The costs of traffic congestion

by Nabila Zaman | Updated at 12:09am on June 20, 2017


WITH more than 18 million people, Dhaka is one of the most densely populated cities in the world. Although Dhaka is one of Asia’s least motorised capitals, its traffic congestion is among the worst and steadily deteriorating. According to a recent study, in the past five years over 4.2 lakh motor vehicles have been registered in Dhaka, yet the city is acutely short of road space. With future population predicted to rise to over 26 million by 2035, numerous urban problems have led to Dhaka being described as one of the least lovable cities in the world. Thus, the impacts of traffic congestion on the national economy must be determined for any policy to deal with this situation effectively.
The demand and supply of transport also increased exponentially which is contributed by rising urban population, increasing numbers of lower-capacity vehicles and insufficient public transportation. However, the institutions managing its transport system have been slow to adapt and the city’s traffic has been slowing down. In this regard, according to the Dhaka Urban Transport Network Development Study, in 2004 the average daily speed of traffic was estimated at about 21.2kph which had decreased to 6.8kph by 2015. Traffic congestion provokes a lot of debate amongst the public as well as the academics and policy-makers. However, an in-depth scrutiny of the situation is required to understand the underlying reasons leading to poor traffic and travel demand management.
For this purpose, BRAC Institute of Governance and Development conducted a study with a holistic approach to investigate the current adverse situation of traffic though the lens of governance. In our study we have argued that without a good understanding of the governance perspective, periodic interventions may not provide desired results or live up to the citizens’ expectations. Although there is common agreement among the public about the inefficiency of traffic management in Dhaka, the underlying factors remain unidentified.
One key focus of the study was to assess what are the factors of traffic congestion. In this regard, the impacts of traffic congestion can be grouped into the following broad categories: economic and social impacts. In most cases, economic impacts are estimated in monetary terms, meaning: ‘what value of resources could be saved if an hour of delay due to traffic could be avoided?’ However, traffic congestion also inflicts other social and environmental costs which are less easily quantified. These include the social trade-offs people make due to congestion and various intangible factors such as stress and discomfort from being stuck in traffic.
In the study, to examine the congestion cost a specific arterial route of Dhaka (particularly Airport to Postagola) was selected that has significant importance in terms of commercial and other purposes. The economic cost was simplified to two main components: additional time wasted in congestion, and additional vehicle costs (considered as additional fuel costs for vehicles delayed in traffic). The number of vehicles on the corridor for the month of January 2014 was obtained from BRTA ‘Vehicle Tracking’ data. We also conducted an experiment to calculate the daily average delay due to congestion by travelling the Airport-Postagola route by private car and comparing peak and off-peak journey times. The BIGD socio-economic survey of transport users estimated road users’ willingness- to-pay a ‘congestion tax’ which served as the basis of our present report. Interviewees were asked how much extra they would be willing to pay to avoid traffic congestion. From this an overall average of Tk.86 per person per hour was obtained. This information was then used to estimate the ‘opportunity costs’ and the ‘vehicle operating costs’ on the Airport–Postagola route.
The estimated results from our experiment suggest that the overall cost of congestion on the Airport–Postagola route was around Tk 227 crore a month. With 42.6 million passengers a month the average cost of delay was about Tk 53 for each passenger trip. On the Airport–Postagola route this was about 90 per cent of the total economic costs, while vehicle costs (measured as additional fuel consumed while idling) were only 10 per cent of the total economic costs.
Although the estimate was prepared for only one specific route, this paves the way for further investigation into the entire city. For comparison, studies in other world cities have estimated the annual economic cost of congestion as high as $5b in Jakarta, $8b in Cairo and $10b in New York (World Bank, 2011).
What does this imply? From our estimates it can be inferred that congestion causes a significant financial loss which could be avoided by taking remedial measures. It is a very high cost especially when compared to the GDP of Dhaka and the country as a whole. Furthermore, this is the loss incurred due to traffic congestion on a particular commuter stretch. This value if extrapolated for the Dhaka city, it will lead to a more alarming result. This is a huge depletion on the city’s human and physical resources and demands serious attention by institutions and stakeholders involved in traffic policy-making.
Are the costs significantly high in financial terms only? There are various social costs which are not easily measured in financial terms but a critical evaluation of the situation can bring forward the result in a more intensive way. For this purpose, we further diagnosed the situation of user’s cost by examining it though a transport users’ survey. The users’ were asked questions on their perception of social costs inflicted by traffic congestion and the resulting data were analysed in a systematic manner. The respondents included people from all socio-economic backgrounds: students, businessmen, job-holders, and entrepreneurs. The aim of measuring users’ wiliness-to-pay was to study whether there is a potential scope for congestion pricing or not. In other words, we tried to understand whether imposition of congestion price could be an answer to reduce congestion.
In this regard, results as shown in the graphs suggest that congestion also resulted in other trade-offs. On average, more than 70 per cent of respondents claimed that their commuting time was increased three-fold during peak hours. This will have knock-on effects such as income-erosion and influencing households to relocate closer to their workplaces. The social life of commuters and their choice of where to work are also constrained.
‘Congestion tax’ has been given consideration by policy-makers in many countries to tackle traffic congestion with this perception that it can act as an incentive for drivers to reduce congestion. In simplest form, the idea is to charge a certain amount of money as ‘tax’ for use of any particular route/road during peak hours. As rush hour approaches, the price will increase in order to keep all vehicles commuting over the road at the same optimal level. On a macro-level, the resource mobilised could be then utilised by government to facilitate roads and infrastructure (such as guide way transit or metro rail). Experiences from cities that have used congestion price show that when commuters adjust their choices accordingly, the amount of traffic congestion fell significantly. Success stories of this policy implementation ranges from developed cities like London, Stockholm and Gothenburg as well as cities in our neighbouring countries e.g. India and Singapore. Implementation of this policy by the Swedish Road Administration, Vägverket led to enormous benefit by removing 20 per cent of vehicles during peak hours. Other than that the pollutions decreased by around 10-14 per cent which is considered as a big success in Gothenburg as well. Singapore’s experience with congestion pricing dates back to 1975 which was based on a flat rate charge and reduced traffic by 45 per cent and vehicle crashes by 25 per cent. The benefits in London were similar. In London, congestion pricing led to traffic to decrease by 10 per cent in the central London and 28 per cent commuters stitched to use of bicycles instead.
Thus around the globe, congestion pricing has led to enormous benefits although its implication for a developing country like Bangladesh may remain a challenge. Taking into account the perception survey of the BIGD, it can be noted that the groups who considered themselves worst affected by congestion were middle income job-holders and students, who are the main users of public transport. Their negative feedback may reflect the discomfort of travelling by public transport as well as the lost income they experience from travel delay. As a consequence to this, a majority of the responses for the WTP for congestion price comes from students or middle-income job-holders. This holds a serious question whether the imposition of congestion tax would be beneficial for all groups of people? Although revenue mobilisation from congestion tax may be utilised to finance public roads and infrastructure, the trade-off would be efficiency over equity. In this case the worse-off people will end up paying a higher price for commuting rather than the socially better-off people who choose to travel in their own cars. In this regard, although our study provides valuable insights for implementation of congestion pricing, it also draws alarming signs regarding increased burden on the mass of middle-income group. The study provide important insights for policy makers to design policies to resolve the sever traffic congestion in Bangladesh. There must be effective traffic demand management and increased investment in public transport to ensure a better quality of services and hence reduce the impacts of traffic congestion.

Nabila Zaman is a research associate at BRAC Institute of Governance and Development, BRAC University.