Traffic Forecasts Ignoring Induced Demand: a Shaky Fundament for Cost-Benefit Analyses

Although the phenomenon of induced traffic has been theorized for more than 60 years and is now widely accepted among transport researchers, the traffic-generating effects of road capacity expansion are still often neglected in transport modelling. Such omission can lead to serious bias in the assessments of environmental impacts as well as the economic viability of proposed road projects, especially in situations where there is a latent demand for more road capacity. This has been illustrated in the present paper by an assessment of travel time savings, environmental impacts and the economic performance of a proposed road project in Copenhagen with and without short-term induced traffic included in the transport model. The available transport model was not able to include long-term induced traffic resulting from changes in land use and in the level of service of public transport. Even though the model calculations included only a part of the induced traffic, the difference in cost-benefit results compared to the model excluding all induced traffic was substantial. The results show lower travel time savings, more adverse environmental impacts and a considerably lower benefit-cost ratio when induced traffic is partly accounted for than when it is ignored. By exaggerating the economic benefits of road capacity increase and underestimating its negative effects, omission of induced traffic can result in overallocation of public money on road construction and correspondingly less focus on other ways of dealing with congestion and environmental problems in urban areas.

[1]  Staffan Algers,et al.  The Usefulness of Transport Models in Swedish Planning Practice , 2011 .

[2]  Luca Bertolini,et al.  Why Cost Benefit Analysis is perceived as a problematic tool for assessment of transport plans: A process perspective , 2012 .

[3]  M. J. H. Mogridge,et al.  Travel in Towns: Jam yesterday, jam today and jam tomorrow? , 1990 .

[4]  Bent Flyvbjerg,et al.  Megaproject Policy and Planning: Problems, Causes, Cures , 2007 .

[5]  Rune Elvik,et al.  The barely revealed preference behind road investment priorities , 1997 .

[6]  J. M. Thomson,et al.  Great cities and their traffic , 1977 .

[7]  R. Cervero,et al.  Induced Travel Demand and Induced Road Investment: A Simultaneous Equation Analysis , 2002 .

[8]  Terry Williams,et al.  Making essential choices with scant information: front-end decision-making in major projects , 2009 .

[9]  Petter Næss,et al.  What Kinds of Traffic Forecasts are Possible? , 2012 .

[10]  P. Mackie,et al.  THE VALUE OF TRAVEL TIME SAVINGS IN EVALUATION , 2001 .

[11]  T. Sager,et al.  The Political Relevance of Planners’ Analysis: The Case of a Parliamentary Standing Committee , 2005 .

[12]  D. Banister,et al.  Assessment of large transport infrastructure projects: The CBA-DK model , 2008, 2008 First International Conference on Infrastructure Systems and Services: Building Networks for a Brighter Future (INFRA).

[13]  Gert Marte.  SLOW VEHICLE TRAFFIC IS A MORE ATTRACTIVE ALTERNATIVE TO FAST VEHICLE TRAFFIC THAN PUBLIC TRANSPORT , 2003 .

[14]  D. Kahneman,et al.  Delusions of success. How optimism undermines executives' decisions. , 2003, Harvard business review.

[15]  Martin J. H. Mogridge,et al.  Wider roads, more cars , 2001 .

[16]  Lisa Heinzerling,et al.  Priceless: On Knowing the Price of Everything and the Value of Nothing , 2004 .

[17]  R. Grimaldi,et al.  Cost benefit analysis to assess modular investment: the case of the New Turin-Lyon Railway , 2011 .

[18]  Peter Newman,et al.  Cities and automobile dependence , 1993 .

[19]  Otto Anker Nielsen,et al.  OVERVURDERES TIDSBENEFIT AF VEJPROJEKTER , 2005 .

[20]  D. Wood.  Trunk roads and the generation of traffic , 1994 .

[21]  David Banister,et al.  Assessment of large transport infrastructure projects: The CBA-DK model , 2009 .

[22]  P. Hall,et al.  The Buchanan Report: Review@@@Traffic in Towns: A Study of the Long Term Problems of Traffic in Urban Areas. Reports of the Steering Group and Working Group Appointed by the Minister of Transport , 1964 .

[23]  N. Weinstein.  Unrealistic optimism about future life events , 1980 .

[24]  Søren L. Buhl,et al.  How (In)accurate Are Demand Forecasts in Public Works Projects?: The Case of Transportation , 2005, 1303.6654.

[25]  Petter Næss.  The Third Limfjord Crossing: A Case of Pessimism Bias and Knowledge Filtering , 2011 .

[26]  B. Flyvbjerg,et al.  Megaprojects and Risk: An Anatomy of Ambition , 2004, Perspectives on Politics.

[27]  Yoshihiko Hayashi,et al.  International comparison of background concept and methodology of transportation project appraisal , 2000 .

[28]  D. Kahneman,et al.  Heuristics and Biases: The Psychology of Intuitive Judgment , 2002 .

[29]  L. R. Jones,et al.  Strategic Misrepresentation in Budgeting , 1991 .

[30]  B. Burns.  Traffic in Towns , 1967, Nature.

[31]  B. Wee.  How suitable is CBA for the ex-ante evaluation of transport projects and policies? A discussion from the perspective of ethics , 2012 .

[32]  Colin Buchanan,et al.  Traffic in Towns , 1964 .

[33]  Da Wood,et al.  TRUNK ROADS AND THE GENERATION OF TRAFFIC. STANDING ADVISORY COMMITTEE ON TRUNK ROAD ASSESSMENT (SACTRA) , 1994 .

[34]  James Odeck.  What Determines Decision‐Makers’ Preferences for Road Investments? Evidence from the Norwegian Road Sector , 2010 .

[35]  Phil. Goodwin,et al.  Empirical evidence on induced traffic , 1996 .

[36]  M. Holm.  Economic appraisal of large scale transport infrastructure investments , 2000 .

[37]  R A Johnston,et al.  TRAVEL MODELING WITH AND WITHOUT FEEDBACK TO TRIP DISTRIBUTION. TECHNICAL NOTE , 1996 .

[38]  P. Hills.  What is induced traffic? , 1996 .

[39]  Shelley E. Taylor,et al.  Heuristics and Biases: When Predictions Fail: The Dilemma of Unrealistic Optimism , 2002 .

[40]  James Laird,et al.  Current Practice in Project Appraisal in Europe , 2005 .

[41]  David M Levinson,et al.  Post-Construction Evaluation of Traffic Forecast Accuracy , 2009 .

[42]  G. Kirkebøen.  Decision behaviour - Improving expert judgement , 2009 .

[43]  Søren L. Buhl,et al.  Do Road Planners Produce More ‘Honest Numbers’ than Rail Planners? An Analysis of Accuracy in Road‐traffic Forecasts in Cities versus Peripheral Regions , 2006 .

[44]  Frank Ackerman.  Critique of Cost-Benefit Analysis, and Alternative Approaches to Decision-Making , 2008 .

[45]  James Odeck,et al.  Do Planners Get it Right? : The Accuracy of Travel Demand Forecasting in Norway , 2011 .

[46]  Peter Mackie,et al.  Cost-Benefit Analysis in Transport , 2010 .

[47]  Todd Litman,et al.  Generated Traffic and Induced Travel Implications for Transport Planning , 2010 .

[48]  M. Hansen,et al.  Road supply and traffic in California urban areas , 1997 .

[49]  Todd Litman,et al.  Generated traffic: implications for transport planning , 2001 .

[50]  Todd Litman,et al.  Generated Traffic and Induced Travel , 2013 .

[51]  R. Noland,et al.  A review of the evidence for induced travel and changes in transportation and environmental policy in the US and the UK , 2002 .

[52]  James Odeck,et al.  Cost overruns in road construction--what are their sizes and determinants? , 2004 .

[53]  Martin J. H. Mogridge,et al.  Travel in Towns , 1990 .

[54]  Caroline J Rodier.  Verifying Accuracy of Regional Models Used in Transportation and Air Quality Planning: Case Study in Sacramento, California, Region , 2004 .

[55]  Jonas Eliasson,et al.  Do Cost-Benefit Analyses Really Influence Transport Investment Decisions? Experiences from the Swedish National Transport Investment Plan 2010-2021 , 2010 .

[56]  Tore Langmyhr.  The rationality of transport investment packages , 2001 .

[57]  Petter Næss.  Cost-Benefit Analyses of Transportation Investments: Neither critical nor realistic , 2006 .

[59]  David Banister,et al.  The sustainable mobility paradigm , 2008 .

[60]  A Downs,et al.  THE LAW OF PEAK-HOUR EXPRESSWAY CONGESTION , 1962 .

[61]  J. Kain.  Deception in Dallas: Strategic Misrepresentation in Rail Transit Promotion and Evaluation , 1990 .