Does Congestion Have a Cost?

Many of the costs of driving are fixed (see the AA's driving table of driving costs...). However, that doesn't change the fact that they exclude some people from owning/driving a car (as does a congestion charge, i.e. it's not really any more of a social discrimation factor than other motoring costs). As regards whether they influence whether people use their cars or not, if we do want to discourage car use then more of these costs must be made variable, i.e. if one drives less one pays less. Some steps have been made towards this, e.g. pay as you drive insurance (Norwich Union being one example). If road tax were also usage-dependent (as well as on emissions and vehicle weight) this would further encourage people to carefully consider each car journey.

Does congestion itself have a cost? I would say "definitely". Before listing a few example costs, one interesting point to consider is the price people are willing to pay to avoid congestion (which hence puts a value on it). Clearly people do place a value on getting round congestion, as evidenced by people using toll roads (e.g. the M6 toll) instead of alternatives. What costs does congestion have? A few are:

• Longer journey times, which means less time at work, or with family. Either results in lower productivity and hence lower incomes. For some businesses, such as multi-drop deliveries, more congestion means more vans/drivers are needed.
• Air quality is considerably worse with large numbers of cars idling, then continually undergoing stop/start transitions (as in congested cities). Higher levels of pollution cause long term health problems (asthma, probably lung cancer...), which then cost the tax payer via the NHS.
• Journey costs are increased to the driver themselves, as congested conditions will mean less efficient fuel burn, plus extra wear and tear on the vehicle due to continual stop/start behaviour.
• Congestion has been linked to higher incidents of vehicle collisions, which both increases health costs and insurance/repair expenses.

All of these costs have significant values (hence the £12bn/year estimate I gave in the post titled "Road Pricing & Delivery Vehicles"). This is both in costs to individuals and to society as a whole. However, clearly these costs aren't ones that the average driver considers when planning a journey (e.g. every time I go to the shops I don't think about the tiny increase in the probability that I'll get lung cancer). Moreover, such costs are paid for by everyone, regardless of whether they drive. It seems fairer to charge those who are causing such costs accordingly.

Further details of the costs of congestion can be found in section 5.5 of VTPI's "Transportation Cost and Benefit Analysis".

A congestion charge could indeed be used to raise tax revenues. However, there is nothing to stop a government, in principal, committing it to be spent on transport. This has been the case in London, Bergen, and Stockholm. Such revenue hypothecation is one of the characteristics of successful congestion charging schemes (if only the UK government would learn that).

In terms of high fuel duty not affecting congestion, that is correct: it simply increases the costs of driving, regardless of when or where (apart from using more fuel in congested areas). A congestion charge (particularly time-variant) provides an economic disincentive to people from travelling in congested areas at peak times (i.e. causing congestion). Petrol prices do have an effect on how much people use their car, as was seen in the USA recently when prices were particularly high (estimate of 58 billion fewer miles travelled in first seven months of 2008). However, that just penalises everyone wherever, whenever.

Overall a government needs to be clear on whether they want to reduce congestion, which is discouraging people from travelling at certain times in certain places, or to reduce total vehicle miles, which can be achieved by increasing the proportion of the total cost (but not necessarily the total cost!) of running a vehicle that is distance-dependent. Of course, we probably need to do both, (carbon dioxide emissions now being hugely significant will require us to cut down total vehicle miles; congestion costs us all, as described above).

So: does congestion have an economic cost? Yes, definitely. But do people really take that cost into account at the moment? No.

(Cross-posted from the thread on congestion charging over at the Cambridge Network social network.)