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Appendix B | Measuring congestion costs

Estimates of the total cost of congestion can be misleading in that they implicitly

compare the current situation to a hypothetical free-flow situation. Such a situation

would be untenable from an economic point of view—the cost of providing sufficient

roads to ensure that free-flow prevailed would cripple the community coffers.

Since free-flow is clearly an unrealistic comparison, it is difficult to avoid the

conclusion that the total cost of congestion is of limited direct policy relevance:

Current traffic volumes could not actually operate on the existing road system under

free flow conditions. The cost of congestion is, therefore, primarily a measure of the

scale of the problem, useful in motivating the community and government to address

the issues, but not a measure of savings to be made (BTCE 1996a, p. 26).

However, others do not make the concession that such estimates are ‘useful in

motivating the community’. As UK transport policy specialist Phil Goodwin concluded:

… it is a mistaken concept and devalues the currency of debate about what can

usefully be done in practice. Once such a figure enters into the policy consciousness,

anybody who comes along with a smaller figure seems to be saying that congestion is

not important, which is not the case (Goodwin 2004, p. 15).

The essential point is that congestion cost estimates that use free-flow as the

yardstick may be of use in some areas, but they offer no policy guidance. As VCEC

concluded:

… defining congestion in terms of free flowing traffic … does not guide policy makers

towards an appropriate policy response to address congestion. Expanding the road

network to the point where all traffic moves at ‘free-flow’ speeds, for example, would

incur costs far in excess of the benefits (VCEC 2006, pp. 2 3).

Other nominated speeds

Other nominated speeds may also be used as a reference point. While this will

generally be an improvement on using free-flow as a comparison, it still means that

the choice of nominated speed will have a major impact on the congestion cost figure

calculated and can create perverse results.

The implication of this, pointed out by Morton and Mees (2005), is that the estimate of

congestion costs can increase or decrease with the speed nominated as the reference

case. Say, for instance, that the speed nominated as the reference case is the posted

speed limit, then congestion costs are estimated by calculating the speed at which

the traffic travels below the speed limit. If congestion resulted in an average speed

of 40 km/h in a 60 km/h zone then the ‘congestion costs’ (based on travel time only)

would be double the cost compared to the situation where the limit was 50 km/h for

that same part of the network. This is despite the fact that actual congestion is the

same under both scenarios.

London congestion charging scheme measure

The figure that has ‘proved’ the success of the widely-acclaimed London Congestion

Charging Scheme is the 30 per cent reduction in congestion (TfL 2005b)—the upper

end of the range of the expected reduction. However, this figure is also an artefact of

the reference point or the base case selected when estimating the gains.

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