By Bill Holloway
Tolled traffic lanes on otherwise unpriced facilities offer a unique opportunity to understand how much people are willing to pay for a faster commute and to truth test the assumptions used by transportation agencies to judge the benefits and costs of potential projects. As noted recently in Sightline, one of these projects, the high-occupancy toll (HOT) lanes on Washington’s SR 167, demonstrates the difficulty of accurately predicting how travelers will value reductions in travel time.
The SR 167 HOT lane pilot project began in 2008. Motorcycles and vehicles carrying at least two people are allowed to travel on the HOT lanes for free. Single-occupant vehicles may travel in the HOT lanes for a fee, which adjusts dynamically based on vehicle speeds and volumes.
As noted in the pilot program’s First Annual Performance Summary, “the goal of the system is to manage traffic congestion and maintain free-flow traffic conditions,” and the lanes have indeed been successful in terms of increasing efficiency and maximizing vehicle throughput. Toll revenue projections made prior to the HOT lanes opening, however, have proven to be way off.
The 2006 Traffic and Revenue Analysis for the project provided toll revenue estimates for the years 2008 through 2020 (Exhibit 12, p. 16). However, according to WSDOT data (2012 Annual Performance Summary and the financial statement for 4th quarter of 2012) the baseline estimates have proven to be nearly four times higher than the actual toll revenue over the past three years. Even the low estimates were three times greater than the revenue that has been collected.
What makes the SR 167 revenue predictions unique is not that they are incorrect, but that they can be measured against drivers’ actual willingness to pay. Since in most cases drivers are not charged directly for using highway facilities, there is no way to gauge whether their travel-time savings justify the project costs.
The SR 167 HOT lanes have been successful, maximizing vehicle throughput and more than covering their operating costs. The gap between predicted and actual revenues, however, has implications for practice. The estimated value of travel-time savings is one of the key inputs in the benefit-cost analyses that are used to make decisions about transportation projects. Normally, there is no way to test the validity of these estimates. When one of the few measurable cases shows the disparity apparent in the case of the SR 167 HOT lanes, it may be time to reassess assumptions about the value of travel-time savings and the use of these estimates in benefit-cost analyses.
Bill Holloway is a Transportation Policy Analyst at SSTI.
By Bill Holloway