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6
Findings and Recommendations
Transportation plays a key role in the functioning of the nation’s econ-
omy and in determining people’s ability to participate fully in society.
Consequently, equity is an underlying issue in nearly all transportation
decisions, from how transportation services are paid for to how existing
and proposed transportation systems and services are provided. The
equity implications of transportation systems and how we pay for them
defy simple characterization, and talking about transportation finance
equity without talking about a broad spectrum of other factors is guaran-
teed to lead to misguided conclusions. This report focuses on equity as a
criterion for assessing transportation finance mechanisms, but, in practice,
equity is only one of many criteria considered by public officials weighing
alternative means of financing a transportation project or program.
Trade-offs among different criteria are often needed to arrive at a compro-
mise solution. Furthermore, the equity characteristics of transportation
finance mechanisms are not solely matters of ethical concern; they can be
important factors in determining political acceptance or rejection of a
mechanism. Failing to address matters of equity, real or perceived, can
contribute to implementation failures or delays or to increased social and
economic costs. Against this backdrop, the committee was asked to pro-
vide guidance to public officials about assessing the equity of evolving
transportation finance mechanisms.
This chapter discusses the various dimensions of equity, summa-
rizes the current understanding of the equity of evolving finance
mechanisms and of opportunities to remedy inequities, and discusses
approaches to measuring equity. It then identifies equity-related issues
for policy makers to consider and recommends actions to be taken by
policy makers and their staff. A discussion of research needs is followed
129
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130 Equity of Evolving Transportation Finance Mechanisms
by recommendations directed to researchers and analysts. The chap-
ter concludes with recommendations about sources of funding for the
recommended actions.
DIMENSIONS OF EQUITY
Researchers have compiled many different, and overlapping, definitions
of equity and have explored different classification schemes in an
attempt to analyze transportation equity in a logical and consistent
manner. By way of illustration, Table 6-1 lists five of the many aspects
of equity encountered in transportation debates, namely, income, geog-
raphy, mode, generation, and race–ethnicity. This table lists important
questions for judging the fairness of the distribution of burdens and
benefits, identifies the kinds of information policy makers need to
answer these questions, and gives examples of potential remedies for
associated inequities. These illustrative examples are intended to out-
line the several and overlapping ways of thinking about equity and
transportation finance and are neither exhaustive nor prescriptive. For
example, income equity is ultimately founded on the concept of ability
to pay; generational equity is based on the relationship between costs
paid and benefits received.
This multiplicity of definitions and perceptions of equity often com-
plicates the interpretation of results from empirical studies. As noted in
Chapter 4, studies investigating the equity implications of road pricing
typically consider only one aspect of equity—for example, the price sen-
sitivity of low-income groups vis-à-vis new road tolls (ability to pay), or
the ways in which low-income groups are affected by expenditures of toll
revenues (benefits received). In fact, the overall equity outcome of a
transportation finance policy depends on an array of factors, including,
but not limited to
• The size of payments by the affected groups;
• The price sensitivity of the affected groups;
• The transportation options available to these groups;
• The shifting of the financial burden via changes in market prices;
• How the revenues are spent, including any efforts to offset inequities;
and
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TABLE 6-1 Types of Equity for Considering Distribution of Burdens and Benefits
Category Important Questions Policy Makers’ Information Needs Potential Remedies for Inequities
Compensatory service enhancements (e.g.,
Ultimate distribution of fees paid, services
Are different economic classes burdened dis-
Income
improved transit services for low-income
received, and resulting travel behavior for
proportionately, taking into account fees
communities), discounted fees or fares,
different income groups
paid, benefits received, and impacts experi-
rebates, offsetting payments
enced? In particular, are lower income peo-
ple paying a disproportionate share of their
income for transportation?
Spatially adjusted finance and investment
Distribution of fees paid within, and invest-
Are different geographic districts or regions
Geography
strategy, e.g., investment in different proj-
ments accumulating to, each geographic
paying proportionally more or receiving
ects or services in different jurisdictions
district or region
proportionally less from transportation
investments?
Adjusted investment (or taxing) plan, e.g.,
Pattern of allocation of funds across modes,
Are the fees paid by users of different modes
Mode
more or less money to (or from) a particular
e.g., dollars per trip, per passenger mile, or
proportionally returned to the users of
mode
per ton-mile
transportation services?
Adjusted financing schemes, particularly bor-
Patterns of cost obligations (e.g., bond pay-
Are the costs paid by current and future gener-
Generation
rowing arrangements, to change the stream
back) and expected transportation service
ations proportional to service benefits they
of future payment obligations, e.g., reduced
characteristics and needs over time
receive from transportation investments?
(or increased) long-term borrowing
Compensatory service enhancements (e.g.,
Ultimate distribution of fees paid, services
Are different racial and ethnic groups,
Race–ethnicity
improved transit services for minority
received, and resulting travel behavior for
particularly minorities, burdened dispropor-
communities)
different racial and ethnic groups
tionately, taking into account fees paid, ben-
efits received, and impacts experienced?
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132 Equity of Evolving Transportation Finance Mechanisms
• The effects of the policy on the performance of the transportation sys-
tem (for example, shorter travel times on some routes and improved
air quality as a result of reduced congestion).
Consequently, studies examining only one aspect of equity provide use-
ful, but incomplete, information and must be interpreted with caution
and their limitations explicitly understood.
Furthermore, the equity of a finance mechanism depends not only on
the aspects of equity considered, but also on how the baseline for com-
parison is defined, whether for a specific project or for a broader finance
policy. For example, the equity implications of a high-occupancy toll
(HOT) lane may differ depending on whether the lane in question is to
be created by converting an existing toll-free lane or by adding a new
lane. In the former case, the baseline is an unpriced general purpose lane;
in the latter case, it is a highway with fewer lanes. In a broader context,
the current highway financing approach is generally used as the baseline
against which to compare evolving mechanisms, such as a comprehen-
sive vehicle miles traveled (VMT) fee. There is no set rule for how to
define the “correct” baseline in a particular case, however, and this can
be one of the confusing characteristics of equity debates when different
parties define baselines differently.
EQUITY OF EVOLVING FINANCE MECHANISMS
People tend to favor the status quo strongly, and sometimes even irra-
tionally, over potential alternatives, as noted in Chapter 5. It comes as
no surprise, therefore, that equity concerns are raised far more often in
connection with evolving and relatively untested transportation finance
strategies (which are the focus of this report) than in connection with
established finance strategies. Nonetheless, research has shown that
most current transportation finance mechanisms are generally regres-
sive. For example, the use of sales taxes to fund transportation is less
equitable than the gas tax or other user fees according to several equity
criteria. Sales taxes are generally regressive with respect to income, are
paid by nonusers and users of the transportation system alike, and make
no distinction between occasional and heavy users of the transportation
system.
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Findings and Recommendations 133
Much of the analysis to date on the equity implications of evolving
transportation finance mechanisms relates to road pricing. Most of the
studies have addressed the equity implications of motorists’ ability (or
inability) to pay road tolls or other fees based on their income.1 The
extent of the empirical evidence is limited, however, by the extent of
practical experience with different road-pricing options—HOT lanes,
cordon tolls, VMT fees, and so on.
In the United States, practical experience with road pricing includes
tolled roads, bridges, and tunnels, as well as “weak” congestion pricing
variants offering toll-free alternatives to priced links, notably HOT lanes.
Examination of equity implications has largely focused on HOT lanes; in
a few cases, such as the 91 Express Lanes in California’s Orange County,
data pertaining to equity implications have been carefully and compre-
hensively documented. In general, however, the empirical evidence is
limited in scope, and much of the research into the equity implications
of HOT lanes is theoretical in nature.
In a number of countries outside of the United States, comprehensive
road-pricing variants offering only a tolled route have been implemented.
Studies of the cordon toll policies in London; Stockholm, Sweden; and
several other cities provide some limited evidence about equity impacts.
In the case of VMT fees, however, the literature on the likely equity impli-
cations is almost entirely theoretical. Theoretical analyses, including
modeling studies, can be indispensable in guiding both analytic thinking
and empirical studies. Nonetheless, empirical evidence constitutes a more
credible basis for informing decision making—particularly given the dif-
ficulties of anticipating how people or firms will change their travel
behavior in response to a new transportation finance policy—and thus
how the burden of any new tax or fee will be distributed in practice.
Empirical evidence shows that road pricing, like most current forms
of highway finance, is almost always regressive in terms of out-of-pocket
costs. Priced facilities can benefit a variety of income groups, however,
depending on circumstances. Despite the commonly held belief that
road pricing is unfair to low-income drivers, both empirical data on trav-
elers’ use of priced roadways and public opinion surveys tell a more
1
Ability to pay is generally assumed to be proportional to income.
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134 Equity of Evolving Transportation Finance Mechanisms
nuanced story. It is dangerous to make broad generalizations about the
equity of a road-pricing policy without delving into the details of its
implementation. The actual effects of road pricing on low-income driv-
ers depend greatly on the specifics of the pricing program, how travelers
perceive and use priced facilities, and the services funded with the tolls.
Likewise, public opinion research has shown that low-income respon-
dents do not oppose congestion fees or HOT lanes any more than the
average survey respondent does and, in some cases, are even more sup-
portive of congestion pricing.
REMEDYING INEQUITIES
Empirical evidence about the effectiveness of strategies for remedying
inequities resulting from transportation finance policies is very limited.
In the relatively few instances in which a remedy has been implemented,
the most frequent approach has been to provide alternative transporta-
tion services in the form of new or improved transit services aimed at
assisting low-income groups and others who prefer not to drive. Sub-
stantial evidence indicates, however, that such services cannot always
fully meet the mobility needs of affected groups or communities and
thus may not remedy the inequities effectively. Public transit services,
with their limited geographic scope and fixed schedules, rarely can serve
all of the trips made by drivers wishing to avoid tolls, no matter how well
these services are designed and delivered. In some cases, however, dis-
parities between the needs of adversely affected communities and pro-
posed remedies may be the result of failure to engage the communities
in identifying responsive solutions, incomplete knowledge of the extent
of adverse impacts, or other uncertainties—for example, unanticipated
adaptations in travel behavior that change distributional outcomes.
Even when inequities are clearly identified, building remedies into a
finance policy may be difficult because of financial constraints. Establish-
ing compensatory mechanisms, such as discount schemes to benefit low-
income travelers, often involves redirecting some of the revenue stream
away from paying for the new or improved transportation services that
motivated the finance policy in the first place. Many recent HOT lane
projects have not yet covered their initial costs, leaving little or no net
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Findings and Recommendations 135
revenue for remedying inequities. Public transportation budgets can be
equally constrained. Nonetheless, HOT lane policies designed to include
funds set aside for transit investment in the corridor have been success-
fully implemented in several instances, thereby providing transportation
alternatives for some adversely affected travelers.
MEASURING EQUITY
A transportation finance mechanism levies money from various groups
to pay (in full or in part) for transportation facilities and services.
There is, however, no single way of defining what constitutes an equi-
table outcome—that is, an acceptable balance of costs and benefits—
resulting from a finance mechanism. Whether an outcome is perceived as
equitable varies across different contexts (for example, in different geo-
graphic locations) and depends on the perspectives—and experiences—
of different individuals and groups. Thus, there are many different
dimensions of equity, as noted earlier in this chapter and discussed in
more detail in Chapter 3.
From a practical standpoint, the assessment of equity from any and
all of the relevant perspectives should be informed by measuring the dis-
tribution of effects—the costs (who pays and how much they pay); the
uses of funds (where, how, and how effectively funds are deployed); and
the services, facilities, and prices delivered to various groups. Differing
values and judgments come into play even in the apparently objective
process of measuring these distributions, for choices must be made
about what to count as costs and benefits and how to count (measure)
them. Identifying and measuring distributions of effects is also compli-
cated by the fact that people and institutions may change their behaviors
in response to new or modified transportation options and associated
taxes or fees, and may pass some or all of these costs on to others. The
notion of burden shifting is discussed in Chapter 3.
The starting point for measurement is to define the financing scheme
in detail, identifying who will bear the initial burden in terms of demo-
graphics, geography, behaviors, and other dimensions discussed in
Chapter 3. The magnitude of this burden can then be estimated in both
absolute terms (e.g., dollars per year) and relative terms (e.g., proportion
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136 Equity of Evolving Transportation Finance Mechanisms
of household income per year). Contrasting these effects with those of
existing financing mechanisms enables one to characterize the initial
impacts of additional or replacement taxes or fees and to present a com-
parison with the status quo. Following this initial assessment, it is neces-
sary to address additional effects resulting from behavioral changes,
notably, the shifting of both economic and noneconomic burdens (see
Chapter 3). Suitable models for predicting such shifts are not widely avail-
able, so logical reasoning may well be needed to develop a qualitative
picture of the redistribution of the burden of a new policy.
The distribution of benefits resulting from the deployment of funds
from a new finance mechanism also needs to be identified and measured.
These tasks may be challenging if specific commitments to the uses of
funds have not been made in parallel with selecting the finance mecha-
nism. It is, nonetheless, important to address the potential benefits, since
innovative transportation finance mechanisms arise because there is
(presumably) a substantive need for incremental funds. In describing the
benefits and their distribution, care is needed to avoid overpromising
what future funds will actually bring.
Data to develop descriptions of the various effects described in pre-
ceding paragraphs depend in the first instance on descriptions of the
finance mechanism itself—for example, who will pay the new or revised
tax or fee, how much they will pay, how much revenue is anticipated, and
how this revenue will be spent. In most cases, data from a variety of other
sources will also be required—for example, demographic information
from the Decennial Census and the American Community Survey,
regional travel data collected as a part of regional transportation plan-
ning processes, and national travel data from the National Household
Travel Survey. Finding relevant and sufficiently detailed freight data is
more difficult, but the national Commodity Flow Survey and specialized
regional data sources may be relevant.
ISSUES FOR POLICY MAKERS TO CONSIDER
Understanding the complex web of equity implications associated with a
transportation finance policy is a challenge, as the preceding discussion
illustrates. In addition, the shortage of comprehensive and carefully
documented empirical evidence about the equity impacts of road pricing
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Findings and Recommendations 137
and other evolving policies leaves public officials with relatively little
experience-based information on which to draw when considering finance
options. Despite these difficulties, there are a number of ways in which pol-
icy makers and the analysts who support them can address transportation
finance equity issues more effectively. The following paragraphs address
the importance of
• Adopting a comprehensive perspective when a policy’s equity impli-
cations are considered,
• Considering the possibility that the actual incidence of a relatively
untested finance policy may differ from that originally intended or
anticipated,
• Engaging stakeholders in the planning and decision-making processes,
• Drawing on the results of carefully conducted public opinion
research, and
• Avoiding red herrings raised during public debates over equity.
Comprehensive Perspective
Understanding the equity outcomes of a finance policy involves asking a
broad range of questions about who will be affected by the policy and
how, rather than just the commonly asked questions about who pays for
and who benefits from transportation services. Both short- and long-term
behavioral responses to a policy need to be considered, together with their
consequences—for example, changes in mobility, changes in land use and
associated home and job locations, and environmental impacts.
Intended Versus Actual Incidence
The actual incidence of a finance policy may be quite different from that
intended or anticipated when the policy was developed and enacted into
law. Individuals and institutions may be able to modify their behaviors
to avoid paying a new tax or fee or to shift the economic burden to oth-
ers. The equity implications depend ultimately on how the burden is
shifted through the complex array of behavioral responses and market
forces. Furthermore, shifting of the economic burden may change the
nature of noneconomic equity considerations through disproportionate
effects on particular communities or categories of people. For example,
toll or tax increases may lead to greater reductions or changes in trip
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138 Equity of Evolving Transportation Finance Mechanisms
making among low-income travelers than among higher income groups,
with an associated loss of benefits. Thus, low-income travelers may forgo
needed visits to health clinics or may have to use public transit to make
very long trips that were formerly made by car.
Stakeholder Engagement
Evidence from road-pricing initiatives demonstrates the value of engag-
ing stakeholders in the planning and decision-making processes in a
meaningful way to address concerns about the equity of transportation
finance mechanisms. Stakeholder engagement provides opportunities to
• Develop a better understanding of equity concerns, including any
such concerns that may have been overlooked in an initial assessment;
• Educate policy makers, the public, and the media about a project and
its financing and forestall or correct any inaccurate or misleading per-
ceptions about the financing plan and its likely equity implications; and
• Identify potential remedies for inequities and target those remedies to
the specific needs of adversely affected groups.
Public Opinion Research
Public opinion research can help policy makers understand their con-
stituents’ expectations for and responses to evolving transportation finance
mechanisms and associated equity concerns, as well as any misperceptions
about these topics. Public opinion can be influenced by limited understand-
ing and unrealistic expectations about a finance mechanism, so explanation
and education may be necessary prerequisites to getting a meaningful mea-
sure of public opinion. Furthermore, public opinion may change after a
policy has been implemented. As discussed in Chapter 5, evidence from
London and Stockholm shows that people’s views about the proposed
projects changed following implementation, becoming more supportive as
the promised benefits (reduced congestion, for example) materialized.
Possible Red Herrings
Anecdotal evidence suggests that some higher income travelers may cyn-
ically use arguments about “pricing poor drivers off the road” to mask
their own desire to avoid additional fees. At the same time, there may be
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Findings and Recommendations 139
genuine equity concerns, even if some people’s claims are self-serving.
Thus, it is sometimes difficult to distinguish legitimate concerns about
equity in road pricing (or other finance policies) from people’s general
resistance to paying more or paying differently.
Although public officials generally have to address all the equity con-
cerns raised by stakeholders, specific concerns raised by an affected
group or by someone representing them may carry more weight than
general comments about the equity implications of a policy made by
those unlikely to be affected. In a hypothetical case, interest groups con-
cerned about the impact of a project on the environment might choose
to bolster their case by also claiming that the project would be unfair to
low-income groups. Although such a claim might have merit, input from
low-income groups themselves would likely be more useful to public
officials in assessing the need to modify a policy or develop remedies for
inequities.
RECOMMENDATIONS FOR PUBLIC POLICY MAKERS
AND THEIR STAFF
Recommendation: Public policy makers should engage all their con-
stituents and stakeholders early and repeatedly in discussions of pro-
posed transportation finance mechanisms. In addition, they and their
staff should ensure that appropriate data, analytical results, and com-
munication strategies are used to address equity explicitly from the
outset of a program or project. Specific tasks include
• Assessing likely impacts of financing strategies,
• Using lessons learned elsewhere to inform discussions,
• Developing outreach programs and educational materials, and
• Exploring possible remedies for inequities.
Assessing Likely Impacts of Financing Strategies
Public policy makers and the analysts who support them should explore
the ways in which people’s travel behavior is likely to change as a result
of implementing financing strategies and should develop reliable esti-
mates of transportation service and facility use to the extent possible
with existing and emerging analytical tools and data. In particular,
they should
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140 Equity of Evolving Transportation Finance Mechanisms
• Apply the most appropriate data and forecasting tools available,
while acknowledging that better data, more sophisticated models, and
alternative assumptions could refine, and possibly even modify, the
outcomes;
• Address the likely incidence of costs and benefits, not just the intended
effects;
• Draw on documented experience with similar finance mechanisms;
• Consider the implications—short- and long-term, direct and indirect—
of changes in people’s travel behavior on their quality of life and access
to opportunities; and
• Consider valid public opinion research that assesses people’s views,
while recognizing that people may well be averse to change before it
occurs and more accepting afterwards.
Using Lessons Learned Elsewhere to Inform Discussions
Public policy makers should take advantage of experience in the United
States and overseas with evolving transportation finance mechanisms to
inform their discussions with constituents and stakeholders. To the
extent that this experience is well-documented, it should be treated as a
knowledge base that, with thoughtful interpretation, can guide future
decisions about transportation finance mechanisms.
Developing Outreach Programs and Educational Materials
Public policy makers should develop outreach programs and educational
materials to help diverse audiences understand and engage in discussion
about the proposed mechanisms and their likely equity implications.
During the course of this activity, they should do the following:
• Tailor the design and content of outreach and educational materials
to meet the information needs of specific audiences.
• Address the motivations or problems that led to a search for new fund-
ing mechanisms, the benefits expected to result from those mechanisms
(for example, improvements in transportation services), and alternatives
to the proposed funding policy.
• Explain to constituents and stakeholders the equity implications of the
current way(s) in which the transportation system is financed to pro-
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Findings and Recommendations 141
vide a contemporary baseline against which to understand differences
between current and proposed mechanisms.
• Encourage and capture input from the various audiences to inform
subsequent iterations of the program or project proposal—in partic-
ular, discern the underlying equity principles raised during discus-
sions to help identify inequities requiring remediation among the
various stakeholders.
• Provide special outreach as necessary throughout the project process
(i.e., planning, implementation, identifying and resolving impacts,
and monitoring outcomes) to ensure that traditionally underserved
or vulnerable populations engage meaningfully in the discussions.
Obtaining expert advice from resource agencies experienced in work-
ing with underserved populations could be valuable in these special
outreach efforts.
Exploring Possible Remedies for Inequities
Public policy makers and their staff should identify and evaluate possi-
ble remedies for inequities, including both modifications to the design
of the finance mechanism chosen and ways to use some of the revenues
generated by the mechanism to compensate those adversely affected.
Any change in transportation finance policy results in both winners and
losers, but the new revenue may, when in excess of operating costs, offer
opportunities to compensate the losers through monetary rebates or the
provision of alternative or improved transportation services, such as new
bus routes or more frequent bus services. Where remedies for finance
inequities are identified and adopted, policy makers and their staff
should develop strategies to help ensure that those remedies are mean-
ingfully implemented and assessed. Engaging the affected communities
in identifying and evaluating remedies is essential.
RESEARCH NEEDS
Comprehensive Before-and-After Studies
To date, comprehensive before-and-after studies documenting practical
experience with emerging finance mechanisms have been limited in
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142 Equity of Evolving Transportation Finance Mechanisms
number, at least in the United States. Such studies are expensive to conduct
because they involve extensive data gathering. For example, evaluation of
the impacts of the 91 Express Lanes in Orange County, California, involved
collecting data over a period of more than 5 years, including about a year
and a half prior to the facility’s opening (Sullivan 2000). Such studies are,
however, a particularly valuable resource for informing future policy deci-
sions and guiding accompanying analyses because they produce results
based on actual experience.
Better Understanding of Travel Behavior and Its Consequences
There is a shortage of reliable information about the real distribution of
both burdens and benefits to travelers and shippers—information that
is needed to assess the equity implications of transportation finance
mechanisms. Relatively few studies to date have considered either the
equity impacts of people changing their travel behavior to avoid paying
a tax or the benefits resulting from the expenditure of tax revenues. For
example, people who stop driving to avoid a user fee may experience a
more time-consuming or less reliable commute than previously, and
some may change or lose their jobs as a result. Implementing congestion
pricing should, however, result in toll payers experiencing faster trips
and, in many cases, also being offered better transit services.
Among the questions for which research could provide useful insights
into the equity implications of transportation finance mechanisms are
the following:
• How do members of different socioeconomic groups alter their
behavior systematically to avoid or reduce payments, either in the
short or long term? Short-term changes could include changing routes
or time of travel, or both; using public transit rather than driving; or
foregoing a trip entirely. Long-term changes (over a period of years)
could include changing home, job, or business locations, or choosing
to stop work or travel less.
• Do the consequences of any of these behavioral changes have direct
and material equity impacts on the people involved, including the
range of costs that they may incur (e.g., longer commutes, poorer job
benefits, more expensive rents or mortgages)?
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Findings and Recommendations 143
• Do the consequences of any these behavioral changes have indirect or
independent equity impacts on other stakeholders? For example, do
behavioral changes in response to new taxes or fees change the com-
petitiveness of certain retail, housing, land, or labor markets, possibly
accompanied by a spatial rearrangement of jobs? Do such behavioral
changes improve health outcomes by reducing environmental pollu-
tants, noise, or other negative externalities? And if so, what are the
equity effects?
• What have been the behavioral responses to remedies intended to
address inequities in transportation finance and services? How effec-
tive have the remedial actions or programs been? Have efforts to mit-
igate perceived inequities of a finance policy ever worsened actual
equity outcomes?
Analysis of the equity implications of transportation finance mecha-
nisms calls for anticipating and forecasting the ways in which people and
businesses are likely to modify their use of the transportation system in
response to changes in both prices (including taxes) and services. Devel-
oping reliable forecasts depends on the availability of fine-grained data
on personal travel and freight movements as well as on models that can
reliably simulate relevant behavioral changes.
Analysts today routinely assess some aspects of changes in travel behav-
ior, but the traditional travel behavior models used by states, counties, met-
ropolitan planning organizations, and local governments are limited in
their ability to capture these changes. For example, none of the models in
use in the United States today recognizes that willingness to pay to save time
(as in HOT lanes, for example) varies from person to person, and for the
same person in different situations. Cost-benefit analyses of transportation
projects typically assume all drivers have the same value of time for all trips,
and, as a result, evaluations of road-pricing strategies using forecast data are
of questionable validity. Similarly, commonly used analytical models do not
address so-called “second-order” impacts such as changes in the allocation
of household duties or in work styles (e.g., more telecommuting) to mod-
erate the burden of new transportation fees. In contrast, more advanced
activity-based travel-demand models offer the potential to forecast travel
behaviors with sufficient sophistication to support comparison of alterna-
tive finance schemes. In the coming years, such models, which are now
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144 Equity of Evolving Transportation Finance Mechanisms
being developed and gradually implemented, are expected to prove useful
in informing equity analyses, although their complexity and demanding
data requirements may delay or limit widespread implementation.
More Attention to Freight and Transit
Much of the recent research on the equity implications of evolving trans-
portation finance mechanisms has focused narrowly on public and polit-
ical concerns that road pricing will force low-income drivers off the road.
In contrast, the broader effects of road pricing, including impacts on
freight transportation and the workers in that sector, have received far
less attention. A better understanding of the impacts of road pricing on
the freight sector is needed to provide a more complete picture of the
likely equity implications of this finance policy. A new finance mecha-
nism may influence the effectiveness and efficiency of freight transporta-
tion, affecting economic competitiveness and the spatial arrangement of
jobs as well as changing patterns of mode utilization and congestion.
The equity impacts of transit pricing have also been largely ignored in
the research literature, although concerns over the inability of low-
income people to pay transit fare increases are common. Nonetheless,
most conventional equity assessments largely ignore the impacts of actual
fare levels, discounted passes, and the like. Transit pricing tends to affect
those in the very lowest income categories far more than road pricing.
Thus, informed assessments of the equity implications of finance policies
on the mobility of the lowest income group cannot ignore transit pricing.
RECOMMENDATIONS FOR RESEARCHERS
AND ANALYSTS
Recommendation: Researchers and analysts should conduct scientifi-
cally rigorous before-and-after and cross-sectional studies to measure
the equity implications of evolving financing mechanisms and pro-
vide a robust basis for future decision making. These studies should
• Track short- and long-term behavioral shifts in response to the
evolving mechanisms,
• Conduct verifiable analyses to ensure the validity and transfer-
ability of results, and
• Avoid preconceived notions and oversimplification.
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Findings and Recommendations 145
Researchers and analysts should monitor the overall impacts of evolv-
ing transportation finance mechanisms through systematic and ongoing
data collection and analysis programs. Such monitoring should include
analyses of resulting transportation service changes and the effectiveness
of remedies aimed at redressing inequities. In the case of before-and-
after studies, it is particularly important to ensure that reliable before-
implementation data are collected to provide a strong basis for comparison.
A special data collection effort may be required, because routinely main-
tained data on travel and financial impacts may be insufficient. After
implementation, data need to be collected on the direct and indirect
impacts, both short- and long-term, on various groups. Collection of such
data should ideally be done at regular intervals.
Important questions to be answered by these data include the following:
• How do members of various socioeconomic groups alter their behav-
ior, in the short or long term, to avoid or reduce the payment?
• To what or whom are the burdens of taxes or fees shifted, in whole or
part, and what are the equity implications of such shifts?
• What are the consequences (for example, reductions in travel bene-
fits) of any resulting behavioral changes for the people involved? Are
there indirect and independent equity impacts on other stakeholders?
• How have negative equity outcomes been compensated for or
addressed?
• How are the affected communities engaged in identifying and address-
ing negative impacts?
As these questions illustrate, it is important to extend the scope of
before-and-after studies beyond monetary effects to recognize behav-
ioral impacts, the effects of changes in transportation services, and the
effectiveness of any remedies. This effort should include not only short-
term implications, but also long-term and indirect impacts that are often
difficult to follow.
It will be important—and challenging—to sort out confounding effects.
Discernible effects from funding changes emerge over time, during which
many other events occur. For example, changes due to the economic cycle,
such as recession or expansion, can confound the attribution of response to
new finance mechanisms. Likewise, fuel price fluctuations and relocation
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146 Equity of Evolving Transportation Finance Mechanisms
of centers of employment or other activities can also confound responses.
Such confounding effects need to be documented as a part of comprehen-
sive before-and-after studies. High-quality before-and-after studies are dif-
ficult and expensive, but they are the most reliable source of objective
information to guide future decision making.
Although evolving transportation finance mechanisms are the focus
of this report, research on current mechanisms is also relevant to the
issues under consideration. In particular, analyses continue to reveal cer-
tain inequities of current mechanisms, thereby providing a baseline
against which public policy makers can consider the relative strengths
and weaknesses of evolving mechanisms.
Recommendation: As practical experience is gained with newer
transportation finance mechanisms, researchers and analysts in the
United States should take full advantage of opportunities to cap-
ture lessons learned abroad.
Capturing lessons learned is partly a research activity, and partly a
matter of direct information exchange, possibly through site visits by
public officials or their staff. The value of adding to the empirical knowl-
edge base through such efforts returns to decision makers, and thus this
latter group bears responsibility for ensuring that the necessary resources
are made available.
Recommendation: As researchers and analysts continue to develop
and implement advanced travel behavior and land use models for
a variety of applications, they should ensure that such models
incorporate features needed to inform equity analyses of trans-
portation finance policies. In particular, models need to recognize
that a willingness to pay to save time (value of time) varies from
person to person, and for the same person in different situations.
Activity-based travel models are advancing in sophistication and are
gradually moving into practice for transportation planning and policy
analyses. The need to analyze the equity implications of road-pricing
options provides another motivation to accelerate the implementation of
such models. It will be important to include explicitly in the data collection
and model development tasks those population segments and household
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Findings and Recommendations 147
characteristics that are expected to be of special interest in equity analysis,
for example, persons with disabilities, racial minorities, and low-income
households.
Advanced models used to inform equity analyses need to include the
ability to simulate variations in the use of modes, links, and paths as trav-
elers adjust their behavior to optimize some combination of travel time
and user costs. They also need to capture the long-term effects of trans-
portation investments and fees on land use and development as individ-
uals and organizations change their behavior in response to changes in
transportation facilities, services, and the way these are financed.
Researchers and practitioners should remain cautious about the
uncertainties inherent in all travel forecasting models and should con-
sider how alternative assumptions could modify the outcomes of stud-
ies using these models.
SOURCES OF FUNDING FOR RECOMMENDED ACTIONS
Recommendation: The Federal Highway Administration (FHWA)
and the Federal Transit Administration (FTA) should ensure that
equity assessments integrated into overall project and program
evaluation processes are both effective and meaningful. To this
end, they should clarify and publicize the eligibility of such equity
assessments as expenses of the federal aid program.
The equity assessments performed by public policy makers to inform
and support decisions about the use of various transportation finance
mechanisms are eligible expenses of the federal aid program via Title VI of
the Civil Rights Act, requirements for environmental impact statements,
and other legislative mandates. Such equity assessments, which identify
equity impacts of both the finance mechanisms and of the transportation
services they fund, are challenging and costly to conduct, as this report
illustrates. Clarifying and publicizing the availability of funds from the fed-
eral aid program could help bring more resources to bear on equity assess-
ments. These additional resources could improve the scope of assessments
and provide the ability to address more long-term and diffuse issues.
Recommendation: The U.S. Department of Transportation’s Office
of Policy and its Research and Innovative Technology Administration
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148 Equity of Evolving Transportation Finance Mechanisms
(RITA) should support and direct a collaborative effort to build a
knowledge base for decision support that includes
• A program of scientifically rigorous before-and-after and cross-
sectional studies to assess the equity outcomes of road pricing
and other evolving transportation finance mechanisms as they
are implemented in the United States and
• An ongoing effort to gather lessons learned about equity impli-
cations from the implementation of such mechanisms abroad.
Because there is widespread interest in evolving finance policies, par-
ticularly road pricing, there is a clear federal role in supporting research
activities that lead to a more robust and informed basis for future deci-
sion making. High-quality empirical studies of the equity implications of
new finance mechanisms are essential to build a credible U.S. knowledge
base to support future transportation finance decisions. Both a mandate
and support for equity analyses should be linked to programs and incen-
tives to test new ways to finance transportation, particularly various forms
of road pricing. The proposed knowledge base should encompass studies
from other countries as well, to accelerate the rate of learning and broaden
the perspectives on finance methods.
Organizations with relevant experience and expertise that could use-
fully lead in building this knowledge base include, but are not limited to,
RITA’s Bureau of Transportation Statistics and its Volpe Center; the Oak
Ridge National Laboratory; FHWA; and university transportation centers
around the United States.
Recommendation: The American Association of State Highway and
Transportation Officials (AASHTO) and the FTA should support
activities under the National Cooperative Highway Research Program
(NCHRP) and the Transit Cooperative Research Program (TCRP),
respectively, to develop information, guidance, and analysis tools for
state departments of transportation and others to use in studying and
understanding the equity implications of evolving transportation
finance mechanisms. These activities should include the development
of a handbook describing recommended procedures for conducting
equity analyses of transportation finance policies.
Given the interest in road pricing, including VMT fees, as an alterna-
tive to current transportation finance mechanisms and of the important
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Findings and Recommendations 149
role of the states in funding the nation’s surface transportation system,
NCHRP provides an appropriate framework under which to conduct
research aimed at developing a better understanding of the equity impli-
cations of evolving transportation finance mechanisms. Given the impor-
tance attached to both income and racial equity and the role of transit in
providing mobility for low-income and minority groups, there is a clear
opportunity for the FTA and the TCRP Oversight and Project Selection
Committee to contribute to this research through TCRP. There may
also be opportunities for RITA to contribute to this effort through the
National Cooperative Freight Research Program.
A transportation equity analysis manual, analogous to AASHTO’s
Highway Safety Manual, could provide tools and guidance targeting prac-
titioners at the state, county, metropolitan planning organization, or local
levels who need to conduct equity assessments of projects and programs
for which the use of evolving finance mechanisms is being considered. As
with the Highway Safety Manual, the transportation equity analysis man-
ual would describe a science-based technical approach that helps practi-
tioners make the most effective use of available tools and data while also
recognizing areas of uncertainty and knowledge gaps.
Other potential sources of funding for the recommended actions by
researchers and analysts include state planning and research funds for
state-level projects, perhaps used in collaboration with one or more of
the university transportation centers; the National Science Foundation
(NSF); and private foundations that have traditionally been interested in
topics related to equity. NSF addresses a wide range of program areas
through its multiple divisions and could perhaps be a source of funds for
research into burden shifting in transportation finance, research on tools
for forecasting social impacts of transportation decisions, and research
on other basic topics. Given the diverse facets of equity assessment,
researchers will likely need to think beyond traditional transportation
programs and funding sources in seeking support for their work.
CONCLUDING REMARKS
The equity implications of transportation finance mechanisms are com-
plex, often controversial, and important in decision making. Policy mak-
ers addressing such equity issues need to have a broad understanding of the
array of issues involved. They also need to recognize that the complexity of
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150 Equity of Evolving Transportation Finance Mechanisms
the issues can be managed—though not eliminated—through systematic
consideration of the ways in which burdens and benefits are distributed
across society and institutions. Such an approach means
• Considering the ways in which people and organizations respond to,
and sometimes shift, new transportation charges;
• Taking into account the distribution of the benefits from the use of
those funds;
• Weighing the equity concerns about new ways to pay for transporta-
tion against those for existing methods;
• Exploring and assessing possible remedies to inequities; and
• Working closely with stakeholders to find solutions that are feasible,
effective, and acceptable.
The knowledge and tools to accomplish these tasks are emerging, but
there remains a need to invest in research and development to provide
more effective support for decisions about new finance mechanisms. In the
meantime, there is much that can be done to support our transportation
systems and to make informed decisions about paying for them.
REFERENCE
Sullivan, E. 2000. Continuation Study to Evaluate the Impacts of the SR 91 Value-Priced
Express Lanes. Final Report. State of California, Department of Transportation, Traf-
fic Operations Program, HOV Systems Branch, Sacramento, December.
