Wednesday, July 26, 2006

Traffic Congestion in Singapore

Traffic congestion plagues almost all large urban areas. It's one instance in which economists believe there is reason for government intervention. Singapore is one of the few countries that regularly intervene.

Driving to work is what economists call a negative externality: an action taken by one person that affects the well-being of another. For example, my decision to drive my car to work makes the road a little more crowded, making your commute a little bit longer. My contribution to traffic congestion is small, but when there are thousands of other drivers like me, the problem becomes huge.

Economists dislike negative externalities because they cause inefficiencies. This simply means that people drive even though they shouldn’t from a societal point of view. For example, if you calculate that the benefits of driving - such as a more comfortable and flexible commute - outweigh its costs, such as petrol and maintenance, you would drive to work.* But you have left something out of the calculation, namely, the cost of a longer commute that you inadvertently impose on others. This is why too many people drive: some people drive even though the benefits of driving are not greater than the total cost to society.

To discourage people from driving, the government can intervene to make commuting more expensive to better reflect its true cost. In the US, the government often does not intervene in the market, maybe because individuality rules. As expected there are huge rush-hour backups in cities like New York and Los Angeles. On the other hand, in Singapore, given its small size, urban planning is viewed as essential and has allowed the implementation of two programs designed to reduce traffic congestion, Electronic Road Pricing (ERP) and the Vehicle Quota System.

The ERP is an electronic system that charges drivers when they use certain roads at certain times of day. Each car in Singapore has a device called an In-vehicle Unit that sits on the dashboard. Before driving the car, the driver inserts a type of debit card called a CashCard into the device. Money is deducted from the CashCard automatically when the car passes through traffic checkpoints across the city. In May 2006, passing through central business district checkpoints cost between S$.50 and S$3.50 (US$.32 and US$2.22), depending on the hour of the day and the location.

Under the Vehicle Quota System the government controls the number of cars on the road by limiting the number of new car registrations based on traffic conditions. The government then sells the registrations in twice-monthly auctions. In December 2004, there were 7,332 registrations available. There were 8,605 bids, with an average winning bid of S$20,893 (US$12,745).

So how does car ownership in Singapore compare to major U.S. cities? According to an AC Nielson survey the rate of car ownership in Singapore is 39%. According to the US Census Bureau, the lowest rate of car ownership in a large U.S. metropolitan area is 58% in New York City. Chicago and Los Angeles have car ownership rates of 89%, which ranks 8th.

How do commuting times compare? The average commuting time in Singapore is 33.6 minutes. The average commuting time in New York City is 38.4 minutes, in Chicago 32.7 minutes, and in Los Angeles 28.5 minutes. The U.S. numbers are actually too low because they include city residents only and not suburbanites who commute to these cities.

These numbers provide some evidence that the Singapore programmes have been effective. Of course, these numbers are suggestive and only meant to provide food for thought.

* Costs should include the opportunity cost of driving, the value of your best alternative such as taking the train.


Anonymous Little Blue PD said...

Urban congestion pricing and its effectiveness and ramifications have to be considered before rushing in to it.

For instance, London's results have been mixed.

Now NYC Mayor Mike 'The Nanny' Bloomberg is all excited about it, while he wasn't just a couple of years ago.

We all have to wonder what Bloomberg is really thinking of with this congestion pricing tax scheme. Maybe he mostly just wants a new tax. Just wrap it up in ‘concern for the environment’, and then people can just demonize those who oppose it.

If he cares so much about traffic jams, congestion and air pollution, why does he let Park Avenue be blocked off? Why doesn’t he do anything about that?

It's true, Pershing Square Restaurant blocks Park Avenue going South at 42nd St. for about 12 hours a day/5 months of the year! This Causes Massive Congestion and Air Pollution!

But apparently it does not bother NYC’s Nanny-in-Chief Mike “Congestion Pricing Tax” Bloomberg?

It certainly supports his claim that the city is hugely congested.

Check out the map!

Check it out!


Little Blue PD


1:19 AM  
Anonymous Viagra Online said...

this cause a lot of problem not only for those that drive in that congestion, also for the people around then, just think in accident in middle of this hell, or the high risk gas inhaler in the city.

4:16 AM  
Anonymous viagra online said...

I think that traffic congestions are now in all of countries of the world, it is a problem that I think has no ending, more and more people is buying cars.

1:21 AM  
Anonymous miami air conditioning said...

Driving has a social ans economical cost for Singapur!!

It's true traffic is a real problem in almost every city, but just a few goverments are trying to find a solution!!
Good for Singapur... and all people willing to take action!!

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Anonymous 4rx said...

this is really worrying, because Singapure is one of the biggest cities in the world, or at least it's ones with the most quantity of persons, so this could affect the development of it in the future. Authorities and the gouvernment have to do something as quick as possible to solve this fact.

12:10 AM  

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