Policy Documents

Using Pricing to Reduce Traffic Congestion

Congressional Budget Office –
March 1, 2009

Highway congestion occurs when a vehicle causes delay to other vehicles on the road, resulting in longer and less reliable travel times, the use of additional fuel, and other costs to the economy. According to one widely cited study, in 2005 highway congestion resulted in 4.2 billion hours of delay and 2.9 billion gallons of additional fuel used, at a cost of $78 billion to highway users.1 The costs are borne not just by highway users themselves, but by households and firms throughout the nation as well. Moreover, highway congestion has been increasing and is expected to worsen in the coming years.

Policymakers have adopted a variety of strategies for reducing congestion, including building more roads, supporting public transit, and improving the efficiency with which highway capacity is used. One fundamental way of improving efficiency is through congestion pricing.

Congestion pricing reduces the number of vehicles on a highway at peak periods by charging drivers for using the highway during those periods. When successfully applied, congestion pricing makes better use of highways’ capacity by allocating it more efficiently. Other strategies that are designed to allocate the existing capacity more efficiently in specific circumstances include timed traffic signals, signs that warn drivers of congestion ahead, and improved responses to accidents. Such strategies have attracted more attention as building or expanding highways has become increasingly expensive and less feasible. 

Congestion pricing also can be linked to strategies to improve mobility by making alternatives to the private automobile, such as subways, buses, or commuter rail service, more attractive during peak periods. The revenues generated by such pricing have sometimes been used to pay for improvements in public transportation systems.