Estimating Costs of Traffic Congestion in Dhaka City

Dhaka, the capital city of Bangladesh, is one of the most traffic congested cities in the world. For any policy making to deal with the situation efficiently, the impact of traffic congestion on the national economy must be ascertained. This paper estimates in monetary terms, the cost of traffic congestion, the state is currently facing. The time spent on travelling has an opportunity cost and is the most important item cost of the total congestion cost which also includes travel time variability losses, i.e. TTV, arising from unpredictability of the journey time. This study calculates travel time costs, TTC (using value of time, VOT approach) and Vehicle operating cost, VOC, due to traffic congestion directly while it makes allowances for TTV, Dead-weight loss, DWL- the avoidable social costs of congestion, externality cost due to travel time delay (imposed on others) and environmental damages. Estimated annual TTC is obtained as about USD 1499 million per annum after allowing for the estimated TTV. VOC due to congestion is estimated yearly as USD 196 million. Adding up the Delay externality (USD 1049 million), DWL (USD 749 million) and environmental externality cost (USD 375), the total annual cost due to traffic congestion in Dhaka is found to be USD 3868 million.