Finance

I-580 Variable Toll Lanes One Year On


I580 Monday night lights flickr photo by Images by John 'K' shared under a Creative Commons (BY-NC-ND) license

It's been a year since the variable toll express lanes on I-580 through the Tri-Valley region were rolled out, and initial results are in. As reported in the San Francisco Chronicle

Since the combination express and carpool lanes opened in February 2016 on I-580, along the main route between the Bay Area and the Central Valley, more than 7.6 million drivers have taken advantage of them, according to a report released Thursday by the Alameda County Transportation Commission, which operates the lanes.

You can read the report here

As toll roads are used more often as a tool in transportation demand management, there is more data available for comprehensive evaluations of road pricing systems. As transportation funding evolves with a greater reliance on public-private partnerships that will often rely on tolls for cost recovery, it is important to understand how they will affect travel demand.  In the case of 580, they look to be a hit.

Gov. Brown wants to fix California's highways


flickr photo shared by 1Flatworld under a Creative Commons ( BY-NC-ND ) license

Yesterday California Governor Jerry Brown help a press conference at the Port of Oakland to call for a bipartisan solution to fund the state's needed highway reapairs. Brown was evasive about the actual mechanisms to be used to raise funds, refusing to say anything about taxes. 

Then how can the state fund these necessary improvements? A recent report from ITS Davis,"A Funding Compromise Can Set Transportation on Path Toward Sustainability", proposes: 

The funding recommendations include a one-time use of corporate taxes to allow states to reduce the backlog of maintenance needs. The federal gas tax would be continued and indexed to inflation. Greenhouse gas (GHG) reduction targets would be set for each state and states would be allowed to ‘buy down’ their gas tax as they reduce their GHG emissions. States would be given pricing and tolling authority and have the authority to implement a vehicle miles traveled (VMT) tax. States would also assume responsibility for all roads. Taken together, these strategies would set transportation on the path toward sustainability.

For VMT-based pricing, we're still waiting for conclusive numbers from Oregon's recent implementation. Research has indicated that other types of road-pricing in California will need to be tailored to specific regions to be successful. It clear that even without the political will to raise it, the gas tax alone is not stable enough to fund the infrastructure repairs on the horizon. 

Oregon's New Opt-In Mileage Tax Pilot

Interstate 5 from the Portland Aerial Tram

This week Oregon DOT (ODOT) announced the public trial of a proposed new mileage tax. They're calling it a Road Usage Charge Program and it will beging July1, 2015. They are looking for 5,000 volunteer drivers to launch the program, which will be trailblazing user-based fees like this. 

New funding structures for transportation are needed as it's not clear how much longer the federal gas tax will last, which is especially problematic given the depletion of the Highway Trust Fund. To cover the challenging gap between current funding and what is needed to maintaining the current U.S. transportation system, new finding models are emerging. Road pricing, often implemented as tolling, is a very common method. Vehicle Miles Traveled (VMT) based taxes are another user-based method which is being discussed nationally, though Oregon is the first state to take steps to implement such a tax. Critics of these methods argue that such taxes penalize fuel efficient vehicles, or that they are regressive taxes and social inequities must be accounted for. The equity question is currently a very active research topic.  

This past spring, a mileage tax for California drivers was introduced in the state Senate. SB-1077 was voted by the Senate and Assembly, and approved Governor Jerry Brown in September. 

Metro ExpressLanes preliminary report

Harbor Freeway Transitway

Last week the Los Angeles County Metropolitan Transportation Autority, or LA Metro, released the preliminary data from the ExpressLanes program. ExpressLanes is a demonstration project with Metro and Caltrans that implemented toll lanes on I-10 and I-110 in conjunction with improved transit and carpool options along those corridors. 

While the demonstration period is not yet over, there have already been noticable increases in transit ridership and vanpools along the corridor. To explore more of the data and figures, the full report can be found here

Highway Grants: Roads to Prosperity?

Night Construction II

A new Economic Letter from the Federal Reserve Bank of San Francisco focuses on new research from Sylvain Leduc and Daniel Wilson. From their forthcoming paper, "Roads to Prosperity or Bridges to Nowhere?:Theory and Evidence on the Impact of Public Infrastructure Investment", Leduc and Wilson study the macroeconomic effects of infrastructure investment. 

This research focuses on investment in roads and highways in part because it is the largest component of public infrastructure in the United States. Moreover, the procedures by which federal highway grants are distributed to states help us identify more precisely how transportation spending affects economic activity.

We find that unanticipated increases in highway spending have positive but temporary effects on GSP, both in the short and medium run. The short-run effect is consistent with a traditional Keynesian channel in which output increases because of a rise in aggregate demand, combined with slow-to-adjust prices. In contrast, the positive response of GSP over the medium run is in line with a supply-side effect due to an increase in the economy’s productive capacity.

This research is timley given the prognosis that the Highway Trust Fund will go brankrupt by 2014 all while hoping infrastrcture investment can spur the economy through job creation, as outlined in MAP-21.

A National PPP to Support Infrastructure Investment?

Construction

A new report from the Brookings Institution calls for a Federal Public-Private Partnership (PPP) for infrastructure investement by potentially streamlining the process. 

To address this problem, countries, states, and provinces around the world have created specialized institutional entities—called PPP units—to fulfill different functions such as quality control, policy formulation, and technical advice. The federal government should establish a dedicated PPP unit to tackle bottlenecks in the PPP process, protect the public interest, and provide technical assistance to states and other public entities that cannot develop the internal capacity necessary to deal with the projects themselves.

The full report can be found on their website

Special Semiar: Ricardo A. Daziano on "Accounting for Uncertainty in Willingness to Pay for Environmental Benefits"

(130/365) March 3, 2010: Who defines these terms?

Tomorrow, Thursday May 17, there will be a special seminar. Ricardo A. Daziano of Cornell University will present, "Accounting for Uncertainty in Willingness to Pay for Environmental Benefits."

Previous literature on the distribution of willingness to pay has focused on its heterogeneity distribution without addressing the interval estimation problem.  In this paper we derive and analyze Bayesian confidence sets for quantifying uncertainty in the determination of willingness to pay for carbon dioxide abatement. We use two empirical case studies: household decisions of energy-efficient heating versus insulation, and purchase decisions of ultra-low-emission vehicles. We first show that deriving credible sets using the posterior distribution of the willingness to pay is straightforward in the case of deterministic consumer heterogeneity. However, when using individual estimates, which is the case for the random parameters of the mixed logit model, it is complex to define the distribution of interest for the interval estimation problem. This latter problem is actually more involved than determining the moments of the heterogeneity distribution of the willingness to pay using frequentist econometrics. A solution that we propose is to derive and then summarize the distribution of the point estimates of the individual willingness to pay.

The seminar will be in 212 O'Brien Hall from 2-3 PM.

More on PPPs and Road Financing

PA Turnpike tilt-shift

Yesterday we talked about Britain's proposed privatization of their transport infrastructre and made an error when we said the Pennsylvania Turnpike was leased to a private company. In 2007 bidding was opened on the Turnpike and in 2008 the highest bid was received from Spanish firm Abertis Infraestructuras, but ultimately the plan failed. Currently the Turnpike is managed by a state-operated commision that "receives no state or federal taxes to operate and maintain its toll road system." The Pew report, Driven by Dollars, outlines several of the problems that were a part of the leasing proposal and calls for a more open process and transparency.

As funding sources dry up, such as the transportation bill now stuck in gridlock on Capitol Hill or depleted state budgets, transportation agencies will have to come up with new methods of financing which has an increasing interest on private money. The 2011 book Road to Renewal examines private investment in transportation projects from around the world, outlining what works and what doesnt for PPPs as well as how to protect public interests. Louise Nelson Dyble has a recently published article "Tolls and Control: The Chicago Skyway and the Pennsylvania Turnpike" which compares the two plans and raises questions about impact on future transportation planning policy.

 

 

Privatizing Infrastructure: Leasing Toll Roads

M6 J7 Fireworks

This week Britian's Prime Minister David Cameron gave a speech on infrastructure. He touched upon many different industries and modes, but this is what he said about highways:

Now, road tolling is one option, but we are only considering this for new, not existing capacity.  For example, we’re looking at how improvements to the A14 could be part-funded through tolling.  But we now need to be more ambitious.  We should be asking ourselves, ‘Why is it that other infrastructure’ — for example, water — ‘is funded by private sector capital through privately owned, independently regulated utilities, but roads in Britain still call on the public finances for funding?’ We need to look urgently at the options for getting large-scale private investment into the national roads network; from sovereign wealth funds, from pension funds, from other investors.  That is why I’ve asked the Department for Transport and the Treasury to carry out a feasibility study of new ownership and financing models for the national roads system and to report progress to me in the autumn.  Let me be clear: this is not about mass tolling and, as I’ve said, we’re not tolling existing roads; it’s about getting more out of the money that motorists already pay.

People are already panicking about China owning the motorways, though the BBC does have a nice Q&A about public private partnerships and toll roads. There is also a focus on "shovel-ready" projects, which is apparently concept in the UK. The most famous example of a privitized toll road in Britian currently is the M6 north of Birmingham, which opened in 2003, was proposed by John Major when he was Prime Minister, and is regarded as a mixed success.

These sorts of public private partnerships (PPPs) are quite common in the US. Edit: There was an attempt to lease the Pennsylvania Turnpike, but that failed with lots of lessons learned. The Pew Center on the States wrote an overview of what states and agencies should consider when entering these PPPs. It will be interesting to see how this plays out.

Friday Seminar - Elizabeth Deakin on BART State of Good Repair: What It Will Take to Maintain The System

200408 bart carriage

This week's Friday TRANSOC Seminar has Elizabeth Deakin, JD, Professor, City and Regional Planning and Urban Design, University of California, Berkeley, presenting "BART State of Good Repair: What It Will Take to Maintain the System."

The Bay Area Rapid Transit (BART) system is approaching 40 years of service, and BART is preparing for a large reinvestment program, including replacing overage vehicles and aging infrastructure to keep BART in a state of good repair (SGR).  However, some of the funding for this program is uncertain and therefore it is possible that some of the planned investment in the replacement of equipment and infrastructure will have to be deferred.  This presentation examines the levels and types of investment needed to maintain BART in a state of good repair, identifies the kinds of deterioration in BART services that are likely if less money is available for SGR than needed, evaluates how service deterioration would affect BART ridership, and assesses the consequences for the Bay Area’s transportation system, the economy, and the environment.  Stakeholder perspectives on funding for SGR also are investigated.

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