[_dain_]

You're missing half the story; "demand" only makes sense with reference to a price. At the moment, that price is zero, but it needn't be. As we all know, market prices are an efficient mechanism to allocate scarce resources. People have a curious blindspot about this when it comes to roads.

[AnthonyMouse]

> As we all know, market prices are an efficient mechanism to allocate scarce resources. People have a curious blindspot about this when it comes to roads.

It's not a blind spot. It's a characteristic of services with a high fixed cost and trivial variable cost.

To ask if we should price roads is to ask if the price needed to deter usage enough to relieve congestion without expanding the road would generate less revenue than it would take to expand the road. But this is basically never the case because most of the expansion cost is one-time (e.g. buying the land) whereas the congestion charge would have to be collected forever to continue deterring usage.

The strongest case for not expanding the road is if there is a more efficient way to relieve congestion, e.g. by relaxing zoning restrictions to allow higher density housing and reduce travel distances.

But if people value using the road at more than the cost of expanding it, and there are no higher efficiency alternatives, that implies the road should be expanded. And once it has been and there is no congestion even at zero unit price, there is no benefit in charging a unit price to deter congestion that isn't there anyway, and a detriment in deterring use of a public resource for which the same fixed cost has to be paid whether you use it or not.

Charging road tolls is also especially inefficient because the collections process has a high administrative overhead and a high privacy cost. Every dollar spent collecting tolls -- toll tags, gantries, billing, maintenance, customer service -- is a deadweight economic loss not incurred by any alternative that doesn't require them. The privacy cost is the same.

[_dain_]

>To ask if we should price roads is to ask if the price needed to deter usage enough to relieve congestion without expanding the road would generate less revenue than it would take to expand the road. But this is basically never the case because most of the expansion cost is one-time (e.g. buying the land) whereas the congestion charge would have to be collected forever to continue deterring usage.

First of all, that just doesn't follow. You can take out a loan to pay for the up-front cost and pay it back using the revenue you collect from tolls. Second, roads cost a lot of money to maintain. There are the usual ongoing costs to fix potholes and so on, and then they have to be totally replaced after 25-30 years. This is far more than what local taxation can bear in many cases. Replacement costs are chronically underestimated.

(e.g. Winnipeg would have to raise taxes 95% to properly fund their existing road liabilities: https://www.strongtowns.org/journal/2021/1/3/death-of-a-car-... )

>But if people value using the road at more than the cost of expanding it, and there are no higher efficiency alternatives, that implies the road should be expanded.

This is wrong, they are not valuing it properly because it is paid for by taxation and debt. A motorist pays exactly the same amount directly as a non-motorist: zero. The true costs are diffuse, invisible, and incomplete.

>And once it has been and there is no congestion even at zero unit price, there is no benefit in charging a unit price to deter congestion that isn't there anyway, and a detriment in deterring use of a public resource for which the same fixed cost has to be paid whether you use it or not.

This situation hardly ever happens. There is almost always more congestion after expansions than predicted by planners. If you wanted to overpower induced demand and get rid of all congestion the roads would have to be utterly gargantuan.

>Charging road tolls is also especially inefficient because the collections process has a high administrative overhead and a high privacy cost. Every dollar spent collecting tolls -- toll tags, gantries, billing, maintenance, customer service -- is a deadweight economic loss not incurred by any alternative that doesn't require them. The privacy cost is the same.

Time spent stuck in traffic is also deadweight loss, and it creates pollution.

[AnthonyMouse]

> You can take out a loan to pay for the up-front cost and pay it back using the revenue you collect from tolls.

The fact that you can do this is the point. It means the value of expanding the road is more than the cost of expanding the road, which implies it should be done absent some better non-toll alternative like increasing housing density.

But once you have enough capacity that there is no congestion without congestion charges, it's inefficient to deter use of the sunk cost road.

> There are the usual ongoing costs to fix potholes and so on, and then they have to be totally replaced after 25-30 years.

These costs aren't linear in the number of lanes. Resurfacing a four lane highway doesn't cost four times more than resurfacing a one lane highway (or your contractors are ripping you off).

Moreover, the initial cost is typically the highest, because you have to acquire land and possibly rebuild bridges and overpasses the first time.

> This is far more than what local taxation can bear in many cases. Replacement costs are chronically underestimated.

This applies to roads to nowhere that are under-utilized but still have to be maintained. Anything with traffic congestion is seeing more use than its cost.

You also have problems with corruption in government contracting inflating the cost of everything, but that's a separate problem and applies equally to mass transit etc.

> This is wrong, they are not valuing it properly because it is paid for by taxation and debt. A motorist pays exactly the same amount directly as a non-motorist: zero.

It's not a question of what they're actually paying, it's a question of what they would be willing to pay, i.e. the value they assign to the road. If you put a toll somewhere there is congestion, would the toll pay enough to expand the road? The answer is almost always yes, which implies that that the road should be expanded when congestion exists, unless there is some more efficient alternative to relieve the congestion.

It shows that expanding the road is more valuable than deterring usage with tolls. The possibility remains that some non-toll method of relieving congestion is still better than expanding the road, but it shows that expanding the road is better than deterring usage with tolls.

And whether to expand the road is a separate question from whether to actually fund the expansion from the tolls, because toll collection is inefficient and privacy invasive the deterrence function is undesired when the congestion can be relieved without it. The toll being able to fund the road proves that people value the road at more than its cost, but it's not the most efficient way to fund it.

> If you wanted to overpower induced demand and get rid of all congestion the roads would have to be utterly gargantuan.

This is only the case if you for some reason insist on using road expansion as the only solution to relieve congestion.

Mass transit can relieve congestion in higher density areas. Zoning that allows higher density housing to be built near jobs relieves congestion by both reducing the distances people have to travel and making mass transit more efficient.

Expanding roads works where those don't, or in combination with them. For example, if you have a growing city with restrictive zoning and a congested road between a large suburb and the city center, what you want to do is cause new housing to be built closer to the city instead of further expanding the suburbs, but the road to the suburbs still needs to be expanded because it is already too small for the existing traffic from housing which is already there and is not about to be removed.

This is politics. The most effective solution involves allowing higher density housing near urban areas, but this is not the solution desired by existing land owners, so they push inefficient alternatives like tolls. Because that increases rather than decreases property values closer to the city center by making it more expensive to live further away without increasing the supply of housing that isn't further away, so existing land owners collect higher rents to the detriment of residents.

> Time spent stuck in traffic is also deadweight loss, and it creates pollution.

Which is why we should relieve congestion by using the alternatives with fewer deadweight losses, like building higher density housing where that works and expanding roads where that works.