VALUE PRICING PROJECTS AROUND THE UNITED STATES

Value pricing, also called congestion pricing, uses fees which vary by time-of-day and location of use to reduce congestion. Value pricing can provide improved service to transportation users, reduce emissions, make more efficient use of existing transportation capacity, and reduce the need for future capacity expansion. It is horizontally equitable, i.e., those who are responsible for generating the need for additional capacity are faced with some or all of the costs to pay for that capacity. The concept of assessing relatively higher prices for travel during peak congestion periods is the same as that used in the private sector of the economy to respond to peak-use demands. Airlines and hotels offer off-peak discounts, and public utilities offer peak/off-peak pricing plans. Through the Value Pricing Pilot Program of the Transportation Equity Act for the 21st Century (TEA-21), the Federal Highway Administration (FHWA) supports State and local efforts to plan, test and evaluate this market-based concept. This paper provides an overview of value pricing and addresses the follow questions: What is value pricing? How can it address metropolitan transportation issues? What type of pricing strategies have been implemented in the U.S., or are being considered for implementation under the federal Value Pricing Pilot Program? What are the issues faced in attempting to use pricing strategies, and how can they be addressed? What is the role of the FHWA? Is there a longer-term future role of Value Pricing? What types of changes in current funding and institutional arrangements in highway transportation might be needed if pricing is to play a larger role in metropolitan areas in the U.S.?