What Happens When We Expand Transportation Capacity?

Don PickrellVolpe Center, U.S. Dept. of Transportation

UCLA Public Policy Symposium:Tackling Traffic CongestionLake Arrowhead, California

October 20-22, 2002

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Short-Term Responses to Capacity Expansion

• Speed on expanded facility increases• Travel diverted to expanded facility

– From competing facilities or routes– From other hours (trips rescheduled)– From other modes (carpools, transit)

• Usage on facility increases, speed slows from initial level

• Speeds may increase on other facilities, and at other hours

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Longer-Term Responses

• Households– More outside-the-home activities– Increased auto ownership– May relocate further from work, other

activities

• Businesses– More frequent shipments– More “logistics-intensive” organization– Some relocate to more distant sites

• Facility use increases further, speed slows further

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What Does this Mean for Benefits from New Capacity?

• Demand for highway use just like demand for anything else

• Induced demand erodes benefits to previous users, but adds new ones

• Benefits can be higher or lower than with no response– Sensitivity of demand to speed– Relationship of speed to use– Magnitude of capacity expansion

• Benefits cannot disappear

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Can Induced Demand Make Congestion Worse?

• Not by itself• In some circumstances, maybe

– Severe (and irreversible) cuts in transit service

• So why do people believe otherwise?– Investments often made where demand is

growing rapidly– Wrong “counterfactual” in assessing

benefits from expansion

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What’s the Real Issuewith Induced Demand?

• May increase harmful side-effects (“externalities”) caused by travel– environmental impacts: air pollution,

“greenhouse” gases, noise– Safety (including pedestrians)– Dispersion of land uses (“sprawl”)– So can construction itself

• Escalating demand for continued expansion

• Strain on financing mechanisms (highway and transit)

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What Causes these Problems?

• Environmental impacts are consequences of vehicle technology

• Safety consequences have several sources

• Land use impacts are responses to underpricing, over-investment

• Demands for more capacity and inability to finance it stem from reliance on fuel taxes

• Fighting investment only works at the margin, if at all

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Why Not Solve Real Problems?

• Tailpipe and fuel standards “second best,” but hugely successful

• Fixing CAFE loopholes or raising fuel taxes would do the same for greenhouse gases

• Re-focusing traffic engineering, reforming insurance would improve safety

• Changing pricing and investment policies, reforming zoning would promote “better” land use

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Is Induced Demanda Serious Problem?

• Highway investment policy has problems, but ignoring induced demand isn’t one of them– Congestion is the wrong signal – Pressure to expand comes from fuel tax– Some expansion “benefits” are really costs

• Expanding capacity to eliminate congestion won’t work, but not because of induced demand