New York City is poised to launch the first congestion pricing plan to reduce traffic in a major U.S. metropolitan area. Like many journeys in the Big Apple, this one has been punctuated by delays. Once the system starts up, however, it’s expected to significantly reduce gridlock in Manhattan and generate billions of dollars to improve public transit citywide.

The basic idea is simple. To enter the Congestion Relief Zone, which covers Manhattan south of 60th Street, large trucks will pay $36, small trucks $24, passenger vehicles $15 and motorcycles $7.50. Ride-share vehicles and taxis will pay $2.50 and $1.25, respectively. Peak hours run from 5 a.m. to 9 p.m. on weekdays and 9 a.m. to 9 p.m. on weekends; overnight tolls are discounted by 75%.

Evidence from cities around the world shows that charging motorists fees for driving into city centers during busy periods is a rarity in urban public policy: a measure that works and is cost-effective. Congestion pricing has succeeded in cities including London, Singapore and Stockholm, where it has eased traffic, sped up travel times, reduced pollution and provided funds for public transportation and infrastructure investments.

As an urban policy scholar, I’m looking forward to seeing New York’s plan go into effect. There may well be surprises and adjustments as officials see how it works in practice. But given the heavy costs that traffic imposes on public health and productivity, I’m encouraged to see a major U.S. city finally test this approach.

Congestion pricing is a response to externalities – costs or benefits that are generated by one party but incurred by another. Clogged city streets and air pollution are externalities created by urban car users, many of whom live outside the city.

This concept has been around for some time. British economist Arthur Pigou discussed it as early as 1920 as part of his attempt to remedy the suboptimal workings of the market system. In Pigou’s view, taxing harmful activities would discourage people from engaging in them.

Other thinkers took up this idea. In 1963, Canadian economist William Vickrey, a future Nobel laureate, argued that roads were scarce resources that needed to be valued by imposing costs on users.

This approach is behind behavioral economics, the policy strategy of using “nudges” that preserve choice but encourage certain actions. Congestion pricing assumes that increased prices will make people heading into New York think more carefully about their travel patterns, and about alternatives to driving.

Congestion pricing in a city a big as New York is no small step. The New York plan was presented to the board of the Metropolitan Transit Authority in November 2023 after years of study and a detailed environmental impact assessment, required by federal law.

Project sponsors, which include several city agencies and the state transportation department, stated in the impact assessment that on an average weekday, an estimated 1.86 million people entered lower Manhattan by motor vehicle. Travel speeds in Manhattan’s central business district, below 60th Street, declined by 23% between 2010 and 2019, from 9.1 to 7.1 mph. The traffic was generating air and noise pollution, wasting travelers’ time, increasing business costs and preventing emergency vehicles from responding quickly to accidents.

...continued