What Congestion Pricing Signals

Manhattan has around 3 million parking spaces, close to 19,000 lane miles, and streets that occupy more than one third of its area.

So yes, we could say that Manhattan is car friendly..

However, on June 30, its relationship will shift.

Congestion Pricing

On the last day of June, Manhattan plans to start congestion pricing. According to the plan, vehicles entering the city at and below 61st street at designated times will pay a fee. These are some of the details:

• Cars pay $15 to enter between 5 a.m. and 9 p.m.
• Cars pay $3.75 for off-peak entry.
• Motorcycles, light trucks, tour buses, uber, lyft, taxis will pay a different fee structure.
• License reading cameras will be at 110 locations.
• New revenue available for mass transit should be close to $1 billion.
• The projected vehicle reduction is 17%.
• The congestion charge will add 40% to an average commuter’s normal expense.

Externalities

As economists, we can say that one reason for congestion pricing is the externalities that cars create. Defined as the rippled impact of a policy to uninvolved third parties, negative externalities diminish with higher costs. For NYC driving, the negative externalities include more gasoline demand, elevated carbon emissions, walking less, living farther apart, endangered pedestrians, less demand for mass transit. In addition, many of us waste hours looking for parking spots, the city loses revenue by mispricing meters, and it unfairly diverts resources from its tax-paying non-drivers.

But those externalities don’t stop with congestion pricing.

According to UCLA “parking guru” Donald Shoup’s estimates, one year of “cruising for underpriced curb parking” in the Westwood Village area of Los Angeles, resulted in a whopping 950,000 vehicle miles of “unnecessary travel.” Using an extra 47,000 gallons of gasoline, those motorists instead could have traveled around the earth 38 times._.He suggests though that we should not blame the drivers.

Their municipalities need to create new incentives.

Our Bottom Line: Driving Incentives

Our incentives nudge us toward driving. Not only are countless parking spaces free but federal funds maintain a highway system that we tend to expand when it becomes too crowded (and then the new road becomes over-crowded). In addition, most local municipalities’ building codes require that off street parking accompany new construction.

Taking a “baby step,” in May, Colorado lawmakers eliminated (with exceptions) the new construction parking space mandate. The goal was to reduce building costs and make neighborhoods more walkable by bringing us closer together.

Somewhat similarly, New York is considering dynamic pricing for its parking meters. When San Francisco began its program more than a decade ago, it had considerable success. Seeing that emissions, congestion, and commercial activity all improved because of variable parking space pricing, they still have what they call “demand responsive pricing.” Consequently, the hourly rate rises when “occupancy” is high and falls as much as 50 cents when it is low.

Concluding, I wondered if you agree with this quote from a Donald Shoup paper: “A city can be friendly to people or it can be friendly to cars, but it can’t be friendly to both.” (Enrique Peñalosa)

My sources and more: Thanks to Timothy Taylor’s Conversable Economist blog for inspiring today’s post and suggesting the  Vital City link for congestion pricing facts. Then, Colorado Public Radio described the state’s new law. Finally, you might want to take a look at this Donald Shoup (parking guru) interview.