Objections to Road Pricing in Toronto

The idea of road pricing has been floated in Toronto uncountable times over the past five years. Compared to cities that have gone before, it’s all the same and it’s all different. [download the PDF]

Early on, road pricing thinking in Toronto was predominantly congestion related as it was during the 2003 and 2006 mayoral campaigns. There have been the obligatory comparisons with London, as dozens of other cities have made. Toronto’s Mayor David Miller even sent one of Toronto’s Councillors over to see London’s system first-hand.

For a modest period it was environmentally related. In the summer of 2007 Toronto released its Climate Change, Clean Air and Sustainable Energy Action Plan, in which appeared a statement that “the city will work with the Province [and other local authorities] to investigate a road pricing regime for the GTA that will encourage people to use alternative modes of transportation, and dedicate any funds raised to transit improvements.”

More recently it has been almost entirely funding related. On February 21 2008, Toronto released a commission report entitled: Blueprint for Fiscal Stability and Economic Prosperity, which included a strong recommendation that the arterials around Toronto be tolled. Since many of these are under Provincial jurisdiction this cannot be undertaken without regional (i.e., provincial administration).

The Mayor has been quoted several times as saying he favors the idea of road pricing as a last resort, but that it needs to be a wide-area mandate – essentially a provincially administered initiative. Since the Blueprint report, Ontario’s Minister of Transportation, Jim Bradley, has been quoted as saying the province has no intention of tolling its existing “400-series” highways, but that the Mayor of Toronto, who has been recently granted certain new taxation powers, is free to toll those under city jurisdiction, such as the two limited access congestionways: the Gardiner and the Don Valley Parkway.

But tolling the roads you can toll for financial reasons instead of the ones that you should toll for demand-management reasons can have unintended effects. Network demand management requires at least some finesse. Attaching a toll to one small part disturbs the system unevenly.

Same old?

In some ways, traffic congestion is the same everywhere. It has similar causes and similar harms. Sandwiched between its minority advocates and its minority detractors is a majority of motorists who are against it – usually around 60-70%.

But no detractor, no local politician and certainly no effected motorist is interested in a general economic theory of the effect of market pricing on network efficiency. However much the common good may be harmed by congestion and emissions, most of us prize our purse more. Even Al Gore’s message fades in the face of a tax bill. And however much government may indeed be running out of money, a majority of citizens believe the money can be found elsewhere – certainly not from their entitled drive to work.

But in other ways, no two cities’ political and urban landscapes are identical with respect to congestion and congestion pricing. One of the truisms that challenge advocates (and aids detractors) is that London, Stockholm and Singapore are not only not like each other, they are also not like any other city.

Specifically, they are not like Toronto.

So when cities like New York and now Toronto begin a public debate about road user charging or congestion pricing, they variously think they have everything or nothing to learn from the cities that have stumbled through this before us.

The truth, as always, falls in between, and in this minefield of opinion the truth can be hard to tease out. No one has yet gotten it exactly right and there is merit to both sides of each argument. But there are a few things that I am as sure of for Toronto as for any other city.

1. We will argue that it is not acceptable.

A majority of Toronto motorists will be against road pricing. This will change to a minority once a suitably designed scheme is in place. This has happened in London, Stockholm, and Singapore. It has not yet happened in Dubai where an incomplete scheme diverts rather than reduces traffic.

A suitably designed scheme has to be fair. Tolling just two major arteries (the Gardiner feeding in from the southwest and the DVP feeding in from the northeast), forces a minority subset of motorists to shoulder the whole road-tolling bill. This means some will possibly overpay for driving their vehicle while others will continue to underpay. In fact, elasticity effects will encourage more driving from those who are not paying, because the roads will be somewhat less congested and parking will be somewhat more available. This compounds the unfairness, while diminishing the desired congestion effects.

Every road-pricing scheme has three potential components: reducing congestion, raising money, and easing emissions. London’s scheme, which does a very modest job of raising money was designed to reduce congestion and emissions – and measurably succeeds at that. The Singapore and Stockholm schemes were similarly designed. The Mayor’s Commission’s recommendation of tolling a couple Toronto arterials is biased toward raising money. This will delay its acceptance. Indeed, if it does not noticeably ease congestion, it will never be accepted.

A further problem will occur with tolling these two roadways. Each has parallel secondary roadways that will be subjected to more traffic from toll evaders (just 5% off the highways is a lot for these secondary roads). Some of these traverse neighbourhoods, which has implications for safety, local pollution, and property values. While this may only affect local acceptability, it is still unfair.

Tolling needs to be graduated and wider-spread rather than in a few corridors or in a small cordon.

A congestion-pricing program has to be, and be perceived as being, socially beneficial, not just a correction for a financial problem. Rather than road pricing, it would be better if the Mayor of Toronto saw and promoted congestion pricing as does San Francisco’s Mayor Gavin Newsom, who said in his inaugural address on January 8, 2008: "A sensible congestion pricing plan is the single greatest step we can take to protect our environment and improve our quality of life."

2. We will argue over why to do it.

Because of the recent report from a commission charged by the Mayor with making recommendations regarding Toronto’s fiscal dilemma, the current motivation is access to funds. In the past both congestion and emissions have been the drivers of the Toronto debate. While it is nice to have three good reasons for a congestion-pricing program – and Toronto does – each reason on its own has other solutions. Congestion pricing is best designed to address all three. If you stress only funding there are other ways to raise money and the argument that “we are picking on drivers” can be made and requires a long-winded argument to diffuse it. If you stress only emissions, it is possible to argue that cleaner engines are starting to come on line, and that governments should pressure automobile manufacturers and rely on innovation. If you stress only congestion, demands for improvement to our deteriorating transit system will be made in its stead.

The truth is we pay for road use the wrong way. Fuel taxes are losing their ability to fund roads in the face of more efficient engines, they are weak in addressing emissions, especially in North America, and they are completely silent about congestion.

We need to move away from fuel taxes and toward pay-for-use. This means that tolling needs to be graduated and wide-spread rather than in a few corridors or in a small cordon. Road pricing should become the new fuel tax, not remain as a surcharge. The Mayor of Toronto is right in theory that the province should take the lead, but he should move forward anyway. If he did what he could the province would have to follow his lead. The Ontario Minister, while right about the original mandate of his stewardship of the 400-series roads, needs to start looking to guidance from the Feds who do encourage the application of pricing programs. The mid-twentieth century era of Big Free Roads in North America has played out long ago.

3. We will argue over how to do it.

We are on the cusp of a dramatic technology change. There will be advocates for the older, more familiar short-range radio technology (the kind used on the 407, the only tolled highway in Ontario) and yet other advocates for the newer and more flexible technology based on GPS. The older technology while limited is adequate for tolling the DVP and the Gardiner, but it is hyper-expensive for tolling a central business district. This and the inconvenient urban-clutter of gantries in the downtown core is why the New York proposal to blanket Manhattan in 340 E ZPass gantries was rejected in favour of a simpler, but less comprehensive system.

If Toronto were to toll the DVP and Gardiner and no other roadway or cordon, then Toronto could simply extend what is being used on the 407. But most planners realize that the jig is up on free road access. They know that whatever Toronto does with road pricing, it will only be the beginning. For this reason, the newer infrastructure-free, GPS technology should be used. It will allow gradual pricing by distance throughout Toronto and eventually North America so that the financial burden is fairly spread, so that traffic is reduced rather than re-routed, so that prices can be set to offset emissions and so that pay-per-use can gradually supplant the fuel tax.

The Netherlands believes that GPS technology is ready and intends to deploy it countrywide over the next 8 years. It would be wise to follow that lead rather than London’s (look where that took Mayor Bloomberg).

4. We will argue that it harms the poor.

Many argue that road pricing harms those with lower incomes. But advocating a policy of unfettered road access is actually detrimental to low-income earners. Lower-income commuters are generally captives of transit – often buses. These buses are delayed in traffic that is generated more by motorists of middle to higher incomes than by transit users. According to Todd Litman of the Victoria Transport Policy Institute (a world-leading transport think-tank based in British Columbia): "In virtually every congestion pricing project analyzed, low-income people represent a very small portion of total users. When revenues are spent to improve transit services or in other ways to help lower-income people, congestion pricing is almost certainly progressive."

Professor Harry Kitchen makes the identical point in his essential but much maligned, January 2008 report, Financing Public Transit and Transportation in the Greater Toronto Area and Hamilton “...if some of the road pricing revenues are used to subsidize public transit, the poor will benefit because they use public transit much more than the rich.”

New York City's recent Kheel report, suggests combining congestion charging with free public transit for New York City. In Toronto, public transport is not only underfunded, it is overpriced and there is no accounting for distance travelled making short trips overpriced – especially for people of lower income who may not have a vehicle for short distances nor the money to pay for parking. Money to improve transit and to lower fares would be of dramatic value to those with lower incomes as well as to our environment.

Unfortunately, there is another terrible bit of social logic afoot in the myth that road-pricing automatically harms the poor. Most us agree that human activity is harming the planet. We also generally agree that the transportation sector is a major contributor in that harm. In turn, we have singled out the single-occupant vehicle commuting to work daily as the single most offensive component of that. Finally, we argue that with proper pricing signals we could have a significant portion of commuters choose a different modality. Given all that, some then make the argument that road-pricing should be avoided to prevent (unsubstantiated) harm to the poor. This implies that we should choose between poverty and our planet.

Why not raise the minimum wage rather than eschew market pricing of our roads. To do otherwise this unfounded logic would keep poverty and congestion locked in together. There is not a lot of difference between how we treat our planet and how we treat our fellow humans.

5. We will argue that it is not environmentally friendly.

Because most congestion schemes are proposed as cordons around central business districts or, worse, proposed as tolls on selected arterial segments, many people warn that a significant portion of vehicles will simply use other streets, moving emissions to another place, and generating parking problems including idling and circling at the cordon boundaries. While these effects do occur they are not necessarily as bad as their worst predictions. But there is enough truth to this to look closely at it for Toronto. If the DVP were tolled, what would happen on Don Mills or Victoria Park or Yonge Street? If this were modeled it would raise questions, and that, in turn, would reduce the likelihood of acceptance for such a tolling program.

Why not, instead, consider Nobel winner William Vickrey’s advice to avoid sharp pricing shoulders – charging something significant on one road and nothing on the next – if we believe that will risk harm to the neighborhoods along the free road? Why not toll more broadly and more gradually, since the technology to do that is now available and can be deployed at a far lower cost of ownership than current technology?

What if we tolled a central business district at $0.30/km, a wider area at $0.15/km, and a wider area still at $0.07, etc., we’d have no abrupt boundaries. Short trips would be quite affordable – perhaps little more than a dollar. Longer trips from Pickering to Mississauga would cost more – $9 at 15 cents/km. And there is no reason to have a simple tiered scheme like that, because the CBD of Mississauga could be priced higher that the comparably lower price of the less congested area in between it and Toronto. Basically, Southern Ontario could rebate the fuel tax and deploy end-to end congestion pricing with relative pricing peaks in all densely populated areas and times.

The important issue is to turn back congestion by shifting travel times and modalities and without spilling it into new places – a problem that is prone to occur with many current schemes.

6. We will argue that it is unsafe.

There are studies that demonstrate that tolling increases accidents and accident severity. One released in November 2007 by Peter Swan and Michael Belzer makes the case readily: Depending how toll rates are set it is possible to “introduce substantial inefficiencies in the overall road transportation network and actually increase congestion and safety hazards in other parts of the system...” Swan and Belzer “showed that as the [Ohio] Turnpike toll increased, truck traffic increased on alternate, free routes as truckers balanced the monetary savings with the cost of the extra time needed to take an indirect route.

It has several times be argued in Toronto that tolls on limited access roadways such as the DVP will cause some traffic to be deflected. The argument is reasonable. Surely, each additional vehicle added to city roads and streets adds both environment and safety risks. So while not quantified for any Toronto circumstance one can imagine that some Toronto streets may be less safe if tolling were instituted on nearby roads.

Again the solution is easy: toll modestly, toll gradually, and toll the entire network, not just a few segments or a ring-road around Toronto. New liability-critical and privacy-assured GPS technology can do this already.

7. We will argue that we already pay too many taxes.

No one wants to pay more taxes. And very few of us think we pay too little. But we are paying the wrong taxes. Fuel taxes are insensitive to congestion, only a charge related to the level of congestion, or a time, distance and place charge can address that.

Mary Peters, US Secretary of Transport says it best in January 2008: “It is a virtual economic certainty that congestion and system unreliability will worsen if we continue to rely on a tax-based financing system that has little or nothing to do with the true costs of using or providing transportation infrastructure. Today, a fundamentally new transportation policy must focus on system performance…”

The only way we can make the requisite tax shift from fuel consumption to road use is to take those steps necessary to toll everywhere and, at first, to find tax rebate or payment exclusion methods until such time that the fuel tax and or other regressive automotive taxes can be replaced.

8. We will argue that transit is not ready.

It is almost certain that if we took ten or 15 percent of peak-hour cars off of Toronto’s roads and a large portion of those commuters decided to use peak-hour transit that our transit system would strain and possibly fail us. However, we can add buses and train cars prior to the onset of a tolling program. London and Stockholm did this and did it successfully.

One of the effects of more buses and less cars is that buses arrive more frequently, and they get to their destinations more quickly. So what was a dreaded bus commute before becomes more attractive after. Note, as well, that transit demographics predicts that this generally benefits those with lower incomes who had previously been using the less-frequent and slower buses, or the less frequent and more crowded trains. Not only can transit easily be made ready, but the result benefits both the tolled (faster journeys) and the transit users (faster journeys). Since this correlates with income, a properly designed congestion-pricing program benefits both high and low income earners.

And there are many modalities besides peak-hour transit, including time shifting, telework, car pooling, biking, walking, and, for some, moving closer.

9. We will argue that it is too expensive to implement.

The minority that understand that Toronto really does need to solve its financial woes and who also understand that we currently underpay for gas often suggest that tolling is terribly complex and expensive. They suggest that if we must raise more money, just raise gas taxes. If it were not the case that congestion is largely unaddressed by fuel tax, I would agree.

Some may note that London and Stockholm spent $600M and $300M, respectively to set up their programs and that they each spend about 40% of their revenues on operations. If Toronto were to spend that much for the sole purpose of raising funds I think we should all complain. I will. London and Stockholm were less concerned about the optics of cost because both cities were squarely addressing congestion. If that were our only agenda, just breaking-even would work well enough. But it is not our only agenda. In fact, the most recent recommendation in front of the Mayor is to raise money and the roads recommended for tolling are simply the handiest to meter with current technology. That puts the debate on a bad footing from the start.

This is one of the problems with being unclear about whether we are being green, addressing congestion or raising money. Congestion pricing should be primarily about congestion cessation. It should be designed primarily to maximize congestion reduction (which can be automatically aligned with reducing emissions) and only secondarily to raise revenue. Obviously, to be careless about the financial aspects of the system would be a dereliction of duties, so we’ll need to maximize retained revenues – which we can do by minimizing both capital and operating expenses.

The new generation of tolling technology does that. The current generation does not.

10. We will argue that our city is different.

We will argue that our congestion is not nearly as bad as is London’s so that we should not copy that. We will point out that we are not a peninsular island as is Stockholm, so that we cannot copy that. We will observe that our natural democratic entitlements are different from those in Singapore, and that we cannot copy their approach.

That’s all true. And we shouldn’t copy any of them.

Until federal and state/provincial governments address congestion management from a fuel-tax reform perspective, each city must find it own way. Fortunately, there is a way to spread tolls gradually and fairly, to introduce new transit at the outset, to save the poor from financial harm, to address congestion and emissions while raising funds for better roads and transit, to protect motorists’ privacy, and to minimize system costs. A dozen companies worldwide, including at least one here in Canada, are developing the next-generation technology that enables these progressive policies.

In the end, Toronto – or the Greater Toronto Area – will have to find its own way, but hopefully with the understanding, guidance and collaboration from the Province of Ontario.

Bern Grush, Chief Scientist, Skymeter Corporation
February 2008

Here is an earlier blog that is worth reading.