Published in The National Post on March 11, 2015
By: Benjamin Dachis
Benjamin Dachis is a senior policy analyst at the C.D. Howe Institute.
The following is an excerpt from a C.D. Howe Institute report entitled “Tackling Traffic: The Economic Cost of Congestion in Metro Vancouver.”
Voters in Metro Vancouver will soon decide whether to approve a transportation and transit plan financed with a region-wide 0.5 percentage point increase in the provincial sales tax. In an upcoming plebiscite, voters across the 21 municipalities in Metro Vancouver … must consider how to deal with the bane of most metropolitan areas — growing congestion. They will need to weigh whether the economic costs of congestion are high enough that reducing them, through this plan, could be of sufficient benefit to warrant a sales tax increase.
What are the economic costs of congestion in Metro Vancouver? The regional Mayors’ Council, which produced the plan, estimates that congestion currently costs residents about $500 million per year in excess vehicle crashes and wasted time in traffic. This will grow to $1 billion per year in 2045 if governments do nothing. The Mayors’ Council predicts its plan will avoid one-third of that cost.
However, congestion costs in Metro Vancouver include more than traffic delay, crashes and injuries. There are also hidden and wider economic costs involved owing to trips forgone. Because of congestion, workers do not take jobs that are the best fit for them. Companies lose out, because the pool of workers they may draw from is shallower than otherwise. People lose opportunities to learn from others around them. Businesses with unique offerings do not have ready access to a broad market. My estimates indicate the hidden costs of congestion in Metro Vancouver are at least as large as the visible economic costs the Mayors’ Council has presented.
If (the Mayor’s Council’s) plan for investment in transit and transportation infrastructure were in place today, (I calculate) the people of Metro Vancouver would have higher incomes of between $500 million and $1.2 billion annually, or $950 per worker in Metro Vancouver, per year. Those higher incomes, in turn, would boost provincial and federal income tax revenues by an estimated $150 million and $360 million per year (respectively) — and those added revenues could partly finance the Mayors’ Council plan.
