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.

The Greening of Our Cars is Oversold

I have long thought that the greening of our cars will have little or no impact on the total problem. In fact, I think it will make congestion worse, since emissions-guilt will no long play a role.

Michael Replogle says it brilliantly: "The forecast growth in motor vehicle traffic--60% over the next two decades in the U.S. and many times that in China and India--threatens to overwhelm gains won through increasing vehicle fuel efficiency." Here's the whole article...


Solutions Michael Replogle 03.19.08, 6:00 AM ET

There is huge potential for fuel-efficient cars and low-carbon fuels to reduce transportation's impact on climate change and public health. But technological developments alone won't be enough to solve these problems.

A key arena for innovation will be finding ways to grow the world's communities and economies while at the same time reducing how much driving the population is doing. The forecast growth in motor vehicle traffic--60% over the next two decades in the U.S. and many times that in China and India--threatens to overwhelm gains won through increasing vehicle fuel efficiency.

Unfortunately, some techno-fixes like biofuels, electric vehicles and hydrogen-fueled transportation have been oversold. While they hold long-term promise, truly green versions of these options are still many years away from delivering major pollution reductions. Managing traffic will not only curb CO2 but also make cities more economically efficient, healthy and livable.

The key to success is to keep car traffic from growing to unsustainable levels to begin with. A 2007 Urban Land Institute study found that shifting two-thirds of new U.S. growth to compact neighborhoods where cars are not the only transportation option would save 85 million tons of CO2 annually by 2030. That figure is more than the combined annual emissions of over 16 million regular passenger cars.

California's San Joaquin Valley recently adopted financial incentives to encourage developers to design subdivisions that reduce the need to drive. This helps cut emissions while providing better choices for consumers and reducing costs overall.

Most cities would also benefit from bus rapid transit systems that delivers high-speed, high-capacity, flexible public transportation at a fraction of the cost and time, while serving many more destinations than traditional rail transit.

Getting incentives right for drivers and commuters is also important, and there is plenty of precedent. London and Stockholm have cut greenhouse-gas emissions from vehicles in their city centers by 15% with congestion pricing (charging motorists to enter the central area during peak hours). Germany charges trucks with dirty engines higher tolls on its nationwide Autobahn network with GPS satellite toll collection.

This has doubled the rate at which old vehicles are replaced by new, clean ones. Pay-as-you-drive insurance, which rewards drivers who drive less by setting premiums by the mile, could reduce Americans' driving by 10% or more.

On a growing number of roads from Singapore to San Diego, tolls are being adjusted by the time of day to ensure roads operate efficiently without congestion, with revenues funding better public transportation. New information feedback systems are optimizing passenger and freight routings. In Yorkshire, England, performance contracts tie the road manager's earnings to how well traffic moves.

Traffic management is powerful. But maximizing its benefits will require the right incentives, such as rewarding carbon reductions equally--whether they come from greener cars or smarter infrastructure. In the end, shrinking our carbon footprint will require better infrastructure, expanded low-impact travel choices and incentives for wise consumption and stewardship of the resources that get us from here to there.

Michael Replogle is transportation director of the Environmental Defense Fund.

Sick of being stuck

I love New York more and more. An organization called Transportation Alternatives advocates for bicycling, walking and public transit. Kinda like Grushhour only waaaay bigger ;-)

Today, they sent me a news email prompting a last minute drive to push congestion pricing through the City's legal process. I copy it here to illustrate what a more mature North American city looks like when they want to take their city back...

We Need Your Help to Pass Congestion Pricing

There are 12 days left to win congestion pricing. After that, NYC takes a pass on the $354 million provided by the federal government to cover the transit expansion necessary to put congestion pricing in place.

To ensure that a future with fewer cars, well-funded public transit and more livable streets doesn't slip away, T.A. is pulling out all the stops. We are hitting the streets this Saturday to generate THOUSANDS of letters to the elected officials who represent us.

We need dozens of organizers to join this historic effort. We need you! From Flatbush to Broadway to Steinway to Fordham Road, our teams will make this last critical push to put constituents in touch with as-yet undecided elected officials and help win congestion pricing. If you need more of a reason to pitch in, we can pay $15+ per hour for your efforts. We need you to help put pricing over the top and set the green street revolution in motion.

So... is THAT what green looks like?

Congestion as Treason

This theme of comparing our tolerance for traffic congestion to the old Soviet ways keeps showing up. Today in the Washington Post, an article by Lyndsey Layton and Spencer Hsu, shared space with a short slide show. One of the frames pictured this:
D.J. Gribbin, the Transportation Department's general counsel and a supporter of congestion pricing, said, "It's almost sort of un-American that we should be forced to sit and be stuck in traffic." (Photo by Nikki Kahn - The Washington Post)

If you are much older than 50 you may well know that the phrase "un-American" was Cold War code for an activity by an American that might a tad treasonous. Congestion as Treason. Words well chosen, Mr Gribbin.

While "treason" may be a stretch, perhaps we could settle for "insane".

Network Musings

Robin Chase, founder of Zipcar and contributor to solutions for urban mobility is a kindred thinker. One of her current companies is Meadow Networks. (The other is goloco, a pretty interesting idea, as well.) If reading is a challenge, you can watch her, instead.

Mesh networks were where I started my congestion-pricing thinking in 2002 before I was persuaded that once Location Anonymity* was feasible, global navigation satellites were the only way to replace the fuel tax. To be fair, that's a simplification, a re-ordering of events -- I did think a lot about mesh networks, and I did find a solution to privacy protection, and I did think navigation satellites were the only way to be universal - i.e., interoperable everywhere without any new infrastructure (actually without any ground infrastructure at all), but I did not fully understand until 2007 that congestion is essentially kept in place by taxing the wrong thing. By then I was already five years into this. But with such fabulous hindsight, we now have perfect social and economic motivation for these inventions.

But here is why I introduce you to Robin's thinking and that of one of her advisers, Andrew Blumberg, a postdoc at Stanford: there are not a lot of people thinking about congestion cessation AND the preservation of our last shreds of privacy, but I do not think we can have one without the other -- i.e., without a privacy solution, we won't see universal GPS-based tolling. Evidently, neither do Robin and Andrew.

Furthermore, the intersection of satellite tolling and mesh networks opens some amazing opportunities for valuable real-time services. Tolling, per se, has no requirement to be real-time, but things like parking finders, congestion-based navigation, probe vehicles do. Mesh-networks could add a lot of value in urban settings, while satellite tolling would retain the requisite universality so that any country wishing to replace the fuel tax could.
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* Andrew and Robin calls it "Locational Privacy", which they define as "the ability to walk in public space and drive on public roads with the expectation that one's movements are not being tracked or recorded for later analysis". Meadow's and Skymeter's methods are different. But both ensure you are untrackable.

And that is a good thing. Having multiple ways to protect privacy sends an important message to motorists: We can move from pay-by-tank-full to pay-by-road-use without exposing anyone's sexual shenanigans. My personal ad hoc research says that is indeed what people are really worried about. I have been asked at every talk I give "will my wife be able to know where I am?" Even a local high-profile radio host asked me in a pre-recorded session "Can anyone see if I turn into a strip-joint?" (it was expunged). No woman has asked me the mirror question (perhaps because they are more discreet), nor has any tax evader asked me whether his government will know he has an unregistered job. To be plain, here, I am suggesting that the single greatest adversary to congestion pricing is marital infidelity, and not the polite-but-boring economic argument called "market pricing is better than free-road entitlement". What Robin and I are saying is that congestion can be fixed even while your neighbor continues his philandering.

Secretary Peters: Tipping Point

For most of the past century, fuel taxes, regardless of how they have been spent, seemed to provide the right amount of revenue and were dead easy to collect. Today that picture is changing. The amount of tax collected is declining in relation to the funding demands of building and maintaining roads. You likely know the long-standing reasons: it is politically unpopular to raise fuel taxes, more efficient engines take heavier vehicles longer distances while consuming less fuel, and capital and operating costs of roads are steadily increasing.

Newer pressures to clean up our emissions and devise alternate power sources exacerbate the problem, and now it is becoming evident to more transport ministers that the fuel tax is a root cause of congestion. No longer a question of whether governments should collect more tax, it is now a question of which they should collect.

In this perfect storm, how can the fuel tax survive?

In the spring of 2004, British Transport Secretary, Alastair Darling went on record as the world’s first Transport Minister to formally propose a move from fuel taxes to road user charging. He proposed a satellite-based, nation-wide, variable time, distance and place charge. Motorists would pay by the mile, depending on where and when they drove. He called it “a radically different approach”.

And a radically good one, too. Tax shifting is the most powerful underused tool in the arsenal to fight environmental degradation according to Donna Morton, Executive Director of the Centre for Integral Economics.

At the time, Professor Stephen Glaister of Imperial College, London, one of the panelists that produced the precedent feasibility report, cited concerns for the sheer scale and expense of "an astronomic IT exercise", the difficulties of locating vehicles among tall buildings and the possibility of jamming weak radio signals.

It is now four years later, and not only is satellite tolling (GNSS) still seen the right approach, but that assumption has grown more accepted, almost self-evident. Long-time British thought-leader, Ian Catling, has grown impatient with EU governments’ lack of appreciation for GNSS interoperability – a critical attribute that removes an important barrier to the universal use that is needed in order to replace fuel taxes.

In those four intervening years technology has improved and countries such as the Dutch, Danish, British and others have been testing it. Each year GPS-metering reliability has improved to the point where the Transport Minister of the Netherlands, Camiel Eurlings, and his country’s Parliament have decided to proceed with their National road pricing system, Kilometerprijs, to deploy over the five years starting with 2011. Granted, their Parliament backed away from wholesale replacement of the fuel tax and will remove a few fixed vehicle taxes such as registration, instead, but the fuel tax has so safe haven there. Once the system to collect universal usage fees is in place, motorists will lobby to have the older tax removed in favour of the fairer and more effective distance charge. Only the minority who travel farther than average benefit from the fuel tax – and the environment always suffers from it. The more that taxes are skewed toward taxing road consumption and away from taxing fuel consumption the more effective is our lever on congestion.

The single substantive argument for the fuel tax, as put forward by Steven Norris (President of UK ITS) and Jack Schenendorf (Co-Chair of the US-DOT National Surface Transportation Policy and Revenue Study Commission), is that it is very easy to collect and that, they assume, no other technology could match its low operating costs.

Fortunately for the ministers who see beyond easy collectibility, that technology is now here – and several companies are perfecting it. It will soon be possible to collect road-use charges in a reliable and private manner, using a mobile, GPS-based technology that will be distributed and managed in exactly the same way that current mobile telephony is managed. Indeed this will have the side benefit of bolstering that industry in regions where mobile telephony services are saturating.

So with the two ministers mentioned earlier and Singapore’s Minister Raymond Lim decreasing vehicle taxes while raising road-use charges, the perfect storm described above, and the dawning of a technology to provide low-cost collection of road user charges, what a propitious time for Mary Peters, Secretary, U.S. Department of Transportation, to join the line of transport ministers who see that the fuel tax is the problem. Because of her county’s size and influence, her stance represents a tipping point.

I recently lauded the Secretary for her refusal to endorse her Commission’s Report: “Toward a New Surface Transportation Economic Model” because of its over dependence on fuel tax escalation. Now she’s released a white paper that beautifully details the several faults of fuel taxes – its ineffectiveness at reducing congestion, its inefficient use of resources, its unsustainability, and its unpopularly compared to effective alternatives. To have a Transport Minister write this, rather than a tweedy economist in a think tank, makes a huge difference.

Peters proposes to solve the problem with “direct pricing of road use, similar to how people pay for other utilities”. She outlines the three major policy objectives that it achieves: [1] the reduction of congestion and delivery of substantial economic benefits, [2] generation of “revenues for re-investment in precisely the locations that need the investment most”, and [3] the reduction of emissions of carbon and traditional pollutants.

It has been difficult to watch the rise and fall of the UK’s National Road Pricing program. It has been a consolation that the Dutch have now risen to the challenge, but the size of The Netherlands didn’t turn heads as did the UK. And Singapore is so far ahead the pack that we don’t dare compare ourselves.

The United States’ joining this movement will hasten the biggest shift in world surface transportation since trucks replaced rail after the Second War.

Thank you, Secretary Peters!

Applauding Mary Peters

At the mid-January Transportation Research Board’s 87th Annual Meeting, a staggering number of sessions were dedicated to transportation demand management, congestion pricing, value pricing, road tolling, HOT lanes, road user charging, and everything else that said the fuel taxes were at the root of unsustainability of our surface transport system. If you weren’t there to meditate on bridge construction, aggregates or traffic signals, you were there to pray for our surface transport network. There was no mistaking the general urgency: we have to find a way to solve the highway funding crisis, address congestion and reduce emissions. And while perhaps not unanimous, a majority of us look to market mechanisms as the sustainable way to address them.

An early session: Emerging Debate About New Systems for Transportation Finance and Funding Approaches for the Future had a panel of four senior transportation thinkers. Among them was Commission Vice-Chair, Jack Schenendorf to provide a Perspective from the National Surface Transportation Policy and Revenue Commission. The Commission’s Report was to be released 48 hours later. A stream of questions from the audience evoked the same answer, “I can’t answer that until Tuesday, but I think you will be very pleased with the Commission’s Report”.

Man we were excited. Commission Chair, U.S. Secretary of Transportation Mary Peters, has been very public in her opinion that the architecture of the gas tax was at the root of the problem – that we are taxing the wrong thing. Commissioner Maria Cino, Former U.S. Deputy Secretary of Transportation had described the Commission’s work thus: “…it will be the tough choices that we have to make and really, I think, being bold, and doing not a lot of what’s been done before...”

Finally, we could anticipate a coherent, thoughtful body of intelligent recommendations to address the problems of the economically inefficient gas tax and strangled road networks – and that Congress would understand and act on it.

Why then did we see three of 12 commissioners, including Peters and Cino vote against accepting the Report? Because in advocating an increase in gas tax while hedging their bets on pricing research and trials, the Report authors failed to teach how to create sustainable, efficient funding mechanisms. In Peters’ Minority View, this “…promotes relative indifference to the revenue mechanisms themselves so long as adequate revenue is generated.”

Commissioners Peters, Cino and Rick Geddes refused to vote for a Band-Aid.

Kudos to them.

Traffic in your trousers

On a video from THE STRAITS TIMES of Singapore, The Singapore Transport Minister, Raymond Lim used my second favorite congestion analogy: “So saying ‘Let’s deal with congestion by building more roads’ is like telling a person who is suffering from obesity that ‘the solution to your problem is to buy bigger trousers with a larger waistline’. It is not a sustainable solution.”

He went on to explain why Singapore is lowering the fixed upfront taxes for vehicles (those are the ones we just raised here in Toronto) while simultaneously raising the road-use fees (those are the ones we are anxious might happen here in Toronto). (And, don’t worry; Singapore is building some new roads too.)

His reasoning for a $110M (15%) cut in vehicle taxes: “The critical thing for a person when they make a decision whether to drive a car … or to own a car … is after they purchase it is the out of pocket expenses. That’s key. They have to make a decision whether they are going to make that extra car trip and how you are going to make that extra car trip. That is why what we have done through the years is to shift greater reliance on usage [charges] while lowering the upfront costs. Because the minute a person pays the upfront costs the behaviour pattern is such that you forget it. What comes to their mind is really what it costs for that extra trip."

Saying this, Minister Lim has explained clearly how pricing signals work. High up-front costs and low operating costs encourages driving. Lower up-front costs and higher operating costs discourages driving. The Minister is not saying “tax more”, but rather “tax differently”. What he and the US Secretary of Transportation, Mary Peters, and many others are saying is that our tax structures are a major root cause of congestion. We simply tax the wrong things.

Singapore has at least a decade of experience ahead of Toronto. We would do well to take an economics lesson from them.