Urban tolls and free lunch
William Vickrey, Nobel Prize winner in economics in 1996, proposed tolling to control traffic congestion in the 1960s. He was a professor at Columbia University in New York and thought about easing access to Manhattan, with the bottlenecks represented by bridges and tunnels8. Between Columbia University and the University of Pennsylvania (where I was a professor), the speaker was taking a long time to arrive and Vickrey stood up and, to entertain the audience, told us a story
It was about how to get a free lunch, that is, obtaining something without cost or effort—an impossibility, as the saying goes. The case was this: I wanted to explain how implementing a traffic-modulated toll on a bridge (or tunnel) could reduce congestion in such a way that it would ultimately benefit drivers as a whole, even if they had to pay to cross the bridge. So, for example, someone who lost an hour each day in each direction to get through the bottleneck could cross it in 15 minutes, and the time saved—evaluated at the person's opportunity cost, for example, their salary—more than offset the cost of the toll. This has been the recent experience of drivers in Manhattan when a toll was implemented to enter the central business district since early January.
If a driver is not helped by the toll—perhaps because they have a very low income and inflexible schedules—then they can be compensated with a direct income subsidy. Furthermore, toll revenue can be used to improve both infrastructure and public transportation. In New York, the toll will contribute to $15 billion of this investment: in the first quarter alone, it raised $159 million with a toll ranging from $4.50 to $14.40.
Other major cities have also implemented urban tolls, including London, Milan, and Stockholm. In New York, the toll—which the Trump administration strongly opposes—has produced the following effects: it has reduced traffic in the congestion zone by more than 10% according to preliminary estimates; it has increased average vehicle speeds, especially during rush hour, and also includes buses, which run more regularly; The use of all modes of public transport has increased, as well as taxi and bicycle use; there is less noise from vehicle movement (complaints have decreased by 70%), and the number of visitors to the congestion zone has increased. It is still too early to assess the impact on pollution levels. An interesting observation is that traffic does not move any slower outside the congestion zone. We can contrast this with the impact of the "green axes" in the city of Barcelona: the traffic they divert from one street (Consell de Cent, for example) is transferred to another (Valencia), which increases congestion, noise, and pollution locally.
The effects in New York are similar to those experienced in London when tolls were introduced more than twenty years ago: traffic fell by 14% in the first year, and in other cities by 20%. The conclusion is that tolls are a good mechanism for reducing the problems associated with public goods in congestion conditions—pollution, noise, wasted time—since they can be modulated according to the time of day, vehicle type, and occupancy level.
Traffic jams at the entrances to Barcelona and its central part are significant, and the lack of public transportation in and out of the city is evident. The park-and-ride parking on the outskirts of the city, allowing private vehicles to arrive and from there, rapid and efficient public transportation to transport users to the center, have either not been implemented or have been unsuccessful due to poor planning. The lack of investment in the commuter rail network has been evident, and is only now beginning to be corrected. It seems to me that imposing a toll to enter Barcelona would be an example of the free lunch Professor Vickrey told us about. We would improve congestion, environmental, and noise problems, first and foremost, and there would be more money for public transport. And perhaps even revive the recent decline in bicycle use.