A Benefit-Cost Analysis of Road Pricing in Downtown Seattle

Abstract

This benefit-cost analysis evaluates the key benefits and costs associated with potential cordon-based road pricing in downtown Seattle to determine if this road pricing option will be beneficial for the region. The accrued benefits quantified in this analysis are (1) reduced travel time, (2) increased travel reliability, (3) reduced emissions, and (4) reduced traffic accidents. On the cost side, the study measures (1) capital and operation costs of the toll collection system, (2) additional subsidy for transit agencies to meet higher demand, and (3) both direct and indirect financing costs. The toll revenues from road pricing and changes in other government revenues such as gas tax are neutral for the society as a whole, because they represent cash transfer between government and residents and do not cause adverse impacts on social welfare unless the toll rates are dramatically high. The results over a thirty-year period show that there will be net benefits of 585 million dollars in present value for the region in the base scenario. The extensive sensitivity and uncertainty analysis also demonstrate that the project will remain favorable in conservative scenarios. The study qualitatively examines possible impacts on other factors such as retail sales and land use but concludes that they are unlikely to undermine the key results in this analysis. These findings suggest that in sum, road pricing in downtown Seattle would have positive impacts for the city and region.