Travel demand forecasts and the evaluation of highway schemes under congested conditions

It has long been argued, particularly by those opposed to the level of resources committed to the highway sector, that travel demand forecasts which are used to justify investments carry with them a self-fulfilling prophesy. Highway construction, it is suggested, is used as a means of accommodating large anticipated increases of traffic, thereby allowing that growth to occur. Furthermore, through the use of growth factors based on national projections or local 'trip-end' estimates which treat incompletely or ignore the effects of capacity limitations and of generated traffic, significant distortion may arise in both local traffic forecasts and investment benefits. Indeed, as a result of such projections the benefits of improving speeds in heavily congested areas may often be such that many road schemes can be justified simply by placing a value on the associated travel time savings. These views, which have not been subject to a detailed quantitative study, exist as a broad-based critique of institutionalised methods and national policies, and their possible inter-relationship. They remain of considerable interest and importance not only because of the need to adopt widely-accepted appraisal techniques, but also because of the influence which road traffic forecasts have in setting national strategies for transport investments. In the UK, for example, road traffic is projected to increase in the range 83-142 per cent by 2025, and these figures are cited by the government as the basis for a substantial highway construction programme (DTp, 1989; HMSO, 1989). The methods of major road appraisal currently adopted by the UK Department of Transport are subject to increasing criticism for the reasons noted above and in particular for assuming that the elasticity of demand with respect to travel time is zero. Although such critiques do not always represent accurately the methods applied in practice, as we discuss later in the paper, nevertheless we believe that the forecasting approach and its implications for benefit assessment merit considerable additional study. The effects of local capacity limitations and changes in travel costs on estimates of demand and benefit are cases in point. Specifically, the assumptions relating to inelastic demand estimations at national and local levels and of 'growth cut-off procedures require, and are currently receiving, detailed scrutiny. In this paper we offer some views on the development of a consistent framework for travel demand forecasting and economic appraisal of highway schemes, and explore the consequences of a failure to achieve an appropriate specification of transport models.