Testimony

Before the Joint Economic Committee 

U.S. Congress 

United States General Accounting Office 

GAO

Not to Be Released 

Before 10:00 a.m. EDT 

Tuesday, May 6, 2003 REDUCING CONGESTION 

Congestion Pricing Has 

Promise for Improving Use 

of Transportation 

Infrastructure 

Statement for the Record of 

JayEtta Z. Hecker, Director 

Physical Infrastructure Issues 

GAO-03-735T 
Congestion pricing can potentially reduce congestion by providing 

incentives for drivers to shift trips to off-peak periods, use less congested 

routes, or use alternative modes, thereby spreading out demand for 

available transportation infrastructure. Congestion pricing also has the 

potential to create other benefits, such as generating revenue to help 

fund transportation investment. Possible challenges to implementing 

congestion pricing include current statutory restrictions limiting the use 

of congestion pricing, and concerns about equity and fairness across 

income groups. In theory, equity and fairness concerns could be 

mitigated depending on how the revenues that are generated are used. 

Evidence from projects both here and abroad shows this approach can 

reduce congestion. Such projects have also shown they can generate 

sufficient revenue to fund operations—and sometimes fund other 

transportation investment as well. However, projects were not 

necessarily able to demonstrate benefits for the full range of 

transportation users. For example, those who were able to use the 

special freeway lane saw a decrease in travel time. But, in some cases, 

there was little systemwide reduction in travel times, and congestion 

increased on alternative routes. Nonetheless, there is some evidence that 

equity and fairness concerns can be mitigated. Some projects have 

shown substantial usage by low-income groups, and other projects have 

used revenues generated to subsidize low-cost transportation options. In 

addition, some recent proposals for refining congestion-pricing 

techniques have incorporated further strategies for overcoming equity 

concerns. For example, the Fast and Intertwined Regular (FAIR) lanes 

proposal in New York suggests crediting users of the non-tolled lanes to 

partially pay for them to use public transportation, or to use the express 

lanes on other days. 

On this highway in Orange County, California, a pilot project allows drivers to pay a toll to use newly 

added express lanes. 

The nation’s transportation 

systems have become increasingly 

congested, and pressure on them is 

expected to grow substantially in 

the future. Most transportation 

experts think a multifaceted 

approach is needed to address 

congestion and improve mobility. 

One potential tool is congestion 

pricing, that is, charging users a 

toll, fee, or surcharge for using 

transportation infrastructure 

during certain peak periods of 

travel. Pilot projects to test this 

approach are currently under way 

in the United States and the 

technique has been used more 

extensively abroad. 

Interest in the usefulness of 

congestion pricing has been 

growing, as evidenced by several 

recent proposals. However, there 

have also been concerns raised 

about the fairness of such practices 

to some users of transportation 

systems. GAO was asked to identify 

(1) the potential benefits that can 

be expected from pricing 

congested transportation systems, 

approaches to using congestion 

pricing in transportation systems, 

and the implementation challenges 

that such pricing policies pose, and 

(2) examples of projects in which 

pricing of congested transportation 

systems has been applied to date, 

and what these examples reveal 

about potential benefits or 

challenges to implementation. 

This statement is based on prior 

GAO reports and other publicly 

available reports. 

www.gao.gov/cgi-bin/getrpt?GAO-03-735T.

To view the full statement, including the 

scope and methodology, click on the link 

above. For more information, contact JayEtta 

Hecker at (202) 512-8984. 

Highlights of GAO-03-735T, a statement 

for the record to the Joint Economic 

Committee, U.S. Congress 

May 6, 2003 

REDUCING CONGESTION 

Congestion Pricing Has Promise for 

Improving Use of Transportation 

Infrastructure 
Page 1 GAO-03-735T Reducing Congestion 

Mr. Chairman and Members of the Committee: 

We appreciate the opportunity to offer this statement for the record about 

the role that charging fees for the use of congested transportation 

infrastructure can play in improving mobility in our nation’s transportation 

systems. There is widespread agreement that mobility is essential for a 

strong economy. It provides people with access to goods, services, 

recreation, and jobs; it provides businesses with access to materials and 

markets. It also promotes the movement of personnel and material to meet 

national defense needs. However, our transportation systems—for surface, 

maritime, and air transportation—have become increasingly congested. By 

some measures, for example, overall roadway congestion has increased 

more than 50 percent between 1982 and 2000 in some of the largest 

metropolitan areas. Congestion results in significant costs to the 

environment through increased pollution, and to individuals and 

businesses through wasted energy, time, and money. 

In recent reports covering all three of these transportation systems, we 

have analyzed ways to make these systems operate more efficiently—

including ways to do so without major new capital investment.1

 One such 

approach involves congestion pricing—that is, charging a higher price to 

use the system during peak periods or on congested routes. Doing so 

provides incentive for users to shift to less congested times or make other 

adjustments. Those who value the service enough will pay the additional 

price; those who value it to a lesser degree will shift their use accordingly. 

Currently, there is renewed interest in the role that congestion pricing can 

play in enhancing mobility, as evidenced by several recent proposals to 

institute pricing policies from industry, interest groups, and the 

Department of Transportation. 

My statement for the record is meant to provide some overall perspective 

on what we have learned about congestion pricing. It addresses (1) the 

potential benefits that can be expected from pricing congested 

transportation systems, approaches to using congestion pricing in 

transportation systems, and the implementation challenges that such 

 1

U.S. General Accounting Office, Surface and Maritime Transportation: Developing 

Strategies for Enhancing Mobility: A National Challenge, GAO-02-775 (Aug. 30, 2002); 

Marine Transportation: Federal Financing and a Framework for Infrastructure 

Investments, GAO-02-1033 (Sept. 9, 2002); National Airspace System: Long-Term 

Capacity Planning Needed Despite Recent Reduction in Flight Delays, GAO-02-185 

(Dec. 14, 2001). 
Page 2 GAO-03-735T Reducing Congestion 

pricing policies pose, and (2) examples of projects in which pricing of 

congested transportation systems has been applied to date, and what these 

examples reveal about potential benefits or challenges to implementation. 

My statement today is based in large part on our prior work in all three 

types of transportation systems. We have also gathered additional 

information by reviewing publicly available reports on a number of 

projects that are part of the Federal Highway Administration’s Value 

Pricing Pilot Program, a program that funds projects that demonstrate the 

potential of congestion pricing to address congestion problems, and on 

selected projects in other countries. 

In summary: 

• According to several reports from the Transportation Research Board and 

others, applying congestion-pricing methods to our nation’s transportation 

systems could have potential to help reduce congestion and enhance 

mobility by providing incentives to shift travel to off-peak periods or less 

congested routes, thereby more efficiently using transportation 

infrastructure. Congestion pricing also has the potential to create other 

benefits, such as generating revenue to help fund investment in 

transportation systems directly from users. While there are a number of 

potential benefits, implementing pricing methods for our transportation 

systems faces numerous challenges. Opportunities to pursue congestion 

pricing are limited because of current statutory restrictions limiting the 

use of congestion pricing and concerns about equity and fairness. For 

example, federal statutes restrict the charging of tolls on interstate 

highways, except where tolls previously existed or where exceptions have 

been made for pilot projects. Concerns about equity center around the 

effect that congestion pricing may have on lower-income groups. The 

economics literature suggests that these concerns can be mitigated 

somewhat because all income groups could conceivably benefit from 

congestion pricing, depending on how the revenues generated are used. 

• A number of congestion pricing projects are in place in surface and air 

transportation systems, both here and abroad. For the most part, they 

demonstrate that congestion pricing can be successful in generating 

greater economic efficiency and reducing congestion within transportation 

systems. Pricing projects have also successfully shown that they can 

generate revenue sufficient to fund their operation and, in some cases, 

fund the operation of additional transportation projects as well. For 

example, in San Diego, where users pay a toll to use a less crowded 

freeway lane, some of the revenues are used to operate a new express bus 

service, providing commuters with more travel options. However, in at 

least one circumstance, congestion pricing was not as effective in reducing 
Page 3 GAO-03-735T Reducing Congestion 

travel during peak periods, either because travelers had little or no choice 

other than to travel at peak times or on peak routes, or the congestion toll 

was set too low to influence demand. Projects were also not necessarily 

able to demonstrate benefits for the full range of transportation users. For 

example, those who were able to use the special freeway lane saw a 

decrease in travel time, but in some cases there was little systemwide 

reduction in travel times, and congestion increased on alternative routes. 

Nonetheless, there is some evidence that equity and fairness concerns can 

be mitigated. Some projects have shown substantial usage by low-income 

groups, and other projects have used revenues generated to subsidize lowcost transportation options. In addition, some recent proposals for refining 

congestion-pricing techniques have incorporated further strategies for 

overcoming equity concerns. For example, the Fast and Intertwined 

Regular (FAIR) lanes proposal in New York suggests crediting users of the 

non-tolled lanes to partially pay for them to use public transportation, or 

to use the express lanes on other days. 

Major capital investment in highways, public transportation systems, 

waterways, and airports are currently funded, in part, through various 

taxes and fees on users, such as fuel taxes or sales taxes; landing fees and 

docking fees; and tolls on certain roads, tunnels, and bridges. However, 

these revenue-raising instruments do not always provide strong incentives 

for efficient use of transportation infrastructure. For example, the tax 

rates on gasoline, which are the same regardless of whether vehicles are 

traveling during congested or uncongested periods, provide no incentive 

for travelers to use the infrastructure more efficiently. Similarly, landing 

fees at airports that are based on aircraft weight help create incentives for 

airlines to shift to smaller, lighter aircraft providing more frequent service, 

which results in increased demand for runways at peak times and 

therefore increased congestion. 

Due in part to increasing volumes of traffic, as well as these built-in 

disincentives to the efficient use of the transportation infrastructure, 

congestion on our nation’s highways, airways, and waterways remains a 

national problem. On already crowded roadways, passenger vehicle travel 

is expected to grow by almost 25 percent this decade, and freight 

movement by trucks may grow by a similar amount. In the nation’s air 

transportation system, before the terrorist attacks on September 11, 2001, 

an unprecedented number of delays in commercial airline flights 

occurred—a substantial part of which were due to airport and airspace 

congestion, particularly during peak morning and evening hours. At 31 of 

the nation’s busiest airports, 28 percent of the domestic flights arrived late 

Background 
Page 4 GAO-03-735T Reducing Congestion 

in 2000. While flight congestion declined significantly with reduced traffic 

after the attacks, a more robust economy and less public apprehension 

about flying will likely lead to renewed demands on the air transport 

system. At locks on our inland waterways and at major seaports, 

congestion has also been growing. For example, the U.S. Army Corps of 

Engineers estimated that 15 key locks would exceed 80 percent of their 

capacity by 2020 as a result of the expected growth in freight travel, as 

compared to 4 locks that reached that level in 1999, resulting in 

significantly increased delay. 

Numerous methods can be used to address congestion, including building 

new infrastructure, improving maintenance and operation of 

infrastructure, and using the existing infrastructure more efficiently 

through demand management strategies, including pricing mechanisms. 

Experts with whom we talked said that consideration of a full range of 

these methods is likely necessary to ease our nation’s transportation 

congestion.2

 In theory, congestion pricing, as one of these methods, is 

useful for mitigating the delay costs of congestion. If highway, aviation, 

and waterway users were charged extra for peak-hour use, some would 

shift to less busy times, or make other adjustments, thereby alleviating 

delay at the peak periods. 

Many other areas of the economy frequently use peak-period pricing 

mechanisms when demand varies considerably by time of day or season. 

Electricity providers, for example, often charge higher prices at peak 

periods and lower prices when demand is reduced. Other industries with 

common peak-pricing practices include telecommunications, airlines, and 

hotels and resorts. In addition, Amtrak and some transit systems use peakperiod pricing. 

 2

GAO-02-775. 
Page 5 GAO-03-735T Reducing Congestion 

In theory, using congestion pricing has the potential to enhance economic 

efficiency, as well as provide other benefits, such as providing market 

signals that can guide capital investment decisions, and generating 

revenue to help fund such investment directly from users of the system. 3

There are several approaches to implementing congestion pricing on roads 

and at airports. However, incorporating pricing into our transportation 

systems involves overcoming several implementation challenges, such as 

current restrictions on using congestion pricing on our highways and on 

runways, and equity and fairness concerns. 

Economists generally believe that charging automobile, truck, vessel, and 

aircraft operators surcharges or tolls during congested periods can 

enhance economic efficiency by making them take into account the 

external costs they impose on others in deciding when, where, and how to 

travel. In congested situations, external costs are substantial and include 

increased travel time, pollution, and noise. The goal of efficient pricing on 

public roads, for example, would be to set tolls for travel during congested 

periods that would make the price (including the toll) that a driver pays 

for such a trip equal or close to the total cost of that trip, including 

external costs. In theory, these surcharges could help reduce congestion 

and the demand for road space at peak periods by providing incentives for 

travelers to share rides, use transit, and travel at less congested (generally 

off-peak) times or on less congested routes. 

Peak-period pricing may have applicability to other modes as well. For 

example, congestion pricing for using locks on our nation’s inland 

waterways might be a way to reduce delays experienced by barge 

operators. Similarly, congestion pricing at commercial airports—that is, 

charging higher landing fees during congested periods—would cause 

aircraft operators, both airlines and general aviation operators, to consider 

external costs in making their decisions. As a result, there would be 

incentives to shift some operations to off-peak hours or secondary airports 

or to provide the same carrying capacity by operating fewer but larger 

aircraft. 

In addition to increasing the efficiency with which current transportation 

infrastructure is used, congestion charges may be helpful in guiding capital 

 3

For further discussion of the research on congestion pricing, see National Research 

Council, Transportation Research Board, Curbing Gridlock: Peak-Period Fees to Relieve 

Traffic Congestion (Washington, D.C.: 1994). 

Research Suggests 

Significant Benefits, 

but Some Challenges, 

to Implementing 

Congestion Pricing 

Congestion Pricing May 

Encourage Greater 

Economic Efficiency, and 

Provide Other Benefits 
Page 6 GAO-03-735T Reducing Congestion 

investment decisions for new facilities. As congestion increases, the delay 

cost that an additional user of the system causes for other users also 

increases. If congestion charges are set such that they reflect external 

costs, then as congestion increases, congestion surcharges will increase. 

Rising surcharges provide signals of increased demand for specific 

increases in physical capacity, indicating where capital investment 

decisions to increase capacity would be most valuable. At the same time, 

congestion charges will provide a ready source of revenue for local, state, 

and federal governments and transportation facility operators to fund 

these investments in new capacity that, in turn, can reduce delays. In some 

cases and over a longer period, in places where external costs are 

substantial, and congestion surcharges are relatively high, this form of 

pricing might influence land-use plans and the prevalence of 

telecommuting and flexible workplaces. 

Congestion pricing could be applied to transportation systems in a variety 

of ways, and there are several possible approaches related to which 

facilities are priced, how the price is set, and how the toll is collected. 

In one possible form of congestion pricing for public roads, tolls would be 

set on an entire roadway or road segment during periods of peak use. In 

another form, sometimes known as value pricing, peak-period tolls would 

be set on only some lanes of a roadway, allowing drivers to choose 

between faster tolled lanes and slower non-tolled lanes. High-occupancy 

toll (HOT) lanes, under which drivers of single-occupancy vehicles are 

given the option of paying a toll to use lanes that are otherwise restricted 

to high-occupancy vehicles,4

 are an example of value pricing. Fast and 

Intertwined Regular (FAIR) lanes is a recent proposal that is another 

variation of value pricing. Under the FAIR lanes approach, revenues 

generated from travelers using electronically tolled lanes would be 

transferred to travelers using adjacent non-tolled lanes on the same 

roadway. These transfers would be done through electronic transponders 

in the vehicles using the toll lanes, as well as the non-tolled lanes. Those in 

the non-tolled lanes would receive a credit equal to 25 to 50 percent of the 

current effective toll, which could then be used toward public 

 4

Sometimes cars with two riders (including the driver) qualify as high-occupancy vehicles, 

while in other cases more than two riders are needed. 

Various Possible 

Approaches to Setting and 

Collecting Surcharges 

Exist 

Approaches for Roads 
Page 7 GAO-03-735T Reducing Congestion 

transportation fares or toward the use of the toll lanes on another day. In 

this way, drivers in the non-tolled lanes would receive compensation for 

the additional congestion that may result from increased use of those 

lanes once tolls are placed on other lanes. In a third form of congestion 

pricing for public roads, known as cordon-based pricing, drivers would be 

charged a fee for entering a specific area of a city, such as a central 

business district, at peak hours. 

Two commonly mentioned methods of applying the concept of congestion 

pricing at airports are differential pricing and auctions. Under differential 

pricing, airports would set landing fees higher at times when demand for 

takeoff and landing slots exceeded their availability, and lower at other 

times, in effect applying a surcharge for using the system at peak-demand 

periods. An auction approach would allow airports to periodically auction 

a fixed number of takeoff and landing slots—equal to the airport’s 

capacity—to the highest bidders. For example, an airport, in conjunction 

with the Federal Aviation Administration, could determine its per-quarterhour takeoff and landing capacity, and a competitive bidding process 

among carriers could determine fees during each period, which would also 

result in surcharges for using the system at peak-demand periods. 

Congestion pricing tolls could be levied using either a predetermined or 

variable approach. Under the predetermined approach, drivers would pay 

tolls that are preset and fixed according to the time of day they travel. In 

contrast, under the variable approach, drivers would pay tolls that vary 

according to the level of congestion on an affected roadway. For either 

approach, the amount of the toll to be levied would likely be set by state or 

local officials, or other toll facility operators, based on information from 

roadway usage and traveler surveys. The toll structure may also be 

influenced by the judgment of the toll facility operators. These tolls could 

then be adjusted upward or downward based on the use of the toll facility 

in relation to the optimal flow of traffic on the facility. 

Electronic methods of collection from users of public roads offer vast 

increases in efficiency compared to traditional tollbooths, which are labor 

intensive and relatively expensive to operate, and create congestion as 

drivers line up to pay their tolls. And, over the past decade, electronic road 

pricing technology has become more reliable and, as a result, more widely 

Approaches for Airports 

Structuring and Setting the 

Tolls 

Collecting Tolls 
Page 8 GAO-03-735T Reducing Congestion 

adopted on many toll facilities.5 According to a report issued by the 

Transportation Research Board, technologies that are currently used at 

some toll facilities to automatically charge users could also be used to 

electronically collect congestion surcharges without establishing 

additional tollbooths that would cause delays.6

 In application of cordonbased pricing, drivers would typically purchase and display permits that 

allow them access to the cordoned section of the city before entering. 

Daily or monthly permits could be differentiated by color and shape for 

easy enforcement. 

One challenge in implementing congestion pricing for transportation 

systems is that, at present, greater use of pricing is limited by statutory 

restrictions. For example, tolls are prohibited on the Interstate Highway 

System, except for roads that already had tolls in place before they were 

incorporated into the system (e.g., the New Jersey and Pennsylvania 

Turnpikes) or where exceptions have been made for the implementation 

of pilot projects.7

 Also, there are a variety of statutory restrictions on 

landing fees at airports that can limit use of congestion pricing. Landing 

fees are typically based on aircraft weight and are required to be set at 

levels designed to recover the historical costs of providing landing 

services. Costs imposed by congestion and other externalities cannot be 

considered in the calculation of the cost base and, hence, cannot be 

recovered in landing fees. Congestion fees, as well as most other types of 

fees, are also prohibited on the inland waterways because of the Interstate 

Commerce clause, according to the Army Corps of Engineers. Therefore, 

addressing some of these restrictions would be necessary to make greater 

use of congestion pricing. 

Another challenge involves effectively addressing concerns raised about 

equity and fairness. Because of this issue, political opposition to using this 

 5

Under electronic road pricing approaches, users of a toll facility can open accounts of 

fixed amounts. The account information is stored in electronic transponders that drivers 

mount on their windshields to “communicate” with an antenna at a signpost (or mounted 

on an overhead gantry) when their vehicles pass by. User accounts are then automatically 

debited. In case users have insufficient balances in their accounts or their transponders 

malfunction, a video enforcement system automatically takes a picture of the offending 

vehicle. See also David J. Forkenbrock and Jon G. Kuhl, A New Approach to Assessing 

Road User Charges, Public Policy Center (Iowa City: University of Iowa, 2002). 

6

Curbing Gridlock: Peak-Period Fees to Relieve Traffic Congestion.

7

 23 U.S.C. § 301. 

Challenges to 

Implementing Congestion 

Pricing Include Legal 

Restrictions and Concerns 

about Fairness and Equity 
Page 9 GAO-03-735T Reducing Congestion 

approach to address mobility challenges has been substantial. One equity 

concern that has frequently been raised about congestion pricing of public 

roads has been the potential effects of surcharges or tolls on lower-income 

drivers. Because a surcharge would represent a higher portion of the 

earnings of lower-income households, it imposes a greater financial 

burden on them and, therefore, is considered unfair.8

 The economics 

literature suggests that these concerns can be mitigated to some degree. 

For example, proponents of congestion pricing have noted that all income 

groups could potentially benefit if there is an appropriate distribution of 

the revenues obtained through congestion pricing. These revenues could 

be used to build new road capacity, given back as tax rebates tilted toward 

lower-income households, or used in some other way so that, in theory, 

the net benefits for each income group would exceed its costs. 

Although equity considerations could potentially be addressed by 

constructing a congestion pricing system for roads so that all income 

groups received net benefits, there could still be individuals who would be 

negatively affected. In theory, the cost of a surcharge or toll would be less 

for those who could more readily make adjustments to their driving 

behavior that would allow them to avoid paying the toll. Conversely, 

drivers who had little flexibility to alter their work schedules to avoid a 

toll by traveling at off-peak hours could potentially be more affected than 

workers with such flexibility. Similarly, those whose commuting patterns 

make it harder for them to form carpools or use transit could also be more 

affected. 

The arbitrary nature of these distinctions, as well as opposition from those 

who find the concept of restricting lanes or roads to people who pay to 

use them to be elitist, raises fairness concerns and accounts for some of 

the political opposition to congestion pricing. More generally, there is 

often opposition to paying a charge to use something that was formerly 

provided “free.” 

 8

Economists note that even if the burden of congestion charges is greater on low-income 

households, the same is true of fuel taxes, which are currently paid by users, and sales 

taxes, which are paid by users and non-users of transportation systems, both of which are 

relied on for transportation investments. For a discussion of equity concerns associated 

with increased use of voter-approved local sales taxes to pay for transportation 

infrastructure, see Martin Wachs, Improving Efficiency and Equity in Transportation 

Financing (Washington, D.C.: Brookings Institution, April 2003). 
Page 10 GAO-03-735T Reducing Congestion 

A number of existing congestion-pricing transportation projects, both here 

and abroad, show that pricing can influence travelers’ behavior to the 

point of reducing congestion and thus increasing economic efficiency. For 

example, value pricing pilot projects in the United States show 

considerable usage and have provided users with a less congested 

alternative, thus improving traffic flows and reducing delays. In addition, 

congestion-pricing mechanisms, in general, have demonstrated that they 

can generate revenue sufficient to fund their operation and, in some cases, 

fund investment in transportation alternatives. The available evidence also 

suggests that implementation challenges can be mitigated, although to 

what extent is not yet clear. 

A number of the congestion-pricing projects we identified enhanced 

transportation mobility through improved traffic flows, increased speeds 

and reduced delays for some users. One way in which some projects have 

done so is by channeling some drivers into infrastructure that is not being 

fully utilized even at peak periods. In several locations in the United 

States, for example, HOT lane projects have been implemented in which 

vehicles with fewer passengers than would normally be needed to use high 

occupancy vehicle lanes have been allowed to use such lanes by paying a 

toll.9

 High occupancy vehicle lanes are generally less congested than other 

highway lanes, and drivers who use them are thus able to shorten their trip 

times. The toll for such use varies, increasing during periods of peak 

congestion. In such HOT lane or value pricing projects in Orange County 

(as shown in figure 1) and San Diego, California, and Houston, Texas, 

drivers willing to pay to use the HOT lane saved an average of 12-20 

minutes per trip in the peak period. In addition, some projects were able to 

shift demand on congested infrastructure to less congested time periods. 

In San Diego, officials were also able to spread out peak period traffic on 

the toll lanes over a longer period of time by charging a lower toll just 

before and just after the peak period. 

 9

Under the Federal Highway Administration’s Value Pricing Pilot Program, the restriction 

on using tolls on the interstate is lifted for approved projects. 

Existing Projects 

Show That Benefits 

Can Result, and Some 

Evidence Suggests 

That Implementation 

Challenges Can Be 

Mitigated 

Projects Provide Evidence 

of Increased Economic 

Efficiency 
Page 11 GAO-03-735T Reducing Congestion 

Figure 1: Tolled Lanes on State Route 91 in Orange County, California 

In many instances, however, a congested transportation system may have 

no equivalent to a high occupancy vehicle lane with additional capacity. In 

these cases, some other congestion pricing models have been used to 

encourage travelers to shift their behavior, either by traveling at another 

time or by using alternative transportation modes, such as buses, trains, or 

carpools. For example, in Singapore, London, and Norway, congestion 

pricing has taken the form of cordon-based pricing, where drivers pay to 

enter entire regions. These projects have demonstrated significant 

decreases in the level of congestion on roads in the cordoned area and 

some significant shifts to other alternative modes, as follows: 

• In Singapore, the city government instituted a $1 charge in 1975 for private 

vehicles to enter the central business district in the morning rush hours. 

Carpools, buses, motorcycles, and freight vehicles were exempted from 

the charge. The result was an immediate 73 percent decline in the use of 

private cars, a 30 percent increase in carpools, and a doubling of buses’ 

share of work traffic. 

• In London, recent implementation of cordon tolls resulted in traffic 

decreases of roughly 20 percent, and about a 14 percent increase in the 

use of buses during the morning commute. 
Page 12 GAO-03-735T Reducing Congestion 

• In Trondheim, Norway, cordon tolls produced a 10 percent reduction in 

traffic at peak times and an 8 percent increase in traffic in off-peak times 

in the central business district. 

Such projects have similarly been used to relieve congestion at crowded 

airports. In one case, the Port Authority of New York and New Jersey 

imposed surcharges beginning in 1968 for peak-hour use by small aircraft 

at Newark, Kennedy, and La Guardia airports. These small aircraft, known 

as “general aviation” aircraft, were not part of scheduled airline 

operations. The need to accommodate takeoffs and landings for these 

aircraft during peak periods was adding to passsengers’ delays on 

scheduled airline flights. The port authority raised the peak-period 

minimum take-off and landing fees for aircraft with fewer than 25 seats 

from $5 to $25, while keeping the off-peak fee at $5. As a result of the 

surcharges, general aviation activity during peak periods decreased by 30 

percent. The percentage of aircraft operations delayed more than 30 

minutes declined markedly over the same period. Similarly, in 1988 at 

Boston’s Logan Airport, the Massachusetts Port Authority adopted a much 

higher landing fee for smaller aircraft. Like the three New York and New 

Jersey airports, Logan experienced a large drop-off in use by smaller 

aircraft. Much of the general aviation abandoned Logan for secondary 

airports, and delays at Logan dropped.10

Proponents of congestion pricing have noted that others besides those 

who can afford to pay congestion pricing costs can share in the benefits 

through an appropriate distribution of any revenues generated. A part of 

these revenues will be needed to administer the system—for example, to 

collect tolls. However, existing projects also contain a few examples of 

situations in which the revenues generated from congestion pricing have 

been used to benefit other transportation alternatives. For example, the 

revenue from the HOT lane project in San Diego has been sufficient not 

only to pay for toll takers and other administrative expenses, but also to 

 10These practices in New York, New Jersey, and Boston have since been discontinued 

because of a successful lawsuit brought by small commuter airlines and the Department of 

Transportation. 

Projects Can Also Provide 

Support for Other 

Transportation 

Alternatives 
Page 13 GAO-03-735T Reducing Congestion 

fund the operation of a new express bus service. This has increased travel 

choices for all area commuters, including lower-income populations.11

International experiences with congestion pricing have been somewhat 

more extensive and revenues generated from congestion tolls have been 

substantial. In Singapore, only about 12 percent of the revenue generated 

from their cordon-based tolls have been needed to cover the costs of 

operation. In Trondheim, Norway, revenues have exceeded capital and 

operating expenses of the toll facility by 5 times. Trondheim’s toll facility 

currently generates about $25 million in profit per year. These profits have 

been used to enhance the capacity of the entire transportation system, 

including financing additional road infrastructure as well as subsidizing 

public transportation facilities and services, and pedestrian and bicycle 

facilities. 

There is some encouraging evidence with regard to mitigating equity and 

fairness issues in implementing congestion pricing, although the extent to 

which these concerns can be mitigated is unclear. At least one project we 

reviewed indicates that implementation of congestion pricing needs to be 

carefully evaluated as an alternative in some circumstances, because it 

provides no automatic guarantee of benefits. In Lee County, Florida, the 

county instituted variable tolls on two bridges based on peak travel 

periods. The county reduced the toll for using the bridges in off-peak 

periods. On one bridge, traffic increased during the off-peak period but 

decreased very little during the peak period. A study from the University of 

South Florida12 found that peak-period demand for the bridge was not as 

flexible as compared to demand during off-peak periods. That is, drivers at 

peak periods may not have readily available alternatives to commute at 

different times, use a different mode of transportation, or take another 

route, and therefore have little choice but to use the bridge during the 

peak period, or the price of the congestion toll was set too low to 

influence the demand of those users. The example illustrates the fact that 

a pricing mechanism may not be very effective at reducing peak-period 

 11A recent proposal for “HOT networks” promotes the use of HOT lanes in conjunction with 

operating bus rapid transit services, utilizing the revenues from the toll lanes. For more 

information, see Robert W. Poole, Jr. and C. Kenneth Orski, “Policy Summary No. 305” (Los 

Angeles, CA: Reason Foundation, 2003). 

12Chris Swenson, Alasdair Cain, and Mark W. Burris, “Toll Price-Traffic Demand Elasticity 

Analysis on Variable Priced Toll Bridges” (Tampa: Center for Urban Transportation 

Research – College of Engineering, University of South Florida, July 1999). 

Extent to Which Equity 

and Fairness Issues Can 

Be Mitigated Is Not Yet 

Clear 
Page 14 GAO-03-735T Reducing Congestion 

travel if the price is not set properly, or without additional measures that 

provide travelers with other choices. 

Although the congestion pricing projects we reviewed produced little 

evidence of congestion reductions in adjoining lanes or in other alternative 

routes, they also produced little evidence that congestion increased in the 

non-tolled lanes or on alternative routes. For example, while the value 

pricing projects in California and Texas resulted in less congested 

alternatives for individuals willing to pay the toll, only one of the projects 

was able to demonstrate any decreases in congestion on the remaining 

“free” lanes of the highway. In Orange County, California, a study found 

that opening two new lanes, which were designated as congestion toll 

lanes, decreased delays on the other “free” lanes from 30-40 minutes to 

about 12-13 minutes, while traffic remained stable on alternative nearby 

freeways. However, there is also some evidence that pricing can increase 

congestion on alternative routes. In Singapore, where the city used cordon 

pricing, there was deterioration in traffic conditions just outside the 

cordoned area caused by travelers attempting to bypass it. Such 

congestion would adversely impact individuals who do not pay the toll or 

individuals not using the congested facility. However, at least one study 

said that the costs of increased traffic on alternative routes did not 

outweigh the benefits of reduced congestion in the cordoned area. 

There are other encouraging signs in relation to distributional impacts 

from existing projects, although there is no conclusive evidence on the 

distributional impacts of congestion-pricing techniques. A report on the 

value-pricing project in Orange County found that there was significant 

usage of the toll facility by individuals at all income levels. This 

demonstrates that low-income individuals also value the time they save, 

and that some value their time enough to be willing to pay a toll that 

amounts to a higher percentage of their income than that paid by 

individuals with greater income. However, in value-pricing pilot projects in 

Orange County, San Diego, and Houston, those using the toll lanes tended 

to have higher incomes than those using the adjoining lanes. 

Experts have noted that tolls might become more acceptable to the public 

if they were applied to new roads or lanes as demonstration projects, so 

that tolls’ effectiveness in increasing commuter choices could be 

evaluated. For example, in the Orange County pilot project, where two 

new toll lanes were added to the highway, opinion surveys have shown a 

high rate of public acceptance. Other pilot projects in Houston and San 

Diego have also demonstrated public satisfaction. In addition, recent 

proposals, such as FAIR lanes and HOT networks, show promise to further 
Page 15 GAO-03-735T Reducing Congestion 

mitigate equity and fairness concerns. FAIR lanes, as previously discussed, 

and which have been proposed in New York, would credit users of the 

adjoining lanes, using revenues generated by the toll lanes, allowing those 

users to use the toll lanes on another day for a reduced or no charge. The 

HOT network proposal couples HOT lanes with bus rapid transit 

initiatives, similar to the experience of the pilot project in San Diego, 

thereby using the revenues from the tolls to broaden the transportation 

alternatives available for all commuters, including lower-income 

populations. 

Traffic on already congested surface, maritime, and air transportation 

systems is expected to grow substantially over the next decade. This 

congestion can be considered a shortage; it occurs when more services—

from lanes of highway, airport runways, locks on rivers—are demanded 

than can be supplied at a given time and place. A range of approaches and 

tools must be applied to solve the pervasive transportation congestion 

problems that our nation faces in the next decade and beyond. Congestion 

pricing—although only one of several approaches that can be used to 

reduce congestion on our nation’s roads, airways, and waterways—shows 

promise in reducing congestion and better ensuring that our existing 

transportation systems are used efficiently. 

Pilot projects and experiences with congestion pricing abroad 

demonstrate the promise of this approach for reducing congestion and 

promoting more efficient use of transportation systems by users. Despite 

this promise, there continue to be concerns over fairness and equity in the 

application and implementation of congestion pricing, which current 

projects have not fully alleviated. Some proposed projects, such as FAIR 

lanes, which use revenues generated to compensate other users of the 

transportation system, could help alleviate some of the fairness and equity 

concerns that have been raised. Experts suggest and some projects 

demonstrate that public opposition to congestion pricing will lessen as 

these projects show that equity and fairness concerns can be mitigated. 

However, if congestion pricing is to be more widely applied to 

transportation systems, the Congress will need to ease statutory 

restrictions on the use of congestion-pricing applications on 

transportation systems. 

Concluding 

Observations 
Page 16 GAO-03-735T Reducing Congestion 

For further information on this statement, please contact JayEtta Hecker 

at (202) 512-8984 or heckerj@gao.gov. Individuals making key 

contributions to this report include Nancy Barry, Stephen Brown, Jay 

Cherlow, Lynn Filla Clark, Terence Lam, Ryan Petitte, Stan Stenersen, 

Andrew Von Ah, and Randall Williamson. 

Contact and 

Acknowledgments 

(544071) 
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