What are the Economics of Road Pricing and Congestion?

Does Traffic Congestion Reduce Employment Growth? (33 page pdf, Kent Hymely, Journal of Urban Economics, Sept. 17, 2008)
Also discussed here: Congestion’s Impact on Urban Economies (Surface Transportation Innovations #101, Reason Foundation, March 2012)

Today, we review a paper that examines what economic benefits result from the application of road tolls or congestion charges on commuting speed and, indirectly, on the economy as demonstrated in several different cities and through simulation modeling of travel times on highways with tolls. The conclusion is that road pricing results in much shorter travel times which vary according to the effectiveness of the pricing (e.g. 70-90% in Cambridge,UK, 30-50% in Stockholm and 14-21% in London, UK). The reduced commuting times in turn resulted in a 10-30% increase in employment growth. This economic benefit, on top of the environmental benefits of reduced pollution and health costs, needs to be considered by cities contemplating road pricing in the future.

Traffic congestion, Sao Paulo, Brazil

Traffic congestion, Sao Paulo, Brazil (Photo credit: Wikipedia)

To see Key Quotes and Links to key reports about this post, click HERE



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