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Appendix B | Measuring congestion costs

The recent estimates of congestion cost in Australian cities compares the total costs of

$11.1 billion based only on total annual delay (that is, excluding the cost elements for

trip variability, VOCs and air pollution) with the cost of $5.6 billion for the ‘preferable

deadweight loss valuation’ or social cost of delay in excess of the efficient level of

delay (BTRE 2007, p. 15).

Other metrics

Net revenues that can be generated by a congestion charge

Some analysts promote the net revenues that can be generated by a congestion charge

as a useful indicator of congestion costs. The figure reflects an amalgam of what road

users are willing to pay and the cost of a congestion charging scheme. However, while

an interesting figure from a fiscal perspective, using it as a measure of congestion

costs would suggest that the higher the revenue and/or the lower the scheme costs,

the higher the congestion costs. In fact, higher gross revenue could simply reflect the

higher congestion charge or a low elasticity of demand for peak-hour travel, due to a

lack of options for alternative departure times, routes or modes.

Figure B2

Annual congestion cost estimates for all Australian capital cities:

total based on travel time vs. social cost

Source: (BTCE 1996a, p. 9).

25

20

15

$ billion

10

5

0

2005 2020

Total (compared to free flow)

Social cost of congestion

133

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