Congestion Pricing

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Congestion pricing refers to levying surcharges on drivers, in order to influence their behavior and account for the negative externalities of driving. Generally, because automobiles are bought with a single large up-front purpose and transit trips are paid for by ride, most auto owners view the time, monetary, and uncertainty costs of auto travel as lower than those of transit travel, even if their total costs of vehicle ownership and use are much higher over the long run. This has a significant impact on the decision whether to drive or take transit, and makes personal auto travel appear more attractive.

This is important because private vehicle usage produces extensive negative externalities; that is, costs imposed on others that are not borne by the driver. Some of the most significant externalities produced by vehicle usage include roadway congestion, the risk of crashes, the cost of building and maintaining roadway infrastructure, greenhouse gas emissions, and air, soil and water pollution. However, it is possible to mostly internalize external costs through the use of pricing, which has been shown to significantly influence driving and transit use.


The aim of vehicle pricing is not punitive, but rather to increase efficiency, efficacy, and equity of the road network. Pricing roadway use increases efficiency and smooths traffic flows by shifting when, where, and how people travel. Pricing fuel increases efficacy by encouraging the use of cleaner vehicles and other modes that reduce emissions per mile traveled. And pricing the use of roadways and parking spaces increases equity by charging people in proportion to the social and environmental costs their choices impose on society, encouraging them to make choices that have fewer societal impacts. By smoothing traffic flows, pricing can actually move more people, and in some cases more vehicles, but with less wasted time and lower emissions.

Currently, no major U.S. city engages in a comprehensive congestion-pricing scheme. International cities with congestion pricing include Singapore (since 1975) and London (since 2003), and Stockholm (since 2006). A proposal by New York City Mayor Michael Bloomberg to implement congestion pricing in Manhattan was defeated in the State Legislature in 2008. Revenues from congestion pricing can be used for any purpose identified by the state, though the most successful pricing programs have used the money to improve public transit and road facilities.

Congestion Pricing in California Today

California currently prices automobile usage through:

  • Tolling on selected highway and bridges
  • High-occupancy toll (HOT) lanes, known as Express Lanes or value-pricing
  • Motor vehicle fuel taxes and fees
  • Annual registration and vehicle licensing fees
  • Municipal parking charges
Region Examples
MTC (Bay Area) Express Lanes (HOT): I-580, I-680, CA-237

Variable Bridge Tolls: San Francisco - Oakland Bay Bridge

SANDAG Express Lanes: I-15
SCAG (Los Angeles) Express Lanes: I-10 HOT, I-110 HOT, CA-91 HOT

Toll roads with fixed peak surcharges and off-peak discounts: CA-73, CA-133, CA-241, CA-261

Future Pricing Options

Congestion-pricing plans can have a variety of goals, and the State has decided that any plan implemented on a large scale must:

  • Remove transit from traffic congestion and increase vehicle speeds and reliability.
  • Encourage transit ridership by increasing the relative attractiveness of transit.
  • Be technically feasible for widespread implementation.
  • Be equitable for rural areas, which typically lack meaningful transit alternatives.

Expanded Express Lanes

Expanding the Express Lanes program would implement High-Occupancy Toll lanes across more of California's highways. While these lanes would provide benefits to certain lower-capacity long-distance forms of transit such as express buses, commuter services, and vanpools, they are often not conducive to high-capacity local transit services due to the inherent design requirements that separate HOT lanes from freeway entry and exits. Overall, outside of express bus services that operate as commuter shuttles between suburbs and downtowns, they have limited applicability on a broad scale.

All-Lanes Highway Congestion Tolling

All-lanes highway congestion tolling would entail pricing some the State’s freeways with either incremental charges at periodic tolling stations, or distance-based tolling assessed based on freeway entry and exit points for each vehicle. As is already done at existing HOT facilities, specific prices could vary by vehicle type (with heavier vehicles paying more) by with time of day and day of week (with more congested time periods having higher costs). Time-of-day charges could be set in advance based on historical congestion levels or could be adjusted in near-real time (e.g., every 5 minutes) based on actual congestion. Prices could be set so as to achieve a target free-flow traffic speed on freeways, such as 45 miles per hour. During low-demand periods, highway usage could be unpriced (free).

In order to be truly effective at relieving congestion, all-lanes highway tolling would need to be implemented across the entire freeway system in a given region. This would have the effect of pricing all long-distance automobile travel, since long-distance travel on lower-speed facilities is usually unattractively time-consuming. Such a program could reduce congestion for transit on both freeways and on surface streets and increase demand for transit—especially for longer distance services during peak-pricing periods, such as the morning and evening peak commute hours and weekend and holiday travel periods.

Cordon-Area Congestion Tolling

In contrast to freeway tolling, cordon programs price all roadways within a set geographic area. All vehicles must pay either: 1) once for every entry into the tolled area, 2) once for every crossing of the cordon, whether entry or exit, 3) a daily fee for the right to drive within the cordon area. Tolls could be adjusted to achieve a target maximum number of vehicles within the cordon area, a target free-flow speed on select surface streets within the cordon area, or target queue lengths or vehicle wait times at select intersections within the cordon area. Cordon pricing will likely be most attractive in areas of California with the greatest congestion on surface streets where walking, bicycling, and transit are robust mobility options.

Congestion Pricing and Transit

Pricing automobile use has important benefits for transit. Where pricing is in place, and when the price of a car trip exceeds the value of a car trip to the user, the would-be driver will choose different routes, different travel times, and/or different modes of travel. The benefit to transit is that the consequent reduction in congestion on roadways means transit vehicles can operate more quickly (reducing the number of vehicles needed to maintain headways) and more reliably adhere to their schedules (improving rider satisfaction).

While pricing provides an impetus for travelers to consider their travel options more carefully, pricing roadway use on its own is not enough to manage overall travel demand. More and enhanced transit service (as well as other modal options) must provide a meaningful travel choice to travelers who have opted not to drive alone. With enhanced transit and roadway pricing in place, a “virtuous cycle” emerges whereby pricing reduces the demand for driving and allows for better and faster transit operations. With greater reliability and faster speed, transit is then able to attract more riders and serve them more efficiently.