With Uber and self-driving cars, the time is right for congestion pricing

Why Uber and autonomous vehicles should be great news for fans of congestion pricing.

Hiding behind the safety debates around self-driving cars is what I consider the more important question: will our driverless car future bring convenient, safe, and efficient mobility? Or will we just get more congestion? Contrary to optimistic forecasts, there’s no guarantee driverless cars won’t be just as stuck in traffic as drivers are now, a point Robin Chase has made repeatedly. 

Autonomous vehicles might make congestion better—or they might make it worse

The risk is that fully autonomous vehicles will make taking a car so easy and cheap that everyone will do it a lot more. Uber may already be having this effect. The added efficiencies of AVs might not outweigh the congestion externality. 

But the worst can be avoided.

Fortunately, congestion is one of the rare real-world problems that actually has a simple, elegant solution. Economists and transportation experts agree congestion can be prevented by internalizing the additional cost through a spatially and temporary variable fee. When congestion is priced at the optimal level, enough potential drivers will decide to not drive, or to travel at a different time, or use a different route, and traffic will flow freely. Moreover, the resulting revenue can be used to improve public transit, or any other worthy cause.

If congestion pricing is such an easy solution, why don’t we use it? The reason is that it’s historically been extremely politically difficult.  Planners and economists have proposed it again and again, in place after place, only to see their proposals fall to political barriers. (Singapore, London, and Stockholm are the few exceptions).

This time the political equation is different

However, now with Uber, and later with AVs, congestion pricing is suddenly much more feasible, for two reasons.

1. Technologically it’s more feasible than ever

Ideally, the congestion price varies by time and location, so you need a system that knows a vehicle’s location at a given time and charges fees accordingly. Until recently this was technologically very difficult. But smartphones and GPS have changed that. Uber’s surge pricing already uses the necessary technology. It would not be technically difficult to add a varying congestion fee. 

2. The political equation finally works—at least temporarily.

Thus far congestion pricing has been a political non-starter. People don’t like being charged for something—road space—they’re used to getting for free. Politicians balk at imposing a fee perceived as a burden on ordinary working people, even though there are proven ways to mitigate the impact. Privacy concerns also loom large—people feel uncomfortable having their movements tracked.

Uber changes this political equation. If cities required a congestion fee for ride-hailing trips, the target would no longer be ordinary people, but a large corporation whose users are relatively well-off. Privacy concerns lessen, because Uber’s passengers are already accustomed to having their movements tracked. Plus, surge pricing has already shown users will (however grudgingly) accept variable prices. In the future, when driverless cars are provided by large mobility companies, a similar political equation will remain.

The main political opponent of such a fee would likely be Uber itself. In this regard cities have leverage because they can decide who gets to operate on their streets. And, Uber’s users and drivers don’t want to be stuck in congestion either. Such a fee might even be good for Uber’s business, if it allows users to take more trips. (Someone should model this.) Any company is unlikely to adopt such a charge unilaterally though, since would only work if also imposed on competing companies.

Cities can and should adopt congestion fees for ride-hailing services now.

Governments could levy a variable per-mile fee on all ride-hailing trips as a condition for operating on city streets. This is important to do now, while the political barriers are low. The policy should remain in place as we transition to autonomous vehicles. This will ensure we can enjoy the effortlessness the technology will bring, without getting stuck in traffic.