Traffic Jams Are Back. How Should Policymakers Deal With Them?

(In collaboration with Andrés Castillo (Andres Castillo | LinkedIn))

Those of us living in large and medium sized cities are constantly affected by traffic congestion. It is estimated that traffic congestion costs the US economy as much as US$88 billion annually, accounting only for lost productivity[1]. The comparable cost in Mexico is estimated to reach US$4.5 billion annually[2]. This does not include fuel waste or health-related costs, such as stress or breathing ailments. Traffic congestion is closely linked to higher stress levels[3], and the consequences of stress have a significant adverse effect on life quality in general.

There were unintended benefits arising from the COVID19 pandemic, including reduced congestion, which to a certain extent might have permanent effects. Clearly, habits around work-related meetings, fitness activities, and entertainment, to name a few, have changed. But while tech platforms will help mitigate congestion, automobile demand is expected to continue growing alongside middle-class development and sanitary concerns about mass transport and ride-sharing will dampen these gains. But staying at home during 2020 was not a free ride. In a paper published in the International Journal of Clinical and Health Psychology, Juan Bueno-Noviol and colleagues suggest that depression prevalence during 2020 could have been as much as seven times higher than in normal years[4]. While it is true that the root cause of such high depression rates might have been a consequence of various factors, including stress directly related to COVID fear, it is not a stretch to say that diminished social interactions must have played a role. No wonder people are flooding restaurants, concerts and other venues. Traffic congestion is certainly back.

From the evidence presented above, it seems clear enough that both staying at home or suffering through traffic are alternatives that have a heavy toll on society in general. Thus, it seems critical that creative solutions are designed and implemented. In fact, we believe traffic congestion should be considered a top priority in policymakers’ agenda

Many of the world’s largest cities have committed substantial resources to help alleviate congestion and increase mobility. Paris opened its first subway line in 1900. Mexico City did so in 1967, now covering a network of more than 140 miles and moving around 4.5 million passengers daily. The Metrobus has seven lines and moves some 1.8 million passengers daily. Additionally, there are toll freeways, bike-sharing and similar measures that all help to reduce congestion and commute times. However, one way or another, citizens still spend many hours a day in their cars. More roads will hardly fix the problem. In fact, it can make it worse as more roads are directly correlated with more vehicles, due to what is known as the Fundamental Law of Traffic Congestion[5].

The root cause of the problem can be found in economics and behavioral sciences: “each driver typically considers only his own private costs and benefits” when deciding to get on the road. Drivers don’t consider “the fact that their driving slows everyone else down.” This is what economists call a negative externality. The solution? Charge the driver for the externality[6]. This is at odds with a basic right of freedom of movement, as stated in the Universal Declaration of Human Rights, but congestion itself is a limitation to exercising such right.

The central idea is to charge drivers for the use of roads in the most congested areas. Charges can be optimized with mathematical methods to include, for example, different charges by zone, time of day, or number of passengers and are made possible through increasingly advanced recognition technologies and algorithms that identify license plates as well as car and passenger features. These schemes apply for both entering certain physically constrained areas, such as city centers, as well as for using certain road lanes at particularly congested times of the day.

The concept of congestion pricing dates back to the late ‘70s, with countries like Singapore taking the lead. London has perhaps one of the most well-known systems, implemented in 2003 with very positive outcomes: bus users increased by 38 percent, translating into a substantial reduction of green-house emissions while generating additional income of around BP£150 million (US$198 million) annually for the city ever since[7]. And even with tangible benefits, the solutions are becoming more and more sophisticated as technology has allowed for further optimization. Copenhagen, for example, is in the process of implementing a countrywide “Clean Air Zone” aimed not only at reducing congestion but improving air quality and reducing commute time and cost, an increasingly critical objective in terms of the COP26 agenda recently committed across countries.

With technology widely available and proven benefits, why is it that only a few cities in the world have implemented this?

First, there are some challenges related to state capabilities, including the need for a robust vehicle registry (preferably at the national level) and a strong penetration of financial institutions across all social layers to seamlessly process and collect charges.

But the greatest challenges remain political. The reality is that citizens are already paying a substantial portion of their income in all sorts of taxes, and often, particularly in developing countries (with poor public transportation systems), there is a high perception that taxes are poorly spent due to corruption and inefficiency. Therefore, the idea of new mobility taxes might seem ludicrous. Politicians will need to spend valuable political capital to implement a measure such as congestion pricing, but there are ways to mitigate the political cost through proper design and communication:

• Income from congestion pricing should be earmarked exclusively for the improvement of the public transportation and mobility needs of the cities that make the charge. Congestion pricing income belongs to the citizens, and it should be used for their benefit.
• This is a form of progressive tax; car owners will bear the brunt of the cost; those who cannot afford a car will be the main beneficiaries. However, attention should be paid to work-related car uses (remember the impact of the infamous “gasolinazo” in early 2017?).
• Emissions will be reduced significantly by reducing congestion, which will have substantial health benefits for the population as a whole.

Cities have become epicenters of economic, cultural and educational value creation across nations; ideas are exchanged all the time in all sorts of unexpected ways that bring huge benefits. This is why we have seen migration from rural areas into the cities for hundreds of years. Living in a large city is a gift in many ways, one that comes with substantial costs, but good policies and technology can go a long way to reduce these.

[1] https://inrix.com/press-releases/2019-traffic-scorecard-us/

[2] ¿Cuánto cuesta la congestión vehicular en México? https://imco.org.mx/wp-content/uploads/2019/09/%C2%BFCu%C3%A1nto-cuesta-la-congesti%C3%B3n-en-M%C3%A9xico.pdf

[3] Haider, Murtaza and Kerr, Kenneth and Badami, Madhav, Does Commuting Cause Stress? The Public Health Implications of Traffic Congestion (August 2, 2013).

[4] Bueno-Notivol, Gracia-García, Olaya, Lasheras, López-Antón, Santabárbara, (2021) “Prevalence of depression during the COVID-19 outbreak: A meta-analysis of community-based studies” International Journal of Clinical and Health Psychology

[5] Duranton, Gilles, and Matthew A. Turner. 2011. "The Fundamental Law of Road Congestion: Evidence from US Cities." American Economic Review, 101 (6): 2616-52.

[6] Glaeser, E. (2012). Triumph of the city. Pan Books.

[7] Transport for London: Annual Report and Statement of accounts (2003/04) and (2015/16). https://tfl.gov.uk/corporate/publications-and-reports/annual-reports-past-years