The Bad Thing Kathy Did and Why It Matters, Or, Understanding The Impact of Congestion Pricing

Jun 14, 2024 | Uncategorized

Dear Clients,

I hope this message finds you in good spirits. In our ongoing discussion on significant climate issues, we delve into congestion pricing and its broader implications for all of us as investors and Americans. Such measures are pivotal, especially considering recent events like Governor Kathy Hochul’s decision to block New York City’s congestion pricing plan. This plan aimed to reduce automotive traffic by imposing a fee on vehicles entering high-traffic areas during peak hours, a strategy that has shown promise in cities like London, Singapore, and Milan.

New York City would have been the first American city to implement congestion pricing — a role model for other American cities to imitate. But someone (Commercial real estate lobbyists worried about increasing office vacancies? Politicians concerned about suburban voters? Auto dealers fearing declines in sales? Suspects abound.) got to Hochul. Although she had supported congestion pricing in speeches just two weeks earlier, when push came to shove, she flipped.

The whole thing reminds me of the book we’re reading this month in our climate change book club, Door to Door, by Edward Humes. Humes explicates the inherent dangers of car dependency, highlighting some startling statistics: 1 out of every 112 Americans will die in a car crash, which translates to 35,400 fatalities annually, with an additional 4.3 million requiring medical care due to injuries. These figures remind us that, although cars are a normalized part of our landscape, their safety risks are significant and often overlooked.

Which leads us to …

The Economic and Environmental Implications of Congestion Pricing:

  1. Reducing Greenhouse Gas Emissions: As transportation is the largest contributor to greenhouse gas emissions in the United States, reducing vehicle numbers through congestion pricing could significantly cut these emissions, thereby slowing global warming. Additionally, minimizing auto use helps reduce air pollution, which can decrease the prevalence of asthma and other pulmonary diseases.
  2. Enhancing Urban Safety: Understanding the risks associated with car use, as explained by Humes, shows the value in reducing vehicle numbers on our roads. Congestion pricing can potentially save lives by decreasing the likelihood of accidents.
  3. Transportation Costs: For those commuting to city centers, congestion pricing creates an opportunity to save money. Use mass transit, or ride share, or work from home.
  4. Real Estate Investments: The implementation of congestion pricing often accompanies enhancements in public transportation (NYC’s plan was estimated to raise $1 billion per year in taxes allocated to mass transit improvements.) which can increase property values near these amenities. Conversely, properties within congestion zones may see values decline due to the perceived inconvenience and higher costs associated with the area.
  5. Investment in Infrastructure: Revenue from congestion fees typically supports public transportation and infrastructure improvements, creating investment opportunities in related sectors and offering potential gains for those involved in these industries. For example, NYC’s plan was going to finance the purchase of whole fleets of electric buses, which would have been a boon to those invested in electric bus companies, charging infrastructure, battery manufacturers, necessary minerals like lithium, etc.

Understanding the implications of congestion pricing is important because whether we do it or not is a choice either way, one that has significant implications for our environmental, urban planning, personal finance, and investment strategies. Hochul made the wrong choice. Hopefully, other, more enlightened leaders, will make the right one.

If they do, we can have nice things! Such as more walkable, safer, healthier cities that have fewer carbon emissions. Like this!

Join Our Climate Change Book Club

Interested in deepening your understanding of climate-related issues and their broader implications? Our climate change book club welcomes new members! We meet online the last Thursday of each month from 5:30 to 7:30 PM. It’s a great opportunity to engage with like-minded individuals and explore good books in a welcoming setting.

As we navigate these complex issues together, our goal here at Green is to provide you with the insights and support needed to align your financial strategies with developments in our ever-more-rapidly-changing world. We are here to assist you every step of the way.

Thank you for your continued trust in our expertise.

Warm regards,

Joe

P.S. For further reading on the impacts of urban policies like congestion pricing on our financial and environmental landscape, I encourage you to read the great Bill McKibben’s insightful commentary here.