc., may not be direct enough to offset the perception of unfairness.

LAT columnist Tim Rutten provides perhaps the most devastating critique of the L.A. scheme, articulating that the plan would essentially "clear a highway for the well-off," while allowing "the middle class and working poor," to "inhale each other's $5-a-gallon exhaust fumes." He argues that the MTA has only decided to take up this issue now that there's "free money" available -- lambasting it for not taking the consequences of congestion pricing (particularly on the poor) into consideration.

As a longtime Angeleno, I know full well how difficult it is to get around without a car. The public transit system is, at best, inconvenient and -- even where it is fully functional -- limited in scope. Many of those who work in the city cannot afford to live there and, as a result, spend several hours a day commuting on Los Angeles' infernal freeway system.

While a congestion pricing scheme would help reduce traffic and provide some much needed funds for the city's Metropolitan Transportation Authority, it would primarily benefit a small minority of commuters; eliminating carpool lanes would also do little to stem the traffic flow, since they are already carrying close to the capacity (1,200 to 1,400 vehicles per hour during rush hour on lanes which have a capacity of around 1,650) -- that is, unless the city is willing to jack up prices enough that it scares off a large number of drivers back into the regular lanes.

While we'd all prefer to see less vehicles on the road -- especially in L.A. -- any proposed traffic-reduction scheme should carefully be evaluated under a rigorous cost-benefit framework. As Thoma noted, financial incentives like regular dividend payments (based on the proceeds of the congestion fee) to low- and middle-income drivers could help slightly ease the pain; on a whole, however, congestion pricing would still penalize these workers the most, and that may be reason enough to reject it.

Via ::Market Movers: The Problems of Congestion Pricing in LA (blog)

See also: ::Bloomberg Congestion Fee a No-Go, ::Wasting Away in Traffic

Is Congestion Pricing Right for Car-Happy Los Angeles?
Following its unceremonious defeat at the hands of New York State Assembly, congestion pricing is looking to make a comeback in -- of all places -- car-mad Los Angeles. The large chunk of federal cash NYC's nixing of

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