Download Africa`s Road Safety Challenges

Third African Road Safety
Conference
The Economics of Road Safety
Stephen Karingi
Director, Regional Integration and Trade Division
ECA
9 July 2015
Addis Ababa
● Context
● Rationale for
estimating the
economic cost of
road crashes
● Methodologies to
estimate the costs of
road crashes: A
review of literature
● Conclusion & Way
Forward
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Context
 Unprecedented sustained economic growth in Africa
 Spurred, partly, by spending in infrastructure, notably construction of
roads
 Spending in Africa’s infrastructure grew by 8% between 2011 and 2013
 Cape Verde, Namibia, Uganda and South Africa allocated 44% , 39%,
28%, and 24% respectively of their budgets to infrastructure in 2012
 Implications for road safety
 Improved quality and coverage of roads could increase road crashes
 Rapid economic growth is translating into increase in car ownership
which increases road conflicts
 Efforts needed to demonstrate that the benefits of investing in road
safety outweigh the cost
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Rationale for Estimating the Cost of Road
Crashes (1)
 Advocacy for road safety is often based on a moral
perspective
 Sympathy with victims and their families
 But this has not generated sufficient political and financial
support
 Need to base advocacy on an economic case
Various studies estimate the cost of road crashes
between 1-6% of national GDP
 Mozambique 1.5 – 2.5%; Kenya 5.5%; Zambia 2.3%;
Developing Countries 1.5-2.5%
 Wide variations affect credibility of figures
 Most of these studies undertaken in the 1990s
 Need for new studies to assess current situation
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Rationale for Estimating the Cost of Road
Crashes (2)
Active participation of politicians and Ministers of
Finance is critical for improving road safety
 Decision Makers can use figures on cost of road crashes
to improve policy making process
 Increase resources devoted to road safety and thereby
reduce road crashes
Comprehensive evaluation of road crashes include
social damages in monetary terms
 Important to include injuries and fatalities when
evaluating damages due to crashes
 Equally important when evaluating benefits of
remedies aimed at reducing road crashes
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Who is Interested in the Cost of Road
Crashes?
Research has been conducted by experts/
practitioners/scholars in a wide range of
disciplines, including:
 Health
 Development studies
 Social and economic studies
 Traffic and Transport
 Business and insurance
 Banking and Finance
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Where have studies been
undertaken?
 Relevant studies have been undertaken across
the world:
 Jordan, India, Sweden, US, Italy, Mexico, Spain,
Japan, Turkey, Kenya, Mozambique, South Africa,
Trinidad & Tobago, Colombia, etc.
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Categorisations of Economic Costs
of Road Crashes
• Material
damage
• Health care
costs
• Production
losses
01/08/2017
• Cost of vehicle
damage
• Medical care
• Compensation
for injuries and
fatalities
• Material
damage
• Medical care
• Labour loss
Tangible costs
• Vehicle damage
cost
• Medical costs
• Cost incurred by
Police and
emergency
service crew
Intangible Costs
• Time individuals
involved spend
in hospital or
individual’s
incapacity costs
• Human cost
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Methodologies Approaches to
estimate Road Accidents
The Human Capital approach
The Comprehensive approach
Years Lost Plus Direct Cost approach
Willingness-to-Pay Cost approach
Discount Rate approach
01/08/2017
9
Methodologies Approaches to
estimate Road Accidents
The Human Capital approach
The Human Capital approach measures only
market costs (property damage, medical
treatment, and lost productivity). This
typically places the value of saving a human
life at $0.5-1 million, with lesser values for
injuries.
01/08/2017
10
Methodologies Approaches to
estimate Road Accidents
The Comprehensive approach
 In addition to market costs, this approach includes
non-market costs, including pain, grief, and reduced
quality of life, as reflected by people’s willingness-toaccept increased crash risk and damages.
 11 components of the comprehensive cost are:
property damage, lost earnings, lost household
production, medical costs, emergency services, travel
delay, vocational rehabilitation, workplace costs,
administrative, legal, and pain and lost quality of life
01/08/2017
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Methodologies Approaches to
estimate Road Accidents
Years Lost Plus Direct Cost approach
 includes the same cost components as the
comprehensive cost category; however, it replaces
lost earnings, lost household production, and pain
and lost quality of life with a non-monetary measure
01/08/2017
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Methodologies Approaches to
estimate Road Accidents
 Willingness-to-Pay Cost approach
 refers to the costs people are willing to pay for
safety improvements to avert a fatality or injury.
Willingness-to-pay cost is another name for
comprehensive cost
 Discount Rate approach
 used to compute the present value of future
monetary costs of injury.
01/08/2017
13
Cost Components in South African
Study
 Loss of output –due to premature death, minor and major injuries
 Estimated using likely future earnings & GDP per capita
 Property damage – inside and outside vehicle
 Goods; road furniture and fixed property
 Pain, suffering and loss of amenities of life
 Hospital, medical and funeral costs
 Administrative costs
 insurance, police investigation and administrative costs
 Legal costs
 Miscellaneous costs
 Loss of time (visiting insurance companies, repair shops, etc.)
 Other cost such as telephone calls
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Types of loss identified in Japan
 Human Loss
 Fatal
 Serious (aftereffect)
 Slight
 Material loss
 Loss to employers
 Loss to public organisations
 Ambulance service cost; Police costs; Court costs; Lawsuit
costs; Prosecutor fiscal costs; Insurance operation costs;
Social welfare costs for physically handicapped people;
Emergency care system maintenance costs; and Congestion
costs
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Key Questions
• What is the experience in different African
countries in estimating the cost of road
crashes?
• What are the challenges to estimate the cost
of road crashes in African countries?
• Which is the most appropriate approach to
estimate the cost of road crashes in Africa?
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Thank You
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