Congestion Pricing in New York: How Will It Work?

In April 2023, USDOT released the result of its environmental assessment of New York City’s proposed “Central Business Tolling” project—known more colloquially as “congestion pricing”—after years of examination and review. The result—a “Finding of No Significant Impact” or FONSI—means that the MTA can continue its process to implement a program to toll drivers for entering Manhattan below 60th St.

It’s supposed to have a monumental effect on travel and transportation throughout the New York Metropolitan region, and notably the program aims to accomplish two goals: fewer motor vehicles in Lower Manhattan and fewer motor vehicles traveling below 60th St., from River to River, and more dedicated money for the MTA, which is responsible for running transit and regional rail throughout New York and Connecticut.



How Will the Program Work?

The program would work similarly to this, and the final details are not yet finalized, but:

Motor vehicles that would enter Manhattan from the north, or by a connecting bridge or tunnel, would be subject to a fee—a toll of between $5 and $23—to enter the zone outlined in orange above, based on several factors, including time of day and consideration for freight vehicles, residents who live within the tolling zone, and low-income drivers.  More information can be found here, including over 29,000 pages of comments from concerned observers. The gist is that, if successful, New York City can be the first North American city to follow in the footsteps of London, Stockholm, Milan, and Singapore as cities around the world to successfully implement a charge.

What are the Program’s Goals?

According to the FONSI, the Tolling Program’s expected goals are as follows:

  • Reduce daily vehicle-miles traveled (VMT) within the Manhattan Central Business District (CBD) by at least 5 percent.
  • Reduce the number of vehicles entering the Manhattan CBD daily by at least 10 percent.
  • Create a funding source for capital improvements and generate sufficient annual net revenues to fund $15 billion for capital projects for the MTA Capital Program.
  • Establish a tolling program consistent with the purposes underlying the New York State legislation entitled the MTA Reform and Traffic Mobility Act.

The major goal is mode shift. The structure of the Tolling Program’s pricing mechanism is both incentives to take other means into and out of Lower Manhattan and deterrent for driving into one of the most congested business districts in the world. MTA would dedicate the collected revenue to fund nearly one-third ($15 billion over five years) of its plan to build more transit and make sure there are adequate and attractive options for regional travel.

How Do We Measure Congestion Pricing’s Success?

There are three important factors: what we choose to measure, how we choose to measure it, and how we interpret the results. Generally, the mechanism to compare how a project might perform is a benefit-cost analysis (BCA). The idea is relatively simple. A team of interested folks gathers a list of quantifiable benefits, which often include, but are not limited to:

  • Travel time savings: how will a reduction in congestion contribute to faster travel times for remaining drivers. How will this redistribution help save commuters who switched to another mode, too?
  • Reduced car crashes: the fewer the number of traveling vehicles, the lower the likelihood for incident.
  • Reduced noise benefits: fewer cars means potentially less noise.
  • Increased environmental benefits: directly related to both air pollution from car exhaust and particulate matter pollution from the paved asphalt.

A BCA’s execution can be wickedly complex to calculate and interpret correctly. How does the team estimate the number of motor vehicles that currently enter the area? How do they estimate the difference once the policy is put in place? Whose time are we measuring?

The goal is to quantify the benefits, extend them out to some point in the future—usually 30 years or more—and compare these benefits to the total cost of implementing the project.[1] This output is called a benefit-cost ratio (BCR) and is relatively easily interpretable in any context. If the BCR is more than 1, the benefits outweigh the costs, and if it’s less than 1, then the opposite is true. By itself a benefit-cost ratio is not a decision-making tool, but it can be used to compare the relative merit of two projects, or two alternatives for the same project. The team can seek to change inputs, like how much it charges to enter the congestion zone, and compare the outputs to optimize pricing, for instance.

Are There Other Places in the United States Ready for a Congestion Pricing/Tolling Program?

It is way too soon to tell. The program hasn’t been implemented in New York City yet, but it has been successful in other parts of the world—especially Singapore, which piloted a program in the mid-1970s and continues to faregate access to certain parts of its city to motor vehicles. It’s also been implemented in Northern and Southern Europe—London, Stockholm, Milan. In all transportation planning projects, context is king, so simply because one projects works in one place doesn’t mean it will work in any other place without considering a few factors, which include:

Historical Context. Has a program like congestion pricing been tried before? Was it successful? What’s driving this project here and now? What are the conditions of the place that might contribute to success?

Geography. What does the city/region physically look like? What would the congestion boundary look like. For example, London is a radial city—its boroughs spread from a central location and the congestion “zone” is somewhat circular. New York, however, is not. There was a conscious choice to limit the boundary to 60th Street and below, and to have it only cover Lower Manhattan, for now.

Political Will. This is potentially the biggest challenge for congestion pricing—telling the right story to the right stakeholders to understand what the tolling authority/agency wants to achieve is key. The coalition of politicians, riders, nonprofits, transit agency staff can make or break a successful program and it takes a champion and the ability to change minds to get a project this big and complex off the ground.

Let’s follow New York City closely as an exemplar and learn from its process. Other transit-starved cities and regions are looking closely.


[1] The BCA will seek to calculate the present values of costs and benefits, which simply considers inflation and the economic idea that a dollar today is worth some amount more than a dollar tomorrow, the next day, or next year.


Sam Sklar, Director | [email protected]

Sam Sklar is a director with Econsult Solutions, Inc. (ESI). Mr. Sklar has extensive experience in program and project management, planning, and analysis. As an effective communicator, Mr. Sklar has special expertise in many forms of communications strategies. In addition to his duties at ESI, he publishes a growing newsletter, Exasperated Infrastructures, which covers state and federal infrastructure policy.


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