Paul Bedford’s Road Ahead

I am encouraged that someone of the intellectual stature and reputation of Paul Bedford has the courage to put his name to the advocacy of road tolling.

Most complaints about this idea center on three areas:

Over taxation. No one ever wants to pay more taxes. Fuel taxes have largely gone to the general fund and governments now struggle to explain that the fuel tax is no longer adequate in volume or in structure (it is insensitive to congestion). While no one would argue that Canadian citizens are under-taxed, it is clear that Canadian motoring is mis-taxed. In other words, the wrong thing is taxed (fuel instead of road use) and the wrong people are paying some of the tax via property taxes and sales taxes. We who favor road tolls are asking for fairness and effectiveness by way of tax shifting. Would such a shift leave every motorist neutral with respect to taxation? Likely not. Some who can change travel times or modes will be better off, some who cannot or will not may be worse off. Will most citizens be better off on the whole? Absolutely. Every transit user, every cyclist, every pedestrian, every motorist who still travels in peak hours, every worker who would be permitted more telework, every citizen who breathes air. The way to be certain that motorists are not overtaxed is to remove or rebate fuel taxes if we expect acceptance of wide area road tolling.

Privacy. There is an automatic assumption that the use of satellite tolling automatically implies tracking or monitoring of motorists. This is based on the Hollywood assumption that journey data is sent from the vehicle to a central location for processing. Some systems can operate this way and such systems can be hacked. But few governments contemplating the use of GPS data would permit this. It is almost universally denounced in the EU and as we in North America get closer to using such systems (we are currently only at the stage of economic and social theory), you can be sure no trip data will be allowed to leave the vehicle. The expected solution is one of (a) payment at the vehicle with a smart card (full anonymity) or (b) movement of billing-data only from the vehicle to a payment center. Mandated, third party audits would be used to ensure this. So while absolute privacy can be provided technically, legislation must also be in place to prevent the use of location data from tolling devices to be used in any way except to settle tolling charges and to severely discourage hacking, including culpability on the part of any private operator who was hacked and can be found negligent based on regular security audits.

Government Trust. Many anti-tolling commentators seem not to trust that governments will use the revenues fairly or properly. Others are of the opinion that governments would themselves ignore privacy constraints. I am not an apologist for government trustworthiness, but there are other routes to ensure constraints regarding revenue use and privacy abuse. I also think the “government distrust card” is overplayed and that the real underlying issue is simple entitlement: “I am entitled to free road use, as were my forefathers” and “I am entitled to go where I want and with whom I want when I want without being observed.” Such commentators as these may be are simply dishonest. Free road use is an oxymoron to anyone experiencing frequent congestion. And the freedom to go when, where and with whom I want can be guaranteed in legislation, enabled in technology, audited in practice, and challenged in court. The day we cannot to that, we have a bigger problem than funding transportation.

There are a few other objections, such as we should just increase the gas tax, or we should build more roads, but these are simply amateur misunderstandings. The real issues that governments must address and that Mr. Bedford must face are the entrenched and real perceptions regarding tax-burden and privacy. If these can be addressed in a manner that a majority believe, then the distrust argument will abate and the natural intelligence of the market will prevail.

We are at the stage where a critical mass are able to see that pricing is coming. Our governments need to move toward education regarding tax-shifting (yes, we will need to remove or rebate some existing taxes), and must also promote privacy legislation specific to location information collected for road pricing. That foundation legislation is in place in Canada and in Ontario for over a decade. This legislation should be reviewed to ensure that we can use GPS for tolling and to ensure that said use cannot admit abuse.


Smart Mobility Metering

New technology often needs new vocabulary.

Once upon a time the toll booth was it. One day they started to be replaced by coin counters which were then replaced by Electronic Toll Collection (ETC) which is now being replaced by Open Road Tolling (ORT). The difference between ETC and ORT is that for ETC you have to slow down and be channeled into a lane to have your transponder read, but for ORT you can rip through at speed and if you don’t have a transponder you’re license plate will be read and you can pay a little later and likely a little more.

If you’ve been paying attention you know that something new is afoot – a way to meter your use of the road without those big metal monster-gantries reading your transponder (“tag” if you are European). This new technology uses GPS and a bunch of other techno-magic to provide satellite-based tolling, or GPS-based tolling. At Skymeter we call this class of highly-reliable GPS, Financial-grade GPS (FGPS), since it can produce evidentiary quality trip records in the event a motorist wishes to confirm or refute whether a certain trip was taken exactly as billed.

FGPS enables tolling anywhere – or better still everywhere – and that makes it the key to eventually ending the gas tax. (The gas-tax has several major problems: it cannot manage congestion, it is already diminished by fuel efficiency, and it will soon become further diminished by alternate fuels including the hybrid and the all-electric vehicle. It has other problems, but let's go with these for now.)

More interesting is the fact that FGPS permits the variation of tolls by place (roadway or area), time of day, day of week and type of vehicle. This introduces a way to protect the environment by tolling differentially by vehicle emission class, a way to reduce congestion by charging more during peak hours, and a far fairer way to fund roads than raising property or sales taxes.

In addition to all that fairness and greenness, FGPS enables automated parking payment and pay-as-you-drive insurance. These get high marks for convenience and yet more fairness. Pay-as-you-drive insurance also reduces congestion and increases road safety.

Even better, it is possible to reward drivers (say, with parking credits) when they do not use their vehicles during peak hours. So they’d pay lower tolls AND receive a reward.

Altogether these capabilities combine to form what we call Smart Mobility Metering, which is analogous to smart electricity metering or water metering and other simple supply-and-demand payment variation.

AND all of this is provided in a manner that keeps the vehicle and driver ID anonymous. We think that is equally smart.


Orski on Obama

Ken Orski writes some very valuable things. While predicting the future is risky, at best, I suspect there are a lot of good insights in his description of the state of play regarding transportation and the incoming Obama administration. I reposted it all here.

November 12, 2008
The Transportation Agenda of the Obama Administration

The election is behind us. A Democratic administration headed by President-elect Barack Obama and a heavily Democratic Congress will assume power next January. How will this influence the direction of federal surface transportation policy and programs? To gain some insight, we have solicited the views of a number of people, including some who are familiar with the thinking of President-elect Obama’s transition team. While the views expressed below are our own, they have been influenced by the observations and speculations expressed in these interviews. By common agreement, all conversations were held off the record and not for attribution in order to allow for the freest possible expression of views.


The transportation agenda of the Obama Administration can be viewed as a two-stage strategy: a short-term action agenda and a longer term policy agenda. A good portion of the short-term action agenda is already known. It is tied to a job stimulus (or "economic recovery") bill, a $100 billion spending package a portion of which (perhaps as much as $25 billion) is expected to be dedicated to roads, bridges and other public infrastructure. As President-elect Obama stated, he wants to see the stimulus bill enacted "sooner rather than later," but if the bill does not get done during the lame-duck session, it will be "the first thing I get done as president," Obama said at his press conference.

A January 2008 AASHTO survey of State Departments of Transportation identified 3,071 "ready-to-go" highway and bridge projects at a total cost of $17.9 billion. A further 559 "ready-to-go" transit projects at a total cost of $8.03 billion have been identified in an October 2008 survey by the American Public Transportation Association (APTA). Obviously, only a small portion of this wish list can be funded through the stimulus bill. At an October 29 congressional hearing on infrastructure, Rep. James Oberstar (D-MN), Chairman of the Transportation and Infrastructure Committeee, was careful to emphasize the need to prioritize the selection of these "ready-to-go" projects using objective criteria of need and job creation potential. Both Congress and the new Administration want to avoid the criticism that the infrastructure projects are nothing more than "pork-barrel spending masquerading as economic stimulus," as House Minority Leader John Boechner (R-Ohio) has already charged.

Another item on the short-term action agenda might be a rescue package for some 30 public transit agencies that are at risk of defaulting on billions of dollars of loans which they entered into from the late 1980s to early 2000s. The transactions involved selling rail cars to banks, then leasing them back. The arrangement provided banks with a tax shelter and transit agencies with upfront capital. The deals were guaranteed by the American International Group (AIG). AIG’s collapse invalidated the guarantees, allowing banks to collect their money immediately. Transit authorities are asking the Treasury Department to assume the role as guarantor of these transactions, lest lenders to transit agencies across the country call in their loans (so far only one bank has done so). Allowing these defaults, wrote Rep. Oberstar to Secretary Peters, "will threaten the very existence of some of the nation’s largest transit agencies, as well as the financial stability of the state and local governments that fund them. ...We urge you to work closely with the Department of Treasury to quickly resolve this pending crisis." Like the stimulus bill, the responsibility for action on this matter may end up with the next Administration.

The Longer-term Policy Agenda

The longer-term transportation policy agenda of the Obama Administration is more difficult to predict. Individuals who have served on past presidential transitions teams (including your editor) agree that the influence of transition teams assigned to individual agencies is short-lived. Reams of position papers and issue memoranda generated by the transition teams tend to be ignored or quickly forgotten by the political appointees once they are placed in charge. The influence of the personal advisers to the President-elect also wanes once a cabinet Secretary is appointed, especially if the Secretary in question has stature, enjoys the confidence of the President, has the respect of the congressional leaders and is knowledgeable in the ways of the Washington bureaucracy. Thus, the longer-term future of the federal transportation program, including its restructuring, will be shaped not by the transition team or the current presidential advisors but by the new Secretary of Transportation and his/her team— subject of course to future legislative directives.

To be fair, the Obama transition team seems disciplined and well organized and is intent on avoiding the mistakes of past transitions by producing short, precise issue assessments and by having its key people cleared in advance for access to sensitive government information. A lean and effective transition could be decisive in how much the new Administration could accomplish in its first year in office.

Development of a Legislative Reauthorization Proposal

An early challenge facing the incoming Transportation Secretary and his team of sub-cabinet officials will be to develop a legislative reauthorization proposal. In theory, the new team will have just a few months to complete this task since the current transportation authorization (SAFETEA-LU) expires on October 1, 2009. Fortunately, they will not have to start from scratch. A solid foundation for a legislative strategy already has been laid down in several reports. Of special value will be the recommendations of the National Surface Transportation Policy and Revenue Commission, the soon-to-be-released (in January 2009) report of the National Surface Transportation Infrastructure Financing Commission and the U.S. DOT report, "Refocus. Reform. Renew." the latter containing departing Transportation Secretary Mary Peter’s recommendations for a comprehensive reform of the surface transportation program. In addition, the incoming team will have the benefit of a set of program recommendations from AASHTO and the American Road and Transportation Builders Association (ARTBA), including the latter’s proposal for "Critical Commerce Corridors." Finally, the team will have an early indication of the thinking of the House Transportation and Infrastructure Committee when the Committee releases a detailed outline of its legislative proposal in February 2009.

Collectively, these documents will offer the incoming transportation team a wealth of advice on a number of crucial issues. Among them are recommendations concerning the overall level of funding for the highway and transit programs; the approach to be taken toward a restructuring of the surface transportation program; the potential value of tolling, pricing and private investment in a future capital program; the appropriate future focus for the Highway Trust Fund; the emphasis to be given to investment in intercity passenger rail, mass transit and freight infrastructure; the fiscal impact of a potential carbon cap-and-trade legislation; and the timetable for a transition to a mileage-based funding system.

Development of a multi-year surface transportation authorization will be a "monumental task" in the opinion of one veteran DOT senior executive, given the expectation of a fundamentally restructured program. Ordinarily, the preparation of a reauthorization proposal and its clearance through the Office of Management and Budget (OMB) and the White House takes several months. This time around, the process may take even longer because of the relative newness of the DOT team and because the White House will have many other pressing legislative priorities on its agenda. While some of the work of drafting the bill can be delegated to the Department’s career staff, many fundamental policy decisions on funding levels, program structure, etc. will require close involvement of the political-level appointees: the Deputy Secretary, the Undersecretary for Policy, the General Counsel, the Assistant Secretaries, the modal Administrators and their key staff.

If past experience is any indication, the vetting and appointment process of these officials will continue well into late spring and early summer of 2009.(President- elect Obama has promised to move on presidential appointments with all deliberate speed, "but I want to emphasize deliberate as well as speed," he added. ) This does not bode well for a timely enactment of new transportation authorization, i.e. by October 1, 2009, since the congressional authorizing committees will wish to obtain the new Administration’s input before acting on a bill. More likely, the Department will seek an extension of the current legislation into 2010.

The National Infrastructure Bank

One of the few specific proposals endorsed by President-elect Obama during his campaign dealt with the creation of a National Infrastructure Bank. The proposal also enjoys the support of House Speaker Nancy Pelosi and Senate Banking Committee chairman, Christopher Dodd (D-CT). With congressional support already assured, there is a good chance that the Bank could be established in the first year of the Obama Administration.

However, precisely what form the new bank should take still needs to be determined. Its initial formulation, as proposed by Senators Christopher Dodd (D-CT) and Chuck Hagel (R-NE) in Senate Bill 1926, called for an institution that would provide financial assistance to public infrastructure projects over $75 million in value, that are "not adequately served by current financing mechanisms." In the Dodd-Hagel version, the bank would be financed with a $60 billion capital contribution over 10 years— a sum of money that appears hardly adequate to meet the vast needs for infrastructure reconstruction and renewal in the years ahead.

The infrastructure bank was resurrected in a fresh and more elaborate form by Everett Ehrlich and Felix Rohatyn in a recent article in The New York Review of Books ("A New Bank to Save Our Infrastructure," October 9, 2008). Both Ehrlich and Rohatyn had been key figures in the CSIS Commission on Public Infrastructure that had produced the original 2007 report recommending the National Infrastructure Bank. In its new version, the National Infrastructure Bank would replace the various modal programs as the source of capital for highways, mass transit, airports and other public infrastructure. The authors have proposed that the Bank’s capital would come from the funds now dedicated to existing infrastructure programs — about $60 billion annually.

Whether Congress could be persuaded to adopt an Infrastructure Bank along the lines proposed by Messrs Ehrlich-Rohatyn is an open question. Asking Congress to cede control over the federal public works programs, surrender its power to make infrastructure investment decisions, and abolish all modal distinctions seems remote. A more promising model might be the already existing Transportation Infrastructure Finance and Innovation Act (TIFIA). The TIFIA program provides federal credit assistance to transportation projects of substantial regional or national significance. TIFIA assistance can take the form of secured loans for construction and permanent financing (for a term of up to 35 years); loan guarantees to institutional lenders making loans for projects; and lines of credit that may be drawn upon to supplement project revenues. Projects must generate a dedicated stream of revenue from user fees.

Endowing the proposed National Infrastructure Bank with TIFIA-like authority while expanding and liberalizing TIFIA’s conditions, e.g., by substantially increasing its capitalization and lifting the ceiling on credit assistance (currently at 33 percent of project costs), is likely to be among the models seriously considered by the new Administration.


Like the economy at large, the nation's transportation system presents the Obama Administration with daunting challenges: growing metropolitan congestion, aging infrastructure requiring billions of dollars in reconstruction and modernization, and inadequate freight system capacity requiring more billions of dollars in upgrades and new facilities. At the same time, the Highway Trust Fund is faced with dwindling gas tax revenues, while new taxes and deficit spending are expected to encounter both popular and congressional opposition. Coupled with these challenges is a widely-shared sense that traditional solutions no longer are working and that the federal transportation program will require a fundamental reform. Along with the rest of the transportation community we wish the Obama Administration well in its efforts to come to grips with these issues. We sincerely hope that the new transportation team will rise to the challenge.

Please feel free to forward or reprint this item with appropriate citation. All correspondence, including requests to subscribe and unsubscribe, should be addressed to: C. Kenneth Orski, Editor/Publisher; email: korski@verizon.net; tel: 301.299.1996; fax: 301.299.4425.


The Rand Road Report

“Will Los Angeles begin to pursue pricing to manage demand for peak-hour automotive travel, or will it instead simply allow congestion to worsen in the coming decades? These are the only choices.”

So concludes the summary paragraphs of a 556 page monograph: “Moving Los Angeles”, just published by the Rand Corporation. If you think congestion pricing is a tool of last resort or just a “European thing” then read this.

The nine study authors, lead by Paul Sorensen and Martin Wachs, compared 28 strategies ranging from freeway ramp metering through one-way streets, car sharing, telecommuting, rush-hour construction bans, driving restrictions, deep discount transit passes, to bicycle strategies. They left out only PAYD insurance and changing the minimum driving age to 21. These 28 were compared for public–sector cost/revenue implications as well as both short and long-term congestion reduction (figure 2.6 in the book). None of the strategies examined has anything but a modest long-term effect on congestion.

Except pricing. Five types were listed, and three – HOT lanes, variable curb-parking rates and parking cash-outs – perform better than all the others except for cordon congestion tolls which performed the best of all 28. The fifth pricing strategy, local fuel taxes*, performed as badly as the 23 non-pricing strategies.

On the flip side, 19 of the 23 non-pricing strategies have modestly-advanced implementation programs in Los Angeles while none of the 5 pricing strategies are past “hardly anything”. In fact “HOT lanes” scored zero.

Worse, is that two of the pricing strategies that show high congestion reduction value also show no implementation obstacles: variable curb-parking rates and parking cash-outs, yet nothing is being done about them.

There are three lessons here: (1) we are spending money on the wrong solutions while clearly ignoring the evidence for the right solution; (2) this is not completely due to the cowardice of democracy, because two of the four winning approaches have no implementation obstacles; and (3) the first key to addressing congestion is through parking pricing rather than road pricing.

There is a fourth lesson: the definition of insanity is doing the same thing over and over but expecting a different result.

* Recently, Mary Peters, US Secretary of Transportation, was quoted saying: "Relying on the gas tax is like relying on cardboard to keep the rain out – the longer you use it the less it works." I’m going to miss her. How can Obama do better?


Instead of Courage

I hosted a round table discussion today, Wednesday, 24 September 2008, at the offices of ITS America in Washington DC. Following are the notes I made to open that discussion.
I attended a breakfast speech yesterday morning, during which the Chair of the Greater Toronto Transportation Authority, Rob MacIsaac, described a new multi-year plan to revitalize road and transit infrastructure in the Greater Toronto Area costing multi-tens of billions of dollars.

I asked his view on protecting that investment in roads and transit with road pricing so that people would tend to use the new transit infrastructure and so that the new roads did not simply fill up with cars as they always do, thereby keeping a sustainable balance instead of returning once again to state we are in now.

His answer was: “"The sides of the road are littered with the bodies of politicians that made ill-advised proposals regarding road pricing."

He went on to say "transit needs to be put in first" citing the example of Livingstone putting buses in just prior to the London Congestion system going live.

But I believe there are many creative ways to introduce pricing at the same time we are providing new infrastructure. There are ways to ease pricing into place over such a multi-year span even if you are not putting in infrastructure. I believe there are ways to do this while retaining political support. I believe we must do this in order to shift away from the gas tax. That is what I will describe today, and that is what I would like this round table to explore.
There are now in the United States, in Europe, and in the world thousands of politicians, traffic engineers, legislators, environmentalists, analysts, bureaucrats, economists and thought leaders that know that our surface transportation systems are as unsustainable as they are critical. Some of us work in jurisdictions that are, in fact, in immediate crisis.

What is more amazing is that the vast majority of these thousands understand the problem and its solution. We understand that automobile use is incorrectly taxed. That what direct taxes are collected are insufficient. That large externalities are shared across all people including non-drivers. We understand that the fuel tax is a proxy for road use and as such its relevance to demand management is rapidly diminishing. As a funding source its efficacy slips monthly and as reminder that we pollute with our vehicles it is almost completely powerless.

Some of our thousands call for more roads to be priced – sometimes in small areas as in London or New York; sometimes in whole countries as in Netherlands or Slovenia. But most often, just another interurban highway where we can or where we must price.

But we know better. We know we need to shift away from the gas-tax. We know that is becoming more and more one of the sources of the problem rather than a tool for its resolution. We are beginning to clearly understand that the consumption that needs market pricing is the use of the road rather than the consumption of fuel. We know that as we move away from the gasoline and diesel-powered engine the gas-tax will fail utterly.

Nevertheless, a few days ago, I received an email from Robin Chase [founder of Zipcar], that said: "When I presented to the executive board of TRB [Transportation Research Board], and [market pricing] came up, they all concurred that: “People won't like it; hence their governors won't support it; hence we won't push it. We want to privatize roads so that someone ELSE will be responsible.”

What this says to me is that as our surface transportation systems become unsustainable, there will be no political will to solve it. Rather, we will sell off the problem.

I believe we have alternatives. These involve slowly addressing antiquated enforcement methods such as ticketing courier vehicles, outdated commercial vehicle registration technologies such as taxi plating, inefficient insurance regimes such as annual or monthly automotive premiums with pay-as-you-go forms of payment. Couriers can pay by the mile or minute for driving and parking in urban centers, taxis can pay commercial registration by the mile, so that a plate owner is not forced to run a vehicle 24 hours whether needed or not and so on.

As trust in anonymous GPS tolling technology’s reliability and privacy and as its cost drops, it can be used for parking payments, traditional tolling, and numerous new programs not otherwise feasible – for example tolling an urban center without cameras and RFID/DSRC gantries.

Building an installed base of road-use meters means that when the time comes to turn off the gas tax, an alternate system will be in place. It will be reliable, cheap, trusted and most of all actually understood. Approaching the problem this way, we can diminish the danger of “political suicide” without selling off all easy-to-toll roads, leaving an unaddressed congestion and funding problem for our city streets.


Senator Dibble Speaks

Sen. D. Scott Dibble, Chair of the Minnesota Senate Transit Subcommittee, gave the luncheon address for the 13th International HOV/HOT Systems Conference in Minneapolis on September 8, 2008. Sen. Dibble talked about how he got involved in transportation issues and gave his thoughts on congestion pricing and HOT lanes. His speech is posted on the Humphrey Institute's congestion pricing blog, here.

From Lee Munnich, Senior Fellow and Director, State and Local Policy Program - Hubert H. Humphrey Institute of Public Affairs University of Minnesota.


Long Live Norwich Union!

It’s old news by now that pay-as-you-drive innovator Norwich Union has withdrawn from the fledgling PAYD insurance market. Many were taken by surprise. Listening to spokesperson Erik Nelson explain why provides that perfect 20-20 hindsight for the rest of us. He also provides a fabulous insight into the value of this program. He still clings to one critical, false hope however. But let’s hear from Erik first. He is interviewed here by Traffic Technology International, and transcribed below for your convenience.

TT: Norwich Union's innovative telematics-based pay-as-you-drive insurance policy was withdrawn earlier this year because it was costing too much to operate, but as spokesman Erik Nelson reveals, the company plans to re-enter the market once economic conditions prove more favorable.

EN: What we did was we installed a box in their vehicles, a GPS-based box and that box tracks their movements, it tracks a couple of things actually. It tracks how far they were traveling, it tracks the time of day and it tracks where they were traveling - that is what type of road specifically they were on. The reason we are interested in a road – what type of road - is because we know for example that motorways are ten times safer than urban roads so we’re able to give you better rate on motorways than driving on an urban road which is more dangerous. We also know for example that driving at night, especially for young drivers is much more dangerous than it is traveling during the daytime, so we take in the time of day, we take in the road that you’re using and we’re able to give you an individualized pence-per mile tariff. Now based on that, [and] the number of miles you drive, you get your premium.

TT: Did you find that people actually did change their driving habits as a result of this policy?

EN: That’s a very interesting question. I think that’s very difficult to answer, because of course we didn’t know what they were driving like beforehand. What we did see was that people were driving over the time gradually a little bit less, I think they were very conscious of how far they were driving. The big thing is not about how far they were driving, though. It’s about the times of day and they types of roads they were using. We definitely saw safer driving behavior. As a result our claims reduced by more than 30% which is a staggering statistic and a huge boon for road safety. But when you are able to incentivize, for example, young drivers not driving during the most dangerous times of day for them, when they are 10 times more likely to be involved in an accident at night, 14 times more likely to be involved in an accident at night on the weekend. And you incentivize them to take the taxi, take public transport or whatever when they go out during those times you see accidents drop more than a third, you’re really on to something in terms of roads safety.

TT: I understand that renewals were really quite high on this, the policy seemed to be popular, yet you didn't carry it on from the Spring of this year.

EN: That’s correct. The retention rate was at or above 90% during the time that we operated the policy, and feedback from customers was overwhelmingly positive. This is probably because customers were saving around 30% on their premiums. So we paused it because, simply put, because the economics of the policy don’t work out for us right now. We thought that telematics was going to be a lot further along than it actually is. We thought that motor manufacturers would be installing telematics devices in the vehicles that they are making at the point of manufacture, but that did not come to be, and certainly not on the scale that we imagined. So instead of piggy-backing our little insurance policy on the back on existing piece of kit in a car, we were actually forced to provide the kit and install the kit ourselves which from an operating model point of view becomes very expensive and that is why we have temporarily withdrawn.

TT: Is it the case that the motoring industry just isn’t ready for this yet?

EN: I don’t know if it is the case of whether the motoring industry is ready for it. You’d have to speak with the motor manufacturers about that. Certainly it’s the case from our perspective I think we were just a little bit ahead of our time. I think we as a company still have faith that the telematics industry will continue to evolve and at some point the time will be right for us to re-enter the market because their will be more telematics devices in vehicles and it will be much more sustainable for us to operate a policy such a pay-as-you-drive and we look forward to re-enter the market in a very good position at that time.

TT: Do you foresee that technology like that is very much going to be a key part of insurance policies in the future, like red-light boxes that stop cars maybe from driving over red lights, that sort of technology’s going to be key?

EN: There are so many different ways that this technology can be used. As an insurer, our main objective is to find a way to calculate a premium. I think that is what pay-as-you-drive did incredibly cleverly and incredibly well and that is calculate a usage-based premium that motorists found fair and transparent in a way that has never been done before.

TT: Erik Nelson from Norwich Union. If you have any questions about this feature contact tt@ukintpress.com.

The false hope Erik Nelson clings to is that the automotive manufacturers will soon pre-install the telematics he needs. While this is technically possible, it is unlikely – mostly because we do not yet know everything about how we want these telematics to behave. To do insurance-only is an unworkable business model – as Erik can attest. We’ll need a whole fleet of cross-subsidizing services to make the pre-installation calculus work out. Even a package like OnStar causes the new-car purchaser some pause before adding it to the invoice. We will soon be paying for road use via GPS, which itself remains unreliable for most telematics manufacturers in built-up cities. And why not handle parking while we’re at it?

The assumption that we will record GPS tracks and process them off-board will hit a privacy wall. The counter assumption that we will pay everything on-board raises equal security concerns. The ISO standards to guide all this were completely scrapped a couple of years ago after nearly a decade of work. Only some components of the new edition, which I estimate to be about ¾ complete, will survive a hard privacy review in the EU and the US. What little the privacy advocates leave intact of the new standard will cause more hesitation on the part of the automotive manufacturers.

I believe all this will serve to postpone the time when the automotive manufacturers will provide a “whole product” that an insurer could simply “piggy-back” on. The telematics market segment that will handle financial transactions (insurance, road-use, parking), must be “liability critical” – in other words, it must be critically reliable and repeatable – something we call “financial grade” GPS. The technology to do this is not the same as navigation grade GPS and the automotive manufacturers know this.

This, and the fact that there is already a world fleet of well over 500,000,000 vehicles that will need an aftermarket fitting, informs my prediction that the early years of PAYD will based on self-installed, specialized, “financial-grade” systems that can be purchased anonymously, monitored without knowing the vehicle or owner ID and without data retention, and that also provide a couple of other payment services such as road and parking tolls.


High oil prices are good for you?

From Maclean’s, July 28 2008
The oil diet
Your wallet may be hurting, but soaring gas prices could be the answer to a long – and skinny – life, according to new research out of Harvard, traffic deaths will plummet by as much as one-third over the next year because so many motorists simply can’t afford o back out of the driveway. A separate study by a North Carolina professor has found that a $1 boost at the pumps could cut obesity rates by nine per cent, as people are forced to walk, bike, and cook at home.
I notice on my drive to work a huge increase in cyclists. People of every age and weight class. This is a good thing, of course, but the condition of our roads (Toronto) and the lack of marked bike lanes on the roads I use make it a very dangerous-looking trip. I can’t help but wonder if there will be enough cycling deaths to make up for the automotive fatality shortfall predicted by Harvard.

When are we going to start putting a couple of bucks into biking facilities for every zillion dollars we spend on automotive facilities?

Oh, yeah, cyclists don’t pay gas tax, right? I forgot.


On-Street Convenience Pricing

The University of Minnesota hosts a listserv dedicated to congestion pricing. I recommend it for browsing on occasion.

Roger Herz of NYC and a long-time advocate of market pricing recently included a comment, there: "on-street parking should be priced at least equal to and perhaps more than off-street."

I couldn’t agree more.

On-street parking should be by-the-minute with no ceiling and at rates comparable with or somewhat higher than off-street parking (which could retain ceilings to be more competitive with on-street). This can be done with in-car meters that are commercially available.

This encourages turnover and a greater preference for off street-parking. The price difference between on-street and off-street should generally reflect the relative convenience of the on-street offering against the inconvenience of off-street. Call this "Value pricing" for parking. Or use USDoT Secretary Mary Peters' newer and more direct term "convenience pricing".

To bring shop keepers and the disadvantaged on side, offer 10-20 minutes free, but make that up in the remainder of the first 60 to 90 minutes. Don't lower it after the make up period, rather make that the premium for convenience.

With such a system, a municipality could save enforcement dollars while maintaining enforcement revenues by using a simple price escalator after the usual two- or three-hour parking allowance is used up. For example double or triple the minute-rate after the allowance period is up.

As well, it is possible – when the system is GPS based and fully automated – to provide parking credits to motorists who do not move their vehicles during peak hours. Such a pricing-and-reward parking system, priced appropriately, would have a dramatic effect on CBD congestion, without the introduction of cordon tolling as London and Singapore have done. Here is an amusing scenario about this new type of meter: http://grushhour.blogspot.com/2007/08/how-to-get-free-parking.html

The meter is available from Skymeter and is available in an anonymous version (wink-wink, nudge-nudge), and, one assumes, in any color, as long as it is black.


A related idea to offer a reward to delay your entry into traffic comes from the Netherlands.

“Rijkswaterstaat (Dutch road administration) [are] providing real-time traffic and public transport information to visitors of amusement parks and catering establishments [to achieve] a better dispersal of traffic. … displays with traffic information are placed at the exit of a large number of amusement parks, zoos, road restaurants and conference centers [to show] real-time traffic jams and or train delays. When there are traffic jams in the surroundings of the participating locations an interesting alternative can be offered to prolong the visitors stay. For example a ‘rush hour menu' for a special price. The ‘rush hour menu' has to stimulate visitors to stay longer at the location when there are traffic jams or train delays. This will create a better dispersal of traffic.”


Mary Peters - on the mark again

Mary Peters, the US Secretary of Transportation, authored an op-ed piece this weekend. I took the liberty of copying the whole thing below, because few say it better than she and if her article ever becomes unavailable, it would be a loss.

Unfortunately, she missed three critical words. In her bold and correct assertion that “… a larger scale regional approach throughout Northern Virginia and the Hampton Roads regions could be put in place in a relatively short period of time”, she did not mention that the only realistic way to do this is with anonymous satellite technology.

Bravo for getting the economics right (and she is no longer a loner on that score), but we cannot straddle large regions like Northern Virginia with current RFID technology because of its expense, its intrusiveness, and its uneven (read unfair) distribution. The proper way to directly charge for road use in lieu of increased fuel taxes (or any fuel taxes if I had my druthers) is to charge everywhere – variably of course, as Secretary Peters prescribes – but everywhere.



Try Real Reform – Not Additional Taxes

WASHINGTON With the special transportation legislative session complete, Virginia's leaders and legislators now have a clean slate to consider real reforms to the commonwealth's transportation challenges.

The answer to these challenges, for both the nation and Virginia, lies in a fundamentally different approach to financing and managing our highways and transit systems. For example, at the heart of Virginia's transportation's debate was a proposed $6.4 billion tax increase to pay for transportation improvements. Yet Virginia has more than $4 billion worth of projects underway utilizing private funds for new construction. And recent studies show that direct pricing of roads would generate at least as much in revenue while delivering far better economic results.

Clearly, we need to change how we fund transportation projects. It makes little sense -- and it's certainly not sustainable -- to increase our reliance on gasoline taxes at a time when we all recognize the need to decrease fuel consumption and increase the use of alternative fuel sources. And, as virtually every study has concluded, gasoline, car, property, and sales taxes have little or nothing to do with the use of highways and are ineffective at reducing highway congestion, increasing business productivity or improving quality of life. Not to mention that they are rightfully unpopular with the public.

The commonwealth should make history by widely embracing the use of new open road tolling technologies where prices vary throughout the day. As traffic levels change, so too would the nominal amount drivers are charged. These varying tolls would ensure that car and bus traffic keeps flowing, even during the busiest times of the day.

Variable pricing, or congestion pricing as it is more commonly called, is a proven approach to managing and financing transportation systems that price road use based on supply and demand, just like long distance phone service, hotels and electricity. Imagine a rush hour where cars move and commuters get home in time for dinner with their families.

This concept is not a new solution for Virginia, where some of the most significant projects -- such as widening the Capital Beltway -- are moving forward as tolled facilities funded with significant amounts of private sector funds. As a result, while many other local transportation projects are likely to be stalled until Virginia settles on a new funding solution, some of the most significant projects in the state will continue unaffected.

Pursuing this approach on a project-by-project basis, as Virginia is doing with the Beltway project, is certainly preferable to doing nothing. But a larger scale regional approach throughout Northern Virginia and the Hampton Roads regions could be put in place in a relatively short period of time. Virginia's leaders could easily and rapidly oversee the first ever statewide reduction in traffic congestion.

Virginia's leaders have a clear choice. They can ask drivers to pay more at the pump, more at the store, and more at the DMV -- regardless of where they live or when they drive. Or, they can put in place direct user fees that will be targeted to areas where congestion is at its worst, and will actually cut traffic, speed commutes and improve the timeliness and quality of transit bus service.

As important, direct road pricing would provide the commonwealth with a significantly more robust and sustainable revenue stream. Congestion pricing would provide needed revenue for road construction projects. It also would help fund transit agencies struggling to cope with the recent surge in ridership. And, it would help finance some of the ambitious transit expansion plans being contemplated.

Embracing direct pricing for road use would also have the added benefit of encouraging better decisions about land use, stimulate reductions in carbon-dioxide emissions and encourage more of the commonwealth's commuters to try transit. In short, embracing tolling as a solution to Virginia's transportation funding challenges would cut traffic, generate needed revenue, improve transit, and significantly benefit the environment.

Clearly, there is good policy available for Virginia's leaders to take up -- policy that promotes accountability and delivers the results that Virginians, and Americans, want and deserve.

Mary E. Peters is the U.S. Secretary of Transportation. To contact her please visit the Web site www.dot.gov.


Why the Gas Tax is a Lame Duck

How many times have you read a comment that road pricing is unnecessary (the language is usually baser) because you could just raise the gas tax?

How many times have you heard recently that the rising gas prices will end the conversation about congestion pricing?

Maybe this will help drive some of the air out of those arguments.


$4,000 Car-pool Bludgeon

There have been hundreds of thousands of articles, papers and reports in tens of languages about the effects of the major cordon charging schemes of Stockholm, Singapore and London (LCC and WEZ). Surprisingly, the subject remains unexhausted.

Reports about these systems generally claim an instantaneous 10% increase in speed, a 15% decrease in air pollution, a 20% decrease in congestion, and a critical shift in public acceptance from somewhat below 50% to somewhat above. Any variability that you note is due to the lack of a single audit standard and confounding factors or assumptions that change from report to report.

However encouraging the good news, there is also some bad news. Because these cordon-class systems are new, we have not yet deployed appropriate technology. We are over-reliant on a clutter of road-side infrastructure of fixed DSRC and cameras, and we have been limited in scope – so far, we deploy in 20sqkm areas for about 200-400,000 daily car-trips.

With Google as the lazy researcher’s crutch, I worked out some rough, unaudited figures. I neglected Singapore because I could not find all the data I needed to complete the requisite calculations. Accordingly, for each of LCC, WEZ and Stockholm, after-deployment daily trip counts of 130,000, 178,000 and 329,000 meant trip-count reductions of 60,000, 72,000, and 81,000, respectively. Using average cost reports of capital and operating costs combined to estimate an annual cost for the first five years ($239M, $255M, and $91M, respectively – all figures in rough 2007 US dollars), the annual cost of servicing a daily car trip (250 trips) into each of these three cordons was $1835, $1433 and $277, respectively. (Stockholm, a peninsular island, has only a few choke points.)

Far more interesting, however, the annual cost of removing a daily car trip (250 trips) – is $3975, $3542 and $1123, respectively. Of course this is double-dipping; if a city paid to service the trips that remain in the system, the trips that moved to car-pool, bus, bike or telework are the bonus. But the whole point of this exercise is to reduce peak-hour trips, isn’t it?

I looked also at the area-costs of servicing a cordon – roughly $11M, $20M and $4M /sqkm/per annum, respectively, over the first five years.

This contrarian’s back-of-the-envelop accounting method tells us something: relatively small, equipment-heavy cordons – as any city mimicking London would create – are disastrously expensive. We should learn how to reduce the road-side infrastructure by deploying privacy-assured GPS technology rather than continuing to punish our central business districts with high-maintenance crapscapes.


GHG, Transportation and Congestion

This says 40% of America's GHG is from Transportation:
Reducing Greenhouse Gases Through Traffic Management and Smart Growth
Environmental Defense Fund, Michael Replogle, Transportation Director May 21, 2008

But this table says that overall in the largest 100 US municipalities 59% of per capita contribution to GHG is from transportation, and 3/4 of that is from cars (you'll have to do your own math).

AND the companion brief says metro area residents have smaller carbon footprints than the average American:
Shrinking the Carbon Footprint of Metropolitan America
The Brookings Institution, Andrea Sarzynski, Marilyn A. Brown, Frank Southworth May 2008

(page two of their brief says 33% of GHG comes from transportation across the nation)

How come the discrepancies?

If you look closer at the table, taking ratios city-by-city (for example San Francisco's ratio is a bit over 75%), we are seeing the effect of the predominance of the private vehicle as the producer of GHG. Metro dwellers may have a slightly smaller footprint, but that budget is largely spent on their cars. That will be exacerbated by sprawl, congestion, lousy transit, low transit patronage, outsized vehicles, congestion, longer average commutes, diminished walking, poor bicycle paths and congestion.

The point? In America, metro dwellers may have a slightly smaller footprint, but they could have a very much smaller footprint. Furthermore, since these 100 largest metro areas occupy a tiny fraction of the United States, wide-area cordon pricing could make a huge difference.


Telcos, Tollcos

On April 28th, this year, Secretary Mary Peters spoke at The Brookings Institution. There she said that congestion in America is worse than ever; that it will continue to get worse; that the gas tax is unresponsive, unsustainable, and unpopular; and that Americans will not agree to increase that gas tax. She added that the “brass-ring opportunity we have before us is to substantially change that system and move forward to something that is more user responsive and more market-based.”

Later in response to a question, Secretary Peters, said that HOT lanes are an interim measure “…a stepping stone to get people acclimated to paying a fee for use of a section of roadway at a peak period of time.” And that here in America we will eventually go to a “vehicle miles traveled (VMT) form of pricing”, by which she means the same thing as the Europeans mean by Time-Distance-Place (TDP) charging. When I asked later how far away that might be, she said “some states cannot wait more than ten years”. The AASHTO Journal in both April and May of this year puts the date for a switch-over to VMT at 2025.

USDOT and Secretary Peters do NOT see market pricing as a way to maximize revenue, rather as a way to maximize network performance – i.e., if we can price to reduce congestion, sufficient funding and somewhat cleaner air will naturally follow.

Given this rapid awakening of Americans to the need to switch to TDP pricing, the American prediction that this will occur somewhere between 2018 and 2025 coupled with the European prediction that it is between 2011-2020 and predictions by many other countries for times in between, this thing might be well past half-way done by 2020.

But what thing?

The EU has declared GNSS to be the only known technology that can feasibly apply TDP pricing everywhere; if the transportation leadership in America sees HOT as interim and sees GPS as the endgame, then we are talking GNSS-tolling in a big way – perhaps 300M vehicles worldwide by 2020.

How is that going to be done? For the US, "ten years" is awfully close. The experimentation, cross-vendor bake-offs and standards bodies in the EU are in a dead heat to be ready for the 2011 kickoff by the Netherlands which has 9M vehicles against Americas 250M. Right now the EU schemes on the drawing board are still expensive; they demand a massive telecommunication commitment, either sophisticated heuristic map-matching at the dashboard or massive amounts of raw data moving to a central processing area. There is nothing on the drawing board that will network to support 300M vehicles. So far we are at 640,000 trucks in open sky in Germany – 0.21% of what is being predicted for 2020.

What will we do here in America? We could assume the Europeans will solve it, then import their technology? Is that what we want? And what if they don’t solve it?

So far as I am aware, the GPS-tolling experiments executed in America have not sought to solve the problem of tolling using Liability Critical GPS as some of those in the EU have addressed – albeit unsuccessfully so far. Rather these experiments use navigation-quality GPS receivers to test user acceptance, state boundary detection, and user modal adaptability. The Europeans have shown repeatedly in Copenhagen, in London, in Amsterdam and in several other cities that navigation grade GPS will not work in our cities due to signal interference.

Let’s assume the problem of low-cost Liability Critical GPS will be solved and shared around the globe. This is a reasonable gamble, since one company already claims this. Still how would such a system be deployed?

What we want to do is:

  • put a small device that includes GPS in a few hundred million vehicles,
  • measure road use in small time, distance and place increments,
  • log that use privately – maybe even anonymously,
  • move that data wirelessly to a billing capability,
  • generate bills for many tens of such small transactions, perhaps hundreds per month per user,
  • set up credit, debit, and pre-paid accounts for these users,
  • handle device fulfillment, customer support, troubleshooting, device repair and replacement
  • make sure motorist driving in an area far away from their home RUC provider can “roam” on the roads of another provider and have the transaction handled seamlessly.
This mimics exactly what the Telcos do now. There are two differences; first the device meters road use instead of handling voice and email, and second it is attached to your windshield instead of your ear. Otherwise, the business of being a Road Network Tolling Operator is identical to that of being a wireless network operator.

The only organizations that can toll the entire United States on short notice are the Telcos. And 10 years is short notice. We should get started.


Intelligent Car Lobbyist

I know this is old news, but ya gotta wonder how a car lobby would ask for Road-Use Charging. How did they get so smart while so many politicians – like some in New York, recently, seem less so?

I copy it all here to be sure it is always available...

Car lobby calls for road-use charging
Shane Wright | theage.com.au | June 17, 2007

ALL motorists should carry a GPS-type transponder in their vehicles and, instead of paying fuel taxes, they should pay for every kilometre they drive, in varying amounts depending on what time they use the road.

This is the ambitious plan of the Royal Automobile Club, which is pushing the Federal Government and the Labor Party for an overhaul of fuel taxation.
The plan, backed by motoring groups, would work in a similar way to the way in which people are charged by phone companies depending on when they make a call, over what distance and how long it lasts.

Motorists would be rewarded for driving at off-peak times or in cars that used less petrol. Instead of the various taxes imposed on fuel, people would be charged on either their use of roads or on carbon emissions.

RAC member advocacy general manager David Moir said suggestions to change the way GST was applied to petrol would deliver, at best, cuts in petrol prices of about four cents a litre.

But a shift to a user-pays system would not only allow people to control the amount of tax they paid, but also enable governments to target carbon emissions from vehicles as well as congestion in large cities.

"This isn't a short-term fix, but a longer-term plan that could address a lot of problems," he said. "It sends the right price signals to people, so you can get a benefit on congestion, you can encourage people to drive the right type of vehicle and at the right time."

The technology to monitor vehicle movements is already available, with cashless motorways in both Melbourne and Sydney relying on electronic tags. Global positioning systems would enable exact measurement of the distances travelled by motorists.

But Mr Moir conceded there could be winners and losers from the system, and some motorists could have privacy concerns. (There are ways to protect privacy -- this is a common error due to a subtle confusion beween 'positioning' and 'tracking' /ed.)


Road Pricing Discounts

RUC discounting schemes have political acceptability as their core motivator, but location-based discounting can be complex, unfair and counterproductive. This article proposes an alternative that is simpler and fairer – one that addresses political acceptability while multiplying the pricing signals that motivate congestion-mitigation programming.

Some RUC (road-use-charging) cordon-based scheme designs provide discounts for those that live within a pricing cordon. This can be done intentionally, as is the case in London, or in the original New York City proposal. It can also happen by default with any scheme that only charges for cordon entry, since residents that travel locally or only re-enter after-hours will avoid the charge by fortune of geography and schedule.

In the face of unsustainable fuel taxes and contemplating more and larger charging schemes, up to and including continent-wide time-distance-and-place (TDP) charges, the question arises: “Can we provide a discount to motorists driving near their homes when we use a satellite-based, RUC system?”

Granting a “discount radius” to each motorist could accomplish this, but that increases the expense of the TDP charging computation. A slightly less expensive way is to assign discounts based on charging districts. However, I am generally against such discounts because I believe everyone should pay for what they consume. In an urban community we generally pay the same for utilities such as electricity or water regardless of our location and I think that should apply to mobility, as well.

Considering that discounts encourage consumption and tend to generate cross-subsidies, a more direct question to ask is: “Should we provide discounts for motoring?” or if we must discount, “Should we provide motoring discounts by geography, since that encourages automotive use in specific geographies, harming other residents sharing those locales?”

Geographic discounts say to motorists: “It is fine to drive as long as you are from here, but we’re going to charge visitors, since they contribute to congestion and to air-quality problems”. Such discounts can be seen as cynical, telling the local motorist: “We value your vote more than accessibility – or more than air quality.” Or “It’s not your car, it’s theirs.” Geographic discounts signal entitlement rather than conservation or increasing choices for mobility.

To the first question: “Should we provide TDP RUC discounts?”, there are at least two critical reasons to say yes:
  1. It is politically easier to sell: “we will charge a very modest fee, perhaps only nominal, to those motorists who are rate payers here, who work, go to school and church here, who are part of our local commercial and social community; and we will charge a market rate to visitors, motorists in transit, and commuters who do not live here.”

    Since the essential hurdle to universal, fair market pricing for roads is political, this reason alone is sufficient to argue for discounts. But is geographic discounting the only political lever to get RUC programs in place?

  2. Poorer motorists tend to drive fewer miles and closer to home. RUC fees, since they can compound the effect of increasing fuel prices, can serve to further exaggerate the have/have-not forces that constrain the mobility of poorer motorists). Hence a close-to-home RUC discount is biased in favor of poorer drivers and this is fair in that regard.

    This social reason is, in my opinion, sufficient on its own to force us to address discounting in some way.
Hence, I believe there are political and social reasons that make RUC discounting a critical conversation that we need to engage in now. Unfortunately, assigning discount by geography is expensive, unfair and counterproductive.
  1. Expensive. Granting a discount radius from a point (e.g. your home) or assigning discounts by district would be administratively expensive.

  2. Unfair. Person A and B are neighbors and live near the edge of a discounting “district”. Both live 5 miles from their respective jobs. Both drive the same type of car and both work the same shifts but A works inside the assigned district while B works in the adjacent district. This unfairness to B could be solved by the more complex and expensive radius approach.

  3. Counterproductive. Assigning discounts to short journeys has the undesired effect of discouraging cycling, doubling, moving, pooling, transit-use, trip avoidance, waiting and walking. This problem is worse than the issue of high administration expense that could be seen as a job generator (a benefit).
Mobility credits

There is another solution that is very inexpensive to operate, fair to all regardless of geographic happenstance and encourages cycling, doubling, moving, pooling, transit use, trip avoidance, waiting and walking. Furthermore, this alternate solution compounds pricing signals, and diminishes entitlement signals.

We have a hint about this solution from the Puget Sound Regional Council (Washington State, U.S.) trials:

If you give people money that they can spend on
RUC fees or keep, they attempt to keep some.

I propose providing mobility credits. These could most easily be distributed on a monthly or annual basis to the user of a pay-for-what-you-drive road-use meter and could be managed by a billing services operator. An annual allotment is preferred so that a motorist is not pressured to “use up” credits before month-end. An annual allotment could be used up well in advance or could even be carried over in the event that a motorist managed to avoid driving during chargeable times or on chargeable roads.

A credit distribution associated directly with the meter ensures that the metering device holds attraction for the motorist. For example, if such a meter was charging 5 to 50 cents per mile (depending on time and place) and was the only access to mobility credits, then a $250 annual credit against a $10 per month device usage fee, makes the meter an investment rather than an expense. Note that such credits would be easy for a government-operated tolling scheme to justify since most government schemes already provide free access to most roads.

Assume a vehicle-attached meter (i.e., a telematics sensor) operating as an electronic license plate and producing an anonymous, evidentiary record of road use from which can be generated a billing feed (our firm makes one such system, as an example). Grant each motorist mobility credits (for example, $20 per month – enough to travel 40 to 400 miles depending on time and place charge rates). In this way, a simple per-device accounting credit provides:
  1. discounted or free trips for a motorist who drives to shop, to church or to drop kids at school;

  2. an incentive for other motorists, including poorer motorists, who would like to conserve these credits for longer trips or trips that must be made in an automobile and to otherwise avoid, cycle, double, move, pool, take transit, wait or walk.
As we engage in the shift from paying based on fuel consumption to paying based on TDP metering, the question will arise whether meters should be paid for by the motorist, by the government, upfront or over-time. If they are distributed at no charge, mobility credits would make it especially attractive to road users to participate in the system, but the meter itself might not be valued, unless credits continued to be provided. If the meters are to be paid for, mobility credits should cover more than just meter costs to provide a net credit. I believe meters should be paid for over time, as are mobility handhelds, now in order to ease the expense. Such as arrangement would make the system easy for motorists to purchase: they would pay gradually for the meters, while receiving a net credit for their participation. It also makes it easy for a meter operator to finance millions of meters, since there is a guaranteed source of revenue to secure the loan.

Transferable Credits

But why stop at credits just to motorists who use the meter? What granting credits to transit users and cyclists? In the economic-fairness spirit of parking cash-outs that provide an equivalent transportation incentive to employees who do not use free employee parking, mobility credits could be provided to all people of driving age. These could be sold or given to others, creating a market analogous to that for carbon credits. Such an approach provides two valuable signals:
  1. the motorist who buys such credits is directly subsidizing some other person to use a non-automotive alternative – or at least to use their automobile on uncongested roads and at uncongested times;

  2. the value of not driving is now rewarded, as opposed to only having the act of driving taxed.

Creating a system on the internet for such an exchange is not terribly difficult. True, not all people have internet access, but most libraries provide access and most people have a friend who could help. What is needed is a unique mobility identifier for each person over driving age. In the extreme, an exchange office could be set up for handling this by mail, but it would be best to avoid such an expense and invest in ensuring that libraries have access and staff who can help new users. This has additional side benefits.

Mobility for all

Is it fair to provide mobility credits only for those over 16? Consider that parents of three- and nine-year-olds likely need to travel additional miles for schools, doctors, sports and the like. Consider also that many families have an older person or a disabled person who does not drive, rather depending on others in that family to drive for them. Mobility credits for every person would send even more cycling/walking/transit signals to a family with a couple of young children, especially if they could sell such credits to other motorists. Similarly, relieving the additional expense burden of transporting an aging family member to medical appointments promotes a greater sense of fairness.

In the balance between road-use charges and credits is the combined opportunity for addressing congestion, emissions and funding issues all while keeping an eye on fairness and political acceptance. Credits say: “we understand you require reasonable access”, while pricing says: “Please take treat that access like the precious resource it is.” Done right, the shift from fuel tax to pay-per-use can provide immediate solutions as well as additional health, lifestyle and urban quality benefits.


Road Pricing for Greenhouse Gas Efficiency

I always prefer to price correctly for congestion and rely on that to address emissions and funding. Nonethless the arguments for pricing away GHGs must still be made. Michael Replogle, once again, does it well (download PDF).


Mary Peters: Woman with a Vision

Seems I just can’t get enough of the US Secretary of Transportation. On Monday (2008-04-28) Secretary Peters spoke at the Brookings Institution. You can watch or read. While she spoke about a lot of things and fielded a bunch of questions, I cherry-pick two things for you:

Mary Peters is NOT seeing market pricing as a way to maximize revenue, rather as a way to maximize network performance – i.e. reduce congestion, reduce emissions and funding will come with it.

“Congestion is at its worst ever in the United States today and only predicted to grow worse if we don’t do something about it. Americans are no longer willing to pay an unresponsive, unsustainable, unpopular gas tax, or certainly not to increase that gas tax. That is the gold ring opportunity that we have before us, to substantially change that system and move it forward in the future to something that is more user responsive and more market-based.”
Q: “Are [HOT] lanes the final step or an interim step?”
A: “…a stepping stone. …[it] gets people acclimated to paying a fee for use of a section of roadway at a peak period of time. I believe that eventually here in America we will go to a vehicle miles traveled form of pricing. Some sections will be congestion pricing or convenience pricing,* I should say, convenience priced for the time of day that you’re using them. Others may be a flat fee, particularly in rural areas. But I see us moving away from the gas tax at some future point, probably almost entirely. In the near term, it’s a transitional strategy. Let me take the opportunity, if I may, at your question to talk about why not a gas tax. I talked about the fact that Americans are less trusting of the gas tax, less trusting that it will be invested in a way that makes a positive difference in the way they use the transportation solution.

*Newt Gingrich proposed this term!


Al Gore's new Slide Deck

Al Gore's new slide deck makes a couple of strong points. One stands out for me:
Tax carbon instead of income.

The single greatest underutilized tool available to deal with environmental issues is to change what we tax. This is called tax-shifting and is starting to gain currency.

The single greatest underutilized tool we have to deal with congestion is to change what we tax.
Tax road-use instead of fuel.


Requiem for New York

Since its inception, I have been a critic of Mayor Bloomberg’s congestion pricing scheme because of its Rube Goldberg architecture, but I have always admired the Mayor’s courage. Few people fight for something they believe in as tirelessly as he has. Fewer still are so willing to compromise. The New York congestion-charging plan has undergone more changes than a showgirl in a casino revue, softening its punch, diluting its effectiveness, but ultimately never pleasing enough people to carry the day.

In the end, the New York state legislature simply didn’t vote, and the congestion charge went out with a whimper. "What we are witnessing today is one of the biggest cop-outs in New York's history," eulogized John Gallagher, a Bloomberg spokesman.

Reuters/Mike Segar

I’d like to think that in the gap between ‘doing the right thing’ and ‘doing the thing right’ this program just didn’t make it. But that is not the main reason for its failure. This was a lot more about not-in-my-back-yardism, and plain wrong-headedness.

One of the most pitiful excuses was made by Democratic Assemblyman Ruben Diaz who said the plan failed “to address traffic jams it would cause outside of Manhattan.” I can just imagine cars driving right up to the edge of the congestion zone and driving around like a bunch of kids trying to crash a sold-out rock concert.

Clearly Mr Diaz in unaware of a useful lesson from the London Congestion Charge: reducing the number of vehicles entering a central congestion zone reduces the number of vehicles in the surrounding areas. Folks who decide to avoid the zone leave their car somewhere between their driveway and the edge of the zone – not all right at the edge. Yes, many will drive part way, park, and take an alternative the rest of the way. But they would have driven that far when they were driving the whole way anyway, so where is the extra “traffic jam” coming from? Who advises these assemblymen and why do journalists just repeat what illogical politicians have to say?

So while this has been a bit of a eulogy for the Mayor’s plan, this is really a Requiem for New York. Blessed with a leader of vision, stamina and flexibility, New York did their best to waste an opportunity to start sorting out Manhattan’s crippling congestion and picking up about a third of a billion from the feds for their trouble.

oh my, a second Canadian who blogs about congestion pricing! What's this country coming to?


For the lack of education and trust

Here is a revealing chart re fuel taxes from Economist.com on 24 March 2008. It explains why Brits are more aggressively opposed to road pricing than are Yanks... if you drove in Britain and you thought that road pricing would be in addition instead of a substitution, wouldn't you complain?

The two biggest barriers to the needed tax shift from fuel to road-use are:
  1. education of motorists and politicians that fuel taxes engender congestion and that road charges relieve it; motorists should be begging for the change.
  2. trust that governments would switch instead of add; so far they have been added because no technology has existed that permits this shift, until now.


Parking Pricing more important than Road Pricing

Last year, TIME printed a very readable explanation of why parking pricing is likely more important than congestion pricing for battling urban congestion. Here is the full article (The New Science of Parking, Ceri Au, 2007-07-09):

If you live in a city and drive a car, chances are you know the hassles of looking for a place to park. Studies of traffic congestion in New York and Los Angeles have found that cruising for parking is, in fact, a major source of gridlock. In a 2006 study undertaken in a Brooklyn neighborhood by Transportation Alternatives, a New York-based advocacy group, 45% of drivers interviewed admitted they were simply looking for a parking spot. A more rigorous analysis was conducted in Los Angeles by Dr. Donald Shoup, an urban planning professor at UCLA and one of the nation's top parking gurus. Over the course of a year, he and his students found, the search for curb parking in a 15-block business district "created about 950,000 excess vehicle miles of travel — equivalent to 38 trips around the earth, or four trips to the moon," which consumes "47,000 gallons of gas and produces 730 tons of the greenhouse gas carbon dioxide."

Urban planners and economists have been trying for years to find solutions to the plethora of traffic problems that afflict urban communities. Now a growing number of cities are turning to the relatively new science of parking theory and the technologies it has spawned for help — to improve their neighborhoods, reduce pollution and kick-start economic growth.

Shoup's solution to reducing congestion due to cruising — which he chronicles in his book The High Cost of Free Parking — begins by raising the cost of street parking to market value. That requires the installation of meters where none currently exist and the setting of rates for metered spots that is proportional to the prices charged in off-street lots. Such market-value parking is not simply a cash-grab; it is about obtaining an optimal balance between occupancy and vacancy. "Ensuring 85% occupancy means that the curb spaces will be well used," says Shoup, "and the 15% vacancy means that they will be readily available."

The idea of market-value pricing to reduce congestion has been around at least since 1952, when economist William Vickery floated the idea to relieve congestion in New York City. But it was not until 1996, when Vickery received a Nobel Prize in economics, that his work, and the idea of congestion pricing, began attracting attention. The lack of early support for market-pricing, says Patrick Siegman, a principal transit consultant with Nelson/Nygaard, was mostly rooted in an inability to measure results. "New technologies are making it much easier to implement ideas that economists have been suggesting for a long time," he says, "and that is leading to some remarkable changes in parking policy."

A San Francisco-based company called Streetline, for example, offers what CEO Tod Dykstra calls a "congestion management system," which includes parking sensors and wireless networked meters. The sensors, engineered using the same principles that make a compass operate, create a unique parking signature for each vehicle, which can determine, based on variations in parking angles and size of vehicles, when a parking space is filled, when a vehicle departs and when a new vehicle replaces it. Wireless networked meters enable parking officials to instantly determine not only who pays up and who doesn't, but also the total revenue for parking by meter, by street and by district based on time of day or day of the week.

So far, Streetline has completed pilot projects and studies for Los Angeles and San Francisco. The L.A. project determined that despite two-hour time limits, the average driver stays parked for four hours. If a city wants to balance the occupancy and vacancy rates to ensure drivers can easily find a spot, they need to understand parking behavior and determine whether drivers obey the rules, and adjust those rules accordingly. Since the technology services offered by companies like Streetline are no more expensive, and often cheaper, than the upkeep of old-fashioned coin meters, smart parking management is starting to catch on.

One city that has fully instituted Shoup's market-pricing plan for street parking is Redwood City, Calif. In 2005 the city council unanimously voted to remove time limits for parking in the downtown core. Additionally, they tasked the city's Parking Manager with ensuring that Shoup's 85/15 formula was maintained throughout the designated zone by adjusting prices based on occupancy. Though rate hikes at parking meters may sound more like political suicide than popular public policy, the move drew wide support, because all revenue generated was returned to the metered zone community, either through direct services or through infrastructure development.

Advocates of the Redwood City plan pointed to the success in the early '90s of a similar program in Pasadena, Calif., which implemented metered parking in a skid row neighborhood called Old Town. Local businesses at first feared that metered parking would drive away existing customers. But when revenue was returned to the district in the form of graffiti removal and new light fixtures on the streets, business actually improved. More than a decade later, Old Town Pasadena is a thriving community known for fine dining and shopping. With parking revenue in excess of $1 million a year, its streets receive biweekly steam-cleaning.

Shoup claims that such success stories are propelling grassroots support for increasing parking fees. "Once you get an alliance between green groups interested in environmental issues and public welfare, combined with business interests keen to improve profit margins, you produce a very powerful lobbying force," he says.

But will larger cities pick up on the idea? A 2006 congestion study undertaken by Partnership for New York, a nonprofit organization comprising 200 of the city's top CEOs, reported that traffic congestion costs New York City $13 billion in lost revenue and 50, 000 jobs annually. Among the study's recommendations for further consideration was increasing the price of curb parking. "In a city where garage parking spots are sold for the price of a new car and where garage parking fees can be as high as $15 to $20 for the first hour," the study noted, "on-street parking, the most convenient and most sought after by drivers, costs about $2 to $3 in Manhattan."

Mayor Michael Bloomberg, with the support of 130 advocacy groups, has proposed a different type of congestion-pricing for dealing with traffic: instituting a toll on drivers who enter Manhattan from the outer boroughs. But Shoup is skeptical that such a toll will significantly reduce congestion. [here, too]

"Much of the traffic in Manhattan is caused by drivers who are searching for a free curb parking space," he says. "It doesn't make sense to charge cars to enter Manhattan without also charging to park on the streets. You have to charge to manage. You can't manage parking if you can't charge for it." And American drivers have clearly demonstrated that if there is a bargain to be had, they will circle the block for a parking space — and keep circling until they find it.