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March 12, 2008

"Value Pricing Our Highways"

Tired of sitting in bumper-to-bumper rush hour traffic on I-95 and the Merritt? Well, esteemed economist Milton Friedman has the answer.

Almost a decade ago, Freidman wrote that traffic congestion was just a matter of supply and demand: too much demand and not enough supply. Some have suggested expanding the supply of roadways by double-decking I-95 or widening the Merritt Parkway. But can you imagine the billions of dollars in cost and years of disruption? And how would the “upper deck” look soaring 90 feet in the air to cross existing bridges? A simpler (and less costly) solution to gridlock seems to be in managing the demand using “value pricing”.

Today, when we drive our highways at rush hour it costs us no more than if we drive off-peak. That is wrong. The value derived from being able to cruise (or crawl) on I-95 in morning rush hour is much higher than at midnight, and should be priced accordingly.

Consider the other services we consume that offer off-peak pricing. Go to a movie on a Saturday night and you’ll pay more than on a weekday afternoon. Take a flight on a busy holiday weekend, when everyone else wants to fly, and you’ll pay more. Even Metro-North offers peak and off-peak (reduced) fares. So too should our highways.

Using electronic tolls (think E-ZPass), motorists who want or must drive at rush hour would pay a small price for the privilege. Those who don’t need to be on the roads at the busiest hours would wait, and pay less (or maybe nothing). That would mean fewer cars at rush hour and less congestion. Those paying the tolls at rush hour would get faster trip times… real value for the price. And the money raised could pay for long overdue highway improvements or, better yet, subsidies for mass transit to keep fares low and attract even more cars off the highways.

Is it worth, say, $4 to drive eleven miles at rush hour? You bet, if it means you pick up your kid at daycare on time and avoid their $1 per minute penalty for late pick-up… or if you can actually make that important 8:30 am meeting that wins you an important piece of business. Time is money.

Value pricing is already underway on the George Washington Bridge. In rush hour, big-rigs pay $40 to cross. But off-peak with E-ZPass it’s only $35 and overnight the toll drops to $27.50. Since its introduction, value pricing has evened out the bridge’s traffic load, saving everybody time and money.

Why haven’t we put such technology to use in Connecticut? Three reasons: 1) people think tolls actually slow down traffic, 2) there are fears of another fiery truck crash into a toll booth and 3) there is a myth that if we reinstate tolls on our highways we’ll have to repay the Federal government billions of dollars. All are false.

Drive the Garden State or Jersey Turnpike using EZPass and you can sail thru the barrier at top speed. Trucks don’t collide into toll booths (and if you’re really worried about trucker safety, let’s open the Greenwich inspection station 24 x 7). And even the Federal DOT acknowledges that it will approve highway tolls used as a traffic mitigation tool.

While other states rapidly embrace “congestion pricing”, Connecticut’s still trying to get together a study of the concept. Seven years after it was formed, you can expect the state-wide Transportation Strategy Board to finally discuss such a plan next month.

Studies, debates, delays. Is this why we’re called “The Land of Steady Habits”?

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