Economic and behavioral effects of transportation infrastructure

1. Economic and behavioral effects of transportation infrastructure Testimony to the New Jersey Clean Air Council April 14, 2010 Robert B. Noland Professor, Rutgers University, Bloustein School of Planning and Public Policy Director, Alan M. Voorhees Transportation Center

2. Major issues • How does funding of transportation infrastructure affect air quality and greenhouse gas emissions? • How do people respond to changes in transportation infrastructure? • What are the effects of transportation infrastructure on economic productivity and development?

3. Transportation funding objectives • Reduce congestion • Increase economic development

4. Do expanded roads reduce congestion? • When the cost of travel is reduced, economic theory suggests that… • Travelers choose to move to their preferred travel time and route – peak congestion stays the same • New trips not previously taken are generated • Longer trips are made • People use their car instead of public transit • New land is opened to development, leading to more and longer car trips

5. S1: Supply before S2: Supply after P1 P3 P2 D3: Exogenous Demand growth D1: Demand before Q1 Q2 Q3 Elastic Demand & Supply Price of Travel Quantity of Travel (VMT)

6. Empirical studies confirm theory • A wide range of empirical research studies confirm that new roads spur increased car travel • But are roads built because planners foresee demand? • Research evidence suggests that expanded roads cause growth in car travel • In the long run, new and expanded roads will not reduce congestion • Transportation models do not fully capture these effects Noland, R.B. & Lem, L.L. 2002, "A review of the evidence for induced travel and changes in transportation and environmental policy in the US and the UK", Transportation Research Part D, vol. 7, no. 1, pp. 1-26.

7. What about vehicle emissions? • Improving traffic flow can reduce emissions from cars • But this effect does not last

8. Break-even point for NOx Initial level of emissions After adding lane 14% more cars 11.5% more cars Noland, R.B. & Quddus, M.A. 2006, "Flow improvements and vehicle emissions: Effects of trip generation and emission control technology", Transportation Research Part D, vol. 11, no. 1, pp. 1-14

9. There are benefits to more traffic • Allows more people to travel when and where they want • This increased mobility increases consumer welfare • However, identifying the benefits depends on the evaluation method used • Methods used by transportation planners tend not to capture the long-term distributional effects

10. Before capacity addition Land prices after increase in available supply Initial land price response Distribution of Benefits from Accessibility Increases Cost of land Travel time

11. What are long run costs and benefits? • Benefits • Allows more land to be developed, benefiting those who own land that is now more accessible • Can allow an increase in supply of housing and commercial development, lowering costs to consumers • Costs • Developments are more car-dependent and thus emissions increase • Environmental costs associated with sprawl

12. Can transportation funding and policy support environmental goals? • Change incentive structure • Funding of roads versus public transit • Change mix of user fees for both roads and public transit • Development patterns make a difference • Focus new development on areas that are transit accessible • This can provide options for people to avoid using motor vehicles