What Happens When We Expand Transportation Capacity?

1. 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

2. 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 UCLA Policy Symposium: Tackling Traffic Congestion

3. 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 UCLA Policy Symposium: Tackling Traffic Congestion

4. 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 UCLA Policy Symposium: Tackling Traffic Congestion

5. 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 UCLA Policy Symposium: Tackling Traffic Congestion

6. 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) UCLA Policy Symposium: Tackling Traffic Congestion

7. 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 UCLA Policy Symposium: Tackling Traffic Congestion

8. 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 UCLA Policy Symposium: Tackling Traffic Congestion

9. 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 UCLA Policy Symposium: Tackling Traffic Congestion