How much does a commute cost?

(by Parker Evans, Lizzy McNamara, Noah Wiedenfield, and Shawn Kremer)

With roads and bridges in the state of Minnesota facing nothing less than a crisis, discussions of alternatives to traditional methods of funding have cropped up. This challenge has received a considerable amount of press in the Twin Cities of late, including two opposing editorials published by the Star Tribune. One option open to Minneapolis is congestion pricing, which can take the form of road pricing, HOV lanes and other fee-based strategies. Arguably the most interesting of these is called cordon pricing. While all congestion pricing methods is an attempt to better align the costs of roads with the users of roads, cordon pricing arguably goes the furthest by imposing a fee on vehicles entering part of the city – generally the downtown district, where congestion is the highest. While such a scheme in Minneapolis might have some tangible benefits for residents, serious concerns must be taken into account as well.

Given the lack of political in the United States, the handful of examples of cordon pricing that the Twin Cities can draw from are global ones. The most famous example from London utilizes many advantages that Minneapolis doesn’t have – namely a convenient border in the Ring Road and a compliant, centralized bureaucracy. Stockholm’s might be a better model. The Swedish capital faced serious pushback from its surrounding suburbs (an arrangement Minneapolis should be quite familiar with), and was forced into a deal in which a chunk of the revenues would go toward road funding in the suburbs, rather than entirely to public transit.

When judging the merits of cordon pricing, efficiency holds up as a strong measure. Drivers using the public good that is our freeway system during rush hour do not account for the negative externalities they create with their contribution to the larger congestion and subsequent pollution. Stockholm-like limits on fees, variable pricing, and effective technology can reduce compliance costs and enhance efficiency further.

Equity is a murkier matter. While the tax is certainly regressive, insofar that its charge is a larger percentage of a lower income, the cost would ideally be variable and correlated strongly to the benefit received (although some might view it as a penalty not incurred). Similarly, the scheme doesn’t fare well in terms of adequacy – the fees will not, and are not intended to, support the full public cost of installing the road. Moreover, it will likely take some time to dial in the variable pricing arrangement before the “optimum” level of traffic is attained.

Of course, the most challenging aspect is feasibility. Not only are administrative costs high due to installation and coordination of state DMVs, but political feasibility is not realistic. Even progressive strongholds like San Francisco and New York City have turned down federal funds to help implement a similar program, and with no American guinea pig to turn to, Minneapolis is likely not chomping at the bit to anger its residents or suburbs