Bangkok made global headlines again recently when a BBC report put the city on a list of "10 monster traffic jams" along with Jakarta, Manila, Mumbai and six others. The report featured one man who spent about an hour travelling from Pathum Thani to central Bangkok via a commuter van on weekdays. Many people would say that's fast.
It seems like a fair observation that an average person spends about two hours a day going to and from work or school or on other trips. In other words, Bangkok commuters waste around 10% of their waking hours in traffic.
A local academic has estimated that traffic jams incur economic losses _ as people normally would spend time on other activities than being stuck in cars _ of 10 billion baht a year, not to mention increased fuel expenses. That's 0.1% of Thailand's annual GDP.
We believe the figure, based on a loss assumption of 100 to 120 baht per person per hour, might be significantly underestimated. The Labour Force Survey of 2011, cited in a study by Direk Patmasiriwat of the National Institute of Development Administration, indicated that the average hourly wage of Thai workers was 83.90 baht. Accounting for inflation and the 300-baht daily minimum wage, the current average might be 126.50 baht per hour, exceeding the 120-baht upper limit of the above estimate.
For Bangkok which has a high concentration of executive and professional personnel compared to the national average, the economic loss could be much higher. Our back-of-the-envelope calculation suggests an average hourly wage of around 260 baht in the capital. That means the cost to the economy could be two to three times as much as previously calculated. And with the worst traffic typically in the most glamorous work spaces such as Sukhumvit, Sathorn and Silom, we think these figures are conservative estimates.
Petrol sales have increased markedly in 2013. Sales of gasohol have jumped 68% from a year ago to an average of 20.4 million litres a day. There is another obvious cost of wasteful fuel consumption during traffic congestion.
There are also other additional "specialty" costs associated with impacts on physical and mental health from pollution and stress.
People frequently blame the government's first-car tax rebate programme for the recent worsening of traffic. After all, there were 1.2 million applications for new cars. Car sales in 2012 skyrocketed to 1.4 million, up 80.7% from 2011. "Organic" growth rates in the decade prior to the programme never rose above 10%.
It's true that the first-car programme has brought a lot new cars onto the streets, but it's probably not fair either to blame everything on this stimulus policy.
Arguably, a fiscal measure such as a tax rebate simply precipitates demand for vehicles; in other words, it's just a catalyst. Instead of waiting for, say, three more years to own a car, a young office worker would rush to buy one immediately. However, it's not likely that he or she will buy another car once three years have passed. Such "inorganic" growth will eventually dissipate. So instead of worsening traffic conditions slowly building up, the first-car programme may only have brought the problem forward a few years.
The root causes of traffic problems go deeper than the simple fact that we have about five times as many cars as our roads can bear. The figure was already about 4.2 times before the first-car policy.
In terms of economics, if you cannot increase the supply of roads, then you manage demand. Roads are public goods that can be used simultaneously by many people, but an increasing number of users can reduce the benefits of each individual due to congestion.
The "benefit received principle" in public economics proposes that the individuals who receive the benefit of a good or service should pay the fees necessary to supply that good or service. For drivers, that means toll roads.
A number of metropolitan areas have adopted congestion fees that drivers must pay for entering high-demand zones, such as a downtown or financial district. For example, according to Transport for London, congestion on roads costs around 2 billion pounds each year, and is a huge hindrance to businesses, commuters and the freight industry.
The Congestion Charging scheme, introduced in February 2003, has reportedly delivered significant benefits from traffic reduction in central London. It's not surprising to see that, in the IBM 2011 Commuter Pain Survey of 20 large cities, London was near the top for being "less painful", second only to Montreal. Mexico City, Shenzhen, and Beijing were the three most painful for drivers. Had Bangkok been on the list, it would surely have been in the latter group.
Implementing a congestion charge is not easy since it involves legal processes as well as technology. In addition, without the proper alternative of decent public transport, it will be viewed as blatant robbery. As a Colombian mayor, Enrique Penalosa, put it quite frankly, "A developed country is not a place where the poor have cars, it's where the rich ride public transport."
Hence to resolve Bangkok's traffic problem, the public transport system needs to be overhauled end-to-end. People need to be able to make a conscious choice about their daily mode of transport with realistic alternatives that do not end up adding more vehicles on the road such as mini-vans and buses.
And once we get there, those who choose to drive simply for convenience should pay for adding more congestion to Bangkok's traffic. This is what hard-headed, but soft-hearted economists would recommend.
TMB Analytics is the economic analysis unit of TMB Bank. Behind the Numbers is co-authored by Benjarong Suwankiri and Warapong Wongwachara. They can be reached at tmbanalytics@tmbbank.com.