Evaluation of Pay-As-You-Drive Vehicle Pricing

Focus Area



Air Quality






Under 1 year

Research Idea Scope

TERI Administrator Note (May 2013). Completed in 2011 as NCHRP Report 686 Road Pricing: Public Perceptions and Program Development


Currently, vehicle insurance, registration fees and taxes are not directly affected by the amount that a vehicle is driven. This creates an incentive for motorists to maximize their annual mileage in order to get their money’s worth. Converting these distance-based fees could provide a significant incentive to reduce mileage, while making these fees more affordable and equitable, since they charge users according to the costs they impose. This research project involves identifying ways to convert fixed vehicle fees into variable fees, and evaluating the benefits that could result.

For information see:

“Pay-As-You-Drive Pricing” (http://www.vtpi.org/tdm/tdm79.htm )

Aaron Edlin (1999), Per-Mile Premiums for Auto Insurance, Department of Economics, University of California at Berkeley (http://emlab.berkeley.edu/users/edlin).

TNO (2003), “Pay As You Drive” In The Netherlands, TNO Inro, Institute for Traffic and Transport.

Urgency and Payoff

Pay-as-you-drive pricing has the potential of providing very large economic, social and environmental benefits, including reduced traffic congestion, increased safety, improved affordability, reduced energy consumption and pollution emissions.

Suggested By

Todd Litman, Victoria Transport Policy Institute

[email protected]