The hidden costs of congestion are between $500 million and $1.2 billion a year for the Metro Vancouver area, according to a new report from the C.D. Howe Institute.
In "Tackling Traffic: The Economic Cost of Congestion in Metro Vancouver," author Benjamin Dachis finds that when congestion causes people not to travel it stifles the key benefits of living in a city, like learning face-to-face, finding better jobs, and sharing services and infrastructure. These are collectively called agglomeration benefits.
"The hidden costs of congestion in Metro Vancouver are as large as the visible economic costs that the Mayors' Council has presented so far," says Dachis.
Dachis finds that increased investment in transportation infrastructure, along with lower congestion, would economically benefit Metro Vancouver in two ways:
1) Region-wide agglomeration benefits: New transportation infrastructure and lower congestion allow current residents to access more of the region in the same amount of time as before. This broader access enables more connections than a person might otherwise have encountered, and that has economic benefits for others.
2) Higher incomes: This will result in an increase in incomes because workers would have better access to higher-paying jobs. These economic benefits accrue directly to the users of transportation, and are best captured by user fees, such as road tolls or transit fares.
Dachis estimates that as a result of higher incomes from reduced traffic congestion, provincial and federal income tax revenues would be boosted by an estimated $150 million and $360 million per year, respectively.
The C. D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. It is Canada's trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review. It is considered by many to be Canada's most influential think tank.
This report is published by the C.D. Howe Institute in collaboration with Clean Energy Canada and the Real Estate Foundation of British Columbia as a way to stimulate discussion of transit policy and does not represent the official positions of any of these organizations. The Institute maintained full editorial independence and is solely responsible for the paper's contents.
