USA Banner

Official US Government Icon

Official websites use .gov
A .gov website belongs to an official government organization in the United States.

Secure Site Icon

Secure .gov websites use HTTPS
A lock ( ) or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.

U.S. Department of Transportation U.S. Department of Transportation Icon United States Department of Transportation United States Department of Transportation

Public Roads - Fall 1996

Congestion Pricing: Reducing Traffic Jams Through Economics

by Ginny Finch



Four new lanes in the median of California state Route 91 are the first commercial test of congestion pricing in the United States.

In urban areas across the country, people are not only fed up with gridlock they're paying for it. For each of 13 urban areas in 1992, the cost caused by congestion exceeded $1 billion, according to the Texas Transportation Institute. Congestion costs were more than $8 billion for Los Angeles, more than $7 billion for New York City, and close to $3 billion each for San Francisco-Oakland, Chicago, and Washington, D.C.(1)

The congestion costs of wasted fuel and travel delays may have the best antidote yet in a concept called "congestion pricing." Congestion pricing charges a premium to road users who want to drive during peak periods such as rush hour or holiday weekends. Drivers pay a toll to enter congested areas. The toll varies according to the level of congestion with higher tolls during peak hours or in peak directions.

This concept has been explored for many years, and it has been successfully applied in public airline pricing, public utility pricing, and other areas of transportation and the private economy.

Proponents of congestion pricing claim the strategy would work in crowded traffic lanes because the peak-hour users of the transportation system would be charged directly and proportionally. During peak periods, users -- not the entire community -- would pay a fee in exchange for greater convenience, fewer delays, and prompt access to a free-flowing highway lane. Revenue from these fees could be used to help support alternative forms of transportation and other environmental measures.

Experience in other countries, particularly in France, demonstrates that congestion pricing does significantly reduce gridlock during peak traffic periods. America's top scientific organizations, including the prestigious National Academy of Sciences, also give high marks to congestion pricing. In its 1995 two-volume report, Curbing Gridlock: Peak-Period Fees to Relieve Traffic Congestion, the academy praises congestion pricing as a potentially powerful tool to persuade people to carpool, use transit, telecommute, vary the times they travel, alter their routes, choose other destinations, or avoid or combine some trips.(2)

In a separate California study funded by the Federal Highway Administration, researchers found that congestion pricing and other market-based transportation pricing measures offer great potential for reducing congestion, improving air quality, cutting energy consumption, and increasing the efficiency of the state's transportation system.(3)

The concept of congestion pricing received legislative backing when the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) created a Congestion Pricing Pilot Program to encourage testing and evaluation of experimental projects in a variety of settings nationwide. ISTEA authorized funding for up to five congestion-pricing demonstration projects.

Plans for implementing pricing pilot projects are now under way in San Diego, Calif., and Lee County, Fla. And studies to explore the feasibility of starting pilot projects have been launched in: Los Angeles and San Francisco, Calif.; Portland, Ore.; Boulder, Colo.; Houston, Texas; Minneapolis, Minn.; and Westchester County, N.Y.

Recently, the first commercial test of congestion pricing was set in motion when the California Private Transportation Company (CPTC) introduced pricing on a 16-kilometer stretch of state Route 91 near Anaheim, between the Riverside-Orange county line and the Newport-Costa Mesa Freeway (state Route 55). Four new, median express lanes -- two additional lanes in each direction -- are predicted to save commuters from 20 to 40 minutes a trip and the headache of bumper-to-bumper traffic on a freeway traveled by 250,000 motorists a day. And the revenues received from the world's first fully automated toll road will enable CPTC to pay capital and operating costs, such as setting up an extensive safety program, ensuring a rapid-response capability for clearing disabled vehicles, paying for a state highway patrol presence along the road, and reimbursing the California Department of Transportation for maintaining the road.

To boost carpooling and to keep traffic moving on the new express lanes, tolls are adjusted according to the number of vehicle occupants, time of day, and the amount of traffic. During rush hour, solo drivers pay $2.50. At other times, they may pay as little as 25 cents. Cars and vans with three or more passengers pay no toll. There's no need for tollbooths or cash baskets because tolls are debited electronically.


The current toll is displayed as drivers appraoch the highway.

Here's how the system works: As drivers approach the Route 91 express lanes, an easy-to-read sign displays the current toll. Drivers have about a kilometer to decide whether to switch to the new lanes or stay on the existing freeway. Every car and van entering the lanes must have a Velcro-backed FasTrak transponder mounted on its windshield. (Drivers pay $40 of tolls in advance to get a transponder.) The 95-millimeter, plastic toll-tracker works like an electronic debiting card. As the car or van crosses into the express lanes, overhead antennas read the account information found on the transponder's microchip and automatically deduct the appropriate toll. The sophisticated antennas can handle up to 2,500 vehicles per lane per hour and can scan vehicles at speeds of more than 160 kilometers per hour.

During peak periods, observers at the toll zones count the number of occupants in each vehicle. Carpool violators face fines of $271 to $813. Those who try to enter the express lanes without a transponder are caught by roadside cameras and fined $100 to $300.

Transportation professionals from around the world are watching the results of this innovative project. Edward Sullivan, chair of the civil and environmental engineering department at California Polytechnic State University at San Luis Obispo and the consultant who is monitoring and evaluating Route 91, predicts the project will win the fight against gridlock and will spur similar efforts elsewhere.

"SR 91's pioneer express lanes will set a precedent in congestion pricing," he said. "I'm convinced the project will be tremendously significant as a model for what can be done."

State Route 91 is already becoming a model. Within just a few weeks of its opening, the new toll lanes and nearby Metrolink trains drew so many commuters that congestion on Highway 91's free lanes dropped to levels not seen in more than 15 years. Carpooling and vanpooling also increased. On one evening alone, more than 160 vanpools were counted. By February 1996 -- four months ahead of schedule -- some 30,000 transponders were in circulation; today, 50,000 of the devices are in use.

Congestion pricing is an idea who time has come. As Deputy Federal Highway Administrator Jane Garvey puts it: "Congestion pricing is value pricing. Everyone involved can get a good return on their investment."

Overhead antennas read the FasTrack transponder mounted on the window and automatically debit the account as the vehicle enters the express lanes.


1. Tim Lomax and David Schrank. Urban Roadway Congestion -- 1982 to 1992, Vol. 1, Texas Transportation Institute, Texas A & M University, College Station, Texas, September 1995.

2. Curbing Gridlock: Peak-Period Fees to Relieve Traffic Congestion, Vol. 1 & 2, National Research Council, Washington, D.C., May 1993.

3. "Exploring the Role of Pricing as a Congestion Management Tool," Searching for Solutions: A Policy Discussion Series, Number 1, Federal Highway Administration and Federal Transit Administration, Washington, D.C., July 23, 1991.

Ginny Finch is a program analyst and communications specialist in the Environmental Analysis Division of the Federal Highway Administration.