Post Synopsis: Every kilometre you drive in Sydney during peak hour, you are costing other motorists $0.66.... so if you drive 20km to work, other people are paying for your trip to the tune of about $13. If that sounds OK to you, remember that when you are stuck in traffic, you are paying (in time, extra fuel, etc) for someone else's decision to drive during peak hour. The best way out of this mess is congestion charging.
Congestion sucks
We all know that congestion is a drag in Sydney, and in most other large developed and developing cities (for fun, check out this congestion in Sao Paulo). A couple of studies have had a stab at estimating the total cost of congestion in Sydney. They found the following:- A CIE report estimated congestion costs of ~ $0.29 per vehicle kilometre in 2005. These are total costs (not avoidable/dead-weight)
- BITRE estimate congestion costs of ~ $0.10 per vehicle kilometre in a 2007 working paper (a really good paper, btw). These are avoidable/dead-weight costs[*] -- total costs are around double that, so not so far from the CIE study.
I've reported these results (and others, below) in costs per vehicle-km, because thats the most common tangible measure, but if you want the total annual cost, you can multiply the above by the number of vehicle-km in Sydney (42.4 billion in 2005, say), and get total annual costs of $8-12 billion/year (depending on whether you use BITRE or CIE total costs).
Why average congestion costs are not so useful
Having just told you about a couple of prior studies that give average congestion costs, I have to break to it you that average costs aren't really that useful. Why? Two reasons:
- Firstly, there is that old problem with averages: your average temperature can be fine if you have your head in the oven and your feet in the freezer.... If you are driving during a relatively quiet period, when congestion is low or non-existent, then you aren't imposing costs on others. If, on the other hand, you are driving during peak hour, then you are going to be imposing very high costs.
- Secondly, congestion is 'caused' by those last few thousand cars that are on the network. People refer to this effect as the 'school holiday effect', because you only need to remove a small amount of traffic for congestion to improve. This is telling us that the marginal cost of each additional vehicle is much higher than the average cost across all vehicles.
So what really matters, from a policy point of view, is the marginal cost of congestion. That is, what is the cost imposed by each additional driver? Since congestion costs are high during the peak, in this blog post I'm going to work out a rough estimate of the marginal congestion cost of each additional vehicle during peak hour in Sydney.
So what are the marginal costs?
We are interested in the costs imposed on other motorists by each additional driver at peak time. We can work this out, to a reasonable approximation, as follows:The average traffic speed during the inter-peak period is 42.9km/h [**]. The average traffic speed during the peak period is 30.0 km/h [***], so this means that traffic is 43% faster in the inter-peak period than during the (congested) peak period.
What causes this? Extra traffic on the roads, of course. Looking at the Figure below, we can see that during peak times, the volume of traffic on Sydney roads is ~ 270,000 vehicles during peak times, but only ~160,000 during inter-peak.
Source: BTS HTS 2011/12 summary report.
So, an extra 110,000 vehicles on the road network increases trip times by 43%. On a per-vehicle basis, this means each additional vehicle slows down all other traffic by 0.000325%. So if the vehicle is on the road for a minute, it slows down all other traffic by 0.000325% for that minute. Since there are 270,000 vehicles on the road at peak time, this means it costs those other motorists 0.88 minutes of delay. Valuing that at $14/hour (a pretty standard choice for peak travel), that's $0.205 of delay costs per minute of peak travel. If we add in other costs (extra running costs, pollution, etc), as in the BITRE report, this comes up to $0.33/minute. Average peak travel speed is 30 km/h, so converting this to a per-km costs, we get $0.66/km.
Note that this figure (of $0.66/km) is an average across Sydney for the peak period, and would be much higher in specific (congested) parts of the road network (and lower elsewhere). I haven't done the numbers, but my guess is that it would be a few times higher on congested links, which implies the marginal costs on congested roads might be in the vicinity of $2/km in the peak period.
[*] In the economics of congestion, there is an 'optimal' level of congestion: each additional traveller derives a benefit from making a trip, but there is a cost to other motorists due to congestion, and the optimal level of traffic is when the benefit to the additional traveller is equal to the costs imposed on existing travellers. Avoidable/dead-weight-loss congestion costs are the net costs taking into account the benefits of additional travel as well as the costs. Total costs are usually just the costs of delay relative to free-flow speeds.
[**] I've calculated average speed by using inter-peak travel times and distances from the NSW BTS's Strategic Travel Model. I've calculated the average speed across all trips in the ABS's journey-to-work data-set, using these travel times/distances.
[***] calculated as in [**], but I use am-peak travel times/distances.
[***] calculated as in [**], but I use am-peak travel times/distances.
