The Cost of Traffic Congestion

(Part 1 - Transport costs)

We are often jolted by news stating P3.5 billion is lost daily due to traffic congestion in Metro Manila. That's P1.28 trillion a year! That's like a third of the country's P3.8 trillion budget in 2018. If we compare this to our nominal annual GDP of around US$300 billion, that is still a lot. And we would be tempted to say, if we saved this, we would have been better off than before. Traffic is a national topic nowadays all over the country. We often forget this is also true everywhere else.

But can we save the billions lost? We need to understand what it really means because traffic congestion costs mean a lot differently to many people, basically on two counts -one, to whose perspective it is seen, and two, to which sector it has mostly affected. Let's approach this one by one, starting with the most academic -transport.

To a transport practitioner, the costs of traffic are two things -vehicle operating costs, or VOC, and time costs. VOCs are of two kinds -time-based and distance-based, both connected with the operations of vehicles -fuel, oil, maintenance, repairs, etc. The time-based costs are more important because these are due to delays caused by slower driving speeds and waiting times at intersections. The time costs are estimated as the cost of productive time lost in traffic. Note that is always present, and congestion is measured comparatively -traffic costs increase when travel time increases as travel speeds decrease due to congestion. These are estimated for the working population -laborers, professionals, skilled workers, etc. Each will have a certain productivity cost which is standard for all, across the sectors. You can get this figure from the government agencies.

Note that these estimations do not include LRT and MRT riders since their contributions are considered minimal, and likewise for students, who are not considered "productive." Businessmen may complain that they too lose money due to lost opportunities. While they are affected sectors, the transport economics analysis used looks at the individual unrealized potential productivity. When government reports economic losses due to traffic, these refer to unrealized forgone benefits. Hence, these may not be readily convertible to cash if traffic improves. JICA, who estimated the P3.5B per day, said that if all the Build-Build-Build projects of the administration are completed, traffic costs may reduce to P3.0B per day. It would still be there, only reduced, because the metric is incremental, not absolute.

The metric, which concentrates on mixed-road traffic, mostly cars, jeepneys, and buses, will always increase because the motorization rate is always higher than the growth of transport infrastructure. No wonder Singapore implemented its zero-car growth rate this year. Increasing traffic costs are subdued by fixed frequency-dedicated ways mass public transportation, not by road widening which will only increase the traffic costs due to induced traffic. This goes back to the question parroted by many but seldom understood -for whom/what are we planning for, for people or for cars? (To be continued)