A new charge on cars

Starting in 2025, San Francisco will begin charging drivers a fee to enter the downtown area during peak hours. This road-pricing strategy—often referred to as cordon pricing—has been used in London, Stockholm, Milan, and other cities to alleviate road congestion and offset the negative environmental and health impacts of vehicle traffic.

But research by Matt Tarduno, an Agriculture and Resource Economics PhD candidate, suggests that these strategies are often too simplistic. The price set by cities sometimes leads drivers to detour around the cordon zone, simply moving congestion elsewhere. And drivers are usually charged the same amount regardless of their vehicle’s fuel efficiency, trip duration, or anticipated route.

Published as a Haas Energy Institute working paper, Tarduno’s research uses data from the Bay Area’s FasTrak system to understand how drivers respond to toll prices and model how cordon zones would impact congestion and pollution.

“Road-pricing models can help address congestion, accelerate the retirement of “heavy polluters” by tying price to fuel efficiency, and push both transit systems and individual drivers toward greener technologies,” said Tarduno. “This research builds on the benefits of traditional road-pricing models while explicitly accounting for the imperfect nature of proposed road-pricing systems.”

Tarduno found that cordon pricing performs better when cities set both off-peak and peak prices, rather than only charging prices during peak hours. In San Francisco, he said, this policy improvement would generate hundreds of millions of dollars each year in avoided traffic slowdowns and air pollution-related health costs. San Francisco drivers also stand to benefit under Tarduno’s peak-pricing proposal: It is two-thirds lower than the city’s current proposed rate. Even though it was modeled using Bay Area data, Tarduno said, his proposed approach can also be deployed by cities across the globe.

— Mathew Burciaga