by Ali Donaldson
Governor Hochul’s decision to halt congestion pricing was applauded by business associations like the New Jersey Chamber of Commerce, but entrepreneurs, who are concerned about the prospect of sinking sales and tighter margins, may not have as much reason to worry as they think. Gernot Wagner, a climate economist at the Columbia University Business School who has studied the potential impact of congestion pricing in New York, disagrees with the governor’s assessment. In cities where congestion pricing is the norm, businesses and the local economy have not been harmed, he says. Instead, the policy has often bolstered entrepreneurs.
In London, drivers are charged £15 a day to enter the most heavily trafficked parts of the city. When surveyed about the toll’s impact, 69 percent of businesses in London said there was none at all, and 22 percent reported a positive change, citing cost savings from faster deliveries. Only 9 percent of businesses reported a negative impact.
Congestion pricing has been effective in reducing the number of cars on the roads, but that has not translated into fewer people eating at restaurants or shopping at stores, Wagner says. Some consumers have just changed their mode of transportation.
“Retail business clearly isn’t hurt by fewer cars, more pedestrians,” he says. “Pedestrians, cyclists, basically people who spend more time in the city, closer to business,” he adds, “tend to spend more money.”
What’s more, the status quo is actually causing more harm to businesses in lower Manhattan, Wagner says. New York’s heavy traffic, which has become increasingly gridlocked since the pandemic, imposes a hefty cost in terms of lost time and productivity. Using a detailed cost-benefit analysis, Wagner calculated that expense adds up to about $150 per car during rush hour.
By alleviating heavy traffic, congestion pricing will even help business owners that depend on their vehicles, Wagner says. Entrepreneurs, such as contractors, electricians, and delivery drivers, will be able to travel to job sites more quickly and tack on more clients to their schedule.
“The big problem is this perception of believing that driving into a limited space is free. It is just not,” says Wagner. “There is this massive externality that, frankly, drivers don’t pay.”
He adds, “$15, in many ways, is a baby step.”
Quoted in: “Governor Hochul Said $15 Congestion Pricing Would Hurt New York City Businesses. This Expert Disagrees” by Ali Donaldson, Inc. (12 June 2024).