If the No side wins, it’ll cost Vancouver billions: C.D. Howe

The price of not paying may be higher than you thought

Congestion: it’s costing us, and if we don’t do anything about it soon—chiefly, vote yes in Metro Vancouver’s upcoming transit referendum—it’ll cost us even more. That’s been the message from the Mayors’ Council and other Yes side supporters.
But it may be even worse than they thought.
A report released Monday from the economically-minded C.D. Howe Institute, done in partnership with Clean Energy Canada, says the yearly cost of voting no will fall somewhere between $500 million and $1.2 billion beyond what previous reports estimated.
“The numbers that have been tossed around so far have been about the visible costs,” says Benjamin Dachis, the senior policy analyst who authored the report. He’s referring to a study released by Metro Vancouver’s Mayors’ Council, which claimed congestion costs the region roughly $500 million per year—a number that will grow to $1 billion by 2045 if unchecked—resulting mainly from traffic jams and crashes. Their $7.5-billion, 10-year transit plan, which would add a subway along Broadway Avenue and a light-rail network in Surrey among other projects (to be paid for by a 0.5 per cent regional sales tax, assuming the referendum passes) could reduce those costs by a third, they estimate.
“But there are hidden costs,” says Dachis, and they may be the biggest costs of all. A major one, he says, is how businesses are impacted when fewer people can get to them. “When congestion makes you decide to not make a trip, not go to a BC Lions game, not go to a new restaurant, that’s a cost, but it’s not a cost we’ve calculated.” Plus, you get more specialized businesses—say, a social media consultancy, a board game shop—popping up that couldn’t exist in a smaller market. If only one in 10,000 people are interested in what you’re selling, your survival depends on how easily people from afar can reach you.
Business also benefits when people are able to meet face-to-face—knowledge spillover, something congestion discourages—and, importantly, by a larger labour pool, his report says. A labour pool is determined not by kilometres but by the time it takes you to get to work. Less congestion, then, means a bigger labour pool, which has myriad benefits. With more candidates to choose from, for example, companies stand a better change of finding the best fit for a particular job.
As a result of this, when a city doubles in population—a rough way of measuring labour pool size—average incomes go up 3 to 8 per cent, Dachis’s report says. “The hidden costs are equal to if not greater than the visible costs of congestion.” And the sum of both, even greater. “There are wider economic benefits that people haven’t been thinking about,” Dachis says. And his calculations may be somewhat conservative, he adds, given they’re based on current population numbers and thus a level of congestion that could worsen. “If anything, these numbers will get higher” if nothing is done.
He puts it like this: “Imagine a restaurant: if I live around the corner, I can get there no matter what. But if I’m the only person who can get to that restaurant, and they can only serve one person, do you think that restaurant is going to exist?”