Financing Transportation Networks

Financing Transportation Networks

Transport Economics, Management and Policy series

David M. Levinson

Pollution, alternative fuels, congestion, intelligent transportation systems, and the shift from construction to maintenance all call for a reconsideration of the existing highway revenue mechanisms, especially the gas tax. David Levinson explores the fundamental theoretical basis of highway finance, in particular the use of tolls, and supports that theory with empirical evidence. The author examines highway finance from the perspective of individual jurisdictions and travellers, and considers their interactions rather than specifying a single optimal solution. Congestion pricing has long been a goal of transportation economists, who believe it will result in a more efficient use of resources. Levinson argues that if the governance were to become more decentralized, and collection costs continue to drop, tolls could return to prominence as the preferred means of financing roads for both local and intercity travel. An approach that creates the local winners necessary to implement road pricing is required before it can be expected to become widespread.

Chapter 11: Compensation

David M. Levinson

Subjects: economics and finance, public finance, transport, environment, transport, urban and regional studies, transport


INTRODUCTION The equity issues facing congestion pricing are an impediment to its adoption. In part there is resistance due to people’s dated perceptions of how toll roads operate; they still envision stopping at toll booths and paying the toll, a situation where the toll road causes more delay than it relieves. Electronic toll collection, discussed in Chapter 12, will obviate some of these concerns. There is additional resistance to the idea of paying twice for the same thing. If gas taxes have already paid for the road, why should tolls now be put in place? A third criticism is the idea of so-called ‘Lexus lanes’, the idea that toll roads (in parallel with free roads) are only for the wealthy, so that they can bypass congestion while poor and middle-class citizens are stuck in traffic. Research on the operations of SR91 in southern California suggests that income effects are weak. While logic argues that the rich do have a higher value of time than the poor, and so would in general be more willing to pay a toll, working-class individuals may have a greater penalty for being late to work or pick up a child from day care. A related criticism, and one that gets very little attention, is that not only does a toll road enable some to buy their way out of congestion, they do so at the expense of others if the toll lanes operate as queue jumpers - that is, they may make others wait longer...

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