International Perspectives on Road Pricing (2005)

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1In any discussion of road pricing, one of the firstchallenges is to clarify definitions. The conferencecommittee was charged with organizing a sympo- sium to explore American and international applica- tions of road pricing strategies in various gov- ernmental and socioeconomic settings. Although they are often used interchangeably, the phrases “road pricing,” “congestion pricing,” “value pricing,” and “variable pricing” can have different meanings to dif- ferent users. This document typically uses the phrase “road pricing.” Under a road pricing strategy, road users are charged a fee that reflects the cost of their use of the road more fully than do existing fees and taxes, and thus pricing can serve as a public policy tool to help manage demand for a limited resource— road space. Because of its role in managing demand, road pricing is often referred to as “congestion pric- ing,” particularly in cases where the charge rises at peak travel times and falls or is eliminated entirely when demand is low. As with any other genuine pricing system, road pric- ing allocates road space to those most willing to pay for it, provides guidance in the revenues collected as to where capacity expansion is needed, and creates one source of money for paying for investment. Pricing a road is thus different from traditional turnpike tolling, which aims merely to produce revenue to recover costs and plays no reallocative function. While the term “road pricing” generally suffices as a shorthand phrase to indicate the allocation of scarce road space through the use of charges that vary with the level of congestion on a road, other, more specific vocabulary has emerged in the road pricing community as well. The following are some examples: • Value pricing. The term “value pricing” was pro- posed in place of the term “congestion pricing” by the U.S. Department of Transportation during the develop- ment of pricing legislation to convey the benefits (“value”) of using pricing to reduce congestion. How- ever, some choose to limit the term’s meaning to charg- ing for use of additional road lanes that offer premium service alternatives to unpriced highways. • Cordon. A ring around an area (typically a city center) with a series of charging points at all entries. Both Singapore and London use a cordon approach. • Area charging or licensing. A variant of cordon charging in which the charge is levied to use a vehicle within a defined area, rather than just to enter it. • Distance-based charges. In contrast to cordon or area-based charges within a defined area, distance- based charges represent fees that vary depending on the distance traveled. • Managed lanes. A lane or lanes designed and oper- ated to achieve stated goals by managing access via user group, pricing, or other criteria. A managed lane facility typically provides improved travel conditions to eligible users. • High-occupancy/toll (HOT) lanes. A variant of the high-occupancy vehicle (HOV) carpool lanes com- monly used throughout the United States, HOT lanes are managed lanes that provide free (or reduced cost) access for transit and other vehicles carrying the required number of passengers and charge a fee to Background and Terminology

other vehicles not meeting occupancy requirements. Emergency vehicles are typically exempt from the fee. An alternative to HOT lanes that has been mooted but is untried is the concept of FAIR (fast and inter- twined regular) lanes. If implemented, FAIR lanes would divide currently free, general-purpose traffic lanes into two sections: fast lanes and regular lanes. Under FAIR lanes, drivers using the regular lanes dur- ing peak hours would be compensated with credits that could be used as toll payments on days when they chose to use express lanes. The express lane credits would compensate drivers for giving up their right to use lanes that they “have already paid for” and for any added delays that might result. • HOT networks. This concept expands the idea of HOT lanes to a complete network of premium service lanes offering both congestion relief to motorists and improved transit service. A HOT network would be developed by adding missing HOV lanes and converting the entire oper- ation to electronic variable pricing. Access would be at no charge to “super-HOV” vehicles (vanpools and buses), which would preregister to use the system and carry transponders granting them passage at no charge. All other vehicles would pay a toll intended to maintain high-speed, free-flow traffic at all times. A seamless network of this sort would provide the functional equivalent of an exclusive busway, since pricing would be used to guarantee a prede- fined amount of capacity for buses and vanpools. 2 INTERNATIONAL PERSPECTIVES ON ROAD PRICING