Light Sunday Reading I: “Smart Transportation Investments”

The Victoria Transport Policy Institute has published a report, “Smart Transportation Investments: Reevaluating the Role of Highway Expansion for Improving Transportation.” This study argues that investment in urban highway capacity suffers from the law of diminishing returns. Early investments generated a high return on investment. But comparable investments today will generate a much lower rate of return.

The paper summarizes the issues thusly:

  • “The first highway projects are generally the most cost effective because planners are smart enough to prioritize investments. For example, if there are several possible highway alignments on a corridor, those with the greatest benefits and lowest costs are generally built first, leaving less cost effective options for subsequent implementation.
  • “Interregional highways (those connecting cities) are generally constructed first. They tend to provide greater economic benefits and have lower unit costs than local highway expansion, due to numerous conflicts and high land costs in urban areas.
  • “Adding capacity tends to provide declining user benefits, since consumers are smart enough to prioritize trips. For example, if highways are congested, consumers organize their lives to avoid peak automobile period trips. As highway capacity increases, they travel more during peak periods, perhaps driving across town during rush hour for an errand that would be deferred, or moving further away from their worksite. Each additional vehicle mile provides smaller user benefits, since the most valued vehicle-miles are already taken.”

The chart at the top of the post shows the declining rate of return on dollars invested in highways. As recently as the 1970s, public investment in highways generated higher returns than did private capital. By the 1990s, however, the return on highway investment trailed the return on private investment, representing a loss of economic efficiency.

That’s not to say that carefully selected individual highway improvements won’t be economically efficient. But any large-scale plan by a state, city or region to build its way out of traffic congestion is likely to be very inefficient.

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11 responses to “Light Sunday Reading I: “Smart Transportation Investments””

  1. ” As highway capacity increases, they travel more during peak periods, perhaps driving across town during rush hour for an errand that would be deferred, or moving further away from their worksite.”

    Neither the graph nor anything in the report jusatifies this gratuitiously agenda drivien premise.

    I can’t think of anyone who would move further away from their worksite, just because additional highway capacity was built.

    Even if it is true that additional highway capacity leads to more peak period driving, it is because peak periods are when driving is most valuable: when you are not at work, and you can combine trips on the way to or from work. This is one way that more roadways add value that does not necessarily show up as reduced congestion.

  2. There is another graph that shows that highway additions in smaller cities provide more congestion benefit longer. So, you want to get the most out of your transportation dollars, put more of them in smaller cities.

  3. Jim Bacon Avatar

    Ray, You said, “I can’t think of anyone who would move further away from their worksite, just because additional highway capacity was built.”

    C’mon, think real hard. Why would anyone move farther away from their worksite? Well, if the worksite is located in Fairfax, Arlington or Alexandria and the less expensive housing is located in Stafford or Spotsylvania, smaller mortgage payments are a major inducement for moving farther out. That inducement is constrained by the cost in time/gasoline/auto depreciation of the commute. If highway improvements significantly reduce the time spent commuting, more people will be willing to move to the land of cheaper real estate.

  4. Toomanytaxes Avatar

    I think that Jim is probably right on this one, but it also shows why density is not the silver bullet. There are quite a few people who want to work here because of good jobs and pay, but many of them cannot stand the thought of living in an urban or urbanizing area. And of course, cheaper land means more house for the dollar. So long as we keep growing, we will keep growing out, even if we also grow upwards.

    We need more good-paying jobs outside the inner rings.

  5. Larry Gross Avatar
    Larry Gross

    re: “I can’t think of anyone who would move further away from their worksite, just because additional highway capacity was built.”

    let’s think pre I-95… and how many folks commuted from Fredericksburg to NoVa on old Route 1…..

    let’s think pre-beltway… would you live in Md and commute to Gainsville for work?

    People DO calculate NOT the mileage distance but the time-in-transit… we all do it… what is the shortest TIME distance between point A and B.. not distance in miles…

    re: how to get the highest salary and the least urban homeplace – COMMUTE … on “free” roads…of course.. then compalin about the terrible congestion.. and advocate that other Va taxpayers should pay for your infrastructure upgrades.

    Driving during rush hour?

    reality check -> ask yourself if you’ve ever decided to NOT drive during rush hour or say.. made travel plans that would avoid rush hour…etc… If you answer YES.. how many others do you think will also answer the same Yes?

    The entire concept of HOV and Congestion Pricing IS based on the idea that if people can be convinced to NOT drive as much at rush hour – then the existing highway capacity will be less congested and the need for additional highway capacity can be decreased.

  6. I don’t think they moved farther away, JUST because better highways were built. And, you are assuming that all those people once lived someplace closer. In fact, many of them probably moved from much farther away.

    I moved from Massachusttes to Alexandria, but it wasn’t because of the roads. Then iImoved form Alexandria to Delaplane, but it had nothing to do with Rte 66 being completed.

    Those roads are not free: we pay for them. True enough, the method we pay for them with is convoluted, but we do that for a reason. It is the same with home services are paid for by a convoluted process that uses businesses as an intermediary.

    The roads are not free: we pay for them.

    If you don’t think that those who use the roads the most are paying enough, then advocate for a gas tax high enough to cover the costs. I’m sorry that other people pay some of my costs, I’m happy to pay my own.

    But I have a problem with people who think they should pay nothing for things that benefit everyone. Like my 170 acre back yard.

    Of course I have decided not to drive during rush hour. I also do my grocery shopping at the all night store at O’dark thirty: to avoid congestion. Congestion is a tax, and I would also avoid the tax if it was a congestion charge.

    I would do my business elsewhere. It doesn’t mean I would travel less, in fact, I might travel more.

    I have a friend in the same business I’m in, and we frequently attend the same functions in the city. Either I pick him up, he picks me up, or we meet somehere in the middle so we can use HOV.

    Either way, we have driven 40 miles out of our way (on the “free” roads in order that HOV can produce less VMT. Somehow I don’t think that is how it is supposed to work.

    I wouldn’t live in Maryland and commute to Gainesvill for all the tea in China. I’d change my house, or my job.

  7. Larry Gross Avatar
    Larry Gross

    “roads are not free, we pay for them”

    This concept is a lot like saying that I paid for lobster.. now I’m entitled to all I can eat.

    or .. I paid into Social Security – all 8K worth and now I’m entitled to 20K a year the rest of my life.

    The gasoline tax in crowded and congestion urban areas with significant rush hours, is a lot like “pay one price then use as much as you wish” because it comes nowhere close to providing enough revenue to pay for added capacity and that is the fundamental problem from a financial perspective.

    In other words, a buck’s worth of gasoline in a car in Farmville, Va does not have the same impact on road capacity that a buck’s worth of gas in a car on the Beltway at rush hour does.

    The guy in Farmville does not need his gas tax raised for roads because his gas tax dollar only has to pay for rural roads at 10 million a mile .. not multi-lane interstates at 100 million a mile.

    I think this is fundamental to the entire discussion.

    Only when road useage is charged according to USE not just miles but WHEN you drive will there be sufficient revenues generated to replace/upgrade/improve capacity.

    I’m not advocating punishing people – only that we end up with a truly balanced system where supply and demand are both in the hands of the consumer who then will make appropriate choices about their mobility – and the cost/benefits trade-offs associated with it.

    Right now.. folks believe that congestion is a “TAX” on them that they do not deserve.

    Congestion is a DEFICIT that comes from using more than you are paying for.

    When this fact is accepted and recognized.. then the folks who bear responsibility for solutions will know that it is them.. not that guy in Farmville.. who needs to step up to the plate.

  8. Toomanytaxes Avatar

    Interesting discussion. But there are important questions that doesn’t seem to be discussed. How and where can one add road capacity in urbanizing areas?

    I wouldn’t suggest that it is never possible to add a lane to some roads here and there. Route 7, especially in Loudoun County, has been widened. People talk about adding a lane to I-66 in Arlington. Those steps might make good sense. But where would one build a new major road in Fairfax County that could improve traffic?

    Toss in the strong opposition of existing residents to anything that might bring them more traffic. Living in Fairfax County forces one to play an aggressive form of defense regularly.

    Any thoughts?

  9. Larry Gross Avatar
    Larry Gross

    re: “How and where can one add road capacity in urbanizing areas?”

    I’ve gone along with the premise of adding urban road capacity for the sake of open discussion… but pointing out just the dollar cost and the EPA non-attainment status are not insignificant impediments. They’re actually much more than that in reality.

    Even if one could find a path that did not have significant opposition and even if one could come up with another 300-700 million per year, the EPA would not let you build the road because NoVa is classified as an area on the edge of non-attainment status which in simple terms means no more roads unless they are HOV or HOT lanes.

    Few folks know that the EPA can actually stop highway construction but they can.

    But pro-road folks persist and are undaunted at these obstacles preferring instead to view them as “challenges” that can be overcome by .. more money arbitrarily imposed by some “leader” who is not afraid of the voters… getting the Congress to gut the EPA and getting someone like VDOT to fast-track a project before citizens can unite against it.

    I think most folks recognize that in “theory” you “could” build your way out of congestion but in reality it simply is not a realistic path – for the reasons you cite.

    I’m positive that most elected leaders in the GA subscribe to this also.

    I think most folks in urban areas support Transit as a more realistic approach even if they feel that it will never be financially self-supporting. They view it like they do Schools, Fire/Rescue and other services that “do not pay for themselves” but are necessary and vital services worth paying for.

    I think most folks want to see the remaining road network optimized.. simple things like “smart” signals that adapt to traffic loads, left turn and decceleration lanes, and focusing on spot transportation improvements that decrease congestion.

    I’m not sure I’ve seen a recent POLL on TOLL roads but a survey done in Spotsylvania in 2005 indicated 65% in favor of HOT lanes ( as they say.. NoVa “mileage” may vary in this regard) …

    however… it’s.. very clear in the GA that electronic Tolling (and unspecified user fees) are vastly preferred to taxes and I think likely to be accepted.

    I think it not unlikely that within 5 years – there will be electronic tolling in place along I-95 and the Beltway and that the toll will be variable according to congestion – i.e. congestion pricing.

    Also likely will be money generated from the TOLLs will be used to further optimize the road network with select targetting improvements AND some money used for transit.

    Likely also.. I think are Regional Authorities

    and my quess is that elected leaders who support this approach will not be voted out of office…

  10. I never said that what we are doing now isn’t screwed up. Tolling is just going to add to that, for precisely the same reason that all our other funding programs got the way they are: The people in favor figure they live where the tolls won’t affect them.

    Tax the guy behind the tree. To my way of thinking you are exactly right about Farmville and NOVA could cure it congestion problem by moving substantil chunks of it to Farmville.

    The other way to look at the Farmville argument is that Farmvill is not congested BECAUSE WE SPENT FAR TOO MUCH ON ROADS THERE FOR THE DEMAND AT HAND.

    His tax dollars probably didn’t pay for the roads he uses: they probably came from NOVA.

  11. Larry Gross Avatar
    Larry Gross

    I’m getting a good laugh this morning about the concept of the state having “overbuilt” the highway infrastructure in Farmville and places like it… using NoVa gas tax dollars.

    I think the state DID do that for primary roads across Va – years ago. In fact the theory behind designated Primary Roads in Va is worth understanding. It was VDOT’s “vision” that these roads would be Virginia’s version of the National Interstate system – all of Va would be “connected”.

    That plan had the same flaw as the interstate plan with respect to urbanizing areas.

    At any rate – VDOT’s approach to State Primary Roads was similar to the State’s approach to school funding. The State, would essentially guarantee a minimal standard statewide road network – the same way they would guarantee that a locality – no matter how poor – would have sufficient funds for minimally standard schools.

    Thus the concept of the state collecting taxes and the local level and then re-allocating them back… some getting a tad less and others getting a tad more than they contributed.

    This approach does not prevent .. say Fairfax from adding even more money to education… as they have done.. to have schools that far above those in rural areas.

    In that regard .. both Fairfax and Farmville have the same option – if they want to have something more than minimal state roads – they can – and the path is the same as the school path.

    The reason Farmville has “adequate” roads is that they are not a urbanizing job center that NoVa is. They can get along just fine with a minimal road network and I’d have to see dollar specifics to be convinced that .. over time – over 50 years or so – that other jurisdictions in Va, in fact, actually subsidize Farmvilles roads.

    Even if totally true – wouldn’t you agree that such a system of allocating funds would encourage an irresponsible approach to land-development because the approving officials would never be taking into account the road infrastructure costs and always assuming VDOT and the State would step in and make them whole with other folks taxes?

    That’s the core issue. No local responsibility and an expectation that other taxpayers will build whatever roads are needed.

    Not only was it wrong – it was not sustainable…. and now.. changes have to be made… not try to bubble-gum together something that will let that rube golderberg machine sputter for a few more years.

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