Congestion Relief: Assessing the Case for Road Tolls in Canada

The Study in Brief

Amid growing congestion on urban roads and aging highway infrastructure, the merits of road tolls are receiving increasing international attention. Direct road user charges in the form of electronic highway tolls, area charges, or distance-based charges are not only a tool to alleviate traffic congestion, they confront drivers with the costs of road damage and emissions. This Commentary lays out the merits of road pricing and discusses design considerations, describes the state of play in implementing road pricing worldwide, and makes the case for road pricing in Canada.

Among key conclusions:

• Congestion is a serious and growing problem in major Canadian cities as measured by the costs of travel delay, additional fuel consumption and greenhouse gas emissions. Canada’s nine largest urban areas, by one estimate, face annual costs of $3 billion.
• Neither fuel taxes nor parking fees are effective in dealing with traffic congestion. Appropriately designed road-pricing schemes are the best instrument. Road-pricing’s usefulness in charging for road damage, insurance, and so on are a bonus.
• Net revenues from road charges, after deducting operating costs, can be used for various purposes: to pay for road construction and maintenance, to support other modes of transport, or to reduce other distorting taxes; they can also enhance the public’s acceptance of road pricing by compensating potential losers.
• Claims that road pricing hurts the poor are exaggerated. Poorer people travel less than richer people. They rely more on urban public transport, which would speed up if there were fewer cars on the road, and they would benefit if road-pricing revenues were used to enhance public transport service. Also, policymakers may choose to address equity concerns by offering discounts or exemptions.

Experience with road pricing generally — and congestion pricing specifically — is growing around the globe. Research and planning in Canada should begin now on road pricing for heavily congested urban highways and/or downtown areas.

The goal should not be to implement schemes that meet a theoretical ideal. Road-pricing programs should pass a cost-benefit test, be adaptable to changing circumstances, and not soon become technologically obsolete. Privately operated schemes have the potential to reduce implementation and operating costs and to accelerate development, and thus warrant serious consideration