an economic case for freeway management · 2017-01-04 · congestion stinks! ... why? economic case...

Economic Case for Freeway Management April 11, 2014

An Economic Case for Freeway Management or, “The Artist Formerly Known as Congestion Pricing”

Mike Brown, PE, AICP President, Metro Analytics Chandler Duncan, AICP EDR Group

Win-Win for Virtually Everyone


Technically Easy?

• Ask a DOT, “Are you managing your freeway?”

• This may well be the highest B/C ratio opportunity.


Congestion Stinks! • But what else can we do besides build?

Billions in savings, productivity, new jobs available for any city that can reduce freeway congestion.


Congestion Stinks!

• Build our way out? Been there, Done that, Doesn’t work It’s a cancer that returns with a vengeance

• Decide our way out? – Easy Technically Easy Politically Impossible!! Eventually Inevitable?


Technically Easy?

• Freeway congestion is easy to eliminate. Approaching failure? Slow the Flow!

• How? Congestion Pricing Extended Ramp Metering Decent Alternatives to Create Elasticity


Politically Impossible! Because people think… • Pricing will clobber side-streets as people avoid fees! • Congestion Pricing is a tax, or even double-tax! TEA Party = “Taxed Enough Already”

• Right or wrong, free freeways are an Institution Like baseball and apple pie!

Could become politically inevitable if we educate about the positives


Key to Inevitability – Convince People They Are Better Off • Free freeways ensure doom on all streets • Pricing makes all streets better off Really? Yes, Really


Scenario 1: Everyday, USA

*Based in Salt Lake City, Utah, but generally applicable almost anywhere


I-215 Redwood I-15 State 700 E

Green: Maximum 1-hr Capacities



Blue: 90% Loads, just before peak hour



Red: Freeway Sustains Max for 15 Minutes



Black: Collapses to Stop-n-Go; 70% throughput for next 2-hours

Yellow: Remaining 30% try to go

somewhere else



Their diversion causes other roads to fail



Now 2nd Freeway collapses. All

streets become parking lots

Lose-Lose for everyone


Scenario 2: Tollway, USA…




High prices could shift too much to arterials.

Win-Lose: Win for Many,

Lose for Too Many

Tolling is better than status quo, and a good way to generate funds if that is the objective.


Scenario 3, Congestion Pricing: Everyday, USA…

Someday




90% Loads, just before peak hour



Pink: Computer-managed access allows freeways to “hover” at 95%, just short of “red” collapse



Some people move to arterials to avoid fees.

Others use transit, adjust schedules, or eventually move closer to work.



But even with many shifting to side streets, side streets are NOT worse off.

Why?



Yes, 5% leave. But 20% come back, because they fit! Last 5% is intentional safety cushion.


And where every road crawls today…

Every road moves tomorrow, so virtually everyone is better off!

Win – Win!



Max Potential Throughput

Peak Period Sad Reality

Managed Bliss

100% 77%

95%

Screenline

Peak Volumes



100%

28%

86%

Screenline

Weighted Speeds

Peak Period Sad Reality

Managed Bliss

Max Potential Throughput


Speed vs. Flow

Pricing moves everyone out of the “Road Rage” zone, into a happier place, just at the verge of “white-knuckle”

Happy Zone White

Knuckle

Road Rage Zone


I need more power.

Three of Eight cylinders aren’t

working.

Government Engineers


So my V-8 acts like a V-5… If we install a V-12 will it act like a V-8?

We’ll have to double-deck two

V-6’s, but… Let’s do it!

Government Engineers


Highlights • Pricing is like a tune-up that creates lots of “new” capacity. Equivalent to many new freeway lanes Guarantees 60+ speeds, 24-7 Costs very little to implement Makes parallel arterial speeds slightly faster too. Extremely high Benefit-Cost ratio Generates cash for mitigation projects.


Words Matter

Meet Mr. Congestion Pricing

Meet Mr. Freeway Optimization


The Economics of Freeway Optimization

Chandler Duncan

Economic Development Research Group


Removes regulatory barriers and creates programs for market-based solutions Greater state autonomy in establishing toll facilities

for new lanes or facilities

Congestion pricing strategies: priced express lanes, HOV to HOT lanes

Value Pricing Pilot Program: for pricing of existing toll-free facilities without substantial reconstruction


Three E’s to Remember

• 1. ECONOMICS Consider economic effects of tolls, not just

performance effects • 2. EFFICIENCY Look at the whole networks (not just the tolled

facility) • 3. EQUITY It matters who pays, and how you spend the

proceeds

Economic Case for Freeway Management April 11, 2014 38

Economic Break-Even Point

-40.00

-20.00

0.00

20.00

40.00

60.00

80.00

0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00

Toll Revenue Collected (InMillions)

Societal Benefit of TrafficImpact

Implementation Cost(Including ImprovementCosts Imposed onSecondary Systems)

Total Societal Benefit (ofToll + Secondary RoadwayImprovemetns)

Source: EDR Group/TREDIS – (with Data from Portland Metro Model)


Base Case: 2040 “Do Nothing”

• All Wasatch Front freeways = unmanaged access

• Most segments failing in peak hours


2040 “Blind Tolls”

• What if all freeways were converted to tollways? Primary Objective: Maximize Revenue Indirect Benefits: Gets freeways moving again


2040 Freeway Optimization

• All freeways remain free most of the time. • Modest fee applied only at eminent failure. Primary Objective: Maximize Throughput Indirect Benefits: Income stream for mitigation


TREDIS Transportation Economic Development Impact System

• Can be integrated with travel models

• Compare project ideas against base case

• Monetary value, GDP and jobs created by… Reduced VMT Reduced Travel Times


Economic Benefits and Impacts Benefits and Positive Impacts “Blind Tolls” Congestion

Pricing 30-Year Societal Benefit $4 Billion $54 Billion

30-Year Gross Regional Product chg.

$1.5 Billion +/- $1.7 Billion

$12 Billion +/- $760 Million

New Jobs, Year 30 2,100 +/- 1000

17,000 +/- 500

Potential Transportation Effects Potential Toll Levy Effects


Look Before You Leap! “Blind Tolls” (as taxes) can actually make the economy smaller Some states require economic impact analysis Economic Tolling Evaluation Can Help:

• Learn from the experiences of peers (case studies) • Educate the Public and Stakeholders • Assess what the local market will bear • Identify economic break-even toll and revenue points • Assess Land Use and Community Development Effects


“Pricing” Vs. Taxation – What’s a Network Worth?


Competitive Advantage

Frustrated businesses

One more reason to choose Utah!


We want less use of cars, and more use of transit. But price structure is opposite.

Cars

Tran

sit

The way it is… The way it should be, to get what we want…

Pay

for

Chea

p


"Today's problems cannot be solved by the level of thinking that created them."

– Albert Einstein

Solving Future Mobility Problems Requires

“Non-Linear” Thinking

Outside the Box

!!!!! !


Extra Slides for Other Shows


I-15 SB at 5400 South

From 4:45 – 6:00, demand still >= 2200, but “turbulent flow” ruins throughput, bouncing it from 1100-1800.

Volume builds to high of 2200


25-40% Loss!


Case Study: SR-91, Riverside CA

Throughput Speed Approval

??

Overload Underload |


Components of Societal Benefit

Vehicle Operating

Costs 12%

Business Savings

13%

Personal Time 56%

Safety 3%

Shipping 6%

Environmental 10%


Economic Unknowns & Costs

Potential Areas of Risk How they Affect the Economy

Implementation Cost Determine B/C Ratio, Public Return on Investment

Dis-Benefit of Tolls Paid Determine total value of Societal Benefit

30-Year Gross Regional Product chg. From Tolling Effects

Economic Retraction from Tolls Collected (similar to any tax)

Job Impact of Tolling Effects Economic Retraction from Tolls Collected (similar to any tax)

• Both Positives and Negatives Must be Counted.

• Positives often Outweigh negatives.


Net Impacts: Ohio River Bridges (Louisville, KY)

Impact Type Cumulative Earnings ($M)

Cumulative Output ($M)

Average Annual Employment Level

Construction Spending $2,303 $5,724 1,532 Enhanced Market Access $3,043 $7,504 1,950 Transportation Efficiency/Operations $1,679 $4,234 1,279 Impact of Tolls -$2,211 -$5,580 -1,578 Impact of Land Use $22,489 $66,100 14,614 Total Economic Impact $27,303 $77,983 17,796 Source: EDR Group/TREDIS – Derived from KPDA Model

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=vRI-dyJqvIAcjM&tbnid=fN_Z-EtTCGznGM:&ved=0CAUQjRw&url=http://en.wikipedia.org/wiki/John_F._Kennedy_Memorial_Bridge&ei=CVhhUuagHo_E4AP39YDQDA&bvm=bv.54176721,d.dmg&psig=AFQjCNHghRYaM8vzt3QtOvf9N02Vi1legQ&ust=1382197635588230


Politically Inevitable? • Pricing is not a tax. It is a system management tool that

happens to generate revenue from heaviest users. • It is a Great American Tradition. How? Selling something of value to those willing to pay.

Still work on this slide, or find some way to end


“Congestion Pricing”

Examples

• Is there too much “Congestion” for… Cigarettes? Tax for Less Smoking Junk Food? Tax for Less Obesity Alcohol? Tax for Fewer Drunk Drivers Electricity? Price Peaks for Conservation Oil? Tax Fuel and get smaller cars, less VMT

• Too much congestion on I-15? Charge and get Less Congestion!


Mike’s Amazing Transit Project Existing Bus + Rail

Program Mike’s Secret 2020 Project

Capital Investment Roughly $3 Billion Maybe $500 Million Daily Boardings Roughly 140,000 Another 140,000 Annual O&M Roughly $200 Million Maybe $100 Million

Return on Investment ROI, O&M Roughly 2:1 ROI, Capital Roughly 6:1

• A single transit project that could double system ridership at a fraction of capital cost and only half the O&M?

• If so, shouldn’t we move heaven and earth to build this project?

Sources: UTA’s 2006 and 2010 CAFRs and the National Transit Database; 2012 Performance Audit of the Utah Transit Authority for State Legislature


Economic Benefits – Less Construction • Mega-projects solve problem temporarily at huge costs. I-15 could exceed $5B to double-deck Temporary relief due to induced demand It could be ruined in our over-due earthquake


• Pricing can solve congestion in the long-term • Generates revenue for sustainable infrastructure

Funding Benefits – Freeway Alternatives


Funding Benefits – Freeway Alternatives

• With general fuel tax, where is the logical spending nexus? Roads: used by drivers who pay fuel tax.

• With freeway pricing, where is the logical spending nexus? Assistance: To those who leave due to price.

• What form could assistance take? Transit: Fare reduction, route enhancement Arterials: Innovative Intersections, Complete Streets 7D Communities: Then they don’t need to drive!


What is this Secret Weapon Project?

• Ta-Da! New train to Eagle Mountain! Just kidding

• Free Fares. That’s it!


What Free Fares Might Do? • Free systems can double ridership over fare systems • Today’s bus + rail close to 140k riders So I assumed my “Project” could attract another 140k

• UTA farebox recovery about $40M; ~20% of $200M O&M My project needs $40M to replace fares, plus another

$60M in additional O&M from huge ridership surge.

• To carry another 140k would take a lot of new vehicles So I wild-guessed at $500M to buy them.


Free Fare Examples • Logan: Roughly double ridership of comparable systems • Boulder & Missoula: EcoPasses Downtown, huge ridership • U of U: U-Pass for all made huge difference in ridership • Austin in 80’s: Tried free fares, but quit… because demand overwhelmed capacity.


Fare Caveats • Not all routes need to be free • Can only do this if you have solid commitment to

overcome capacity problems (PnR, Crush loads, etc.)

an economic case for freeway management · 2017-01-04 · congestion stinks! ... why? economic case...

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