Report: Traffic Studies Systematically Overstate Benefits of Road Projects

Todd Litman, the Victoria Transport Policy Institute

Nearly every time a new road is built, traffic volume increases beyond the predictions of the traffic studies. And nearly every time, transportation planners are surprised.

The explanation is a wonky little phenomenon called “induced demand.” Essentially, if you widen roads to reduce congestion, people who were avoiding the road because of congestion will find it more convenient and take more trips, thus increasing traffic again.

So what do you have then? A big expensive project to eliminate traffic, and more traffic.

Induced demand has been widely studied; it was acknowledged by the American Association of State Highway and Transportation Officials in 1957. Today it is widely accepted by transportation practitioners. The Clean Air Act even requires big cities to account for this effect in traffic modeling.

But many large metropolitan planning agencies refuse to comply, according to Todd Litman of the Victoria Transport Policy Institute [PDF], and smaller cities are under no obligation to do so. Futhermore, though they may account for certain types of induced demand — extra trips — they don’t account for some of the long-term impacts of highway investments, namely sprawl.

That alone is enough to undercount the impact of induced demand. According to a 2005 study [PDF] set in California, “the net benefits of a suburban highway capacity expansion project declined by 50 percent if the project caused 60,000 residents (about 2 percent of the regional population) to move from urban to suburban locations, thereby increasing traffic congestion on that roadway link.”

Failing to fully account for induced demand causes public entities to greatly overestimate the benefits of transportation projects and build more roads than is optimal from a financial and environmental perspective. And according to a new study out of Denmark, that’s exactly what’s happening.

According to the study, completed by researchers at the Institute of Transport Economics and a Danish university, this leads to skewed cost-benefit analyses that call for new highways and road widenings of dubious benefit to the public.

Researchers reported that perceived time savings make up the largest portion — sometimes 85 percent — of the economic benefits assigned to prospective highway projects. But an unanticipated boost in traffic volume can turn many projects that would theoretically pass analytical muster into economic losers. Unless transportation agencies are carefully accounting for these effects, however, many of these projects get built anyway.

The Danish study focused on Scandanavian countries, but its authors said the results should be applicable internationally, wherever transportation agencies are not fully accounting for induced demand.

7 thoughts on Report: Traffic Studies Systematically Overstate Benefits of Road Projects

  1. Is there a link for the Litman Study?  I love VTI, but their website is not the most user-friendly for searches and you didn’t cite the title.

  2. I think the easiest way is to Google this: Generated Traffic and Induced Travel. Implications for Transport Planning, Todd Litman, Victoria Transport Policy Institute 2011 (it’s full of great stuff, by the way)

  3. This is a basic tenant of urban planning. I learned this fact while I served as a traffic commissioner in my community back home: “Roads breed traffic,” or to put it colloquially, If you build it, they will drive on it. Traffic will always go beyond the projected usage as a part of any study or prediction. We are not building any infrastructure to help remove cars from the road as part of our traffic maintenance plans, therefore we will always have more cars than projected for any road construction project

  4. Whether or not a road breeds more car trips, we need to ask, “Does this road breed more net dollars in our coffers over the lifetime of the project?”

    If a highway doesn’t generate enough real, actual, wealth directly or indirectly in the bank accounts of the government body responsible for its upkeep – then the highway is a money loser.

    The performance of a highway should include the wealth and value it creates and destroys. We have underfunded schools and arts education, our parks are typically in disarray – but the highway departments in America’s cities always seem to have enough treasure to fund the next capacity increase.

    To what end? If the project loses us money over the long run, why the hell are we building it?! I don’t care if cars trips increase or decrease one thousandfold. Let’s stop sending good money after bad.

  5. Transportation systems are complex and adaptive.  If we change something (add capacity, change policy, add transit) somewhere and this will result consequences that we expect as well as consequences we don’t expect.  Key to transportation planning is understanding that we can’t forecast the full effects of system changes but that we need to improve feedback loops, multiple connection pathways, and process controls to keep certain system elements within acceptable parameters.  Essentially, this means more bikes, walking, and transit and fewer accommodations for the automobile.

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