Wednesday, May 2, 2007

Congestion pricing in Manhattan

A few cities have tried congestion pricing, most notably Stockholm and London, and in most cases it has been a success. Stockholm imposed congestion pricing on a trial basis last year; the program worked so well that voters opted to reinstitute it. Since the London plan was introduced, in 2003, vehicle speeds in the city's central business district have increased by thirty-seven per cent and carbon-dioxide emissions from cars and trucks have dropped by fifteen per cent... Now nearly two-thirds of Londoners say that they back the scheme.

The case against congestion pricing is often posed in egalitarian terms. "The middle class and the poor will not be able to pay these fees and the rich will," State Assemblyman Richard Brodsky, of Westchester County, declared after listening to the Mayor’s speech. In fact, the poor don't, as a rule, drive in and out of Manhattan...

Meanwhile, it's naive to suppose that congestion isn't itself costly. Sitting in traffic, a plumber can't plumb and a deliveryman can't deliver. The value of time lost to congestion delays in the city has been put at five billion dollars annually. When expenses like wasted fuel, lost revenue, and the increased cost of doing business are added in, that figure rises to thirteen billion dollars. The question, Bloomberg observed, is "not whether we want to pay but how do we want to pay?"

--Elizabeth Kolbert, New Yorker, on the compelling case for charging people to drive in Manhattan

3 comments:

Sophist said...

Will there be an exemption for people like plumbers and construction workers that need trucks/cars for their work, but may not afford the fee? Or maybe the driving fee would eventually be offset by traffic being so much better that they could do more jobs and and sit around in traffic less.

But that's an eventual benefit, not an immediate one...

James Choi said...

The congestion and pollution caused by plumbers and construction workers when they drive in to do work is a true cost of providing their services. Unless the true cost of using those resources is charged for, congestion and pollution will be too high, since there's no incentive to conserve clean air and uncongested roads.

If the government provided a subsidy that made marble free, then we would see too much use of marble. Yes, construction workers are better off if the government subsidized marble, but that doesn't mean that subsidy makes sense. Similarly, the government currently makes the use of roads free, so too many cars drive on the road.

Some portion of the congestion tax will be passed on to customers through higher prices, so the plumbers and construction workers won't bear the entire cost of the tax. If you're worried about helping the poor, allowing free use of the roads is an extraordinarily inefficient way to redistribute resources, since that benefit goes to both the poor and the rich. A better way is to lower the tax rate on the poor.

Sophist said...

Yes, I was figuring that the cost associated with driving in the city for a job would likely passed onto the customers, which sounds fair enough, or would be offset in some form of tax rebate/exemption.