Congestion Pricing Unpopular in NY

Newsday reports that small business groups are unhappy with Mayor Bloomberg's proposal to help the environment and increase the speed of transportation in New York by reducing congestion through "congestion pricing". Small business groups correctly view congestion pricing as a new tax on something that has always been free before. Ignoring for a moment the distributional effects on the poor who will effectively priced out of driving between 86th Street and downtown, congestion pricing is obviously capable of doing exactly what it was designed to do: reduce traffic.

The problem with most schemes for charging for road access is that new infrastructure needs to be built to differentiate between paying costumers and everyone else. Bloomberg apparently plans to avoid this hassle by using pre-existing infrastructure that already charges for bridge access.

Savvy investors should be on the lookout to buy a piece of infrastructure investments like toll roads. While the political nature of the situation in Manhattan makes it unlikely that a private company could buy all the public roads in Manhattan, the potential revenue stream looks unbelievably inviting.

Cities like London have already demonstrated that congestion pricing works to reduce traffic by forcing people to pay for a public good. And the people who are willing to pay more than $10 every day just to drive downtown are likely willing to pay $15 or even $20 in just a few years. Hedge funds and universities with large endowments like Harvard are the main players in infrastructure investments today, but if more cities follow New York's lead here in the United States, the market could really take off.