What Happens When We Expand Transportation Capacity? Don Pickrell Volpe Center, U.S. Dept. of Transportation UCLA Public Policy Symposium: Tackling Traffic Congestion Lake Arrowhead, California October 20-22, 2002

October 20, 2002UCLA Policy Symposium: Tackling Traffic Congestion2 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

October 20, 2002UCLA Policy Symposium: Tackling Traffic Congestion3 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

October 20, 2002UCLA Policy Symposium: Tackling Traffic Congestion4 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

October 20, 2002UCLA Policy Symposium: Tackling Traffic Congestion5 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

October 20, 2002UCLA Policy Symposium: Tackling Traffic Congestion6 What’s the Real Issue with 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)

October 20, 2002UCLA Policy Symposium: Tackling Traffic Congestion7 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

October 20, 2002UCLA Policy Symposium: Tackling Traffic Congestion8 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

October 20, 2002UCLA Policy Symposium: Tackling Traffic Congestion9 Is Induced Demand a 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