Canadian Manufacturing

C.D. Howe: Vancouver-area congestion costs up to $1.2B

Study estimates reduced traffic congestion would boost annual provincial income tax revenues by $150 million



TORONTO—The hidden costs of congestion are between $500 million and $1.2 billion a year for the Metro Vancouver area, according to a new report from the C.D. Howe Institute.

Benjamin Dachis, author of the study Tackling Traffic: The Economic Cost of Congestion in Metro Vancouver, finds that when congestion causes people not to travel, it stifles the key benefits of living in a city.

These benefits, collectively called agglomeration benefits, include finding better jobs and sharing services and infrastructure.

“The hidden costs of congestion in Metro Vancouver are as large as the visible economic costs that the Mayors’ Council has presented so far,” says Dachis.

Dachis says that increased investment in transportation infrastructure, along with lower congestion, would economically benefit Metro Vancouver in two ways:

  • New transportation infrastructure and lower congestion allow current residents to access more of the region in the same amount of time as before. This broader access enables more connections than a person might otherwise have encountered, and that has economic benefits for others.
  • This will result in an increase in incomes because workers would have better access to higher-paying jobs. These economic benefits accrue directly to the users of transportation, and are best captured by user fees, such as road tolls or transit fares.

Dachis estimates that as a result of higher incomes from reduced traffic congestion, provincial and federal income tax revenues would be boosted by an estimated $150 million and $360 million per year, respectively.

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