Cost of road accidents

COST OF ROAD ACCIDENTS

With the fast growth of traffic, the road accident rate in India is increasing at an alarming rate. 

Road accidents cause huge economic loss to society by way of

•  loss of output by fatal and injured victims
• expenses incurred in medical treatment
• administrative costs of police
• insurance companies and accident claims tribunals and
• damages to vehicles and property. 

Apart from these tangible components, intangible costs such as 

• pain
• grief and 
• suffering are also caused. 

An accurate understanding of the monetary costs of accidents of various types helps transportation planners and economists to account for this component of road user cost while undertaking an economic appraisal of highway schemes. 

In view of the urgent data gap in the country on accident costs, the Central Road Research Institute took up a limited investigation into this subject as a part of the road user cost study.

A study by the Ministry of Road Transport and Highways found that average socioeconomic cost of every death due to a road accident in 2018 in the country was roughly ₹91 lakh. And as for every victim that sustained grievous injuries in road accidents in India, the cost is about ₹3.6 lakh.

The study offered three different estimates of the socioeconomic impact under three scenarios. The third estimate, which is based on the Global Burden of Disease (GDB) Study, pegs the socioeconomic impact at about ₹8.63 lakh crore.

The estimates are said to include medical expenses; loss of income due to lost output cost; pain, grief, and suffering; damage to vehicle; public asset; and administrative costs .

 

COST OF ROAD ACCIDENTS
Two main approaches are used to estimate the cost of road accidents. They are:

• Human capital (HC) approach which is based on Gross-loss-of-output methodology and
• Willingness To Pay (WTP) approach
  

The cost values obtained are updated using inflation rates. The results indicate an estimated cost of road traffic accidents. Cost estimation helps determine the economic benefit arising from preventing accidents. 

This is done through a cost-benefit-analysis that guides policy makers especially in developing countries. The above listed techniques are widely used to estimate the cost of traffic accidents. Countries such as USA, UK, Newzealand and sweeden use the WTP approach to estimate the costs while the HC approach is used by the following countries: Australia, Canada, Germany, India, Vietnam, Portugal, Japan, Austria and many more. 

Among different variations of the HC approach, the gross loss-of-output is the easiest and most frequently used. It calculates the cost as the present value of the expected earnings that could have been achieved by the injured or the deceased person if not experienced the accident. This is done by estimating the average costs of a fatality, an injury and a damaged vehicle. These averages are then multiplied by the corresponding totals and added together with other cost components to find the  total cost of road traffic accident. Estimating the cost of road accidents requires a lot of data requiring a number of surveys  along with continuous data quality improvement.