Tuesday, November 24, 2009

Is road congestion the best allocation mechanism?

Congestion is a darling topic of politics and the media, and a topic of many conversations around the barbeque. But what is it? Is it a bad thing? Do we want more of it or less of it?

I define congestion as a condition of a network (of roads or other conduits) whereby the existence of extra users slows the rate of progress of all other vehicles. Given this definition, there can be a little congestion, where progress of road users is slowed a little, or plenty of congestion, where progress is greatly slowed.

The basic assumptions required for this brief analysis are that travel on the road network consists of a number of costs including vehicle capital and maintenance, fuel, and time, and that congestion affects road users by adding to the time cost of road transport.

However, given that people still choose to drive during times of peak congestion, and assuming that congestion is known in advance, we must assume that each traveller still receives a net benefit from their trip.

We end up with a situation where congestion results in the allocation of road space to users with a higher value of use, and a road system that still provides net benefits to each road user.

So where do the figures about costs of congestion originate?

The other way to look at congestion is that each extra individual who uses the road network incurs a cost to all other users in terms of increasing their travel time. Thus, there is an incentive for people to ‘overuse’ roads, as they receive all their benefits, without incurring all of their costs.

Thus if we have 100 road users and their trip time is 20 minutes (before noticeable congestion begins), and each extra road user after this amount increases everyone’s travel time by say, 1 minute (obviously the relationship is non-linear), then we can estimate the cost of congestion as follows:

With 5 hours per day where 120 users are on the road, we can estimate the cost as 5 hours of the value of time to 120 people, minus the benefit of undertaking the trip to 20 road uses.

The main shortcoming of this traditional approach is that it is assumed the costs borne by other road users are unavoidable, and thus it fails incorporate the benefits accrued by road users even when congestion occurs.

This is where my (I think) realistic assumption of prior knowledge of congestion is important. All 120 road users will know before embarking that their trip will take 40mins instead of 20mins. Other road users are prepared to ‘pay’ the extra time cost of travel, thus we still have a net benefit to society from congested roads.

Congestion charges essentially aim to replace the increased time cost with a hip pocket cost, to keep some users off the road. However, since the time cost of different individuals is greatly different, a congestion charge will benefit the wealthier road users and hinder those who place a lower value on their time.

Alternatively, congestion could be reduced by offering more/better alternative modes of transport, to attract marginal road users to trains, buses, cycling and such transport alternatives.

In my mind, congestion is an extremely functional and efficient mechanism for allocating our finite road space.  I have no problems with introducing a congestion tax, as long as it is complemented with signficant investment in alternative modes of transport.


  1. Cam, I'm not sure I agree with the way you expressed:
    'Other road users are prepared to ‘pay’ the extra time cost of travel, thus we still have a net benefit to society from congested roads.'

    Net benefit to society from congested roads? - compared with having no roads at all? or compared with having clear roads? I find that similar to saying; if we chopped off everyones right arm, but they still go to work - there is still a net-benefit of having only one arm.

    I see it more like a tax - that people still go to work despite paying taxes there is a net advantage of working. Although unlike taxes there is no intrinsic value of congestion (and no intrinsic value of getting your arm lopped off). Quite the opposite - less congestion would mean a greater value to society without significant side-effects to our quality of life (maybe you could think of some?). If people could get to work (let's say into the city) in the shortest possible time that would be good. Although most of the populist methods to achieve less congestion do reduce our quality of life; more roads, fatter roads, less bus lanes etc. claim a financial and social toll. Although these populist methods are widely agreed not effect congestion but just to attract more people who have a lower value on their time as well - still generating a greater value since more people can scoot around but not benefiting the high time value people who sit in congestion anyway.
    In my opinion we should do the opposite; close roads, skinnier roads, and more public transport and congestion tax. All, on first glance, impede societal benefits. Although I think this is a case of the second degree effects outweighing the primary effects - or the 'short term' fix making the problem larger (like a depressed drunk - who drinks because he is depressed, and is depressed because he drinks). Second degree effects of more & fatter roads: expanding cities which act as a positive feedback loop. Businesses having to do business with businesses 2 hours across town (need a road?) etc. The counter-intuitive method would be a stabilising policy - curb the dropped cow pat city and thus concentrate businesses and living together (Ever dreamed of living 5 min walk from work? Then pick up some groceries on the walk back home?) We all have this dream - so why not institute a policy that will encourage it? In the long-term we will see greater benefits both socially and economically than the short-term benefits of the fat-roads approach. Environmentally and economically high-density cities are far more efficient (and also aesthetically more efficient - not necessarily much prettier but at least it's all in one spot) than low density shit-stains on the landscape we have in Brisbane.

    But what about the quality of life in the city? I need my garden for my kids, the fresh air of suburbia, I want to mow my lawn and work on the boat. Yeah good points. My nightmare, and I have literally had nightmares of this sort, would be to have to catch a lift back to my stylish-grey lifeless apartment in the city where you don't know your neighbor anyway - because you have 200 of them.
    We have life-stupid, never touched a hammer in their lives, flat screen owning, Hugo-Boss/chino/loafer wearing, 30 somethings to thank for buying these hellish, dream of the fucked in the headers - whores will have their trinkets. I always have the urge to throw myself over the cheap aluminum railings of the tiled balconies when I find myself in apartments such as these.

  2. continued (due to character limit)...

    How can we live the dream of walking to work, gain the efficiencies of a modern high-density city and still have an 'Aussie' quality of life?
    I have lived for the past five years in Austria/Germany (Munich; voted in 2007 the worlds most livable city). Munich just wouldn't work in Australia. Germans have no desire to work on their cars, or build an extension, or make home-brew or any of the other things that make life in Australia unique. There is no place for such things in this city. On the other side; I know all my neighbors (I live in a 5 story apartment building with high ceilings and large rooms - very beautiful), walk the dog in huge community gardens, swim in the river, ride my bicycle everywhere (by far the fastest mode of transport, car is marginally faster than walking) and walk to the grocery shop. My quality of life is very good. The amazing thing is that you can drive from the center in any direction and reach fields or forests in 12 mins. That still shocks me every time, and is absolutely profound. And Munich is the most economically successful city in Germany - and I would venture to say, in part due to this high-life-quality and low-travel barrier to business.
    What would the vision of Brisbane look like? The higher density re-zoning of inner-city suburbs is a step in the right direction. I think areas like spring-hill, new farm and west-end are good examples of Australian city living. Quality of life is good: lots of public transport and parks, strong communal social connections, and the Aussie ethos is appeased. But we cannot squash the entire population of Brisbane into these inner-city areas - or can we?