Hidden Costs

I was shopping the other day, and a transportation and land-use question popped into my head.

I was at one of the big box stores when I told the cashier that I had my own bags and wouldn't want more plastic bags. She scanned a code that gave a five cent discount per bag. The premise, from the store's perspective, is those who use their own bags are saving the company bags, and therefore aren't charged the amount of the bags.

In turning this around to transportation policy, what happens to transit users who don't use their parking lot? The store either owns the lot and pays for construction, maintenance and taxes, or leases the property from an entity that pays for for construction, maintenance and taxes and that cost is included in the lease. Either way, that cost isn't going to be a sunk cost to the store. That is passed on in the price and is paid for by consumers. That's okay if you actually use that service.

But in the case above, my wife and family took the train there. Yet we still paid for the parking space.

Cars are virtually the only thing that gets a pass. There are so many hidden costs such as this. Some economists have pegged the hidden cost/subsidy of a gallon of gas at 6-10 dollars. City taxes are derived primarily from property and sales taxes, regardless of whether the payee uses or owns a car. Free parking, as I briefly describe above is paid by any customer. Increasingly, the federal gas tax is coming up short on highway funding, so the general fund is being tapped. In fact, as highways become more expensive, regional planning agencies are getting creative in getting the money.

This is also why I am a fan of tolling roads. It shifts the cost from hidden into the open. There has to be a lot of changes at so many levels to shift this. I think the start has to be from ubiquitous city zoning codes with their origins in the 1950's to be abolished in favor of a market-based strategy pioneered by Donald Shoup. I think that alone will solve much of the negatives associated with auto-centric land-use and development.

Update from the Bay

About ten months ago, I briefly chronicled the San Francisco area's strategies for battling congestion. Under the category of congestion pricing, tolls for area bridges and roadways went up when use went up. While many people look at roadway capacity as a supply-and-demand function, they don't like to think of those same economic forces are applied to roadways, if they actually have to pay for it. Which in that essence is why it actually relieves congestion.

The San Francisco Chronicle reported on a study that followed up on the strategy, and it appears to be working. While carpooling (a dubious attempt at congestion reduction) has decreased, so has main lane use. Transit ridership is up, vehicle miles traveled are down and travel time savings is up, tremendously in some cases. The extreme example is I-880, which saw its average travel times reduced by half!

The main problem with congestion pricing implementation on a wide scale is the lack of available case studies. However, of the ones that are out there, it appears that adding a market approach actually reduces congestion, more so than any other attempt that has been tried before.

Benefits of Paying to Drive

To the chagrin of many, transportation planners in recent years have been advocating policies, other policies and different policies that revoke hidden subsidies to the car. While many of the ideas have been idling in neutral, some have stuck, notably toll roads. However, one of planners top ideas of reducing congestion and increasing the attractiveness of other options is congestion pricing.
In essence, congestion pricing charges drivers to access a certain area, usually congested business districts. The underlying assumption here is that market forces, when applied to auto use, will reduce congestion. Since roads are now free, or bare minimum underpriced, people consume the service (roads) at a rate greater than its worth. An easy comparison, if bread (roads) was no longer priced at current levels, but instead was free or .50 cents, then more bread (roads) would need to be made (new or expansions) or there would be shortages (congestion).

Since there is a lack of congestion pricing case studies here in the states, it is hard to quantify the benefits. New York City passed a congestion pricing plan for parts of Manhattan, but the State shot it down. California has implemented some aspects, but it is predominantly toll roads with variable pricing, more expensive at peak times than non-peak hours and lacks other aspects.

San Francisco passed the most comprehensive plan and enacted it in 2010. The central element is the Bay Bridge, which was tolled at the same rate and carpools could use it for free. Now, prices are higher from 5 a.m. to 10 and from 3 p.m. to 7. Carpoolers now pay a discounted rate.

Market rate parking, which I touched on near the end of this post, is another part of San Fran's congestion plan.

The results have been close to what was predicted. From the Silicon Valley, travel times have been reduced traveling into San Francisco and transit trips have seen a 4,000 commuter increase. The only downside has been a reduction in carpool trips, which as I will explain, doesn't concern me.

I believe this is a positive first step. While true congestion pricing doesn't exist on this continent, the preliminary results from this myopic case study are positive. As expected, introducing the market forces into transportation resulted in a supply and demand relationship according to the price. Since San Fran has adequate transit service, it can compete well. And as expected, saw a sizable increase in ridership. Now imagine4,000 new riders for every freeway/bridge that adopted the same policy as well as major downtown entrances. If this was a city policy only, there would be an increase in the tens of thousands. If it was increased regionally, on every freeway/bridge, there would be a sizable increase.

As with any project or plan that reduces priority for the automobile, the naysayers where out. Business would suffer, people won't come into _______and go elsewhere or the externalities will be pushed to the just outside the edge of the congestion zone, in this case Oakland. As is usual, none of the against arguments have materialized. Business activity is consistent in San Francisco, downtown is still an attractive place and people are coming and congestion and increased parking in Oakland is not at a significant level.

The decrease in carpooling doesn't concern me as much. The idea of trying to get people out of one person per car has been an abject failure. It was a nice idea in theory, but it hasn't worked in reality. The reason is that we still favor single-use autos through myriad policies and regulations. Until we see wholesale changes in transportation and land use, which outside of San Francisco is similar to every Sun Belt metro, thn carpooling will be another underutilized aspect, just like transit. The idea of if you build it, they will come applies here. It simply isnt convenient to carpool.

Now Texas is trying the HOT, High Occupancy / Toll Lanes. These may work and reduce congestion/speed up commutes, but they will if only because they introduce market forces, not because they encourage people to ride together. I am optimistic here.

Would congestion pricing work everywhere? As far as I am concerned, that is still up in the air. I tend to lean toward yes on these types of questions. Everywhere that downtown living was non-existent before a recent proposal to bring them in has happened, people said no one from this place (whether it be a big city like Dallas or a smaller city like Aberdeen, South Dakota) will want to live downtown. Sure enough, people did and near everywhere, developers can't keep up with demand.

Now congestion pricing is a bit different than urban living, but, I think there has to be two factors in existence for any congestion plan to be successful, the area in question has to be a vibrant, attractive place and there has to be at least adequate transit service. These two things preclude any meaningful congestion pricing zone in the Dallas/Fort Worth area. Downtown Dallas is not at the critical mass for attractiveness and downtown Fort Worth doesn't have adequate transit service. Either way, it is a mute point, as this type of program would never be implemented here politically in the near future.