4.01.2008

GET THE PRICE OF DRIVING RIGHT

Bloomy's getting closer to making it more expensive to drive in the heart of Manhattan: "Congestion Pricing Passes NY City Council, Now Goes to Albany." All that money will be plowed into mass transit, which is the more efficient and environmentally friendly way to deal with all the density. Cars, on the other hand, clog up precious road and parking space, and belch out noise and pollution; so it makes sense to change the economics so that they pay more for the right to do those things.

Of course, one "enlightened" opponent on City Council was quoted as saying, "What's next, we're going to charge a user fee to come into Central Park because it's crowded?" It's an important statement. We economists classify parks as public goods, because they cost nothing to provide them to one more person, and because you can't exclude people from using them.

But parks aren't free to operate; someone has to pay for the landscaping and the garbage collection and the maintenance. There's no profit motivation to bear these costs if there's no revenue to be had, so parks end up being paid for by cities, who decide that it's worth it to levy broad taxes to make parks available to all residents and visitors. (Of course, there are parts of parks that can and do have user fees, like skating rinks or rollerblade rentals; and, not surprisingly, sometimes those services are outsourced to a for-profit entity.)

Is driving a public good? Roads are a form of a public good - they cost nothing to provide to one more person, and, except for toll roads, you can't exclude people from using them. That's why governments pay to build and maintain roads, and levy taxes to raise the money they need to do that.

But much more so than parks, driving imposes on others something that we economists call negative externalities: bad things that affect others that are not directly paid for by the user. Pollution is the classic negative externality: we all suffer when factories belch out dirty emissions, and (until recently) those same factories paid nothing in penalties and therefore had no incentive to reduce those emissions.

Driving imposes an additional negative externality of traffic congestion: we all suffer because we are all on the road together. This is of particular consequence in car-choked areas like Manhattan. So that's two negative externalities - pollution and congestion. And congestion pricing gets the price right so that a better equilibrium of volume of driving results - better for mobility, better for infrastructure, and better for the environment. Let's hope those legislators in Albany get this.
Post a Comment