Fees for using roads could foster economic growth

There is again talk of raising the state gas tax to address the dramatic under- funding of transportation infrastructure. But even when a road network is fully supported by the fuel tax, there is still a disconnect in most motorists’ minds between what they pay and the act of driving.

Common goods like public schools or parks are collectively owned by society rather than by its individual members. They are normally supported by tax revenues and responsibility for operating and maintaining them is (usually) assigned to government.

This is the standard pattern for metropolitan road systems in the United States.

They are built and maintained by a combination of state and local governments that fund most of their costs out of general tax revenues, often supplemented by user taxes on motor vehicle fuel.

The result is an instinctive sense among motorists that roads are free. This mistaken view further complicates already difficult issues around how much road capacity we need and how it should be managed.

The basic problem is illustrated by Garret Hardin’s metaphor of a community that has a publicly owned pasture where local farmers can graze their cows without paying user charges. The farmers seek to graze as many cows as possible in the pasture, because each will increase the farmer’s milk production with no additional feeding cost.

But it only works so long as the total number of cows remains within the pasture’s feeding capacity. Once the farmers exceed this limit, the pasture begins to break down as the cows consume grass faster than the pasture can replenish itself. As a result, the pasture produces less nourishment for each cow.

Since each farmer’s cows are producing less milk for him to sell, his response is to buy still more cows and add them to the overused pasture.

When all the farmers do this, the result can only be declining milk production for everyone.

In Hardin’ words: “Each man is locked into a system that compels him to increase his herd without limit – in a world that is limited. Ruin is the destination towards which all men rush, each pursuing his own best interest in a society that believes in the freedom of the common.”

When the commons in question is the nation’s roads, especially congested ones in metropolitan areas, some believe their livelihoods depend on free use of the roadways and propose expanding them to support more vehicles.

They believe the purpose of the commons should keep pace with economic growth.

And since, like the pasture, roads are publicly owned, the cost of expanding them should be paid out of general tax revenues so its users can continue to obtain benefits without having to pay for them directly.

Others insist the real problem is not too little supply, but too much demand.

They argue that the time has come to “think green” about the future of public commons.

Then there are those who suggest the time has come to begin charging motorists per-mile user fees. In this way, each will pay more directly for the benefits received .

By using a sensible pricing system to allocate the use of scarce resources, each motorist will be  motivated to make the most efficient use of them, making discretionary trips at times when roadways are less congested and, depending on the pricing system, cheaper. When it becomes necessary to expand the public commons, income from user fees – not new taxes or more debt – can cover expansion costs.

The most sensible solution to the pasture problem is to charge the farmers grazing fees.

The same is true when it comes to roads, especially in metropolitan areas where traffic congestion is afflicting residents and choking off economic growth.

originally published: October 12, 2011