1. Crossing the Bridge: The Effectiveness of Time-Varying Tolls on Curbing Bay Area Congestion Kate Foreman UC Berkeley Camp Resources August 7, 2012

2. Current road pricing is suboptimal “In no other major area are pricing practices so irrational, so out of date, and so conducive to waste as in urban transportation. … particularly deficient: the absence of adequate peak-off differentials…” William Vickrey, AER, 1963 2Kate Foreman (Berkeley) - Crossing the Bridge

3. Congestion is costly EPA estimates that transportation: – contributes 27% of US GHG emissions – is the fastest-growing source of US GHG emissions Annual urban road congestion costs in US include: – $115b 3.9b gallons of wasted fuel (34m mtCO 2 ) 4.8b hours of travel delay – $31b mortality cost due to particulate matter 3 Kate Foreman (Berkeley) - Crossing the Bridge

4. Theory favors price mechanisms to address congestion Solution to road congestion externalities: – Baumol & Oates (1988) Pigouvian tax equal to marginal social damage – Boardman & Lave (1977) Pricing must vary by time of day – Anas & Rhee (2006) Pricing is first-best Non-pricing is not second-best (boundary roads harmful) 4Kate Foreman (Berkeley) - Crossing the Bridge

5. Congestion pricing seldom implemented & literature lacks empirical analysis Examples: – Cordon pricing (London, Milan, Stockholm…) – Off-peak discount (Lee County) – Static & dynamic variable time pricing (Orange County, Singapore, San Diego) Literature – Davis (2008): driving restrictions in Mexico ineffective – Brownstone et al (2003): WTP for travel time=$30/hr – Industry reports (Milan, Bay Area) Kate Foreman (Berkeley) - Crossing the Bridge5

6. 6 Bay Bridge: 124,000 (62%) San Mateo Bridge: 46,000 (23%) Dumbarton Bridge: 31,000 (15%) Westward traffic volume per day on three bridges

7. Toll changes on July 1, 2010 were not the same on all bridges Congestion pricing introduced on Bay Bridge BridgeBeforeAfter PeakOff peak RegularCarpoolRegularCarpoolRegularCarpool Bay$4Free$6$2.50$4N/A San Mateo & Dumbarton $4Free$5$2.50$5N/A 7Kate Foreman (Berkeley) - Crossing the Bridge

8. Predictions from theory due to toll changes: – Decrease in traffic volume and travel time during peaks due to: – Trip reduction (combining, avoidance) – Time-shifting (from peak to off-peak hours) – Route-shifting (to San Mateo Bridge) – Mode-shifting – From ride-sharing (carpool) to solo driving (Fastrak/cash) – From driving to public transit (BART, bus) 8 Theory predicts decreases in traffic volume and travel time on the Bay Bridge Kate Foreman (Berkeley) - Crossing the Bridge

9. My research question tests the theory Did the introduction of time-of-day congestion pricing on the Bay Bridge decrease traffic volume and travel time during peak hours? 9Kate Foreman (Berkeley) - Crossing the Bridge

10. My data span the year before and year after the toll changes for 3 bridges Hourly volume (# vehicles crossing), by lane – Lane type: Fastrak, cash, carpool Hourly travel time (median # minutes to cross) 1 year before & after change: – 1 July 2009 - 30 June 2011 Weekdays, westbound, excluding holidays 10Kate Foreman (Berkeley) - Crossing the Bridge

11. 11

12. Kate Foreman (Berkeley) - Crossing the Bridge12

13. Diffs in diffs approach to estimate of average treatment effect 13Kate Foreman (Berkeley) - Crossing the Bridge Y hdw = α 0 + α h + β 0 after w + β h after w + γ d + θ w + ε hdw Y hdw = outcome variable (traffic volume or travel time) h is hour of day d is day of week w is week of sample after = indicator for after policy change on July 1, 2010 α h = hour of the day FE (1-23) γ d = day of the week FE (TWRF) θ w = week of sample FE (1-7 Jan excluded) β h = coefficient of interested (policy ATE for each hour)

14. 14Kate Foreman (Berkeley) - Crossing the Bridge Time-varying congestion pricing worked to decrease traffic overall & shift travel from peak to off-peak!

15. 15Kate Foreman (Berkeley) - Crossing the Bridge Time-varying congestion pricing worked to shift morning peak travel from Bay to San Mateo?

16. 16Kate Foreman (Berkeley) - Crossing the Bridge Time-varying congestion pricing didn’t affect Dumbarton (but price increase  volume decrease).

17. 17Kate Foreman (Berkeley) - Crossing the Bridge Time-varying congestion pricing worked to decrease travel time during peak hours on Bay Bridge!

18. 18Kate Foreman (Berkeley) - Crossing the Bridge San Mateo Bridge absorbed any extra traffic without increasing travel time.

19. No effect on travel time on the Dumbarton. 19Kate Foreman (Berkeley) - Crossing the Bridge

20. Positive welfare impacts of time-varying congestion pricing on Bay Bridge Time savings – Bounded: $6.6m - $27.6m (@$30/hr) Fuel savings – 280,000 gallons/year  $1.1m/year Emissions abatement – 2,700tCO 2 /year  $54,000/year (@$20/tCO 2 ) 20Kate Foreman (Berkeley) - Crossing the Bridge

21. Conclusions Congestion pricing works to decrease traffic volume and travel time – Trip reduction – Time shifting: vehicles switch from peak to off-peak – Route shifting: substitution toward non-congestion priced bridge Bridge absorbed extra traffic without increasing travel time – Mode-shifting: substitution from carpool to non- carpool lanes 21Kate Foreman (Berkeley) - Crossing the Bridge

22. Next Steps Integrate public transit data (BART and bus) to estimate substitution & cross price elasticities Calculate additional welfare implications Include estimates of changes in travel time variance 22Kate Foreman (Berkeley) - Crossing the Bridge