University of California Institute of Transportation Studies

Economists have long argued in favor of congestion pricing, under which drivers pay a fee or toll to enter roadways during peak times. An increasing number of global cities have adopted or are considering pricing programs. Even so, these regimes remain relatively rare and controversial. One key concern with congestion pricing is fairness. Road pricing can pose a substantial burden for low-income drivers, many of whom have little option to avoid travel during peak times and limited opportunity to choose other modes of travel. Prior research has shown that congestion pricing regimes tend to be regressive in terms of their initial burden, that is, in terms of who ends up paying more to use the roads.1 But, the ultimate effect of a road pricing program depends also on how its revenue is used. Some or all of the revenue from a congestion pricing program can be returned to households, and this can fundamentally change the program’s fairness.