How traffic congestion kills the economy

Did you drive to work this morning? A new study says you not only contributed to traffic congestion, but also prevented someone else from using the road.

Transit users don’t get too smug. The same study shows your decision to take the train or bus during rush hour has the same impact, inspiring people to take their car instead of packing themselves in with other transit commuters.

In fact, both transit and traffic congestion is keeping many workers at home. They're either telecommuting or giving up their jobs altogether just to avoid the every day gridlock that can be both financially and emotionally draining.

The C.D. Howe Institute study says the combined social and economic costs of congestion are costing cities billions of dollars in lost revenues. It's calling on governments to make better infrastructure decisions to try to stop the economic bleeding.

"When congestion makes people choose to stay at home rather than travel, all sorts of activities are curtailed, resulting in a quantifiable loss to the economy," says Benjamin Dachis, author of the report called, Cars, Congestion and Costs: A New Approach to Evaluating Government Infrastructure Investment. "These losses should be included in the costs of congestion and, in turn, estimates of the benefits of new infrastructure investment."

It’s the latest in a series of reports calling on governments to fix transit gridlock issues in major Canadians cities.

The C.D. Howe report estimates the costs of congestion in the Greater Toronto and Hamilton Area to $7.5 to $11 billion a year, which is an additional $1.5 to $5 billion than current forecasts.

That’s money lost when people choose to stay away from urban centres as a result of increasing congestion.

Dachis points out the benefits of “urban agglomeration,” including people accessing jobs that better match their skills, in-person knowledge sharing and more demand entertainment and cultural opportunities, which benefit other people.

"When congestion makes urban interactions too costly to pursue, these benefits are foregone, adding significantly to the net costs of congestion," said Dachis.

“The social returns from infrastructure can be substantial.”

The report says government aren’t calculating these benefits in their infrastructure spending decisions, which he argues is a mistake.

Dachis recommends governments in Canada should make infrastructure investment by calculating the positive and negative external factors in their cost-benefit analysis used in the initial decision to build.

They should considering charging the “social costs” for users, which Dachis says includes fares and tolls to the extent that they generate economic activity at the destination.

"Charge users of infrastructure the full social costs, to the extent possible," he wrote in the report. "In the case of transportation infrastructure, governments should charge users for the full cost of congestion, but invest in more infrastructure than would be self-sufficient from fare or toll revenue alone, with a view to increasing quantifiable benefits from urban agglomeration."