Transit and 

Congestion Pricing 

A Primer
Quality Assurance Statement

The Federal Highway Administration (FHWA) provides high quality 

information to serve Government, industry, and the public in a manner 

that promotes public understanding. Standards and policies are used to 

ensure and maximize the quality, objectivity, utility, and integrity of its 

information. FHWA periodically reviews quality issues and adjusts its 

programs and processes to ensure continuous quality improvement.
Contents

The Primer Series and the Purpose of This Volume 2

The Traffic Congestion Problem 4

Costs of Traffic Congestion 4

Trends 4

Causes of Congestion 4

What Is Congestion Pricing? 6

Effects of Pricing on Vehicle Throughput 6

Types of Congestion Pricing 7

Benefits of Congestion Pricing 7

Use of Revenues From Pricing 7

Pricing Strategies and Their Effect on Public Transportation 8

Variably Priced Lanes 9

State Route 91 Express Lanes in Orange County, CA 9

HOT Lanes on I-15 in San Diego, CA 9

Houston, TX, HOT Lanes “QuickRide” Program on I-10/Katy Freeway 10

Minneapolis–St. Paul, MN, I-394 MnPASS Value-Pricing Program 10

Denver, CO, I-25 Express Lanes 10

Variable Tolls on Roadways 10

New York–New Jersey Variable Pricing 11

Lee County, FL, Variable Bridge-Toll Pricing 11

Zone-Based (Cordon or Area) Pricing 11

Central London 11

Stockholm City Center 12

Singapore 13

Area-Wide Pricing 14

Parking-Pricing Strategies 14

Parking Cash-Out 14

Variably Priced Parking Meters 14

Lessons Learned 14

The Domestic Experience 14

The International Experience 15

U.S. Department of Transportation’s Urban Partnership Agreements Program 16

Federal Transit Administration’s Policy on HOV to HOT Conversions 17

Summary 18

References 20
2 | C o n g e s t i o n P r i c i n g

The Primer Series and the Purpose of This Volume

States and local jurisdictions are increasingly discussing congestion pricing as a strategy for improving transportation system performance. In fact, 

many transportation experts believe that congestion pricing offers promising opportunities to costeffectively reduce traffic congestion, improve the 

reliability of highway-system performance, and 

improve the quality of life for residents, many of 

whom are experiencing intolerable traffic congestion in regions across the country. 

Because congestion pricing is still a relatively 

new concept in the United States, the Federal 

Highway Administration (FHWA) is embarking 

on an outreach effort to introduce the various aspects of congestion pricing to decision-makers 

and transportation professionals. One element of 

FHWA’s congestion-pricing outreach program is 

this Congestion Pricing Primer Series. The aim of 

the primer series is not to promote congestion 

pricing or to provide an exhaustive discussion of 

the various technical and institutional issues one 

might encounter when implementing a particular 

project; rather, the intent is to provide an overview 

of the key elements of congestion pricing, to illustrate the multidisciplinary aspects and skill sets 

required to analyze and implement congestion 

pricing, and to provide an entry point for practitioners and others interested in engaging in the congestion-pricing dialogue. 

The concept of tolling and congestion pricing is 

based on charging for access and use of our roadway network. It places responsibility for travel 

choices squarely in the hands of the individual 

traveler, where it can best be decided and managed. The car is often the most convenient means 

of transportation; however, with a little encouragement, people may find it attractive to change their 

travel habits, whether through consolidation of 

trips, car-sharing, by using public transportation, 

or by simply traveling at less-congested times. The 

use of proven and practical demand management 

pricing that we freely use and apply to every other 

utility is needed for transportation. 

The application of tolling and road pricing provides the opportunity to solve transportation problems without Federal or state funding. It could 

mean that further gas tax, sales tax, or motor-vehicle registration fee increases are not necessary now 

or in the future. Congestion pricing is not a complete plan of action. It has to be coordinated with 

other policy measures to maximize success.

Against this background, this transit and pricing 

primer was produced to examine the interrelationships between congestion pricing and transit 

operations and use. 

About This Primer Series

The Congestion Pricing Primer Series is part of FHWA’s 

outreach efforts to introduce the various aspects of 

congestion pricing to decision-makers and transportation 

professionals in the United States. The primers are intended 

to lay out the underlying rationale for congestion pricing and 

some of the technical issues associated with its implementation in a manner that is accessible to non-specialists in the 

field. Titles in this series include:

•	 Congestion Pricing Overview.

•	 Non-Toll Pricing.

•	 Technologies That Enable Congestion Pricing.

•	 Technologies That Complement Congestion Pricing.

•	 Transit and Congestion Pricing.

•	 Economics: Pricing, Demand, and Economic Efficiency.

•	 Income-Based Equity Impacts of Congestion Pricing.
T ransit and Congestion Pri c ing | 3
4 | C o n g e s t i o n P r i c i n g

Costs of Traffic Congestion 

Demand for highway travel by Americans continues 

to grow as the population increases, particularly in 

metropolitan areas. Construction of new highway 

capacity to accommodate this growth in travel has 

not kept pace. Between 1980 and 1999, route miles 

of highways increased by 1.5 percent, whereas vehicle miles of travel increased by 76 percent. According to the Texas Transportation Institute, in 

2003, congestion in the top 85 U.S. urban areas 

caused 3.7 billion hours of travel delay and 2.3 billion gallons of wasted fuel, for a total cost of $63 

billion. This figure would be substantially higher 

(perhaps three times the amount) if it accounted 

for the significant cost of growing system unreliability and unpredictability to drivers and businesses, 

the environmental impacts of idle-related auto 

emissions, or high gasoline prices. In the 10 most 

congested areas, each rush-hour traveler “pays” an 

annual “congestion tax” of between $850 and $1,600 

in lost time and fuel and spends the equivalent of 

almost 8 workdays each year stuck in traffic. 

Trends

Highway congestion has increased over the past 2 decades. Between 1982 and 2003, U.S. highway congestion has increased in extent, duration, and intensity. In 

2003, in the largest U.S. cities, highway congestion: 

•	 Impacted 67percent of travel (up from

33 percent in 1982), 

•	 Lasted 7 hours per day in duration (up from

4.5 hours in 1982), and 

•	 Added an additional 37 percent to the length

of the average rush-hour driver’s trip (up from 

13 percent in 1982).

Congestion also is growing rapidly in small- and 

medium-sized metropolitan areas. On the basis of 

current trends, a medium-sized city should expect 

its congestion in 10 years to be as bad as or worse 

than that currently experienced by a large city. The 

rate of congestion growth has been greater in rural 

than in urban areas, portending increased congestion in communities of all sizes. 

Causes of Congestion 

Congestion results when traffic demand approaches 

or exceeds the available capacity of the system. Although this is a simple concept, it is not constant. 

Traffic demands vary significantly depending on the 

season, the day of the week, and the time of day. In 

addition, the capacity, often mistaken as a constant, 

can change because of weather, work zones, traffic 

incidents, or other non-recurring events. About half 

of congestion is caused by temporary disruptions that 

take away part of the roadway from use, that is, nonrecurring congestion. 

Roughly half of the congestion experienced by 

Americans happens virtually every day—it is recurring. This is the type of congestion in which there 

are simply more vehicles than there is roadway. Recurring congestion occurs during peak-travel periods for a simple reason: The number of vehicles trying to use the highway system exceeds the available 

The Traffic Congestion Problem 
T ransit and Congestion Pri c ing | 5

capacity. Effectively managing demand during 

peak periods involves convincing travelers to make 

their trip at a less-congested time, on a different 

mode, on a less-congested route, or through a 

means other than travel on the highway system 

(e.g., telecommuting).

When searching for a solution to the congestion 

problem, most people immediately think of adding a new lane to an overburdened highway. Construction costs for adding lanes in urban areas average $10 million per lane mile. In general, the 

funding for this construction comes from the tax 

that drivers pay when buying gas for their vehicles. 

This amount is insufficient to pay for the lane addition. The bargain price paid by motorists for use 

of expensive new capacity encourages more drivers to use the expanded highway. 

Introducing congestion pricing on highway facilities would discourage overuse during rush hours 

by motivating people to travel by other modes, such 

as carpools or public transportation, or by traveling 

by automobile at other times of the day. 

Bottlenecks

40%

Traffic Incidents

25%

Special Events 

Poor Signal Timing 5%

5%

Bad Weather

15%

Work Zones

10%

Causes of congestion (by percentage).
6 | C o n g e s t i o n P r i c i n g

Congestion pricing—sometimes called value pricing—is a way of harnessing the power of the market to reduce the waste associated with traffic congestion. Congestion pricing works by shifting 

purely discretionary rush-hour highway travel to 

other transportation modes or to off-peak periods, 

taking advantage of the fact that the majority of 

rush-hour drivers on a typical urban highway are 

not commuters. By removing a fraction (even as 

small as 5 percent) of the vehicles from a congested roadway, pricing enables the system to flow 

much more efficiently, allowing more cars to move 

through the same physical space. Similar variable 

charges have been successfully utilized in other industries, for example, airline tickets, cell phone 

rates, and electricity rates. There is consensus 

among economists that congestion pricing represents the single most viable and sustainable approach to reducing recurring traffic congestion. 

Although drivers unfamiliar with the concept 

initially have questions and concerns, surveys show 

that drivers who have experienced congestion pricing support it. They do so because it offers them a 

reliable trip time, which is very valuable, especially 

when they have to be somewhere on time. 

Effects of Pricing on Vehicle 

Throughput

Vehicle throughput on a freeway is the number of 

vehicles that get through a distance over a short 

period of time, such as an hour. Once freeway 

traffic exceeds a certain threshold level, both vehicle speed and vehicle throughput drop precipitously. Data show that maximum vehicle throughput occurs at free-flow speeds ranging from 45 

mph to 65 mph. The number of vehicles that get 

through per hour can drop by as much as 50 percent when severe congestion sets in. At high-traffic levels, the freeway is kept in this condition of 

“collapse” for several hours after the rush of commuters has stopped. This causes further unnecessary delay for off-peak motorists who arrive after 

rush hour. With peak-period highway pricing, a 

variable toll dissuades some motorists from entering freeways at those access points where traffic 

demand is high and where such surges in demand 

may push the freeway over the critical threshold 

at which traffic flow collapses. Pricing prevents a 

breakdown of traffic flow in the first instance and 

thus maintains a high level of vehicle throughput 

during the rush hours.

What Is Congestion Pricing? 
T ransit and Congestion Pri c ing | 7

types of congestion pricing 

There are five main types of pricing strategies: 

1. Variably priced lanes: Variable tolls on separated 

lanes within a highway, such as express-toll 

lanes or high-occupancy toll (HOT) lanes. 

2. Variable tolls on entire roadways: Both on toll 

roads and bridges, as well as on existing toll-free 

facilities during rush hours.

3. Zone-based (area or cordon) charges: Either variable or fixed charges to drive within or into a 

congested area within a city. 

4. Area-wide charges: Per-mile charges on all roads 

within an area that may vary by level of congestion.

5. Pricing that does not involve tolls: This includes 

innovative parking-pricing strategies (e.g., surcharges for entering or exiting a parking facility 

during or near peak periods) and a range of parking cash-out policies, in which cash is offered to 

employees in lieu of subsidized parking.

Benefits of Congestion Pricing

Congestion pricing benefits drivers and businesses by 

reducing delays and stress, by increasing the predictability of trip times, and by allowing for more deliveries per hour. It benefits state and local governments 

by improving the quality of transportation services 

without tax increases or large capital expenditures, 

by providing additional revenues for funding transportation, by retaining businesses and expanding the 

tax base, and by shortening incident response times 

for emergency personnel. By preventing the loss of 

vehicle throughput that results from a breakdown of 

traffic flow, pricing maximizes return on the public’s 

investment in highway facilities. 

Congestion pricing also benefits public transportation by improving vehicle speeds and service reliability. This in turn increases public transportation 

ridership and lowers operating and maintenance 

costs. Public transportation and ridesharing advocates appreciate the ability of congestion pricing to 

generate both funding and incentives to make public transportation and ridesharing more attractive.

Use of Revenues From Pricing 

Congestion pricing can generate substantial revenues from tolls. A portion of the revenues generated 

will be needed to operate the toll-collection and 

traffic-management systems. Net revenues after 

payment of operating costs can be used to pay for 

expansion of roadway facilities; to support alternatives to driving alone, such as public transportation; 

to address impacts on low-income individuals by 

providing toll discounts or credits; or to reduce other taxes that motorists pay for highways, such as 

fuel taxes, vehicle registration fees, or sales taxes. 

Transponders are read by overhead antennas, 

allowing tolls to be paid without stopping.
8 | C o n g e s t i o n P r i c i n g

Congestion pricing and public transportation convey mutual benefits—road pricing benefits public 

transportation by improving public transportation 

speeds and the reliability of public transportation 

service, increasing public transportation ridership, 

lowering costs for public transportation providers, 

and expanding the source of revenue that may be 

used for public transportation. 

Public transportation benefits road pricing by absorbing commuters who shift their travel from automobile to bus or rail. By replacing traffic with 

free-flowing conditions on major routes, congestion 

pricing can improve the speed and productivity of 

current express bus services, making them more attractive to commuters while reducing operating 

costs. Reducing congestion can also facilitate rapid 

deployment of innovative, high-performance busrapid-transit (BRT) operations in major corridors, 

which require only modest investments in new vehicles and passenger facilities. Improving the performance and variety of peak-period public transportation through a combination of congestion 

pricing and limited capital investment can provide 

significant benefits to current public transportation 

users. It can improve public transportation’s effectiveness in reducing peak-period auto travel and 

can provide the expanded passenger-carrying capacity necessary to accommodate shifts in public 

transportation commuter use induced by the imposition of congestion pricing.

Recent experience suggests that the effect of 

congestion pricing on public transportation depends 

on the type of pricing strategy implemented. At 

present, variably priced lanes have had limited efPricing Strategies and Their Effect 

on Public Transportation

Congestion

pricing

Higher

transit

ridership

The Virtuous Cycle

Opportunities

for New Capacity

Less

highway

congestion

Higher transit 

speeds & 

more reliable

transit service

Higher transit 

ridership; 

lower costs

for transit

providers

More 

frequent

service &

lower fares

Increased 

price for

peak period

highway use

Expanded

mobility

Congestion Pricing

Improved transit service

Congestion pricing: Benefits to transit.
T ransit and Congestion Pri c ing | 9

fect on public transportation usage, whereas the impact of zone-based (cordon or area) pricing has been 

significant.

Variably Priced Lanes

Variably priced lanes include express toll lanes and 

HOT lanes. On HOT lanes, low-occupancy vehicles 

are charged a toll, whereas high-occupancy vehicles 

(HOVs), public transportation buses, and emergency 

vehicles are allowed to use the lanes free of charge or 

at reduced rates. HOT lanes create an additional category of eligibility to use HOV lanes. People can meet 

the minimum vehicle passenger requirement, or they 

can choose to pay a toll to gain access to the HOV lane. 

With citizens growing more frustrated with underused HOV lanes, HOT lanes are increasingly being 

viewed as a solution that can reduce public opposition 

to HOV lanes. Express toll lanes are similar to HOT 

lanes—the difference is that all vehicles are required to 

pay a toll, that is, HOVs do not get free service. 

The current experience with HOT lanes suggests 

that variably priced lanes do not generate a shift to 

public transportation per se; however, in many cases, 

some of the revenues generated by the lanes are dedicated to public transportation. 

State Route 91 Express Lanes in 

Orange County, CA 

The four variably priced express lanes in the median of 

the State Route (SR) 91 freeway opened in December 

1995. The objectives of the SR-91 express lanes were 

to generate revenue and to provide additional highway 

transportation options. The variable tolls range from 

$1.25 during off-peak times to as much as $9.80 on 

Friday afternoons. The toll schedule is adjusted every 3 

months based on traffic observed over the prior 

3-month period. Speeds are 60–65 mph on the express 

lanes, whereas congestion on the free lanes has reduced 

average peak-hour speeds to no more than 15–20 mph. 

During the peak hour, which occurs on Friday afternoon (5:00–6:00 p.m.) in the eastbound direction, the 

two “managed” express lanes each carry almost twice 

as many vehicles per lane than do the free lanes because of the effect of severe congestion on vehicle throughput in the free lanes. Toll revenues 

have been adequate to pay for construction and 

operating costs.

Although local public transportation vehicles 

use the express toll lanes, there is little impact on 

public transportation operations from this variable-pricing application (Jackson, Zirker, Peirce, 

& Baltes, 2008). Although a commuter rail line 

and an express bus line both operate in the SR91 corridor, total public-transit ridership in the 

corridor amounts to less than 1 percent of the 

highway traffic (Sullivan & Burris, 2006).

HOT Lanes on I-15 in San Diego, CA

The San Diego HOV/HOT-lanes deployment, 

known as FasTrak®, is a reversible HOV facility 

that operates along an 8-mile corridor within the 

median of I-15, north of downtown San Diego. 

Typical of other HOT lanes, the San Diego HOT 

lanes allow public transportation vehicles and 

carpools with two or more persons to travel free, 

and single-occupant vehicles may access the 

lanes if they pay a variable toll ($0.50–$8.00). 

When the I-15 FasTrak® HOT-lanes project was 

opened with electronic tolling in 1998, it became 

the world’s first fully dynamic variable-pricing 

operation. The toll varies based on the congestion level, which is analyzed every 6 minutes, 

with appropriate modifications made to the toll 

rate if needed. 

Although this operation is primarily seen as a 

traffic-reduction highway initiative, the San Diego HOT lanes have always had a public transportation link in its concept and operations. The 

HOT lanes currently generate annual toll revenues of approximately $1–$2 million. Approximately half of the toll revenues are used to fund 

the Inland Breeze bus express service between 

northern San Diego County and downtown San 

Diego along the HOT lanes. Ridership on the Inland Breeze is modest, and most of its riders had 

been using public transportation prior to its advent; thus, the new express bus service had little 
10 | C o n g e s t i o n P r i c i n g

direct impact on congestion. Still, public transportation improvements financed by toll revenues contributed to a 25-percent increase in bus ridership.

Overall, the I-15 FasTrak® value-pricing program has been so successful that construction is underway to expand the system by 2012 to a 20-mile, 

two-directional managed-lane project that extends 

from downtown San Diego to Escondido in the far 

northern part of the county. A key component of 

this $1 billion expansion project is the inclusion of 

direct access ramps to five new BRT stations. The 

high-frequency BRT service is currently in development and will address the shortcomings of the Inland Breeze express bus service (Jackson, Zirker, 

Peirce, & Baltes, 2008).

Houston, TX, HOT Lanes “QuickRide” 

Program on I-10/Katy Freeway 

There are approximately 105 miles of HOV lanes 

that are operating in the Houston metropolitan 

area. The HOV lanes are owned and managed by 

the Metropolitan Public Transportation Authority 

of Harris County (Houston Metro). Public transportation vehicles, carpools with specified occupancy, vanpools, and motorcycles are allowed to use 

these lanes. The QuickRide program operates on 

two HOV facilities (I-10 and US 290) on which 

two-person carpools are required to pay a toll of 

$2.00 to use the HOV lanes during certain specified peak times when only vehicles with higher occupancy levels may ride free. Although a large number of public transportation vehicles use the HOV 

lanes, including express buses, there does not appear to be a strong connection between HOV lanes, 

the QuickRide program, and public transportation. 

On the basis of a 2004 evaluation of the QuickRide 

program, there were a number of complaints in regard to existing Houston Metro service along the 

HOV corridors. The service is not generating substantial and sustainable modal changes that favor 

public transportation ridership (Jackson, Zirker, 

Peirce, & Baltes, 2008).

Minneapolis–St. Paul, MN, I-394 MnPASS 

Value-Pricing Program 

In May 2005, the Minnesota Department of Transportation (MnDOT) opened the I-394 HOT-lane 

corridor. Known as the I-394 MnPASS project, this 

project has the first HOT lane not physically separated (e.g., by barriers, separate roadway, etc.) from 

the toll-free, general-purpose lanes. This was made 

possible through strong enforcement and by incorporating the latest technologies into the HOT-lane 

operations. Toll rates are dynamically set (ranging 

from $0.25 to $8.00), depending on the current 

congestion level and the distance traveled. As is 

typical with all Minnesota HOV lanes, public transportation, carpools, and motorcycles never pay a 

toll. Although value-pricing objectives stated that 

road-use charges seek to provide incentives to shift 

some trips to off-peak times, less-congested routes, 

or alternative modes, a November 2006 evaluation 

found that most public transportation providers reported negligible impacts on operations as a direct 

result of the MnPASS deployment. The evaluation 

went on to emphasize that the MnPASS deployment will not result in mode-share changes to the 

I-394 corridor (Jackson, Zirker, Peirce, & Baltes, 

2008).

Denver, CO, I-25 Express Lanes

Since the I-25 express lanes opened in Denver, CO, 

in June 2006, usage levels are above predicted use. 

In June 2006, the first month of operation, 21,551 

vehicles used the HOT lanes. This increased by 73 

percent in March 2007 to 80,665 vehicles that used 

HOT lanes. Regional transportation district buses 

operated over 96 percent on time in the first year of 

operation of the HOT lanes. 

Variable Tolls on Roadways

With variable tolls, flat toll rates on existing toll 

roads are changed to a variable-toll schedule so that 

the toll is higher during peak-travel hours and lower 

during off-peak or shoulder hours. This encourages 

motorists to use the roadway during less-congested 

periods and allows traffic to flow more freely during 

peak times. Peak-toll rates may be high enough to 
T ransit and Congestion Pri c ing | 11

guarantee that traffic flow will not break down, thus 

offering motorists a reliable and congestion-free 

trip in exchange for the higher peak toll. Variable 

tolls can also be introduced on existing toll-free facilities to manage traffic flow. Again, tolls vary by 

time of day and are charged only on congested 

highway segments to manage traffic flow and to recover the highway’s capacity to carry the number of 

vehicles for which it was designed. 

New York–New Jersey Variable Pricing 

In February 2001, the Port Authority of New York 

and New Jersey changed its tolling system from 

fixed to variably priced along its numerous Hudson 

River crossings. An early analysis in June 2001 

showed some effect on travel and public transportation patterns at a few key locations. Long-term impacts have not been reported (Jackson, Zirker, 

Peirce, & Baltes, 2008).

Lee County, FL, Variable Bridge-Toll 

Pricing 

The variable-pricing program on the Cape Coral 

and Midpoint Bridges in the Fort Meyers, FL, area is

a small-scale project. To provide an incentive for 

motorists to adjust their travel times, half-price tolls 

are offered during a short period prior to and after 

peak hours to those vehicles registered with Lee

Way prepaid toll accounts. (Standard tolls range 

from $0.50 to $1.00.) Survey data revealed that, 

among those eligible for the discount, there was an 

increase in traffic of as much as 20 percent during 

the discount period before the morning rush hours, 

with corresponding drops in the rush hour itself. 

However, there has been no discernable public 

transportation interest in this bridge-toll-pricing 

system (Jackson, Zirker, Peirce, & Baltes 2008). 

Zone-Based (Cordon or Area) 

Pricing 

Zone-based pricing involves charging a fee to enter 

or drive within a congested area, usually a city center. Two of the most comprehensive and successful 

international examples of zone-based pricing have 

been in London, U.K., and Stockholm, Sweden.

These cities’ experiences demonstrate that properly 

structured zone-based charging schemes can reduce 

urban congestion and increase public-transportation ridership. More important, there is a significant 

relationship between the success of zone-based 

pricing and the provision of public transportation. 

Central London 

On February 17, 2003, London implemented an

ambitious plan for using pricing to combat congestion in central London. The scheme requires the

payment of an £8 ($16) fee to enter a 15-squaremile area of Central and West London, which includes the historic and commercial core of the city. 

The charge is in effect from 7:00 a.m. to 6:00 p.m., 

Monday through Friday. There is an array of exemptions, including a 90-percent discount for residents 

of the zone. 

The congestion charge had been in the planning 

stages since the mid-1990s but was ultimately implemented by London’s first elected mayor as one

component of his transportation strategy for the region. Enhanced public transportation services were 

at the core of this strategy and were deployed well 

in advance of implementing the congestion charge. 

Most of the public transportation investment was 

focused on the bus system, with 300 additional 

buses put into service months before the congestion charge was initiated. 

A detailed, pre-charge review of bus services resulted in improved frequencies on 53 routes and 

the use of larger vehicles on 10 routes, that is, a 

change to double-decker or articulated buses. Fifteen routes were restructured or extended, and 

seven entirely new routes were introduced. All of 

these changes were implemented in 2002 and early 

2003, months before the congestion charge actually 

took effect. A similar review was conducted in 

2007, prior to the westward expansion of the zone. 

Overall, total scheduled bus mileage within the 

zone (including on the boundary) increased by 10 

percent between January 2002 and January 2003. 

These service expansions coincided with other ongoing efforts to improve bus services, including improved traveler information, exclusive bus lanes, 

electronic fare payment, stricter enforcement of 
12 | C o n g e s t i o n P r i c i n g

bus lanes and parking restrictions, public transportation signal priority, and low-floor and accessible 

vehicles. Essentially,Transport for London created a

200-mile network of dedicated bus lanes. 

Evaluation results indicate that the charging system has been successful in reducing congestion by 

about 25 percent within the zone and has led to substantial increases in bus ridership. The charge raises 

£122 million ($240 million) per year, which by law 

must be reinvested in transportation. Monitoring 

showed that bus ridership increased even more than 

expected. In the first year, ridership into the zone during the 

morning peak was up by 29,000 

passengers (38 percent). Half of 

this was attributed to the congestion charge itself as opposed to 

other improvements that had 

been made to the bus system. The 

following year, inbound morning 

ridership increased by another 12 

percent. Overall, bus ridership 

across the zone boundary during 

charging hours is now 37-percent 

higher (70,000 additional passengers) than before the charge. The 

additional bus capacity provided 

decreased impact on load factors: 

From 2002 to 2003, average occupancy on inbound morning buses 

only increased from 32 to 36 and 

has since moderated. 

Bus travel times and reliability 

improved due to the reduction in 

traffic congestion brought about 

by the charge. “Excess wait time” 

at bus stops fell by 24 percent across Greater London during the first full year of charging, with a 

30-percent decrease within the zone itself. By contrast, there has been little change in ridership on the 

London Underground and suburban rail services.

One noteworthy aspect of the London case is

that Parliament granted a single agency, Transport 

for London, final authority for almost all aspects of

transportation in Greater London, including the Underground and bus networks, light rail, maintenance 

on major roads, and the congestion charge itself. This 

fosters cooperation between the various modes of 

travel and appears to have been a significant success 

factor in coordinating the start of the congestion 

charge with additional public transportation services. An additional institutional factor that has proven 

important is support from other layers of government. In this case, the required level of public transportation investment exceeded the net revenue produced from the congestion charge, and public 

transportation funding, which was made available 

by the central government, offset the shortfall. 

Stockholm City Center 

Stockholm is the most recent large international 

city to deploy cordon pricing. It was first deployed 

on a trial basis from January 2006 to July 2006 and 

was made permanent in August 2007. During the 

trial, vehicle owners with Swedish registration were 

required to pay the congestion tax if their vehicle 

passed one of the 18 control points on the way in or 

out of the Stockholm inner-city area on weekdays 

between 6:30 a.m. and 6:29 p.m. Fees varied depending on the time of day, ranging from $1.50 to 

$2.75 (U.S. dollar equivalent). The highest charges 

were during the peak periods of 7:30 a.m. to 8:29 

a.m. and 4:00 p.m. to 5:30 p.m. The cost for passing 

a control point varied, and there was a maximum 

charge per day, initially set at $8 per day. No congestion charges were made for travel during the 

evenings or at night, Saturdays, Sundays, or public 

holidays. Certain vehicle types, such as emergency 

vehicles, those with disabled drivers, and buses, 

were exempt from the tax. There were no resident 

discounts, except for residents of one land-locked 

island, which is only accessible by passing through 

the cordoned area. 

Actual planning for the cordon pricing on a trial 

basis began in the autumn of 2003, and beginning 

on August 22, 2005—5 months in advance of the 

congestion charge itself—public transportation service was expanded. It was the largest increase in 
T ransit and Congestion Pri c ing | 13

public transportation investment in modern times 

and accounted for an overall 7-percent increase in 

public transportation service. As the fixed-track 

(rail) service was already considered fully utilized 

during rush hours, it was clear that much of the increase in capacity had to be achieved by investing in 

extended bus service. During the trial, the public 

transportation system added 197 new buses and 16 

new bus routes to allow for additional alternatives 

for travel during peak periods. Of the 16 new bus 

routes, 14 were express buses with enhanced comfort, transporting people from the municipalities 

surrounding Stockholm into the inner city. Although the express routes became the “face” of the 

public transportation service enhancements for the 

trial, almost 70 percent of the increase was to existing services. All existing bus routes added more frequent trips, and train lines added off-peak capacity 

where possible. 

The cordon-pricing trial results were very favorable, with public acceptance climbing throughout 

the trial, from under 30-percent approval before 

the trial to over 55 percent toward the end. There 

was an immediate 22-percent drop in vehicle trips 

into the zone, a decrease in travel times, and a large 

shift to public transportation—ridership on innercity bus routes rose 9 percent. Buses, taxis, and distribution vehicles reported reductions in travel 

times. Traffic accidents involving injuries fell by 

5–10 percent. Exhaust emissions decreased by 14 

percent in the inner city and by 2–3 percent in 

Stockholm County. 

Overall public transportation use increased by 6 

percent (i.e., 45,000 riders), although about 1.5 

percent of the increase was attributed to an increase 

in fuel costs. During the trial, 97 percent of the increased public transportation traffic took place 

when the tax was charged, with 75 percent occurring during peak periods (6:30–9:00 a.m. and 3:30–

6:30 p.m.). Use of the park-and-ride lots increased 

by 23 percent. There was substantially less congestion on Stockholm access roads and a significant 

reduction in traffic to and from the city center. 

The clear lesson is that expansion of public transportation alone was insufficient to meaningfully impact congestion; the real change occurred after the 

congestion charge began. Both additional public 

transportation service and congestion pricing are 

necessary to reduce congestion (Jackson, Zirker, 

Peirce, & Baltes, 2008). Residents of the City of 

Stockholm voted for continuation of the system in 

a referendum on September 17, 2006. It was reinstated in 2007. 

Singapore 

Traffic congestion was significantly reduced when 

peak-period pricing was introduced in downtown 

Singapore during the morning rush hours in 1975. 

The U.S. General Accounting Office noted that in 

1975, the Singapore city government instituted a 

$1 charge for private vehicles to enter the central 

business district during 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 spring 1998, 

the city shifted to a fully automated electroniccharging system, with in-vehicle electronic devices 

that allow payment by smart card, which is enforced with the use of cameras and license-plate–

reading equipment. Variable electronic charges 

were also introduced on the expressway system, 

with charges set by time of day to ensure free flow 

of traffic. The system, the first of its kind in the 
14 | C o n g e s t i o n P r i c i n g

world, has reduced traffic by 13 percent and increased vehicle speed by 22 percent (U.S. General 

Accounting Office, 2003).

Area-Wide Pricing 

The State of Oregon has tested a pricing scheme 

that involves per-mile charges, which it will consider using as a replacement for fuel taxes in the 

future. A congestion-pricing component was tested, 

with higher charges during congested periods on 

high-traffic road segments. The Puget Sound Regional Council tested the travel behavior impacts of 

a similar charging system in the Seattle metropolitan area during 2005–2006. Charges were based on 

the type of facility used and its level of congestion. 

The impact of area-wide pricing schemes on transit 

use has not been examined.

Parking-Pricing Strategies

This type of congestion-pricing strategy does not involve tolls and is discussed in greater detail in a companion primer, Non-Toll Pricing. The discussion that 

follows focuses on transit impacts of this strategy.

Parking Cash-Out

The vast majority of employers provide their employees with free parking at work; few offer any 

transit or other commuter benefits. Even when alternative benefits are offered, they are generally 

capped at a far lower value than the parking subsidy 

that is provided. For these and other reasons, most 

employees choose to drive alone to work. An especially promising alternative is parking cash-out. 

Parking cash-out allows employers to offer their 

employees the option of receiving taxable cash in 

lieu of any parking subsidy offered, thus providing 

employees an incentive to find alternatives to 

driving alone during peak periods. Among 1,700 

employees in eight case study firms in Southern 

California, parking cash-out led to an 11-percent 

reduction in commuter trips and a 12-percent reduction in commuter vehicle miles traveled. 

Variably Priced Parking Meters

Free on-street parking provides an incentive for 

motorists to circle around congested urban blocks 

in search of a space and to bypass commercial garages that do have space but for which the driver 

must pay to use. Studies show that on average, 30 

percent of traffic in dense urban areas can be attributed to such circling. Introducing on-street-parking 

pricing is a public acceptance challenge, although 

technologies such as pay-by-cell-phone systems and 

mid-block parking-ticket-dispensing machines that 

accept credit cards can help. Donald Shoup, the 

preeminent U.S. authority on parking policy, has 

regularly called for pricing at a level that yields 

85-percent occupancy, leaving about one in seven 

parking spaces per block available for the taking. 

The transit impacts of such schemes have not been 

examined.

Lessons Learned 

The Domestic Experience

All congestion-pricing schemes deployed in the 

United States to date have had the primary goal of 

congestion reduction (via modifications to travel 

times and routes) followed by revenue enhancements. Most areas have barely acknowledged mode 

shift as a goal and usually recognize it only as a byproduct of pricing initiatives. Congested areas may 

need to set their congestion-pricing fees relatively 

high to achieve the desired level of service on the 

roadways (tolls on Orange County’s SR-91 have 

progressively risen to as much as $0.95 per mile) to 

maintain free-flowing traffic. However, in the absence of a reliable and viable public transportation 

alternative, higher fees have not led to significant 

modal shifts. Insufficient development of park-andride facilities has greatly limited public transportation’s involvement in the domestic-pricing deployments. If mode shift is a project goal, properly sited 

parking must be developed to accommodate increased public transportation demand.

Thus far, public transportation involvement in domestic value-pricing strategies has been limited. To 

capture the mutual benefits of congestion pricing 
T ransit and Congestion Pri c ing | 15

and transit, upper management at both highway and 

public transportation agencies must commit to jointly develop multimodal congestion-pricing programs.

The International Experience

International zone-based pricing experiments 

could not have been successful without involvement from public transportation. Enhanced public 

transportation services are an essential component 

of a zone-based pricing system and must be comprehensively planned and deployed well in advance of zone-based charging. In London, planning

for the zone-based charge began in the mid-1990s 

and included a series of progressively more detailed analyses. Much of the additional public 

transportation service was rolled out as early as 

one year before the advent of charging. Congestion pricing had been under discussion in Sweden 

since the early 1990s, and once the decision was 

made to begin zone-based charging, a year was 

spent comprehensively planning service modifications and their related impacts. New and enhanced 

public transportation service was launched 5 

months in advance of the imposition of the congestion tax, which provided time to iron out problems and publicize the service. 

Changes to public transportation service must 

be tailored to local conditions, travel patterns, and 

public transportation capacity constraints. In both 

London and Stockholm, this meant significant increases in bus services due to capacity constraints 

on the underground networks. On the basis of analysis of its travel patterns, Stockholm also emphasized express services from the suburban municipalities to the inner city, with accessible locations, 

limited-stop service, and frequent operations. Stockholm increased park-and-ride spaces by 18 percent 

and heavily publicized the new parking options. Selection criteria were applied to ensure that the new 

parking spaces were in close proximity to public 

transportation options, and parking was free with a 

public transportation pass. 

In London, careful planning ensured that sufficient buses were provided to keep occupancy rates 

relatively constant, thus preventing overcrowding. 

Additional low-floor accessible buses were also ordered. The focus on the bus system also made sense, 

given that it has proven impossible to provide air 

conditioning in the Underground. Passenger comfort is an important factor when planning changes 

to public transportation service in anticipation of 

zone-based charging.
16 | C o n g e s t i o n P r i c i n g

Although the increase in demand for public 

transportation as a result of congestion pricing can 

be relatively modest overall, it can still require major service changes for certain hours, locations, and 

directions of travel. In the year following the beginning of zone-based charging, overall bus ridership 

was up by only 2 percent in Greater London, but

inbound morning ridership increased by 38 percent. 

Although overall public transportation ridership increased by 6 percent in Stockholm, the city saw increases in inbound morning ridership of 10 percent 

on the buses and 13 percent on the Underground 

(even with its capacity constraints). Another noteworthy lesson is the role that private service providers played: The timely expansion of bus services in 

London was possible because of contracts with private service providers.

U.S. Department of 

Transportation’s Urban 

partnership agreements

program 

On May 16, 2006, the U.S. Department of Transportation (USDOT) announced the National Strategy to Reduce Congestion on America’s Transportation Network. One major component of the 

National Strategy is the Urban Partnership Agreement (UPA) Program, through which the USDOT 

partners with specific congested metropolitan areas 

to demonstrate the effectiveness of synergistic combinations of proven strategies in reducing traffic 

congestion. Under the UPA, metropolitan areas 

commit to pursue aggressive strategies under the 

umbrella of the “four Ts” (tolling, public transportation, telecommuting, and technology), an integrated 

approach to reducing traffic congestion (Jackson, 

Zirker, Peirce, & Baltes, 2008).
T ransit and Congestion Pri c ing | 17

At present, USDOT has entered into partnerships with six urban areas under the UPA Program 

and its successor, Congestion Reduction Demonstration Program: 

1. Los Angeles, CA—HOT lanes and additional 

express bus services.

2. San Francisco, CA—Variable parking pricing.

3. Seattle, WA—Variably priced bridge tolls and 

increased transit services.

4. Minneapolis, MN—HOT lanes and improved 

express bus services.

5. Miami, FL—HOT lanes and improved express 

bus services.

6. Atlanta, GA—HOT lanes and improved express 

bus services.

Federal Transit

Administration’s Policy on 

HOV to HOT Conversions

The Federal Transit Administration (FTA) published 

its policy on HOV to HOT conversions in February 

2007 (Federal Transit Administration, 2007). This 

policy states that FTA will classify HOT lanes as 

fixed guideway miles for purposes of the funding 

formulas administered so long as each of the following conditions is satisfied: 

1. The HOT lanes were previously HOV lanes and 

were reported in the National Transit Database 

as fixed guideway miles for purposes of the funding formulas administered by FTA. Facilities that 

were not eligible HOV lanes prior to being converted to HOT lanes will remain ineligible for 

inclusion as fixed guideway miles in FTA’s funding formulas.

 2.The HOT lanes are continuously monitored and 

meet performance standards that preserve freeflow traffic conditions as specified in 23 U.S.C. 

166(d). 

3. Program income from the HOT-lane facility, including all toll revenue, is used solely for ‘‘permissible uses.’’ ‘‘Permissible uses’’ means any of 

the following uses with respect to any HOT-lane 

facility, whether operated by a public or private 

entity: 

a. Debt service, 

b. A reasonable return on investment of any private financing, 

c. The costs necessary for the proper operation 

and maintenance of such facility, and 

d. If the operating entity annually certifies that 

the facility is being adequately operated and 

maintained, any other purpose relating to a 

project carried out under Title 23 U.S.C. and 

Title 49 U.S.C. 5301 et seq. 
18 | C o n g e s t i o n P r i c i n g

The table below summarizes the magnitude of the 

potential impacts that various types of congestion 

pricing may have on transit revenues, transit operations, and transit ridership. Key lessons learned from 

U.S. and international experiences with congestion 

pricing are summarized as follows:

1. Corridor-pricing strategies in the United States 

have shown that the active involvement of transit agencies is not required to be successful. International cordon-pricing experiments, however, could not have been successful without the 

involvement of transit.

2. Transit involvement in domestic value-pricing 

strategies has been limited. Upper management 

at both highway and transit agencies must commit to jointly developing a congestion-pricing 

program. Experience suggests that without an 

Summary

Potential impacts congestion pricing may have on transit.

 Impact on Transit

 Generates Improves Increases

Pricing Strategy Revenue Transit Operations Demand

 Variably Priced Lanes

Variable Tolls on Roadways

Zone Pricing

Area-Wide Pricing

Parking-Pricing Strategies

active transit role, projects are likely to revert to 

a highway initiative.

3. All congestion-pricing schemes deployed in the 

United States to date have had the primary goal 

of congestion reduction (via modifications to 

travel times and routes) followed by revenue 

enhancements. Most areas have barely acknowledged mode shift as a goal and then usually 

only as a byproduct of pricing initiatives.

4. Express buses and BRT are the primary transit 

modes involved with, and benefiting from, 

HOV or HOT lanes and other corridor-pricing 

strategies, compared with the multiple transit 

modes (e.g., bus, rail, BRT, carpools, or vanpools) that must be involved with zonepricing strategies.
T ransit and Congestion Pri c ing | 19

5. Congested areas may need to set their congestion-pricing fees relatively high to achieve the 

desired level of service on the roadways. Tolls on 

Orange County’s SR-91 have progressively risen 

(to as much as $0.95 per mile) to maintain freeflowing traffic; however, higher fees do not lead 

to significant modal shifts in the absence of a reliable and viable transit alternative.

6. Insufficient development of park-and-ride facilities has greatly limited transit’s involvement in 

the domestic-pricing deployments. If mode shift 

is a project goal, properly sited parking must 

be developed to accommodate increased transit 

demand. 
20 | C o n g e s t i o n P r i c i n g

Federal Transit Administration. (2007, January 11). Final policy statement on when highoccupancy vehicle (HOV) lanes converted to high-occupancy/toll (HOT) lanes shall be 

classified as fixed guideway miles for FTA’s funding formulas and when HOT lanes shall not 

be classified as fixed guideway miles for FTA’s funding formulas. Federal Register, 72(7), 1366.

Jackson, D. W., Zirker, M., Peirce, S., & Baltes, M. (2008, January 13–17). Urban partnership 

proposals: Review of domestic and international deployments and transit impacts from congestion 

pricing. Paper presented at the 87th Annual Meeting of the Transportation Research Board, 

Washington, DC. (No. 08-0820).

Sullivan, E., & Burris, M. (2006, March). Benefit–cost analysis of variable pricing projects: 

SR-91 express lanes. Journal of Transportation Engineering, 132(3), 191–197.

U.S. General Accounting Office. (2003, May). Reducing congestion: Congestion pricing has 

promise for improving use of transportation infrastructure. Retrieved April 3, 2009, from 

http://www.gao.gov/new.items/d03735t.pdf

References
For more information, contact: 

Patrick DeCorla-Souza

Office of Innovative Program Delivery

Federal Highway Administration

U.S. Department of Transportation

1200 New Jersey Avenue, S.E.

Washington, DC 20590

Tel: 202-366-4076

E-mail: patrick.decorla-souza@dot.gov
ii | C o n g e s t i o n P r i c i n g

Office of Transportation Management

Federal Highway Administration

U.S. Department of Transportation

1200 New Jersey Avenue, S.E.

Washington, DC 20590

Tel: 202-366-6726

www.ops.fhwa.dot.gov/siteindex.htm

April 2009

FHWA-HOP-09-015