Toll Roads: What We Know About Forecasting Usage and the Characteristics of Texas Users

Road infrastructure is a key component of any region’s transportation system. It allows unprecedented levels of mobility, accessibility, and economic growth. In the U.S., the largest revenue source for the funding of transportation infrastructure is the federal and state fuel taxes. These taxes were conceived in the 1950s as an indirect charge to recover the costs of vehicle travel on the U.S. highway system. However, fuel taxes have not increased with the inflation rate, and are anticipated to decline as fleet fuel efficiency increases. Inadequate funding from fuel taxes, increased demand for transportation, and increasing maintenance needs due to an aging highway system, have resulted in significant deficits along with renewed interest in toll road development, both to finance new roads or add capacity to existing roads. A number of U.S. State Departments of Transportation, including Texas, are actively pursuing tolling as a means to provide much needed capacity sooner. As tolling is considered, reliable traffic and revenue (T&R) forecasts informed by a robust understanding of potential users becomes increasingly important to toll road owners, developers, financiers, and investors, in addition to the consultants who perform these studies. The objectives of this TxDOT research study were to (a) expand upon the analysis conducted by the bond rating agencies that alluded to the existence of an optimism bias in T&R forecasts, and (b) characterize the users and nonusers of Texas toll roads in an effort to conceptualize incentives that can be used to encourage the use of toll roads.