Abstract: To measure and evaluate traffic congestion, the baseline for calculating the cost of traffic congestion and methodology for measuring congestion severity was studied. Combined with the existing findings, impacts of traffic congestion on traffic stream speed, fuel consumption and emission of CO₂ were analyzed and the concept of operational efficiency was defined to synthetically describe traffic states. Taking the operational efficiency as the optimization objective, the methodology of determining the baseline for calculating the cost of traffic congestion was developed. To validate the feasibility of suggested approach, the Van Aerde's model was used to describe speed-density-volume relationship and the model parameters were estimated based on the field data from the 4^th ring road in Beijing. Furthermore, the optimal operational state was obtained and the sensitivity of efficiency to the traffic flow state was analyzed. Finally, the delay caused by congestion, travel time index and efficiency index were reformulated in the light of congestion measuring baseline suggested in this paper.