Governments are underestimating the cost of congestion by ignoring the social costs of gridlock.

 According to the C.D. Howe Institute's latest report, popularly cited studies fail to account for how traffic congestion damages the relationship between firms and people in an urban environment. Some of the benefits of urban living include people accessing jobs that better match their skills, sharing knowledge face-to-face and creating demand for more business, entertainment and cultural opportunities.

The commonly used estimate is that congestion costs the Greater Toronto and Hamilton Area about $6 billion per year. The think tank's latest study puts the cost at $7.5 to $11 billion a year.

CBC Hamilton talked to Benjamin Dachis, the think tank's senior policy analyst and author of the study, and asked him what the study means for Hamiltonians who are on the road.


Benjamin Dachis, senior policy analyst at the C.D. Howe Institute, says congestion costs $1.5 to $5 billion more than previously estimated. (C.D. Howe Institute)

CBC: You estimate that traffic congestion costs an additional $1.5 to $5 billion. What new costs did you find?

BD: The new costs are based on new ways of thinking of how congestion affects the economy. The prevailing estimate we've been hearing from the governments and from Metrolinx and other organizations is based on the time cost that people have when they are in traffic. But what happens is when congestion is so bad that people don't even bother getting in the car in the first place or getting on the subway because they know they can't get somewhere in time? There are a whole range of additional costs to the economy. What we've been looking at for the last couple of years is looking at this relationship between people and companies when they are able to access a larger urban area and the kinds of economic benefits they get, and they are quite substantial.

CBC: Who's paying for these costs?

 BD: These are unrealized benefits. People are paying for this mainly through lower incomes. People aren't commuting. That's the largest cost. People in Hamilton, for example, aren't able to access potentially higher paying jobs in downtown Toronto or other parts of the GTA because it takes them a lot longer to get there than they otherwise could. The time costs are so substantial that it doesn't make sense for them to take a higher paying job.

CBC: Your study shows gridlock means people can no longer access the benefits that come with large cities. Can you elaborate on that?

BD: There's a reason why universities have people together. It's pretty uncontroversial to say that learning happens better in person rather than over the phone. Or video conferencing. There's that intangible benefit about meeting in person rather than video conferencing. When travel becomes so hard, you don't bother meeting with people to learn from them. Guess what, you are not going to see the same benefits.

CBC: You suggest people earn more money when they commute longer. Why is that?

BD: That's a pretty common result we see around the world and especially in Canada. It's also more prominent in Toronto and Hamilton area relative to the rest of canada. When new transportation investment comes in, congestion gets lower and people are able to travel further for the same amount of time. People are commuting more and they are starting to take on higher paying jobs.

CBC: Some people would rather work close to where they live. How do you reconcile between commuting longer to a better paid job and working closer to home?

BD:  Even though they are finding better paying jobs, that's going to come at the cost of people travelling more. It's an important point in the paper. I differentiate between welfare effect where people are genuinely better off versus income effect. The effect of commuting is purely an income effect. That comes at the expense of more expense on travel and more time wasted in traffic because of the initial reduction in congestion. So we need to start thinking through the longer term effects.

CBC: What recommendations do you have for policymakers?

BD:  We got a limited amount of money we can spend on transportation infrastructure. A lot of projects aren't going to make the cut, but other projects are going to move further up the priority list. Government needs to do more to think through all the different benefits they might get.

This interview has been edited for length and clarity.

Are you a long distance commuter? What does congestion and gridlock cost you? Money? Time? Health? Tell us how your commute is good or bad: @cbchamilton, or on facebook.