Fixing America's freeways: the private sector is reinventing our expressways, one lane at a time.

• Author: Poole, Robert W., Jr.

IF YOU WORK anywhere in America outside of New York City, chances are you drive to work. That means you battle congestion twice every weekday. Rest assured that it's not your imagination: traffic is much worse than it used to be.

The Texas Transportation Institute (TTI), which has been measuring the cost of traffic congestion in wasted time and fuel for three decades, estimates that in current dollars the traffic penalty rose from $24 billion in 1982 to $115 billion in 2009 (the latest year for which complete data are available). The average urban commuter wastes 34 hours a year in rush-hour congestion today, compared with just 14 hours in 1982.

Those average figures reflect all 439 urban areas. But if you live and work in one of the 20 largest metropolitan areas, you're stuck in an even worse jam. In Los Angeles, the average commuter wastes 63 hours a year due to congestion. In Dallas/Ft.Worth, it's 48 hours a year. And in the Washington, D.C., area, it's a whopping 70--almost nine full working days that drivers could have back if only freeways and streets delivered motorists at the advertised speed.

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Congestion does far more harm than simply wasting time and fuel. By reducing the area you can traverse in, say, 30 minutes, congestion shrinks your "opportunity circle" of jobs, entertainment, housing, and even dating. Economists find that reduced opportunity circles due to congestion inhibit the best matches between skilled workers and employers, reducing the economic productivity of congested urban areas. The chief economist at the U.S. Department of Transportation has estimated that the true annual economic cost of congestion is at least double the $115 billion figure noted above.

Why does congestion keep getting worse, and what can be done about it? While there is no single answer to either question, a principal reason for ever worse congestion is that the demand for road space (especially on urban freeways) greatly exceeds the supply. That's because after the initial burst of freeway building in the 1960s and '70s, additions to freeways slowed way down while population and economic growth continued apace. Some analysts liken the result to cramming 10 pounds of potatoes into a five-pound sack.

From 1984 to 2009, the TTI estimates, daily traffic on the freeway systems of America's 18 most congested metro areas increased by 142 percent while their capacity (measured in lane-miles) grew only half as much (72 percent). In most cases, that means freeways today are attempting to handle vastly more traffic than they were designed for. That also explains why "rush hour" in major metro areas today runs about three hours in the morning and another three or four hours in the evening.

Again, those are averages. A few metro areas, such as Houston, have expanded freeways much more than 72 percent. But others, such as Los Angeles, San Francisco, San Diego, and Minneapolis, have added only 25 percent to 30 percent more capacity. TTI's 2010 Urban Mobility Report cites a strong inverse correlation between capacity and congestion: In the 13 metro areas that have expanded freeway capacity nearly enough to keep pace with travel demand, congestion is only about one-third worse today than it was in 1982, while the 42 metro areas where the gap between demand and capacity was greatest ended up with congestion about 140 percent worse in 2010 than in 1982.

Building Our Way Out of Congestion

Given the enormous cost of congestion and its relentless increase during the last 25 years, why haven't more metro areas at least attempted to keep pace with the growth in traffic? There are two main reasons.

First, it has become far more costly to widen freeways and build new ones as urban areas have filled in with expensive development. The cost is political as well as economic. Unlike in the early days of freeway building, you can't just bulldoze neighborhoods wherever a new freeway would make transportation sense (on the whole, a positive development), and anything you do build must go through costly and time-consuming environmental reviews.

Second, many transportation planners and politicians believe that expanding road capacity is futile. If you build more, they say, the new lanes will simply fill up with more cars, and within a few years you'll be back where you started. This is only partly true.

Some research does suggest that if you add a small amount of capacity in a place like Los Angeles, where roadway supply and demand are massively out of whack, the latent demand for faster travel during rush hours will fill the new capacity in short order. Still, the long-term data from TTI demonstrate clearly that if a metro area can keep increasing capacity in step with demand, it will end up with far less congestion than places that don't.

Yet because the notion that "we can't build our way out of congestion" is widely accepted, the long-range transportation plans of most large metro areas these days are premised not on making it easier for commuters to engage in their demonstrated preference but rather on the vain hope of "getting people out of their cars."

Road construction receives a low priority in modem America, in favor of expanding mass transit and encouraging "active transportation" (biking and walking) by building more sidewalks and networks of bike lanes. In many of the largest metro areas during the last two decades, approved expansions of freeway capacity have been limited almost entirely to new carpool lanes. If people are going to stick with driving, the planners reason, we should at least push them to share rides by constructing preferential lanes for high-occupancy vehicles.

Congestion Pricing

When I first moved to Los Angeles from bucolic Santa Barbara in 1986, my easy five-minute commute was replaced by 30 to 45 minutes of L.A. freeway hell to go just 10 miles. Certain that there had to be a better way, I discovered the work of a small band of transportation researchers who were convinced that the missing ingredient in bringing freeway demand into sync with capacity was market pricing. Pioneered in the United States by Columbia University economist William Vickrey, who won a Nobel Prize in 1996, road pricing (later known as congestion pricing) had languished due to the lack of a workable method to charge variable prices. A New Mexico company called Amtech was in the process of addressing that gap by developing the first "toll tag" transponder.

Even with this new technology, I could not imagine tradition-bound state transportation agencies using it to charge market prices on freeways. Yet for several decades, high-quality toll roads had already been financed, built, and operated by investor-owned companies in France, Italy, and Spain. The governments there would grant a company a long-term franchise, similar to those used for investor-owned electric utilities in the United States. Based on the franchise (called a "concession"), winning bidders could raise the capital to build the toll road, repaying their investors from toll revenues. So my proposal, in a 1988 policy paper published by the Reason Foundation, the 501(c)(3) nonprofit organization that publishes this magazine, was to invite the private sector to finance, build, and operate market-priced lanes on Southern California's congested freeways.

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That paper soon came to...