Cost of congestion: The growing problem of advanced economies

The continued economic growth and urbanization trends represent a growing challenge for the transportation system of cities. INRIX, the global Traffic Information company, finds in its research that these trends will lead to a significant increase in demand for a road travel time in advanced economies in the near future. As a result, the congestion associated costs are also expected to grow considerably (~50% from 2013 level) onto 2030, the research concludes. Both urban population and GDP per capita growth are to be the main drivers behind persistent traffic problems.

The high number of particularly affected cities is located in the EU and the US. Dutch navigation company TomTom compiles every year the ranking of world cites according to the congestion level, defined as an extra time spent in the traffic in comparison to the free-float situation. According to the ranking, the most affected countries in the EU are the UK, France, and Poland with 23, 10, and 9 cities currently in serious traffic situation respectively. Main urban regions of smaller countries like Belgium and Ireland are also reported to be seriously affected by the traffic congestion. In particular, the citizens in Warsaw and Dublin on average are spending 40% more time in the traffic in comparison to the free-float situation. In peak hours the situation looks even more grim with extra spent time in traffic 72% and 86% respectively.

INRIX and Centre for Economics and Business Research (CEBR) in 2013 conducted the study measuring costs of congestion in the cities around the world. It includes both direct and indirect costs associated with the additional time spent in gridlock and business damages. The results indicate that already now the costs might amount to hundreds of millions or even billions of dollars annually depending on the city’s economic development state and population size. We used these results and one another study conducted by Victoria Transport Institute to estimate the cost of congestion for the cities participating in the VaVeL consortium. Our calculations suggest that annual congestion related costs could be exceeding USD 1bn for both Dublin and Warsaw, reaching 1.9% and 1.8% (vs 1% on average in the EU) respectively of the cities’ GDP. Generally, INRIX and CEBR research indicate that for a typical city with a population 500k-1000k every incremental 1% of congestion (extra time spent in traffic) may cost to the public USD 15-20mn of annual GDP.