The federal ban on New York’s cordon pricing experiment is bad policy

New York City’s cordon pricing experiment is emerging as a powerful tool to reduce roadway congestion in the Big Apple. Even as the U.S. Department of Transportation attempts to curtail the project with legal maneuvers, New York officials say they plan to continue, gathering data and refining a system that charges drivers to use a scarce resource—the limited road space of lower and midtown Manhattan.

The cordon pricing program, which is continuing despite the Trump administration trying to shut it down, allows the city to demonstrate firsthand the benefits of a pricing system that eases gridlock, reduces emissions, and makes urban travel more reliable. (While the New York pricing is often called congestion pricing, congestion pricing is technically for a corridor, while cordon pricing is for a zone.)

At its heart, the cordon pricing system operates on a simple economic principle: When a valuable resource is overused, its price should reflect the scarcity that follows.

Generally, the costs of traffic congestion are largely internalized by the city. Economic activity lost thanks to longer commutes leads to lower economic efficiency and attractiveness for businesses.

Likewise, when responding with road expansions or traffic management systems to manage congestion, the city or municipality is, in effect, eating the costs. A cordon pricing system shifts the cost burden of congestion from the city to lay more squarely on the drivers who contribute to it. 

Some political leaders argue that cordon pricing unfairly burdens drivers and local businesses, but these critics fail to consider the costs of congestion. Excess vehicles on the road cause delays, lead to unnecessary additional fuel consumption, and reduce air quality. By calibrating the charges to lessen these impacts, the program aims to yield more efficient use of the city’s roadway infrastructure. In effect, drivers are asked to internalize the external costs they impose on society—an approach that has been successful in several cities overseas, where cordon charges have led to smoother traffic flow and increased use of public transit.

The impact on the suburbs around New York isn’t clear yet, though it seems likely that, because the goal of cordon pricing is to lower congestion within the central business district, the benefits will be concentrated there. Parts of New Jersey, Queens, and Brooklyn could see increased congestion as a result of the cordon pricing program. 

All that said, the Metropolitan Transit Authority (MTA) plan has considered the needs and interests of many different groups, especially those who would pay the toll regularly. For example, MTA is offering a 50% discount for low-income road users who would have to pay into the program more than 10 times a month.

The practical benefits of cordon pricing are already evident. Early data supports the approach—traffic within the central business district has dropped by approximately 13% compared to historical averages, reducing congestion during the city’s busiest periods. According to TomTom’s latest traffic data, the congestion level (measured as the congested vehicle-miles of travel divided by total vehicle-miles of travel) in Manhattan’s cordon zone fell from 24.7% to 16.9% within a few months of implementation. Average travel times improved significantly—from 5 minutes and 27 seconds per mile to 4 minutes and 57 seconds per mile—while average speeds increased from 10.9 miles per hour to 12.1 miles per hour. These figures highlight how pricing can lead to measurable improvements in mobility and reduced emissions from idling vehicles by keeping the flow of traffic moving.

An additional incentive for maintaining the program is the enhanced performance of public transit. Preliminary data from the MTA indicates that subway ridership has increased; daily averages have climbed by roughly 8.6% compared to the same period in 2024 (although return-to-work mandates may also have played a role), suggesting that as more drivers refrain from driving in Manhattan, some of them may be shifting to the subway.

Similarly, bus routes in New York City are seeing an 18% increase in ridership. The Brown University Congestion Pricing Tracker shows lower-than-reported decreases in congestion, but that may be due to the inclusion of data from the bridges leading into New York City.

The problem with including bridge routes is that the goal is to lower congestion within roadways in New York City, not just on bridges in or out. 

Unfortunately, the New York cordon charge is a flat rate, unlike the variable rates charged on the dozens of express toll lane systems in operation on freeway systems across the country. Dynamic tolling systems can manage traffic flows far better than a single flat rate like that used in New York’s cordon charge. A paper submitted to the Tinbergen Institute highlighted the differences between a fixed-price congestion pricing method and a more dynamic one that adapts to real-time traffic conditions. The latter, while more effective at internalizing congestion externalities, does take time to mature and adapt to longstanding traffic patterns.

There are other issues with the program as well. New York’s MTA was required by a state law passed in 2019 to dedicate 80% of the revenue generated to capital improvements for the subway and bus systems, a major diversion of road user–generated income away from roads. Further, the charges are designed specifically to raise transit revenue. In most cordon pricing plans, managing congestion is the goal; variable prices are set to reduce the number of vehicles on the road during congested times, not to raise revenue for transit. 

A federal ban could end this valuable experiment. By pushing for an abrupt shutdown, policymakers risk losing critical empirical evidence on how cordon pricing may transform urban travel.

Looking ahead, exploring parallel cases in cities like London and Stockholm could further inform the evolution of congestion and cordon pricing in America. Questions remain about long-term impacts and potential adjustments in fee structures as traffic patterns evolve. As the debate continues in the courts and the public arena, one thing is clear: Innovation in urban policy is a necessary step toward more efficient cities and freer-flowing traffic and should not be hindered by federal red tape.

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Source: https://reason.org/commentary/federal-ban-new-yorks-cordon-pricing-experiment-is-bad-policy/