A Primer on Induced Demand, Part 2: NMA Weekly E-Newsletter #665

By Christopher M. DiPrima, NMA Board Member

Editor’s Note: In Part 1, Chris detailed two major causes of induced demand and explained why the overall supply vs. demand effects are manageable. Here he takes on some of the arguments which cite induced demand as a rationale against increasing highway capacity.


Having established the relationship between new capacity, demand, and land use, there is yet more ground on which to challenge induced demand as a critique of adding new capacity.

One benefit of increasing capacity is that more people are able to get where they want to go, when they want to go there.

As documented in Part 1, not all new capacity is consumed after it is built. However, if we assume for the sake of argument that 100% of the new capacity is eventually used, and that in the long term, travel speeds return to pre-expansion baselines, more people are traveling at that slow speed

Each freeway lane can typically carry up to around 1,200 vehicles per hour before it starts to exhibit congestion, and flow rates in heavy congestion tend to sit at over 2,000 vehicles per lane per hour. This means that even if all of the new capacity is absorbed by new trips, over 2,000 more people are served by the expanded road. This is a net social benefit, which is independent of travel-time improvement

The addition of freeway lane-miles tends to decrease traffic on parallel roads and increase traffic on perpendicular ones.

This relationship has been known since the Detroit and Chicago Area Transportation Studies (DATS and CATS) of the 1950s. It should also be obvious to anyone who lives in a region served by freeways. In those regions, the parallel surface streets tend to see a decrease in traffic volume, but the perpendicular streets which connect to freeway interchanges see an increase.

Therefore, a key benefit of adding lane capacity to one route is a proportionate decrease in traffic on a parallel route. This is the fundamental purpose of bypass roads: They carry through traffic on purpose-built roads, leaving parallel local streets to serve local traffic. In rural areas, these bypass roads have caused significant damage to local businesses and communities – one need only look at the decaying remnants of Route 66 as an example. But in urban and suburban areas, these freeway bypasses of local town centers provide significant benefits, as those town centers would be gridlocked without them.

Hayward, California is an excellent example of a city center plagued by the results of an unintentional gap in the freeway system, with its Foothill and Mission Boulevards becoming honorary freeways at rush hour, pushing locals out. There are many examples of the same outcome in other regions, especially in areas where expense, local opposition, or other factors created gaps in the originally planned freeway system.

The planning horizon for transportation projects are not infinite.

It is true that new freeway capacity cannot solve problems for which it was not designed. Most of our urban-area freeways were designed in the 1950s with a 30-year planning horizon, so we are now more than 40 years past the intended lifespans of the original freeway system. In that time, we have added 100 million Americans.

Additionally, in the 1950s, it was assumed that most families would only have a single worker. The mass introduction of women into the workplace alone practically doubled the 1950s-era predicted traffic volumes. The extra congestion generated by those new trips hardly seems like a bad tradeoff, nor is it an indictment of the concept of automobility. Quite the contrary.

As an aside, there is often an argument made that implementing high-speed rail along congested corridors will alleviate congestion on freeways. With few exceptions, this is simply false. By connecting a region more closely, trips will be induced between the cities via the exact mechanisms described in Part 1 of this e-newsletter. (Again, I would suggest this is a good thing – more people get to experience more places!) While a proportion of these trips will be served by high-speed rail, even more of the increase in demand will be picked up by other modes, including the personal car. High-speed rail has many of its own advantages, but it is not a direct substitute for freeway lane-miles.

Another study by Bignazzi and Figliozzi compares the environmental effects of capacity-based (adding lanes) and demand-based (reducing demand) strategies for improving congestion, and that ends up being a lecture unto itself about how certain strategies in certain places under certain conditions produce different results. But that is a topic for another day.

Induced demand is a real phenomenon which should be considered when adding capacity to any transportation network. I conclude with a paragraph from Cervero’s “Roads and Decision Making,” one of the articles cited in Part 1:

“Over the last several decades and in many corners of America, claims of induced demand have stopped highway projects in their tracks. This is wrong-headed. Highway investment decisions should be based on a full accounting of costs and benefits over the service life of a facility. Induced-demand studies have told us only that some benefits of new or expanded highways get eroded over time. This is important to know, for it gives us a handle on the numerator of the benefit/cost ratio. However, induced-demand studies say nothing about other benefits conferred by highways—e.g., increased economic productivity or satisfaction of one’s preference for suburban living.”

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