__________________________________________________________________ Isabel Emery and Walter E . Block The Benefits of Congestion Pricing This paper explores the idea of why the U . S . would benefit from a congestion pricing program , particularly in urban areas . It looks at specific examples of successful cases of congestion pricing both within the U . S . and around the world . Additionally , it focuses on both larger and smaller scales of congestion pricing and its impacts . Finally , this paper will explain how congestion pricing will create economic value for governments and other organizations that own the roadway infrastructure that implement said program . ( We should clarify that we do not favor government ownership of the roads in the first place . Instead , we favor privatization of these thoroughfares . For more on this see Anderson , 2007 ; Beito , 1988 , 1989 , 1993 ; Beito and Beito , 1998 ; Benson , 2005 , 2007 ; Block , 1983 , 1996 , 1998 , 2009 ; Block and Block , 1996 ; Butler , 1982 ; Caplan , 1996 ; Carnis , 2001 , 2003 ; Cadin and Block , 1997 ; Cobin , 1999 ; De Palma and Lindsey , 2000 , 2001 ; Foldvary , 1994 ; Friday , 2019 ; Hibbs and Roth , 1992 ; Hudgins , 1987 ; Klein , 1990 ; Klein and Fielding , 1992 , 1993a , 1993b ; Klein , Majewski , and Baer , 1993a , 1993b ; Knipping and Wellings , 2012 ; Lemennicier , 1996 ; O ’ Toole , 2009 ; Roth , 1966 , 1967 , 1987 , 2006 ; Roth and Butler , 1982 ; Semmens , 1981 , 1983 , 1985 , 1987 , 1988a , 1988b , 1991a , 1991b , 1992a , 1992b , 1993 , 1994a , 1994b , 1995a , 1995b , 1996a , 1996b ). Congestion pricing has been used successfully all over the world in many different types of areas , from London to Singapore ( Brown , 2013 ). The benefits of congestion pricing vary from environmental , to traffic control , to increased productivity ( Berger , 2019 ; Flamm , 2019 ; Griswold , 2019 ; Hawkins , 2019 ; Poole , 2019 ; Vielkind , 2019 ; Vielkind and Berger , 2019 ). Charging a fee in order to drive through crowded areas in urban cities and on highly travelled major highways will create a deterrent for people who cannot afford the tolls . This will lessen the number of vehicles owned and therefore decrease the number of cars driven every day . The benefits will include less but faster moving traffic , diminished air pollution , and a reduction in pressure on key infrastructures such as roads and bridges . In addition , congestion pricing creates an incentive for people to utilize mass transportation which is widely underutilized in urban areas . Another advantage is that it increases societal wealth : traffic congestion in urban cities is reported to lower its GDP by as much as as 3 . 5 percent ( Congestion Charges for Ur- Isabel Emery is a student of economics at Loyola University , New Orleans ( USA ). Walter Block is Harold E . Wirth Eminent Scholar and Professor of Economics at the College of Business Administration , Loyola University , New Orleans ( USA ). Laissez-Faire , No . 54-55 ( Marzo-Sept 2021 ): 45-52 |

__________________________________________________________________ ban Cities , 2015 ). With various proven benefits of congestion pricing , the U . S . would gain economically from implementing a driving fee during rush hours . Business firms are also likely to be led by Adam Smith ’ s ( 1776 ) “ invisible hand ” to stagger start and end times of the workday . If they do so , they will save their employees and customers money , and thus be able to pay the former less and charge the latter more without losing either and thus earn greater profits . Congestion pricing has recently become very popular in countries around the world . In the U . S ., since 1998 , the I- 15 freeway in San Diego has taken full advantage of tolls , which have been classified as variably priced lanes . Drivers using the High Occupancy Vehicle ( HOV ) lanes pay a fee based on the amount of congestion at any given time . Tolls go up in twenty-five cent increments up to every six minutes in order to control the amount of traffic in the HOV lanes ( Congestion Pricing : Examples , 2018 ). This project has been wildly successful earning seven million dollars in revenue since its creation in 1998 , and these funds have been used to maintain and upgrade the freeway , benefiting the community of San Diego . In addition , the number of carpools has increased by 50 percent between 1998 and 2006 , decreasing the number of automobiles on the road with little loss in passenger travel . ( Congestion Pricing : Examples , 2018 ). This project has been accepted by the Southern California community as a positive change that boosts the local economy . Although this is not an example of full privatization , peak pricing allows the supply and demand for driving on the freeway to be brought into line with one another ; as a result , this facility is used to its fullest extent . Another example took place in Lee County Florida on the Midpoint and Cape Coral toll bridges . Here , drivers were offered a 50 percent discount if they traveled during certain times , encouraging motorists to shift from peak periods of travel to off-peak hours . As a result , the amount of traffic during peak periods fell . Congestion pricing has recently been discussed in New York City which would make it the first city in the U . S . to charge all drivers for operating a vehicle in the overcrowded core of the city . This huge change is expected to lead to a 6 . 7 percent reduction in vehicle miles traveled below 86 th street . The cost of the toll is expected to be upwards of ten dollars . The planning had been implemented with the goals of reducing the amount of traffic and air pollution in New York City ( Congestion Pricing : Examples , 2018 ). Currently there is a lot of controversy surrounding this plan , particularly on the part of small business owners and commuters . Critics claim that this financial burden will push lower socioeconomic classes out of New York City , yet a study conducted by the urban planning company in late October of 2017 ranked New York City with the best public transportation in the country ( Batten , 2017 ). Congestion pricing will force those who cannot afford the toll to resort to public transportation . In addition , congestion pricing in New York City would generate billions of dollars to improve the conditions of not only roads , but also public transportation . Congestion pricing in the Big Apple is an initiative that would bring positive change to the city and help solve its traffic problem while also providing a viable option for those who cannot afford the toll . Although there is much debate over congestion pricing in big U . S . cities , the i- __________________________________________________________________ 46

__________________________________________________________________ dea has been proven to be successful in all corners of the world . Singapore was one of the first areas to introduce congestion pricing in 1975 . Cars with one or two people were charged one U . S . dollar in order to enter Singapore ’ s central business district and those with three people or more were considered a carpool and were exempt . This toll was only implemented during peak times which encouraged drivers to travel during off peak times , reducing traffic . In 1998 after extensive field testing , congestion pricing expanded extensively in Singapore and many new charge-point locations were added . Prices vary based on location and time of day . The effects shortly after its implementation in 1975 included a reduction of 73 percent of cars entering the city-state , the carpool rate went from 8 percent to 19 percent , and the bus share increased from 33 percent to 46 percent . Long term impacts after the expansion of congestion pricing following 1998 included an increase in public transportation from 33 percent to 69 percent , and weekday traffic decreased by 24 percent from 271 , 000 vehicles to 206 , 000 vehicles per day ( Federal Highway Administration , 2017 ). Overall , evidence suggests that congestion pricing in Singapore has had positive impacts on mobility , environment , and revenue . London has a long history of congestion pricing which dates back to 2000 , when a five-pound charge was imposed for vehicles entering the Congestion Charge Zone . As of 2019 the charge has been increased to eleven and a half pounds . London ’ s system of congestion pricing is similar to that of Singapore . It was started to control traffic and limit the amount of air pollution . Six years after the program was introduced , Transport for London reported a 15 percent decrease in traffic and congestion , and more recently it reported a 25 percent decrease in traffic from the 2006 report ( Badstuber , 2019 ). Not only has traffic in London decreased , but bike trips increased 79 percent from 2001 to 2011 , and bus usage reached a fifty year high in 2011 with 30 percent more service and a 20 percent less waiting time compared to 2001 . In 2008 the congestion charge ’ s revenues were 268 million pounds , or roughly 435 million U . S . dollars . About 50 percent of that revenue was used for the congestion charge expenses , so the net revenue would have been about 137 pounds or 222 million U . S . dollars ( Kamanoff , 2013 ). British law requires all congestion pricing net revenue collected in London to be spent on transportation in the greater London area . In 2008 , 82 percent of revenue was spent on bus improvements , 9 percent was spent on repairing roads and bridges , and the remaining 9 percent was used to improve road safety ( Kamanoff , 2013 ). Without peak load pricing , all of these improvements would come from taxes ; this policy ensures that road users themselves pay for its maintenance and upkeep . Another result is that travel fatalities and serious injuries have fallen which has been noted in a study regarding road accidents in relation to London ’ s congestion charge ( Green , 2016 ). Stockholm is also a part of the “ Smart Cities ” movement . Their system works in a similar fashion to London ’ s congestion pricing , where drivers are charged a fee to enter the Stockholm Central Business District . To promote travel and tourism , vehicles with foreign registration are exempted from payment . Nor are motorcycles or public transportation required to pay . Charges are limited to rush hours ; early morning and evening drivers are not charged to enter the Central Business District . Since the charge has been im- __________________________________________________________________ 47

__________________________________________________________________ plemented , Stockholm has seen an 18 percent decrease in traffic , a 50 percent decrease in time waiting to enter the city during peak hours , and carbon emissions have been decreased by 14 to 18 percent ( Peach , 2011 ). At first , congestion pricing was unpopular , but after time passed and residents of Stockholm saw improvements of traffic flow , it became widely favored ( Meyer , 2017 ). By looking at the results of congestion pricing in places such as San Diego , Singapore , London and Stockholm it can be seen that this tool can be used to address many different problems . One of its biggest positives is that it creates a deterrent for private vehicle ownership . We have no per se objection to automobiles and trucks . Our reservation stems from the fact that without peak load pricing , our economy overinvests in them . A reduction , therefore , brings us closer to their optimal level . This system creates an incentive for commuters to carpool , take public transportation , and even walk , bike , or skate to the city center . The charge decreases the number of cars owned by families , and also limits the number of cars driven in the target area . Another benefit is that it improves mobility , especially in urban areas . Bumper to bumper traffic can add hours to commutes and , unchecked , has driven congestion in city centers to an all-time high ( Downs , 2018 ). Congestion pricing also leads to improvements in mass transportation . In most big cities this mode is largely underutilized . Peak load pricing changes this by allowing revenues to be used to improve public transportation . The initiative also encourages people to actually use public transportation in order to avoid the fee , improving both air quality and reducing traffic . Creating safer roads is another benefit of the pricing mechanism . By lowering the number of cars on the road the accident rate falls . Congestion pricing has been known to create safer conditions on the roads , which is important since auto accidents are a main cause of death around the world ( Block , 2009a ). Congestion pricing raises a significant amount of revenue for local governments . Even after costs of the charge are taken into account , cities are left with a large sum of money which can be put towards improving roads , public transportation , and public infrastructure . Since the congestion charges revenue is usually put towards street lighting , signals , road repair , and other road related costs , a large sum of money is freed up for the government to make other improvements within the city . 1 Critics of congestion pricing argue that the toll will promote social inequality since the rich will be paying the same amount as the poor , creating a further gap in wealth which will only hurt low income neighborhoods located in urban areas . This argument is invalid since the congestion charge is only applied to drivers of private vehicles , who are not likely to be poverty stricken . Yes , the payment is in effect regressive , but the same applies to the prices of ships and sealing wax . Bill Gates pays the same price for shoes and celery as anyone else , and the poor are not thereby disadvantaged . Indeed , a proportional price system , let alone a progressive one , would be so complicated it would impoverish us all . 1 Should this be counted as a positive or a negative ? Those who view government as a benevolent force will incline toward the former . Those who see perceive the state in the opposite direction will take the latter position . __________________________________________________________________ 48