Friday, November 24, 2006

Road Pricing

The Seattle Times reports on an experiment in road pricing:

Tolls could cut congestion, test shows

For about eight months, drivers in 275 Seattle-area households agreed to pay for something the rest of us get for free: The right to drive on the region's freeways and streets.

They were guinea pigs in a pioneering study that explored how motorists' behavior might change if they had to pay tolls — not just on a few bridges or highways, but on almost every road with a yellow center line. Researchers established virtual tolls ranging from a nickel to 50 cents a mile. They gave participants pre-paid accounts of between $600 and $3,000, and told them they could keep whatever the tolls didn't eat up.

The experiment ended in February. Preliminary results, released this month, suggest that if such so-called "road pricing" were widespread, it could make a significant dent in traffic....

Participants in the Puget Sound Regional Council's "Traffic Choices" study had devices mounted on their dashboards in late 2004 and early 2005 that tracked their travel and transmitted the information to a central computer. Tolls, which varied by road and time of day, were deducted electronically from the pre-paid accounts, which were funded by the study's sponsors and sized to match how much participants had been driving before the study.

The promise of keeping some of that money proved to be a powerful incentive. Nearly 80 percent of the participants drove less than they did before, or they changed their routes or travel times to avoid the highest tolls, said Matthew Kitchen, the study's director. When the study was finished, the average payout was nearly $700 per household.

When other variables are factored out, Kitchen said, participants took 5 percent fewer auto trips and drove 2.5 percent fewer miles each weekday because of the tolls. The drop was even more dramatic during peak-traffic periods, when tolls were highest: 10 percent fewer trips and 4 percent fewer miles in the morning, 6 percent fewer trips and 11 percent fewer miles at night.

Note that road pricing can be viewed as a Pigovian tax on congestion externalities.