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Before the Joint Economic Committee 
U.S. Congress:

United States General Accounting Office:


Not to Be Released 
Before 10:00 a.m. EDT
Tuesday, May 6, 2003:

Reducing Congestion:

Congestion Pricing Has Promise for Improving Use of Transportation 

Statement for the Record of
JayEtta Z. Hecker, Director
Physical Infrastructure Issues:


GAO Highlights:

Highlights of GAO-03-735T, a statement for the record to the Joint Economic Committee, U.S. Congress  

Why GAO Did This Study:

The nation’s transportation systems have become increasingly congested, 
and pressure on them is expected to grow substantially in the future. 
Most transportation experts think a multifaceted approach is needed to 
address congestion and improve mobility. One potential tool is 
congestion pricing, that is, charging users a toll, fee, or surcharge 
for using transportation infrastructure during certain peak periods of 
travel. Pilot projects to test this approach are currently under way in 
the United States and the technique has been used more extensively 

Interest in the usefulness of congestion pricing has been growing, as 
evidenced by several recent proposals. However, there have also been 
concerns raised about the fairness of such practices to some users of 
transportation systems. GAO was asked to identify (1) the potential 
benefits that can be expected from pricing congested transportation 
systems, approaches to using congestion pricing in transportation 
systems, and the implementation challenges that such pricing policies 
pose, and (2) examples of projects in which pricing of congested 
transportation systems has been applied to date, and what these 
examples reveal about potential benefits or challenges to 

This statement is based on prior GAO reports and other publicly 
available reports.

What GAO Found:

Congestion pricing can potentially reduce congestion by providing 
incentives for drivers to shift trips to off-peak periods, use less 
congested routes, or use alternative modes, thereby spreading out 
demand for available transportation infrastructure. Congestion pricing 
also has the potential to create other benefits, such as generating 
revenue to help fund transportation investment. Possible challenges to 
implementing congestion pricing include current statutory restrictions 
limiting the use of congestion pricing, and concerns about equity and 
fairness across income groups. In theory, equity and fairness concerns 
could be mitigated depending on how the revenues that are generated are 

Evidence from projects both here and abroad shows this approach can 
reduce congestion. Such projects have also shown they can generate 
sufficient revenue to fund operations—and sometimes fund other 
transportation investment as well. However, projects were not 
necessarily able to demonstrate benefits for the full range of 
transportation users. For example, those who were able to use the 
special freeway lane saw a decrease in travel time. But, in some cases, 
there was little systemwide reduction in travel times, and congestion 
increased on alternative routes. Nonetheless, there is some evidence 
that equity and fairness concerns can be mitigated. Some projects have 
shown substantial usage by low-income groups, and other projects have 
used revenues generated to subsidize low-cost transportation options. 
In addition, some recent proposals for refining congestion-pricing 
techniques have incorporated further strategies for overcoming equity 
concerns. For example, the Fast and Intertwined Regular (FAIR) lanes 
proposal in New York suggests crediting users of the non-tolled lanes 
to partially pay for them to use public transportation, or to use the 
express lanes on other days.

To view the full statement, including the scope and methodology, click 
on the link above. For more information, contact JayEtta Hecker 
at (202) 512-8984.

[End of section]

Mr. Chairman and Members of the Committee:

We appreciate the opportunity to offer this statement for the record 
about the role that charging fees for the use of congested 
transportation infrastructure can play in improving mobility in our 
nation's transportation systems. There is widespread agreement that 
mobility is essential for a strong economy. It provides people with 
access to goods, services, recreation, and jobs; it provides businesses 
with access to materials and markets. It also promotes the movement of 
personnel and material to meet national defense needs. However, our 
transportation systems--for surface, maritime, and air transportation-
-have become increasingly congested. By some measures, for example, 
overall roadway congestion has increased more than 50 percent between 
1982 and 2000 in some of the largest metropolitan areas. Congestion 
results in significant costs to the environment through increased 
pollution, and to individuals and businesses through wasted energy, 
time, and money.

In recent reports covering all three of these transportation systems, 
we have analyzed ways to make these systems operate more efficiently--
including ways to do so without major new capital investment.[Footnote 
1] One such approach involves congestion pricing--that is, charging a 
higher price to use the system during peak periods or on congested 
routes. Doing so provides incentive for users to shift to less 
congested times or make other adjustments. Those who value the service 
enough will pay the additional price; those who value it to a lesser 
degree will shift their use accordingly. Currently, there is renewed 
interest in the role that congestion pricing can play in enhancing 
mobility, as evidenced by several recent proposals to institute pricing 
policies from industry, interest groups, and the Department of 

My statement for the record is meant to provide some overall 
perspective on what we have learned about congestion pricing. It 
addresses (1) the potential benefits that can be expected from pricing 
congested transportation systems, approaches to using congestion 
pricing in transportation systems, and the implementation challenges 
that such pricing policies pose, and (2) examples of projects in which 
pricing of congested transportation systems has been applied to date, 
and what these examples reveal about potential benefits or challenges 
to implementation. My statement today is based in large part on our 
prior work in all three types of transportation systems. We have also 
gathered additional information by reviewing publicly available reports 
on a number of projects that are part of the Federal Highway 
Administration's Value Pricing Pilot Program, a program that funds 
projects that demonstrate the potential of congestion pricing to 
address congestion problems, and on selected projects in other 

In summary:

* According to several reports from the Transportation Research Board 
and others, applying congestion-pricing methods to our nation's 
transportation systems could have potential to help reduce congestion 
and enhance mobility by providing incentives to shift travel to off-
peak periods or less congested routes, thereby more efficiently using 
transportation infrastructure. Congestion pricing also has the 
potential to create other benefits, such as generating revenue to help 
fund investment in transportation systems directly from users. While 
there are a number of potential benefits, implementing pricing methods 
for our transportation systems faces numerous challenges. Opportunities 
to pursue congestion pricing are limited because of current statutory 
restrictions limiting the use of congestion pricing and concerns about 
equity and fairness. For example, federal statutes restrict the 
charging of tolls on interstate highways, except where tolls previously 
existed or where exceptions have been made for pilot projects. Concerns 
about equity center around the effect that congestion pricing may have 
on lower-income groups. The economics literature suggests that these 
concerns can be mitigated somewhat because all income groups could 
conceivably benefit from congestion pricing, depending on how the 
revenues generated are used.

* A number of congestion pricing projects are in place in surface and 
air transportation systems, both here and abroad. For the most part, 
they demonstrate that congestion pricing can be successful in 
generating greater economic efficiency and reducing congestion within 
transportation systems. Pricing projects have also successfully shown 
that they can generate revenue sufficient to fund their operation and, 
in some cases, fund the operation of additional transportation projects 
as well. For example, in San Diego, where users pay a toll to use a 
less crowded freeway lane, some of the revenues are used to operate a 
new express bus service, providing commuters with more travel options. 
However, in at least one circumstance, congestion pricing was not as 
effective in reducing travel during peak periods, either because 
travelers had little or no choice other than to travel at peak times or 
on peak routes, or the congestion toll was set too low to influence 
demand. Projects were also not necessarily able to demonstrate benefits 
for the full range of transportation users. For example, those who were 
able to use the special freeway lane saw a decrease in travel time, but 
in some cases there was little systemwide reduction in travel times, 
and congestion increased on alternative routes. Nonetheless, there is 
some evidence that equity and fairness concerns can be mitigated. Some 
projects have shown substantial usage by low-income groups, and other 
projects have used revenues generated to subsidize low-cost 
transportation options. In addition, some recent proposals for refining 
congestion-pricing techniques have incorporated further strategies for 
overcoming equity concerns. For example, the Fast and Intertwined 
Regular (FAIR) lanes proposal in New York suggests crediting users of 
the non-tolled lanes to partially pay for them to use public 
transportation, or to use the express lanes on other days.


Major capital investment in highways, public transportation systems, 
waterways, and airports are currently funded, in part, through various 
taxes and fees on users, such as fuel taxes or sales taxes; landing 
fees and docking fees; and tolls on certain roads, tunnels, and 
bridges. However, these revenue-raising instruments do not always 
provide strong incentives for efficient use of transportation 
infrastructure. For example, the tax rates on gasoline, which are the 
same regardless of whether vehicles are traveling during congested or 
uncongested periods, provide no incentive for travelers to use the 
infrastructure more efficiently. Similarly, landing fees at airports 
that are based on aircraft weight help create incentives for airlines 
to shift to smaller, lighter aircraft providing more frequent service, 
which results in increased demand for runways at peak times and 
therefore increased congestion.

Due in part to increasing volumes of traffic, as well as these built-in 
disincentives to the efficient use of the transportation 
infrastructure, congestion on our nation's highways, airways, and 
waterways remains a national problem. On already crowded roadways, 
passenger vehicle travel is expected to grow by almost 25 percent this 
decade, and freight movement by trucks may grow by a similar amount. In 
the nation's air transportation system, before the terrorist attacks on 
September 11, 2001, an unprecedented number of delays in commercial 
airline flights occurred--a substantial part of which were due to 
airport and airspace congestion, particularly during peak morning and 
evening hours. At 31 of the nation's busiest airports, 28 percent of 
the domestic flights arrived late in 2000. While flight congestion 
declined significantly with reduced traffic after the attacks, a more 
robust economy and less public apprehension about flying will likely 
lead to renewed demands on the air transport system. At locks on our 
inland waterways and at major seaports, congestion has also been 
growing. For example, the U.S. Army Corps of Engineers estimated that 
15 key locks would exceed 80 percent of their capacity by 2020 as a 
result of the expected growth in freight travel, as compared to 4 locks 
that reached that level in 1999, resulting in significantly increased 

Numerous methods can be used to address congestion, including building 
new infrastructure, improving maintenance and operation of 
infrastructure, and using the existing infrastructure more efficiently 
through demand management strategies, including pricing mechanisms. 
Experts with whom we talked said that consideration of a full range of 
these methods is likely necessary to ease our nation's transportation 
congestion.[Footnote 2] In theory, congestion pricing, as one of these 
methods, is useful for mitigating the delay costs of congestion. If 
highway, aviation, and waterway users were charged extra for peak-hour 
use, some would shift to less busy times, or make other adjustments, 
thereby alleviating delay at the peak periods.

Many other areas of the economy frequently use peak-period pricing 
mechanisms when demand varies considerably by time of day or season. 
Electricity providers, for example, often charge higher prices at peak 
periods and lower prices when demand is reduced. Other industries with 
common peak-pricing practices include telecommunications, airlines, 
and hotels and resorts. In addition, Amtrak and some transit systems 
use peak-period pricing.

Research Suggests Significant Benefits, but Some Challenges, to 
Implementing Congestion Pricing:

In theory, using congestion pricing has the potential to enhance 
economic efficiency, as well as provide other benefits, such as 
providing market signals that can guide capital investment decisions, 
and generating revenue to help fund such investment directly from users 
of the system.[Footnote 3] There are several approaches to implementing 
congestion pricing on roads and at airports. However, incorporating 
pricing into our transportation systems involves overcoming several 
implementation challenges, such as current restrictions on using 
congestion pricing on our highways and on runways, and equity and 
fairness concerns.

Congestion Pricing May Encourage Greater Economic Efficiency, and 
Provide Other Benefits:

Economists generally believe that charging automobile, truck, vessel, 
and aircraft operators surcharges or tolls during congested periods can 
enhance economic efficiency by making them take into account the 
external costs they impose on others in deciding when, where, and how 
to travel. In congested situations, external costs are substantial and 
include increased travel time, pollution, and noise. The goal of 
efficient pricing on public roads, for example, would be to set tolls 
for travel during congested periods that would make the price 
(including the toll) that a driver pays for such a trip equal or close 
to the total cost of that trip, including external costs. In theory, 
these surcharges could help reduce congestion and the demand for road 
space at peak periods by providing incentives for travelers to share 
rides, use transit, and travel at less congested (generally off-peak) 
times or on less congested routes.

Peak-period pricing may have applicability to other modes as well. For 
example, congestion pricing for using locks on our nation's inland 
waterways might be a way to reduce delays experienced by barge 
operators. Similarly, congestion pricing at commercial airports--that 
is, charging higher landing fees during congested periods--would cause 
aircraft operators, both airlines and general aviation operators, to 
consider external costs in making their decisions. As a result, there 
would be incentives to shift some operations to off-peak hours or 
secondary airports or to provide the same carrying capacity by 
operating fewer but larger aircraft.

In addition to increasing the efficiency with which current 
transportation infrastructure is used, congestion charges may be 
helpful in guiding capital investment decisions for new facilities. As 
congestion increases, the delay cost that an additional user of the 
system causes for other users also increases. If congestion charges are 
set such that they reflect external costs, then as congestion 
increases, congestion surcharges will increase. Rising surcharges 
provide signals of increased demand for specific increases in physical 
capacity, indicating where capital investment decisions to increase 
capacity would be most valuable. At the same time, congestion charges 
will provide a ready source of revenue for local, state, and federal 
governments and transportation facility operators to fund these 
investments in new capacity that, in turn, can reduce delays. In some 
cases and over a longer period, in places where external costs are 
substantial, and congestion surcharges are relatively high, this form 
of pricing might influence land-use plans and the prevalence of 
telecommuting and flexible workplaces.

Various Possible Approaches to Setting and Collecting Surcharges Exist:

Congestion pricing could be applied to transportation systems in a 
variety of ways, and there are several possible approaches related to 
which facilities are priced, how the price is set, and how the toll is 

Approaches for Roads:

In one possible form of congestion pricing for public roads, tolls 
would be set on an entire roadway or road segment during periods of 
peak use. In another form, sometimes known as value pricing, peak-
period tolls would be set on only some lanes of a roadway, allowing 
drivers to choose between faster tolled lanes and slower non-tolled 
lanes. High-occupancy toll (HOT) lanes, under which drivers of single-
occupancy vehicles are given the option of paying a toll to use lanes 
that are otherwise restricted to high-occupancy vehicles,[Footnote 4] 
are an example of value pricing. Fast and Intertwined Regular (FAIR) 
lanes is a recent proposal that is another variation of value pricing. 
Under the FAIR lanes approach, revenues generated from travelers using 
electronically tolled lanes would be transferred to travelers using 
adjacent non-tolled lanes on the same roadway. These transfers would be 
done through electronic transponders in the vehicles using the toll 
lanes, as well as the non-tolled lanes. Those in the non-tolled lanes 
would receive a credit equal to 25 to 50 percent of the current 
effective toll, which could then be used toward public transportation 
fares or toward the use of the toll lanes on another day. In this way, 
drivers in the non-tolled lanes would receive compensation for the 
additional congestion that may result from increased use of those lanes 
once tolls are placed on other lanes. In a third form of congestion 
pricing for public roads, known as cordon-based pricing, drivers would 
be charged a fee for entering a specific area of a city, such as a 
central business district, at peak hours.

Approaches for Airports:

Two commonly mentioned methods of applying the concept of congestion 
pricing at airports are differential pricing and auctions. Under 
differential pricing, airports would set landing fees higher at times 
when demand for takeoff and landing slots exceeded their availability, 
and lower at other times, in effect applying a surcharge for using the 
system at peak-demand periods. An auction approach would allow airports 
to periodically auction a fixed number of takeoff and landing slots--
equal to the airport's capacity--to the highest bidders. For example, 
an airport, in conjunction with the Federal Aviation Administration, 
could determine its per-quarter-hour takeoff and landing capacity, and 
a competitive bidding process among carriers could determine fees 
during each period, which would also result in surcharges for using the 
system at peak-demand periods.

Structuring and Setting the Tolls:

Congestion pricing tolls could be levied using either a predetermined 
or variable approach. Under the predetermined approach, drivers would 
pay tolls that are preset and fixed according to the time of day they 
travel. In contrast, under the variable approach, drivers would pay 
tolls that vary according to the level of congestion on an affected 
roadway. For either approach, the amount of the toll to be levied would 
likely be set by state or local officials, or other toll facility 
operators, based on information from roadway usage and traveler 
surveys. The toll structure may also be influenced by the judgment of 
the toll facility operators. These tolls could then be adjusted upward 
or downward based on the use of the toll facility in relation to the 
optimal flow of traffic on the facility.

Collecting Tolls:

Electronic methods of collection from users of public roads offer vast 
increases in efficiency compared to traditional tollbooths, which are 
labor intensive and relatively expensive to operate, and create 
congestion as drivers line up to pay their tolls. And, over the past 
decade, electronic road pricing technology has become more reliable 
and, as a result, more widely adopted on many toll facilities.[Footnote 
5] According to a report issued by the Transportation Research Board, 
technologies that are currently used at some toll facilities to 
automatically charge users could also be used to electronically collect 
congestion surcharges without establishing additional tollbooths that 
would cause delays.[Footnote 6] In application of cordon-based pricing, 
drivers would typically purchase and display permits that allow them 
access to the cordoned section of the city before entering. Daily or 
monthly permits could be differentiated by color and shape for easy 

Challenges to Implementing Congestion Pricing Include Legal 
Restrictions and Concerns about Fairness and Equity:

One challenge in implementing congestion pricing for transportation 
systems is that, at present, greater use of pricing is limited by 
statutory restrictions. For example, tolls are prohibited on the 
Interstate Highway System, except for roads that already had tolls in 
place before they were incorporated into the system (e.g., the New 
Jersey and Pennsylvania Turnpikes) or where exceptions have been made 
for the implementation of pilot projects.[Footnote 7] Also, there are a 
variety of statutory restrictions on landing fees at airports that can 
limit use of congestion pricing. Landing fees are typically based on 
aircraft weight and are required to be set at levels designed to 
recover the historical costs of providing landing services. Costs 
imposed by congestion and other externalities cannot be considered in 
the calculation of the cost base and, hence, cannot be recovered in 
landing fees. Congestion fees, as well as most other types of fees, are 
also prohibited on the inland waterways because of the Interstate 
Commerce clause, according to the Army Corps of Engineers. Therefore, 
addressing some of these restrictions would be necessary to make 
greater use of congestion pricing.

Another challenge involves effectively addressing concerns raised about 
equity and fairness. Because of this issue, political opposition to 
using this approach to address mobility challenges has been 
substantial. One equity concern that has frequently been raised about 
congestion pricing of public roads has been the potential effects of 
surcharges or tolls on lower-income drivers. Because a surcharge would 
represent a higher portion of the earnings of lower-income households, 
it imposes a greater financial burden on them and, therefore, is 
considered unfair.[Footnote 8] The economics literature suggests that 
these concerns can be mitigated to some degree. For example, proponents 
of congestion pricing have noted that all income groups could 
potentially benefit if there is an appropriate distribution of the 
revenues obtained through congestion pricing. These revenues could be 
used to build new road capacity, given back as tax rebates tilted 
toward lower-income households, or used in some other way so that, in 
theory, the net benefits for each income group would exceed its costs.

Although equity considerations could potentially be addressed by 
constructing a congestion pricing system for roads so that all income 
groups received net benefits, there could still be individuals who 
would be negatively affected. In theory, the cost of a surcharge or 
toll would be less for those who could more readily make adjustments to 
their driving behavior that would allow them to avoid paying the toll. 
Conversely, drivers who had little flexibility to alter their work 
schedules to avoid a toll by traveling at off-peak hours could 
potentially be more affected than workers with such flexibility. 
Similarly, those whose commuting patterns make it harder for them to 
form carpools or use transit could also be more affected.

The arbitrary nature of these distinctions, as well as opposition from 
those who find the concept of restricting lanes or roads to people who 
pay to use them to be elitist, raises fairness concerns and accounts 
for some of the political opposition to congestion pricing. More 
generally, there is often opposition to paying a charge to use 
something that was formerly provided "free.":

Existing Projects Show That Benefits Can Result, and Some Evidence 
Suggests That Implementation Challenges Can Be Mitigated:

A number of existing congestion-pricing transportation projects, both 
here and abroad, show that pricing can influence travelers' behavior to 
the point of reducing congestion and thus increasing economic 
efficiency. For example, value pricing pilot projects in the United 
States show considerable usage and have provided users with a less 
congested alternative, thus improving traffic flows and reducing 
delays. In addition, congestion-pricing mechanisms, in general, have 
demonstrated that they can generate revenue sufficient to fund their 
operation and, in some cases, fund investment in transportation 
alternatives. The available evidence also suggests that implementation 
challenges can be mitigated, although to what extent is not yet clear.

Projects Provide Evidence of Increased Economic Efficiency:

A number of the congestion-pricing projects we identified enhanced 
transportation mobility through improved traffic flows, increased 
speeds and reduced delays for some users. One way in which some 
projects have done so is by channeling some drivers into infrastructure 
that is not being fully utilized even at peak periods. In several 
locations in the United States, for example, HOT lane projects have 
been implemented in which vehicles with fewer passengers than would 
normally be needed to use high occupancy vehicle lanes have been 
allowed to use such lanes by paying a toll.[Footnote 9] High occupancy 
vehicle lanes are generally less congested than other highway lanes, 
and drivers who use them are thus able to shorten their trip times. The 
toll for such use varies, increasing during periods of peak congestion. 
In such HOT lane or value pricing projects in Orange County (as shown 
in figure 1) and San Diego, California, and Houston, Texas, drivers 
willing to pay to use the HOT lane saved an average of 12-20 minutes 
per trip in the peak period. In addition, some projects were able to 
shift demand on congested infrastructure to less congested time 
periods. In San Diego, officials were also able to spread out peak 
period traffic on the toll lanes over a longer period of time by 
charging a lower toll just before and just after the peak period.

Figure 1: Tolled Lanes on State Route 91 in Orange County, California:

[See PDF for image]

[End of figure]

In many instances, however, a congested transportation system may have 
no equivalent to a high occupancy vehicle lane with additional 
capacity. In these cases, some other congestion pricing models have 
been used to encourage travelers to shift their behavior, either by 
traveling at another time or by using alternative transportation modes, 
such as buses, trains, or carpools. For example, in Singapore, London, 
and Norway, congestion pricing has taken the form of cordon-based 
pricing, where drivers pay to enter entire regions. These projects have 
demonstrated significant decreases in the level of congestion on roads 
in the cordoned area and some significant shifts to other alternative 
modes, as follows:

* In Singapore, the city government instituted a $1 charge in 1975 for 
private vehicles to enter the central business district in the morning 
rush hours. Carpools, buses, motorcycles, and freight vehicles were 
exempted from the charge. The result was an immediate 73 percent 
decline in the use of private cars, a 30 percent increase in carpools, 
and a doubling of buses' share of work traffic.

* In London, recent implementation of cordon tolls resulted in traffic 
decreases of roughly 20 percent, and about a 14 percent increase in the 
use of buses during the morning commute.

* In Trondheim, Norway, cordon tolls produced a 10 percent reduction in 
traffic at peak times and an 8 percent increase in traffic in off-peak 
times in the central business district.

Such projects have similarly been used to relieve congestion at crowded 
airports. In one case, the Port Authority of New York and New Jersey 
imposed surcharges beginning in 1968 for peak-hour use by small 
aircraft at Newark, Kennedy, and La Guardia airports. These small 
aircraft, known as "general aviation" aircraft, were not part of 
scheduled airline operations. The need to accommodate takeoffs and 
landings for these aircraft during peak periods was adding to 
passsengers' delays on scheduled airline flights. The port authority 
raised the peak-period minimum take-off and landing fees for aircraft 
with fewer than 25 seats from $5 to $25, while keeping the off-peak fee 
at $5. As a result of the surcharges, general aviation activity during 
peak periods decreased by 30 percent. The percentage of aircraft 
operations delayed more than 30 minutes declined markedly over the same 
period. Similarly, in 1988 at Boston's Logan Airport, the Massachusetts 
Port Authority adopted a much higher landing fee for smaller aircraft. 
Like the three New York and New Jersey airports, Logan experienced a 
large drop-off in use by smaller aircraft. Much of the general aviation 
abandoned Logan for secondary airports, and delays at Logan 
dropped.[Footnote 10]

Projects Can Also Provide Support for Other Transportation 

Proponents of congestion pricing have noted that others besides those 
who can afford to pay congestion pricing costs can share in the 
benefits through an appropriate distribution of any revenues generated. 
A part of these revenues will be needed to administer the system--for 
example, to collect tolls. However, existing projects also contain a 
few examples of situations in which the revenues generated from 
congestion pricing have been used to benefit other transportation 
alternatives. For example, the revenue from the HOT lane project in San 
Diego has been sufficient not only to pay for toll takers and other 
administrative expenses, but also to fund the operation of a new 
express bus service. This has increased travel choices for all area 
commuters, including lower-income populations.[Footnote 11]

International experiences with congestion pricing have been somewhat 
more extensive and revenues generated from congestion tolls have been 
substantial. In Singapore, only about 12 percent of the revenue 
generated from their cordon-based tolls have been needed to cover the 
costs of operation. In Trondheim, Norway, revenues have exceeded 
capital and operating expenses of the toll facility by 5 times. 
Trondheim's toll facility currently generates about $25 million in 
profit per year. These profits have been used to enhance the capacity 
of the entire transportation system, including financing additional 
road infrastructure as well as subsidizing public transportation 
facilities and services, and pedestrian and bicycle facilities.

Extent to Which Equity and Fairness Issues Can Be Mitigated Is Not Yet 

There is some encouraging evidence with regard to mitigating equity and 
fairness issues in implementing congestion pricing, although the extent 
to which these concerns can be mitigated is unclear. At least one 
project we reviewed indicates that implementation of congestion pricing 
needs to be carefully evaluated as an alternative in some 
circumstances, because it provides no automatic guarantee of benefits. 
In Lee County, Florida, the county instituted variable tolls on two 
bridges based on peak travel periods. The county reduced the toll for 
using the bridges in off-peak periods. On one bridge, traffic increased 
during the off-peak period but decreased very little during the peak 
period. A study from the University of South Florida[Footnote 12] found 
that peak-period demand for the bridge was not as flexible as compared 
to demand during off-peak periods. That is, drivers at peak periods may 
not have readily available alternatives to commute at different times, 
use a different mode of transportation, or take another route, and 
therefore have little choice but to use the bridge during the peak 
period, or the price of the congestion toll was set too low to 
influence the demand of those users. The example illustrates the fact 
that a pricing mechanism may not be very effective at reducing peak-
period travel if the price is not set properly, or without additional 
measures that provide travelers with other choices.

Although the congestion pricing projects we reviewed produced little 
evidence of congestion reductions in adjoining lanes or in other 
alternative routes, they also produced little evidence that congestion 
increased in the non-tolled lanes or on alternative routes. For 
example, while the value pricing projects in California and Texas 
resulted in less congested alternatives for individuals willing to pay 
the toll, only one of the projects was able to demonstrate any 
decreases in congestion on the remaining "free" lanes of the highway. 
In Orange County, California, a study found that opening two new lanes, 
which were designated as congestion toll lanes, decreased delays on the 
other "free" lanes from 30-40 minutes to about 12-13 minutes, while 
traffic remained stable on alternative nearby freeways. However, there 
is also some evidence that pricing can increase congestion on 
alternative routes. In Singapore, where the city used cordon pricing, 
there was deterioration in traffic conditions just outside the cordoned 
area caused by travelers attempting to bypass it. Such congestion would 
adversely impact individuals who do not pay the toll or individuals not 
using the congested facility. However, at least one study said that the 
costs of increased traffic on alternative routes did not outweigh the 
benefits of reduced congestion in the cordoned area.

There are other encouraging signs in relation to distributional impacts 
from existing projects, although there is no conclusive evidence on the 
distributional impacts of congestion-pricing techniques. A report on 
the value-pricing project in Orange County found that there was 
significant usage of the toll facility by individuals at all income 
levels. This demonstrates that low-income individuals also value the 
time they save, and that some value their time enough to be willing to 
pay a toll that amounts to a higher percentage of their income than 
that paid by individuals with greater income. However, in value-pricing 
pilot projects in Orange County, San Diego, and Houston, those using 
the toll lanes tended to have higher incomes than those using the 
adjoining lanes.

Experts have noted that tolls might become more acceptable to the 
public if they were applied to new roads or lanes as demonstration 
projects, so that tolls' effectiveness in increasing commuter choices 
could be evaluated. For example, in the Orange County pilot project, 
where two new toll lanes were added to the highway, opinion surveys 
have shown a high rate of public acceptance. Other pilot projects in 
Houston and San Diego have also demonstrated public satisfaction. In 
addition, recent proposals, such as FAIR lanes and HOT networks, show 
promise to further mitigate equity and fairness concerns. FAIR lanes, 
as previously discussed, and which have been proposed in New York, 
would credit users of the adjoining lanes, using revenues generated by 
the toll lanes, allowing those users to use the toll lanes on another 
day for a reduced or no charge. The HOT network proposal couples HOT 
lanes with bus rapid transit initiatives, similar to the experience of 
the pilot project in San Diego, thereby using the revenues from the 
tolls to broaden the transportation alternatives available for all 
commuters, including lower-income populations.

Concluding Observations:

Traffic on already congested surface, maritime, and air transportation 
systems is expected to grow substantially over the next decade. This 
congestion can be considered a shortage; it occurs when more services-
-from lanes of highway, airport runways, locks on rivers--are demanded 
than can be supplied at a given time and place. A range of approaches 
and tools must be applied to solve the pervasive transportation 
congestion problems that our nation faces in the next decade and 
beyond. Congestion pricing--although only one of several approaches 
that can be used to reduce congestion on our nation's roads, airways, 
and waterways--shows promise in reducing congestion and better ensuring 
that our existing transportation systems are used efficiently.

Pilot projects and experiences with congestion pricing abroad 
demonstrate the promise of this approach for reducing congestion and 
promoting more efficient use of transportation systems by users. 
Despite this promise, there continue to be concerns over fairness and 
equity in the application and implementation of congestion pricing, 
which current projects have not fully alleviated. Some proposed 
projects, such as FAIR lanes, which use revenues generated to 
compensate other users of the transportation system, could help 
alleviate some of the fairness and equity concerns that have been 
raised. Experts suggest and some projects demonstrate that public 
opposition to congestion pricing will lessen as these projects show 
that equity and fairness concerns can be mitigated. However, if 
congestion pricing is to be more widely applied to transportation 
systems, the Congress will need to ease statutory restrictions on the 
use of congestion-pricing applications on transportation systems.

Contact and Acknowledgments:

For further information on this statement, please contact JayEtta 
Hecker at (202) 512-8984 or Individuals making key 
contributions to this report include Nancy Barry, Stephen Brown, Jay 
Cherlow, Lynn Filla Clark, Terence Lam, Ryan Petitte, Stan Stenersen, 
Andrew Von Ah, and Randall Williamson.


[1] U.S. General Accounting Office, Surface and Maritime 
Transportation: Developing Strategies for Enhancing Mobility: A 
National Challenge, GAO-02-775 (Aug. 30, 2002); Marine Transportation: 
Federal Financing and a Framework for Infrastructure Investments, 
GAO-02-1033 (Sept. 9, 2002); National Airspace System: Long-Term 
Capacity Planning Needed Despite Recent Reduction in Flight Delays, 
(Dec. 14, 2001). 

[2] GAO-02-775.

[3] For further discussion of the research on congestion pricing, see 
National Research Council, Transportation Research Board, Curbing 
Gridlock: Peak-Period Fees to Relieve Traffic Congestion (Washington, 
D.C.: 1994).

[4] Sometimes cars with two riders (including the driver) qualify as 
high-occupancy vehicles, while in other cases more than two riders are 

[5] Under electronic road pricing approaches, users of a toll facility 
can open accounts of fixed amounts. The account information is stored 
in electronic transponders that drivers mount on their windshields to 
"communicate" with an antenna at a signpost (or mounted on an overhead 
gantry) when their vehicles pass by. User accounts are then 
automatically debited. In case users have insufficient balances in 
their accounts or their transponders malfunction, a video enforcement 
system automatically takes a picture of the offending vehicle. See also 
David J. Forkenbrock and Jon G. Kuhl, A New Approach to Assessing Road 
User Charges, Public Policy Center (Iowa City: University of Iowa, 

[6] Curbing Gridlock: Peak-Period Fees to Relieve Traffic Congestion.

[7] 23 U.S.C. § 301.

[8] Economists note that even if the burden of congestion charges is 
greater on low-income households, the same is true of fuel taxes, which 
are currently paid by users, and sales taxes, which are paid by users 
and non-users of transportation systems, both of which are relied on 
for transportation investments. For a discussion of equity concerns 
associated with increased use of voter-approved local sales taxes to 
pay for transportation infrastructure, see Martin Wachs, Improving 
Efficiency and Equity in Transportation Financing (Washington, D.C.: 
Brookings Institution, April 2003).

[9] Under the Federal Highway Administration's Value Pricing Pilot 
Program, the restriction on using tolls on the interstate is lifted for 
approved projects. 

[10] These practices in New York, New Jersey, and Boston have since 
been discontinued because of a successful lawsuit brought by small 
commuter airlines and the Department of Transportation. 

[11] A recent proposal for "HOT networks" promotes the use of HOT lanes 
in conjunction with operating bus rapid transit services, utilizing the 
revenues from the toll lanes. For more information, see Robert W. 
Poole, Jr. and C. Kenneth Orski, "Policy Summary No. 305" (Los Angeles, 
CA: Reason Foundation, 2003).

[12] Chris Swenson, Alasdair Cain, and Mark W. Burris, "Toll Price-
Traffic Demand Elasticity Analysis on Variable Priced Toll Bridges" 
(Tampa: Center for Urban Transportation Research - College of 
Engineering, University of South Florida, July 1999).