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30 I N T E R N AT I O N A L P E R S P E C T I V E S O N R O A D P R I C I N G River bridges set at the level of current tolls of the two nal costs are those borne by those individuals who have parallel MTA tunnels; not induced them. They remain such until they are · Variable pricing on East River bridges, MTA to incorporated, or internalized, in prices levied on those match: variable time-of-day tolls on East River bridges whose activities produced the externalities. with MTA tolls modified to match them; The European Union takes the view that transport · Like London: a pricing system at 60th Street for pricing reforms should be based on the "users pay" 13 daytime hours on weekdays with flat East River tolls principle, which would require full internalization of during the same time period; and marginal external costs to arrive at the right price. · Full variable pricing: variable time-of-day pricing Two recently commissioned studies are helping policy at all entries, including the East River bridges, MTA makers zero in on ways to capture marginal external crossings, and 60th Street. costs in transport pricing. The Real Cost Reduction of Door-to-Door Intermodal Transport (RECORDIT) proj- As modeled, these scenarios produce traffic reduc- ect, funded by the European Union, has calculated the tions of 5% to 13%, with an even greater reduction dur- external costs of freight transport over more than 9,000 ing the peak period in the second and fourth scenarios. kilometers of network for both road and intermodal ser- Drops in traffic would be higher at the East River entry vices. The UNITE project, also funded by the European points, which would likely lead to the virtual elimina- Union, has carried out more than 30 case studies cover- tion of congestion at those crossings and relief on local ing all modes and situations (urban and interurban streets in Brooklyn and Queens. However, such traffic freight and passenger travel). reductions would result in only 0.3% to 1.0% fewer Both projects address the most relevant categories of trips into the CBD and 100,000 to 270,000 more daily external costs: air pollution, noise, congestion, acci- transit trips. All scenarios would generate substantial dents, and global warming. RECORDIT has also devel- revenues in excess of $700 million, which could capital- oped rough estimates of life-cycle costs (e.g., production ize anywhere from $7 billion to $19 billion of new con- and disposal of vehicles, containers, and fuels). In addi- struction. Along with overall traffic volume reduction, tion, both projects address infrastructure costs, or the pricing would provide benefits such as more reliable, costs arising from wear and tear of the infrastructure stress-free driving; elimination of gridlock on local itself, since these are a further component of the social streets near crossings; faster speeds for necessary vehi- costs to be passed on to the user. cles such as buses, taxis, and delivery vans; more space The evidence produced by RECORDIT and UNITE for amenities such as pedestrian boulevards; and funds shows the following: for the next generation of transportation expansion. Despite its benefits, pricing's opponents can be · The methodologies currently used to calculate expected to raise concerns about economic impacts, geo- external costs are robust, especially for air pollution and graphic and income equity, and fairness to those with congestion and, to a lesser extent, noise and accidents. poor alternatives to driving. Many will claim that city Costs associated with global warming still suffer from streets and bridges simply should not be tolled. Pricing is large uncertainties. especially politically difficult in New York, since 58% of · All categories of external costs are highly sensitive the city council is from Brooklyn and Queens. Given these to situational factors (e.g., geographic position, meteo- dynamics, four mayoral administrations have failed to rology, population density, and time of day). Particu- win over opposition in the past. We suggest that next larly for congestion, this makes it difficult to transfer steps for New York should include agreement on objec- values from one context to another. tives, a concerted effort to obtain support from the · RECORDIT has produced estimates of the aver- Bloomberg administration, further research, involvement age value of external costs for each European Union from the business and media communities, and the devel- member state that take account of the specific charac- opment of a package of short- and long-term transit teristics of the national networks, vehicle fleets, and so improvements that focus on Brooklyn and Queens. forth. It has then derived the value of the internalization charge, as discussed below. RELEVANCE OF PRICING TO EXTERNAL COST For the 16 European Union nations, RECORDIT CALCULATION: RECENT RESULTS identified external costs per kilometer imposed by a 40- tonne articulated truck. These external costs ranged Andrea Ricci from 0.24 (Sweden) to 0.54 (Slovenia), with an aver- age of 0.32. The study further identified the extra Externalities are changes of welfare caused by economic charge per kilometer (compared with current taxes) that activities that are not reflected in market prices. Exter- would be necessary to internalize external costs. These
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C A L C U L AT I N G C O S T S A N D M E A S U R I N G B E N E F I T S O F P R I C I N G S C H E M E S 31 ranged from a low of 0.17 (France) to a high of 0.35 use, with shortfalls in the range of 0.20 to 0.40 per (Switzerland), with an average extra charge of 0.21. kilometer. Correcting current distortions in pricing prac- It can thus be concluded that the taxation and charg- tice requires the introduction of a variable per kilometer ing systems currently in place in the European Union do charge that could capture all important cost drivers, not cover the full social costs of transport infrastructure including vehicle technology and situational factors.