Putting a price on inefficiency

The problem with "letting the market manage" things as we like to in the U.S. is that the wider societal costs are often distributed, while the benefits are concentrated -- take the corporation that drains a local resource for its own ends as an example, or the broad problem of air pollution. It's interesting to see ways that people can come up with to make the invisible prices tangible and give people (or other entities) incentives to change their behavior.

One solution that's getting some discussion in large cities right now is congestion pricing, which charges drivers a fee for traveling through crowded areas at peak rush hours -- the goal is to reduce the pollution from all those idling engines, as well as to increase the ease with which vehicles can actually use the roadways in question, all while generating more customers (and funding) for public transportation options.

The very suggestion that such an idea be considered in Philadelphia caused a minor tsunami in the current mayoral race, and I gather than New Yorkers are squawking too, so I was glad to see in this New Yorker piece that the cities that have tried it have quickly changed their tunes.

Since the London plan was introduced, in 2003, vehicle speeds in the city’s central business district have increased by thirty-seven per cent and carbon-dioxide emissions from cars and trucks have dropped by fifteen per cent. The plan, which the newpapers initially derided as “Kengestion”—after its main supporter, London’s mayor, Ken Livingstone—has grown increasingly popular; in 2004, Livingstone was easily reëlected, and now nearly two-thirds of Londoners say that they back the scheme.

Still, nobody likes paying a fee, businesses can see threats to their customers more easily than they can see the long-term benefits, and everybody worries about anything that could endanger a fragile urban renewal period. So maybe these things will be tried, or maybe we'll wait until the rivers are lapping at the steps of City Hall. Good ideas deserve some discussion, at least.

(via kottke)