Metro’s Congestion Study

The Portland Business Alliance, Metro, and others got decent ink this morning about a report they purchased on the costs of congestion, and a proposed $6 billion plan to address it.

Both the Oregonian and the Tribune reported it as, well, media tend to report on economic studies — go with the press release. Skimming the report, a couple things struck me.

First, more than half of the benefits projected are in personal time benefits ($418 million a year). Economists rightly note that these benefits should be measured. But there is substantial disagreement on how to value these costs. For example, if people are on the cell phone in the car (gasp!), are they really losing the time? And if people are choosing to spend their time caught in congestion, instead of on a bike, in transit, changing jobs, or creating toll roads to avoid congestion, is it accurate to project the value of that time as an hourly wage? I didn’t see at quick glance, how the economists measured the time saved in the report, but it’s a pretty mushy subject. If you take these out, the costs and benefits of building are roughly equal — the region may as well do nothing.

Second, I was surprised at how low the return was overall. Even accepting the personal time benefit measurement, spending money on traffic congestion only pays back two dollars per dollar spent. There are probably many other ways to spend public money that would have much higher benefit-cost ratios, as well as higher net present value of net benefits.

As far as the overall goal of encouraging more money for road expansion: I think folks are dreaming if they think that voters, who recently defeated a gas tax increase by a 7-to-1 margin, will want to pony up another $6 billion for benefits that certain businesses and individuals get disproportionate amounts of. Congestion may be a problem — but its solution is far away due to triple convergence (see Anthony Downs), and our lack of desire to tax or toll.

A final note, I didn’t take the time to note whether the time lost due to construction delays was factored in as a cost. It often isn’t, and indeed, sometimes highway expansions cause more time lost than they save when finished.

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