Thursday, September 29, 2011

Estimating Revenue from New Toll Roads

Toll Avoidance and Transportation Funding (9 page pdf, Clark Williams-Derry, Sightline Institute, September 2011)

Also discussed here: Changing Vehicle Travel Price Sensitivities - The Rebounding Rebound Effect (24 page pdf, Todd Litman, Victoria Transport Policy Institute, Sep. 1, 2011)

Today we return to a review of a paper on experiences with tolling in many different places in the U.S.A. and, in this case, the tendency of this advocating tolls to overestimate revenue by 20-30%. Although this does not mean that tolls are a bad idea, it does underline the greater uncertainties that dictate traffic volume on roads with tolls.



Key Quotes:

toll road revenues typically fall short of official projections–especially when drivers can choose toll-free alternative routes to reach the same destinations”

“Across all case studies, toll road forecasts overestimated Year 1 traffic by 20%-30%.” This “optimism bias” persisted for years after toll roads were first opened to the public”

“For the projects studied, actual traffic ranged from 85 percent below forecasted levels, to more than 50 percent above forecasts ….toll road traffic estimates suffer from a 20-30 percent optimism bias”

“convenient access to toll-free alternative routes can induce substantial toll avoidance, causing traffic volumes on toll roads to fall short of forecasts”

“None of the literature reviewed suggests that tolling is inherently a bad idea. On the contrary, tolling can be an important source of revenue, and a powerful tool for managing limited road space and relieving congestion”
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