Mar 18, 2021 7 min read thought pieces

Advancing Equity via Pricing 💲

With climate change and urban development rapidly accelerating here in the Bay Area, the need to address subsequent issues, such as increase greenhouse gas emissions and growing traffic congestion, that come from these phenomena also become more immediate. These issues are intricately linked; for example, addressing growing traffic congestion can reduce GHG emissions. However, addressing the issue of congestion is easier said than done, especially in our automobile-dependent culture. On top of this, low-income and marginalized communities have long carried the additional burden associated with deficiencies in systems like transportation. Studies have shown these communities are more likely to suffer from traffic air pollution1. Traditional efforts to curb congestion (and subsequently reducing GHG emissions) include congestion-based pricing; however, studies have shown that these efforts also negatively impact these vulnerable communities. These communities end up paying a more significant portion of their income to commute. While inequities are deeply engrained in our transportation systems, efforts that keep them in focus often minimize their negative and disproportionate impacts. While noble, this can be harmful to other societal goals (such as mitigating climate change). Instead, efforts and behavior-changing policies should focus on maximizing the benefits for marginalized communities2. The memo below shares how the combination of equitable pricing and reinvestment policies can work together to address enormous societal challenges such as climate change and its subsequent effects while advancing equity.

Context 🏙

The rapid rise of the American suburbs and continual reinforcement for land use and zoning for single-family homes pushed those in the majority population (white Americans) out to own their land starting in the 1950s. Single-family zoning was an example of exclusionary practices meant to keep vulnerable communities (low-income, immigrants, people of color) marginalized. This practice gave rise to the need for highways and began American automobile dependence. Marginalized communities were less likely to own cars and rely on public transit, often leaving them in zones adjacent to the central business district.

As the population grew and sprawl persisted, so did congestion. Consequently, transportation investments to address them, such as widening highways and roads to move more people. However, this paradoxically induced more congestion since the traveling capacity increased. These investments also exacerbated the physical separation between populations — often, highways would rip through the heart of low-income communities. The results of these practices have left municipalities virtually impossible to commute without a car, and congestion is at an all-time high. Additionally, due to newer developments in transit-rich zones, marginalized communities are often displaced due to their increased property value, which manifests as higher rents. While it may seem impossible at times, transportation policies that created the fragmented neighborhoods we live in today can implement newer strategies that change our future.

Opportunities 🚅

One of such strategies is road pricing. Current road pricing comes in tolls; however, other types are gaining more traction, especially in the US. The first is "high-occupancy tolling," which are essentially express lanes reserved for cars with more than one passenger2. This is to encourage more sustainable practices like carpooling by allowing faster travel times. The second is "cordon pricing," which charges vehicles when they enter defined zones, usually Central Business Districts2.

While these levers, like pricing, can encourage people to be more conscious about their mobility choices, they can deepen social and racial equity. This happens for multiple reasons: the first is that suddenly adding a new expense for vulnerable communities can add to their financial strain, especially if it is an expense they must make, for example, driving to work. Secondly, suppose the revenue from pricing efforts supports unsustainable practices, such as highway widening. In that case, that could potentially induce more traffic, subsequently increasing emissions, and climate pollution, which inadvertently disproportionately impacts the communities we are trying to help. Some might say that is hyperbole or engages the slippery slope fallacy, but this shows how volatile these interconnected systems are when it comes to equity.

Given this, pricing tools are incredibly versatile. First, they can act as alternatives to widening highways. This has been effected in Portland, Oregon, and there are efforts, in the form of studies, underway to adopt a similar practice in the Bay Area along Highway 1012. Another pricing road strategy is congestion pricing for downtowns, also known as cordon pricing defined above. Cities like Seattle and Vancouver have explored this method of road pricing with a careful eye on their impact on low-income communities. Seattle took this further, using revenue generated to support equity programs, including subsidized youth transit passes and partial rebates on vehicle licensing fees. The stand-out case is here in San Francisco with Treasure Island. This will be discussed more in the Solution section.

One thread between these examples is that they each conduct equity studies before deciding the best implementation strategy. As we learned during the SoMa case study, one aspect was deciding if we should prioritize building homes or bringing jobs to the area3. Arguments for jobs noted that for the highly connective transit hub, it might be worth it to place jobs since people traditionally commute from outside the city. If this occurred elsewhere, the housing option might be the more favorable option. The message here is that it is essential to understand each location before deciding which policy to enact.

Also determining the reinvestment strategy, effective policies determine how to make pricing more affordable to vulnerable communities. From charging flat rates, meaning everyone is charged equally, to dynamic rates, such as the time of day, there are several ways to choose the best option. One strategy: means-based pricing, takes into account the user's income status. Given this, according to TransformCA, one of the most direct ways to mitigate costs on low-income drivers is to consider tools like subsidies, discounts, credits, caps, and toll exemptions.

These affordability tools have been implemented worldwide, from transponder credits in Los Angeles (monthly $25 credit to ride the metro) to exemptions for disabled drivers in London. The recommended solution discussed further utilizes toll exemptions.

Vision and Approach 👀

An earlier example stated that road pricing could be inequitable if the revenue generated supported unsustainable practices - what if they did not, though? What if revenue-supported practices like funding transit options? While this on its sounds great, it is not enough. Better, more specific options include subsidizing transit costs to make it easier for vulnerable communities to access. A step further would have revenue support the development of below-market-rate housing.

As stated earlier, the impacts of strategies like road pricing are not in a vacuum. If revenue from road pricing can support other aspects of holistic development such as housing or transit, it can maximize its benefits2. These benefits, a byproduct of advancing equity, include breaking generational barriers to assets like housing and increase access to opportunity for historically marginalized communities. The following train of thought is as follows: mitigating mobility issues not only improve air quality (thereby increase health outcomes), it allows communities to focus elsewhere instead of the previous barrier.

Solutions and Recommendations 📝

One example of a comprehensive program that integrates several strategies and considerations presented above is the San Francisco Treasure Island Transportation Affordability Program. Treasure Island is a small artificial island in the San Francisco Bay, only accessible by the Bay Bridge. Although its location is unique - unlike most places around the country, it has implemented several strategies that show that it is possible to advance equity while mitigating climate change via pricing roads.

This program combines cordon pricing since it is downtown and road tolling by charging all vehicles entering the island2. It uses a combination of dynamic and means-based pricing strategies. Its dynamic pricing has two toll prices: $5 at peak hours, $3.50 at off-peak hours. Its current mean-based pricing is unique for residents4. If residents live in below-market-rate housing for an extended period, then they receive one-non-tooled daily round trip. This effort is highly considerate and allows those residents to reduce their expenses. Starting in 2023, the SF Board of Supervisors decided that all residents would ultimately be exempt from tolls.

While its pricing strategy boldly puts equity at its forefront, its reinvestment strategy pushes it even further. Revenue from tolls helps pay for expanded transit services to manage congestion. The program's goal is to ensure that by 2035, at least 50% of trips are made by walking, biking, or transit4.

Beyond transit, this transportation program, managed by Treasure Island Mobility Management Agency Board, has even more components. One of its primary goals is to have 8,000 homes, many offered below-mark-rate, by 20354. Other goals include reducing the need for car ownership and use while providing high-quality transit and affordability. In addition, since residents will stop paying a toll by 2023, the board plans to increase the island's development to make it a destination. Key features include open spaces, hotels, restaurants, and entertainment venues4. All these efforts combined make it a great space to live and reduce greenhouse gas emissions. This comprehensive transportation program shows that if we want to build a successful transportation program centered on equity, we must incorporate features far beyond just transit.

This example shows that while individual policies can be influential, they need to be integrated with other tools to ensure their effectiveness. For example, in 2016, the San Francisco County Transportation Authority performed a study and recommended the following policy: residents receive credits for the Bay Bridge's toll; else, they would be double-charged just for entering or leaving their homes5. This is before the latest plan (2021) to remove tolls altogether; however, their equity approach created support for longtime below-market-rate residents. The figure in Appendix A shows how they considered how the toll affects people and aligns with their high-level transportation and development goals.

Considering Treasure Island's size (on the neighborhood scale), it might be challenging to directly suggest places like San Francisco (on the city scale) to adopt its policies directly. However, Treasure Island shows that it's possible to achieve equity goals with the right combination and execution. San Francisco and the Bay Area are governed by Plan Bay Area, which has increased focus on equity impacts its last few editions. If ABAG and MTC want to actualize their vision in Plan Bay Area (specifically transportation, but Treasure Island shows that transportation does not occur in a vacuum, it needs to be complemented with other aspects such as housing), then they would encourage counties in the Bay (and smaller planning organizations down to the neighborhood scale) to ask key questions (such as if it aligns with PBA's vision) when making decisions. If we want the Bay Area to replicate Treasure Island's efforts, it will take collective efforts at the Treasure Island (neighborhood scale). Understandably, the Bay Area is not entirely urban; however, efforts like means-based congestion pricing and equitable reinvestment are for the most vulnerable populations. The region can take steps towards addressing climate change with advancing equity.