FROM THE EDITOR, RAILWAY AGE APRIL 2025 ISSUE: It works in London. It works in Stockholm. It works in Singapore. It works in Gothenburg. It works in Milan. Now, it’s working in New York City, in its first month netting more than $40 million based on revenues of nearly $52 million—right in line with projected annual figures. Ha!
“It” is congestion pricing, which the New York MTA calls “Congestion Relief Zone (CRZ) tolling.” According to the MTA, 24% of CRZ revenues comes from taxis and for-hire vehicles, 66% from private passenger vehicles, 9% from trucks, and 1% from buses and motorcycles; 95% of revenue was gathered during peak tolling hours.
To help me understand the “dismal science” (economics) behind congestion pricing, I turned to Wikipedia: “It is a concept from market economics (double dismal!) regarding the use of pricing mechanisms to charge users of public goods for the negative externalities generated by peak demand in excess of available supply. Its economic rationale is that, at a price of zero, demand exceeds supply, causing a shortage, and that the shortage should be corrected by charging the equilibrium price rather than shifting it down by increasing the supply. Usually this means increasing prices during certain periods of time or at places where congestion occurs; or introducing a new usage tax or charge when peak demand exceeds available supply in the case of a tax-funded public good provided free at the point of usage.”
I think I get it. In any case: “According to the economic theory behind congestion pricing, the objective of this policy is use of the price mechanism to make users more aware of the costs they impose upon one another when consuming during peak demand, and that they should pay for the additional congestion they create, thus encouraging the redistribution of the demand in space or in time, or shifting it to the consumption of a substitute public good; for example, switching from private transport to public transport.” (Emphasis mine.)
Ebbene, cosa ne sai! Doing something for the public good! What a concept!
Continuing: “Implementation of congestion pricing has reduced traffic congestion in urban areas, reduced pollution, reduced asthma and increased home values, but has also sparked criticism and public discontent. Critics maintain that congestion pricing is not equitable, places an economic burden on neighboring communities and adversely affects retail businesses and general economic activity.”
Finally: “There is a consensus among economists that congestion pricing in crowded transportation networks, and subsequent use of the proceeds to lower other taxes, makes citizens on average better off. Economists disagree over how to set tolls, how to cover common costs, what to do with any excess revenues, whether and how ‘losers’ from tolling previously free roads should be compensated, and whether to privatize highways.”
OK, listen up: You wanna drive into the Big Apple, Midtown Manhattan? You gotta pay up! Capire? As for me, I’ll take the subway, grazie mille. You gotta problem with that?
