Incentives seem to matter in many settings. Jonathan Leape of the LSE has written a very nice paper on the London Congestion Charge for the Journal of Economic Perspectives. This paper goes into detail about the challenges of implementing a central london congestion charge including the nitty gritty details of enforcement. He also provides some "before/after" facts concerning the impact of the program and discusses the charge's unintended consequences. For those interested in solving big city ills I highly recommend it.
I'm interested in the bigger question of the "demonstration effect". Has NYC learned from London's success? Or does the London success teach us little about how NYC would be affected if it adopted congestion pricing?
This article below has an interesting political economy section on detailing the concerns of garage owners who may lobby against this welfare improving policy.
New York Times
December 10, 2006
Reducing the Cost of Congestion
It is reassuring that Mayor Michael Bloomberg has not shut the door on congestion pricing, even in the face of those who incorrectly call it a tax. The mayor and his planners have no doubt observed the success of congestion pricing in cities like London and Stockholm, which have eased traffic gridlock by charging drivers a fee to use the most heavily-traveled streets.
The argument for considering congestion pricing got a further boost last week with a study from the Partnership for New York City showing that clogged streets cost New York $13 billion a year.
If anything, that number seems conservative. The federal Department of Transportation, using figures from the Texas Transportation Institute, puts the costs of traffic backup around cities across the nation at an astounding $200 billion. That doesn’t even count the unmeasurable value of lost time and opportunity. Businesses and consumers lose when goods and services aren’t delivered efficiently, and both human health and the general environment suffer greatly from dirty air.
Washington is now handing out planning money to help cities find ways of easing congestion. Mr. Bloomberg should grab it. Even though polls show that New Yorkers want relief from traffic overload, an actual test of congestion pricing could help seal the deal. That’s what happened in Stockholm, where citizens first balked, then voted to approve congestion pricing after a seven month trial.
Workers in New York have the longest commute in the nation. If solutions are not found now, the situation will only get worse as the city’s population grows, as expected, by one million people, to 9.2 million, in the next 25 years.
The Partnership study offers other compelling data. If traffic were to come down just 15 percent, it says, as many as 52,000 jobs could be created. This is an achievable goal. In London, which charges a fee of about $16 to most drivers in its main business district, traffic has been reduced about 17 percent. In Stockholm, where charges vary by time of day, downtown traffic dropped 25 percent.
The benefits would ripple to choke points in all five boroughs, Long Island and New Jersey, where the study found that traffic bound for Manhattan’s busiest streets moved at less than 12 miles an hour.
The epicenter of New York’s mess is Manhattan, south of 60th Street. More than 800,000 cars enter the area every weekday. About one-fifth of these vehicles are just passing through, going between New Jersey and Queens or other points east.
But the more amazing figure is that fully 40 percent of the vehicles in the area are occupied by just one person, the driver. Congestion pricing could turn some of these drivers into users of mass transit, which in turn would receive the revenues from congestion pricing fees to improve subway service, expand the number of express buses and subsidize affordable ferries.
Critics of congestion pricing — including some garage owners, who fear empty parking spaces — say they’re standing up for the small business owner, who may have no choice but to drive into the city. Others express concern for city residents who own cars and may need to use them. But the system could be tailored to meet these objections.
The discussion of how New York might implement a pricing plan is less important right now than keeping it on the table as an option. Mr. Bloomberg has been seeking ways to grow New York’s economy, reduce carbon emissions and improve public health. All of these goals could be furthered by simply relieving traffic congestion.