What Will Other US Cities Learn from New York City’s Congestion Charge?

Right now, drivers in New York City are paying a new congestion charge—the first such scheme in the US. ??

The goal is to reduce traffic congestion, noise, and air pollution. Most cars will be charged $9 to enter parts of Manhattan during peak hours, with the money from tolls used to improve public transit in the city.

The So What??

Although other cities such as London, Milan, Singapore, and Stockholm have introduced congestion charges, US cities have not followed suit until now.??

Plans from NYC’s Metropolitan Transportation Authority have taken years to be approved, and there may still be further legal and political challenges to the scheme. ?

“One of the key questions is to what extent the tolls prompt a true shift in behavior and commuting patterns—and how that impacts the business community in different neighborhoods,” says Selin Zalma, a BCG managing director and senior partner in Brooklyn.

Other cities are watching New York City closely. Los Angeles, one of the most congested cities in the country, is under pressure to address its traffic challenges ahead of the 2028 Summer Olympics.??

“Seeing how New Yorkers respond to the new charge and adapt how and when they travel will help inform the transport authorities in Los Angeles County as they grapple with studies and pilots around congestion pricing,” says Santiago Ferrer, a BCG managing director and senior partner based in Los Angeles.

According to the transportation analytics firm INRIX:?

• New York City, Chicago, Boston, Philadelphia, Miami, Los Angeles, and San Francisco are among the top 20 most congested cities in the world.??

• The typical US driver lost 43 hours to traffic congestion in 2024, equivalent to a full week’s work.
• In 2024, congestion cost the US more than $74 billion.?

“As the population in many cities across the globe increases due to urbanization, the quality of life for city dwellers is becoming increasingly important for public sector agencies to tackle,” adds Parth Doshi, a BCG managing director and partner specializing in public sector transportation.

“Regardless of whether congestion charges are on the table, cities need to harness technology to provide a deeper understanding of the movement of people around the city to identify choke points and inform long-term planning needs.”

Now What

These are some key areas for cities around the country when considering or facing possible congestion pricing. ??

Traffic Assessment. Traffic modeling tools can help understand current levels of congestion and show the impact of different prices and scenarios. Once the worst areas of congestion have been pinpointed, it’s then key to identify the optimal charges needed to reduce congestion to the desired levels.

Availability of Public Transport Alternatives. It is important to establish at the outset the percentage of the population who have access to alternative means of travel. Authorities should also check that public transport has the capacity to accommodate any shifts in behavior, and assess whether increased demand can be met from an operational perspective, such as the labor or physical assets required. Over time, businesses will consider congestion charging and proximity to public transport as part of strategies to attract talent when choosing office locations.

Environmental Benefits. Agencies should conduct in-depth studies on the impact of emissions and pollution in both the target zone and the adjacent areas and the impact on emissions should inform the plan of action. Charging schemes could also be used as an incentive to advance the energy transition. Stockholm, for example, provides exemptions for eco-friendly vehicles.??

Equity Issues. Engage with the local community to understand whether any industries or demographics could be disproportionately impacted by the charges. Once identified, it may be possible to mitigate the impact. For example, both London and NYC have exemptions for certain vehicles transporting people with disabilities.??

Economic Impact. It is important to understand the impact on local businesses located in and around the congestion zone. This includes the impact on both potential customers and the workforce. Again, modeling is the best way to gain deep understanding of how different sectors could be affected. Businesses should participate fully in any research, and can potentially use the findings when negotiating for future needs, such as for new developments or to maintain aging infrastructure.

Public Engagement. Understanding public perception will help identify the key issues to resolve. Two Swedish cities, Gothenburg and Stockholm, both ran a pilot program to test optimal charges and sway public sentiment. Pilot parameters and the clear markers for success should be established before designing a pilot.

For further reading:?

US Public Sector and Government?

Cities of the Future

How to Reshape the Future of Megacities

A version of this article was first published in May 2024.