Congestion Pricing

A smart solution for reducing traffic in urban centers and busy corridors

The idea of congestion pricing is simple: Use price to signal when drivers should consider taking mass transit, reschedule their trip or pay a higher fee for driving.

How road pricing works

An electronically-collected toll system charges drivers more to use the most congested roads at the most congested times. Like airline ticket prices, prices can be cheaper at off-peak times.

Cities around the world are beginning to use congestion pricing systems to cut traffic in their urban centers and along heavily-used corridors. Systems in cities like London with dense central business districts charge motorists when they drive into the center and induce them to avoid driving into the city during peak times or to use alternative transportation.

For busy highway corridors, congestion pricing can be used to maintain the free flow of traffic. In all cases, revenues from pricing can be used to benefit travelers themselves, by helping to pay for innovative transit choices and faster travel.

More U.S. cities are looking at pricing

New York City came very close to getting a congestion pricing plan in spring 2008. An extraordinary majority of New Yorkers supported congestion pricing, but the state legislature nixed the plan, despite City Council approval. (Read about New York City's transit crisis and how the city would benefit from congestion pricing.)

San Francisco has received a federal grant to study the possibility of a pricing plan in downtown San Francisco similar to that used in London and Stockholm (see below). An EDF-commissioned poll shows a majority in this environmentally savvy city support a pricing plan that would reduce air pollution and greenhouse gas emissions, generate new funds for transit and reduce traffic congestion.

Successes: London, Singapore, Stockholm and Norway

London: Less traffic in a world financial capital.  In 2003, London began charging a premium to drive into the city's congested business district, where traffic gridlock threatened the city's economic competitiveness and quality of life. A remarkable thing happened. Congestion quickly dropped, and average traffic speed increased. Emissions of the most dangerous air pollutants and greenhouse gases have dropped.

London raised hundreds of millions of dollars in new revenue, which it invested in better transit such as new buses, delivering immediate benefits to affected commuters. Bus ridership rose dramatically, and use of bicycles also increased. Initial public skepticism has turned into support, and London's Mayor Ken Livingston enjoyed popular re-election after adopting the charge.

A key lesson in the London experience is that traffic has not overflowed onto neighboring roads. After a short adjustment period, a free ring road has traffic levels comparable to 2002 levels. A final measure of London's success is the satisfaction of those involved. Seventy-eight percent of people who pay to enter the cordon area are satisfied with the system, and reinstatement of the system is scheduled for August 2007. (More about London's program.)

Singapore: A model of flexibility. Singapore was one of the first large cities to adopt congestion pricing, starting in 1975 with a flat-rate S$3 charge to enter the central business district during morning rush hours. Other charges and a second cordon area were added later. 

Today, the system is a model of flexibility. Toll rates at different locations change over the course of the day, and are raised or lowered every three months to keep roadways operating with optimal traffic flow. After finding that roads in some locations were not congested on Saturdays, those tolls were eliminated.

The system has enabled Singapore to steadily improve its public transportation system and to boost usage even as the city has become one of the most prosperous in the world. (More about Singapore's program.)

Stockholm: Cordon pricing wins over a city. Stockholm initiated a trial period of cordon pricing for its central city for the first half of 2006. As in London, positive results led to an increase in support. Before the trial, only 31 percent of residents favored the congestion charge. Two months after the trial, voters passed a referendum to reinstate the charge. A recent poll says 67 percent of respondents now agree, "It was good that the new government had decided to reintroduce the system." The congestion pricing system enjoys broad support from liberal and conservative political groups.

Norway: Less traffic in three cities. Norway has put charging systems into practice in several cities, including Oslo (the capital), Bergen and Trondheim. Their systems yielded traffic reductions of about six to ten percent. Initial revenues tended to be invested in new roads, but Trondheim also used the money raised for projects such as bicycle paths and a fleet of free bicycles for public use.  All three cities use electronic transponders with manual payment mechanisms as an alternative. Oslo is considering a plan for a major expansion of their system.  (More about Norway's programs.)

Posted: 01-Jun-2007; Updated: 01-Apr-2009