Questions and Answers - Social Cost of Road Crashes and Injuries report

What is the ‘Social Cost of Road Crashes and Injuries’ report?

This report provides an annual update of the social cost of road crashes and injuries in New Zealand. Social cost measures the total cost of road crashes to the nation, including loss of life and life quality, loss of productivity, medical, legal, court and property damage costs.

Why was the report undertaken?

The social cost estimates provide a way of putting a value on road safety impacts to society. To ensure the cost of any safety measure can be compared with the safety benefits it could achieve, the social cost estimates need to be updated each year to express values in current dollars.

Who carried out the report and what methodology was used?

The annual update of the report is carried out by the Ministry of Transport. A brief description of the methodology used to work out the estimates included can be found in the appendix of the report. For a more detailed description of the methodology, please refer to the June 2006 update.

What areas did the report look at?

The report looks at the social costs associated with road crashes and injuries.
 
It provides estimates, at June 2009 prices, of:
• average social cost per injury and per crash
• total social cost of road crashes and injuries in 2008
• annual total social cost of road crashes and injuries for the years from 1997 to 2008.

What are the key results of the report?

The updated value for the loss of life and life quality component of the social costs of road crashes is $3.5 million per fatality, at June 2009 prices. This gives an updated average social cost per fatality from a road crash of $3,528,000, per serious injury of $372,000 and per minor injury of $19,600.

Allowing for non-reported cases of injuries from road crashes, the updated average social cost is estimated at $625,000 per reported serious injury and $64,000 per reported minor injury. In per-crash terms, the updated average social cost is estimated at $4,124,000 per fatal crash, $756,000 per reported serious crash and $85,000 per reported minor crash. These estimates include an adjustment for the level of non-reporting.

The total social cost of motor vehicle injury crashes in 2008 is estimated at approximately $3.7 billion (down from $4 billion in 2007), at June 2009 prices - including both reported and non-reported cases. The reduction can be attributed to a sizeable reduction in the number of road deaths (from 422 in 2007 to 366 in 2008, or a 13 percent decrease) and a smaller reduction (around five percent) in the number of serioius and minor injuries.

How will the estimates be incorporated into the process for evaluting transport projects?

The updated social cost estimates will replace the 2008 estimates currently incorporated in the Ministry’s Crash Analysis System (CAS). The CAS is widely used by transport engineers and analysts for evaluating the safety impacts of any transport project that affects road safety. The updated estimates will also be used by transport officials for evaluating the safety impacts of any transport policy, rules or legislations.

How does social cost of road crashes and injuries differ from that faced by Accident Compensation Corporation’s (ACC) motor vehicle claims?

The social cost estimates include all costs (including non-financial cost) incurred as a result of a crash/injury, irrespective when the cost incurs and who pays. The total social cost estimates are based on accident year and include the estimated cost of loss of life and life quality, loss of output, medical cost, property damage costs and legal and court costs. All on-going costs are incorporated in the social cost estimates. In other words, the social cost estimates is a measure of the true costs of road crashes and injuries.

By comparison, ACC claims costs represent the financial burden to ACC, which covers only part of the social cost components.