Measuring the Cost of Congestion on Urban Area and the Flexible Congestion Rights

This paper presents a methodology to measure the cost of congestion in cities and to identify levers of action to manage traffic. The experimentation focuses on the ten largest Italian cities and considers the evolution between 2007 and 2008. By taking into account the cost of fuel, the cost of CO2 emission and of cost of time spent in traffic due to congestion, the methodology allows to assess the socio-economic cost of congestion as a proxy of the net reduction of GDP induced by traffic. It appears that the variances from a city to another and the evolution over a year can be significant: these differences point out that congestion is not an unavoidable consequence of urbanization and can be dealt with. As a logical consequence of this measurement, the paper puts forward a proposal to address congestion in city through the implementation of a policy relying on the “pay as you pollute” principle: the flexible congestion rights. This incentive scheme would reflect the real externalities of car usage by considering the characteristic of the vehicles, of the journeys, and the effective use of public goods – roads and road related infrastructures. It would also provide rewards to environment friendly behaviors, while any surplus would be reinvested in the public transportation system. Thus, the mechanism would have the advantage of higher flexibility, making it more effective, equitable, and capable to win political resistance than more traditional road pricing schemes.