Kudos to Sean Gordon

It is not often we get a straight piece of reporting on the issue of congestion pricing. Sean Gordon, Quebec Bureau Chief for the Toronto Star wrote just such a piece: Montreal eyes downtown tolls on 18 May, 2007.

It is refreshing to know that a journalist can still report on something and leave his opinion out of it, to let the reader decide for themselves. Nowhere in this article can I tell if Gordon is for or against tolling. I can’t tell if he drives an SUV or uses a bike. That is as it should be.

The only bone I could pick, since that is my job (and I am 100% biased toward proper congestion pricing) is the characterization of Mayor Tremblay’s plan as “presumably patterned on London, England's successful anti-congestion strategy”. If Mr. Gordon means: toll the busy inner commercial core to encourage alternate modalities, then I would concede accuracy. But if he means: set up cameras at ~300 intersections at a cost of $600M (the cost of the first two stages of the London Congestion Charge (LCC) system) and charge a fixed entrance fee, I hope very much he is wrong.

Why? Because a simple one-size-fits-all cordon-fee distinguishes only among drivers who will take their car into the CBD and those who will not. (Yes, I get that is important.) But such a charge is a blunt, regressive instrument. And this is well known criticism of the LCC – indeed our own Toronto Councillor Brian Ashton has traveled to London to review the LCC, and he has rejected this system, presumably for this reason as well as the mistaken notion that we must have a subway system the relative size of London’s, first.

Since the endgame for congestion pricing is to replace the fuel-tax-based economy with a pay-as-you-use-it economy, we need to mete out road access by distance. And location. And degree of congestion. In other words, pay for your externalities, not your gas.

As we start the engines of the road-pricing debate, we will too often refer to the LCC as the model. It is the model for bold action, and Mayor Livingstone deserves all of the praise he garners. But it is not the model for economic efficiency, system efficiency, urban aesthetics, or fairness.

While Mayor Livingstone has been a guiding light for other more timid mayors, his specific system architecture should never be copied.

Are We Slapping or Servicing Motorists?

In Wednesday’s Star, 16 May 2007, Jim Byers wrote a piece called N.Y. mayor wants tax on drivers. While this purports to be a simple piece of reporting, his language colors his work with his personal grudge against congestion pricing and biases the reader.

When you report on congestion pricing by calling it a “tax”, you automatically have the reader hear “punitive” rather than “pay-for-use”. In Toronto, this is especially a problem because the new taxing powers that Mayor Miller has are just that – taxing powers. Conversations about sin taxes and road-user-fees are lumped together in past reporting to make it all look like a huge fiscal correction to our City’s financial woes. The value of congestion pricing to us motorists and to the environment is lost in the fiscal emergency and in the biased reporting language.

Here is At Mayors’ Summit, Bloomberg Campaigns for Clean Air published on the same day by the NYT. This reporter used “fee” and not “tax” – and its her city!

Here is a piece from the New Yorker that also discusses the matter with less bias. The words “fees”, “tolls”, and “pricing” figure prominently (which is what they are). “Tax” only shows up in the sentence “taxis would be exempt”.

But Mr Byers can be forgiven his use of the word “tax” – he’s hardly the first. In fact, Byers is in good semantic company. The economist Greg Mankiw discusses this…

“there is some debate about whether road pricing is really a Pigovian tax or just a user fee for consuming a scarce resource. …. When people are not charged (or are undercharged) for using a common resource such as a congested road, then incremental use of the resource entails a negative externality on other users. Imposing a user fee for the scarce resource can be described as a Pigovian tax to deal with this externality. Similarly, a conventional Pigovian tax such as a tax on pollution emissions can be described as a user fee for consuming clean air. The distinction between user fee and Pigovian tax in these cases is purely semantic.”

But Byer’s one-word version of Professor Mankiw’s long-winded but carefully drawn distinction abuses his readers.

Unfortunately, he compounds his error, when he writes: “[Bloomberg] has proposed slapping an $8 (U.S.) fee on drivers who come into Manhattan…”.

“Slapping” carries clearly punitive connotations, bringing to mind more of a traffic fine than a per-use fee. If Bloomberg uses those fees to fund transit and to open roads or to do something green, he's providing more service to motorists than he is slapping them for driving. Why else did Stockholmers vote their road-use charge back in? Not because they felt slapped.

The truth of the matter is that journalists and reporters often use language in ways that harm the environment by negating the value that bold politicians such as Bloomberg or Livingstone bring to the table.

Journalists’ greatest value to society is to uncover the truth. Defending one’s god-given entitlement to free access to roads brings no value.

Two years in prison

The average motorist commutes each workday about 76 minutes in the GTA. About 30 of these minutes, are lost to congestion. Assuming a five day work week, after 32 years, a motorist will have spent two years standing in traffic. Since we have as yet no workable plans to solve this problem, this is like a two-year jail sentence with no chance of parole.

If road pricing were used to help solve this problem, we might expect to pay about five cents per kilometer to use these roads. If you commuted each day from Oakville to Toronto, that would be a round-trip of 76 km. Those 32 years of commuting at five cents a kilometer would cost you $30,400 in 2007 dollars, if you continued to use your car. If you were to go to prison instead that would imply that you value your life at $15,200 per year. That's about minimum wage.

But few people working at minimum wage can afford a car.

Since they are mostly without cars, the mathematics of congestion pricing does not harm poor people. But the mathematics of NOT deploying congestion pricing harms all of us, and the jail time is only part of it.

And that is the good news.

The bad news is that congestion is still on track to get about 3 times worse between now and 2030.

Your jail time is about to be compounded, and there is still no chance of parole. You should demand your councilor fight for congestion pricing on your behalf as a human right.

Capitalism, Communism, Cars and Congestion

Not long ago I mused over the analogy between communism and our use of congestion as the manager of social equalization. In May 7, 2007 edition of Time Magazine, in their weekly list of ironic or amusing outtakes, the following appeared:

'Using economics to influence behavior is something this country is built on—it's called capitalism.' MICHAEL BLOOMBERG, New York City mayor, who is considering charging people a fee for driving into the heart of Manhattan

Fundamentally, Bloomberg is saying the same thing as was Joseph Giglio.

On the same page in Time, is their equally ironic and amusing “Numbers” column, where the following two statistics appeared:

2.35 million
Number of vehicles sold worldwide by Japanese car company Toyota in the first quarter of 2007

2.26 million
Vehicles General Motors sold in the same period, the first time Toyota has passed General Motors in quarterly sales to become the world's biggest carmaker

The socio-economic engine that creates the automobile will not moderate itself anytime soon. In fact, I myself look forward to buying another car before much longer.

Proper market pricing is the only solution. You, me, and every politician knows that. Unfortunately, too few admit it and even fewer have the courage to do anything about it.

I wish you success, Mayor Bloomberg.

Toronto proposes to waste $1M

I was thrilled to read in Wednesday’s Globe that Toronto is proposing to address parking pricing in the City. Maurice Anderson gets top Shoupista marks for thinking “the hike will help ensure that drivers can find on-street spaces when they need them for short-term errands such as shopping”. That is what short term parking is for – convenience and commerce – get in, do your thing, get out.

But things went south from there.

Mr. Anderson gets very low marks for saying, "I think 50 cents is reasonable" and even lower for saying, “the new rates … compare to inflation over that time…”. Councilor Ashton dutifully and lazily repeated the inflation mantra to 680News, when he said “drivers should realize this would be the first increase at the meter in eight years …[a] 50 cent per hour increase is fair and is still a good deal for drivers compared to private lots.”

Then Councilor Ashton went on to say: “I think people look to the Toronto Parking Authority to get the best bargain for parking in Toronto, it's a great bargain”, which is true, but saying “I feel I want to go and park a couple more times to celebrate the good deal”, really ridicules the real issue.

Parking pricing is properly about access and congestion reduction, not about inflation adjustments and certainly not about celebratory parking. And yes, parking is useful to raise revenue and the City could and should raise much more this way.

Parking prices, when structured as poorly as they are in Toronto need to be reset to reduce “circling” or “cruising”. That is the technique many motorists use to go round and round the block at King and Simcoe (and every other busy street) so they can park for $4-6 for 2 hours instead of driving up four floors two blocks away to pay $16 for 2 hours.

Which would you rather do for a 90 minute shopping expedition, pay $5 and walk 30 steps in the daylight or pay $12 and walk two blocks through an underground parking lot? And isn’t it worth cruising slowly around the block three times to land one of those sweet spots? 15 cents in gas and 6 minutes of cruising to save $7 and a 6 minute stair-climb? It is absolutely worth it. Always.

Donald Shoup says drivers cruising for curb or metered parking generate 30 percent of traffic in business districts. He recommends that cities adjust the price of metered parking to keep 15% of spaces vacant and eliminate cruising. He says with balance between demand for parking and supply of spaces, cities would generate more revenue, which they could use to improve local public services.

Fellow Torontonians: cruising for parking causes congestion and emissions. Keep your incandescent bulbs and demand rational parking pricing instead. Fixing on-street parking in Toronto is easily the biggest free-lunch Mayor Miller can have with respect to green house gases. He’d be Canada’s greenest Mayor ever.

Mr. Ashton is not kidding when he says 50 cents is a bargain. But it is also an enormous rip-off of the livability and accessibility in our greatly congested City. Nothing to celebrate there, Councilor.

Pricing needs to be set to consider the convenience and cost payoff. You cannot underprice the convenient on-street spaces and expect people to use off-street parking.

So you ask: what should the increase be?

It should NOT be a simple increase, it should be a full rationalization. There are places all over the city that are correctly priced already. I park in a little GreenP near Woodbine for $4 (all day!) and take the TTC for $5. Total $9 and about the same travel time (I go pre-rush hour). I take my car in twice a week and park for $15 at an IMPARK. So I save $7 (gas is $1) when I park and ride. If the proposed parking increase hits that little lot, I expect the differential to be more like $5. You know for those $5, I’ll give the money to IMPARK. Why? My car. My music. My cell phone. I can talk to myself. I can watch women walking by.

You see IMPARK knows that, that’s how they can demand that price. Maybe the CFO of IMPARK should be our next mayor.

There are two ways to raise parking prices in Toronto.

The wrong way is a flat, regressive, lazy-minded, revenue-grabbing, across-the-board 50 cents. (Yes, there are the “Lake Shore” exceptions to the proposal, but that’s insufficient.)

The right way is to [1] lower and advertise prices in places where there’s under-demand (you would not know that my favorite lot is 50 cents per hour unless you actually drove in to see), [2] leave prices alone where there is about 85% peak-average demand and [3] and raise them in places where peak-average demand is in excess of 85%.

And there are a lot of streets in Toronto where peak-average demand exceeds 85%. A lot. And 50 cents doesn’t cut it. Some of those streets need $5 per hour – maybe more, but not $3.50. Toronto has departments full of traffic engineers and some of those understand Transport Demand Management very well. Why do we pay to keep this staff, but not consult them? There could not be a single TDM person in the GTA would promote this 50 cents across-the-board wasted opportunity. For the same $1M (or maybe $1.5M) you could rationalize on-street parking, reduce emissions, and raise at least twice the additional revenue for the City.

Politicians: When someone is too lazy, in too much of a hurry, or wearing high-heels (which covers at least 93% of the motorist population), they little care whether it is $3.50 or $5.00 per hour. They will pay for the convenience, safety and time-saving.

In his Globe article, Jeff Gray went on to report that Mr. Anderson said “another hike is unlikely for at least the next five years.” Since this proposal is so wrong, the real problem of parking pricing will require revisiting the following year – as will the City’s financial woes, of course. Since Mr. Anderson is leaving his post, the new executive can break Mr. Anderson’s promise for him. I certainly hope he does so soon.

We really need Toronto politicians to smarten up and structure user-fees to manage access and resources, to curb emissions and congestion. Not to raise revenues.

AND, I guarantee if you priced properly you will accomplish much more, including far more revenue. Toronto parking revenue can be tripled, and access to parking can be improved while reducing congestion to a modest degree – all at the same time.

~~~~~

If you are interested in understanding why parking rates that are not market balanced are detrimental to your city (causing congestion, emissions, lost time for motorists, and lost business to store owners), you need to read more of what Donald Shoup has to say about it. You can borrow his book from the Toronto library. No Urbanist should overlook this book.

Environmental Defense

The Environment Defense site has a nice summary of Congestion Pricing. In fact, this whole page is informative and a delight to read. Best to enjoy that first, then come back…

This site describes four systems (London, Singapore, Stockholm, Norway) rather than the usual three (less Norway). I will use this to illustrate a gradient for congestion pricing.

First: a distinction between congestion pricing and road pricing is critical.

Congestion Pricing is charging for the use of a road in order to influence demand – hence Congestion Pricing is a “Transportation Demand Management” (TDM) tool. Ideally Congestion Pricing means you reduce peak hour demand by setting a price that encourages things like alternate travel modes, alternate times, carpooling, doubling of trip purposes, telework, even moving closer to a job. All of the money you pay to drive into London each day is congestion pricing.

Road Pricing is charging for the use of a road in order to recoup the money invested to build that road. The money you pay to use the Pennsylvania Turnpike is road pricing. Almost all of the money you pay to use Ontario’s 407 is road pricing.

Huh? 407? Congestion Pricing? Well, yes, but not really. The 407 has a base price for three classes of vehicles. For private passenger cars that price is currently $0.168 Canadian per km throughout the 24-hour day. For the morning and afternoon peak that is raised to $0.176 or a premium of 8/10^th of a cent per kilometer – a mere 4.8% premium. Technically, this tiny increment is a congestion price since it is levied during peak hours, but would be clearly ineffective as a TDM tool. For the typical rush-hour trip this would amount to an unnoticed few cents for each motorist, but a nice total incremental revenue to the toll operator. If you wanted to apply congestion pricing to this roadway one might consider $0.10 per kilometer raised to $0.25 during peak hours. Unfortunately, since that road is has a free parallel road (Highway #7) such a “proper” congestion price would drive traffic away defeating the congestion relief that the 407 provides. So this is a case of a revenue-grab pretending to be a congestion price.

So the fact is that while these two terms often get blurred in the press and in your pocket, the reasoning, design and purpose behind them is quite different. One produces revenue and may inadvertently signal that it is expensive to drive a car; the other signals that it is terribly expensive to drive in congested places and at busy times and also intentionally produces revenue that is ideally used to improve roads, transit, bike paths, and other mobility programs.

Let rank our four Environment Defense examples.

Of the four Singapore’s takes highest marks as a congestion price. Here is why:

Today, the system is a model of flexibility. Toll rates at different locations change over the course of the day, and are raised or lowered every three months to keep roadways operating with optimal traffic flow. After finding that roads in some locations were not congested on Saturdays, those tolls were eliminated.

Stockholm takes second place because it stepped prices in four stages for each of the morning and afternoon rush hours setting it low in between the two peak times and zero after the workday was complete. You can see that in the figure:

London and Norway tie for third place.

London qualifies because it has more than one level of price. Peak hour (all day) and not peak (all night). Because it is a flat all or none rate that never raises or lowers it does not distinguish between 8:00 AM and 2:00 PM, so it is a pretty crude price signal. But is certainly put a dent in congestion.

Two of the three Norwegian cities involved toll at a flat rate blunting their signal value, but the third (Tronheim) tolled variably, but had now been discontinued due to a political promise, showing that its initial intention was to raise revenue even though it operated as a TDM method while it lasted.

You can see how the need to finance infrastructure and the need to manage demand get completely intertwined. The reason this matters is that to many people it all just looks like taxes and its visibility gets diluted when road-user charging gets joined by fuel taxes and property taxes and other revenue sources needed to barely keep it working.

The sooner we switch from fuel-tax, plus property tax, plus any available tax, plus annoying tolls to pay-per-use everywhere, the sooner we’ll have clear pricing signals. The sooner we have clear pricing signals, (plus transit, plus bike paths, plus other things) the sooner we’ll have reliable networks.

But proper market pricing is the foundation.