A project that changes user travel costs (money or time) on a particular street, road, or transit route will motivate the following changes in traveler behavior:
Changes in route: Users change their route from other facilities to an improved facility.
Changes in mode: Users of other modes change their mode to take advantage of an improved facility.
Changes in time of travel: Users change their time of travel to a more desired time due to the decrease in congestion.
Generation of new trips: Users choose to make trips they previously would not have made, because travel costs are lower.
This is called generated traffic, referring to additional vehicle traffic on a particular road. This consists in part of induced travel, which refers to increased total vehicle miles travel (VMT) compared with what would otherwise occur (Litman 2001).
This additional vehicle travel tends to increase external costs (downstream congestion, parking subsidies, accident risk, pollution emissions) and provide additional user benefits, although these benefits tend to be small since it consists of the marginal-value vehicle travel that consumers most willingly forego when their time or vehicle operating costs increase slightly.
Virtually any roadway project that increases vehicle travel speeds or reduces travel costs can induce vehicle travel, including roadway expansion and traffic signal synchronization (Noland and Quddus 2006; TRISP 2005). On congested urban roadways with significant latent demand, a major portion of additional roadway capacity tends to be filled with generated traffic and induced travel within a few years (Gorham 2009). On the other hand, congestion pricing and improvements to alternative modes (such as high quality, grade-separated public transit that parallels a highway) can reduce traffic congestion without inducing additional vehicle travel.
Two lanes are added to a highway, increasing capacity and reducing congestion, thereby leading to an increase in the use of the facility.
A traffic signal synchronization program increases average traffic speeds on an arterial.
A bus signal-priority system is installed, leading to a reduction in travel time and an increase in bus ridership.
When an improvement to a transportation facility increases capacity and reduces the cost of using the facility (primarily travel time), traffic along that facility tends to increase. In other words, a transportation improvement project intended to reduce travel times for existing users also "induces" new travel on the facility. The degree to which this happens is a function of the elasticity of demand for travel on the facility, i.e., how much demand falls or rises in response to price. Highly elastic demand is very responsive to price.
Generated and induced travel reflect the "law of demand," meaning that reducing users' cost per vehicle-mile tends to increase total vehicle mileage. Induced travel can have a significant effect on the benefits of a transportation project. For example, if new users, and the congestion they contribute to the improved facility, are not taken into account, the evaluation of a highway expansion will overstate the travel time benefits of the existing users. For additional background and discussion on induced travel, see Gorham (2009), Litman (2004), Noland and Lem (2002), and TRISP (2005).
Incorporating induced travel into a benefit-cost analysis can be difficult and requires additional calculations beyond the standard benefits and costs. The following sections attempt to simplify the process and help practitioners choose how they will incorporate induced travel in their benefit calculations. Estimating Induced Travel explains how to incorporate induced travel into travel forecasts. Evaluating the Benefits of Induced Travel explains how induced travel affects the benefits of a project. The Community Impacts section briefly discusses the effects transportation projects have on land use patterns, which in turn affect the long-run demand for transportation.
This analysis should include these steps:
Estimate the amount of peak-period traffic generated by the project (including shifts from other times and routes).
Estimate the reduction in congestion reduction benefits, and any increase in downstream congestion (for example, if expanding an urban highway increases traffic volumes on surface streets) caused by this generated traffic.
Estimate the amount of vehicle travel induced by the project (any net increase in total vehicle travel, including shifts in mode and destination, and changes in land use development patterns, for example, if expanded highway capacity increases urban-fringe development beyond what would have occurred otherwise).
Estimate any incremental external costs (increased traffic risk, parking subsidies, air and noise emissions, etc.) attributed to the induced travel.
Evaluate the user benefits attributed to the induced travel using the "rule-of-half."
Roger Gorham (2009), Demystifying Induced Travel Demand, Sustainable Transportation Technical Document, Sustainable Urban Transportation Project (www.sutp.org). Available at: www.sutp.org/index2.php?option=com_content&do_pdf=1&id=1461
Kent M. Hymel, Kenneth A. Small and Kurt Van Dender (2010), “Induced Demand And Rebound Effects In Road Transport,” Transportation Research B (www.elsevier.com/locate/trb).
ICF Consulting (2005), Handbook on Integrating Land Use Considerations Into Transportation Projects to Address Induced Growth, prepared for AASHTO Standing Committee on the Environment. Available at: www.trb.org/NotesDocs/25-25(3)_FR.pdf.
Todd Litman (2001), “Generated Traffic; Implications for Transport Planning,” ITE Journal, Vol. 71, No. 4, Institute of Transportation Engineers (www.ite.org), April, 2001, pp. 38-47. Available at: www.vtpi.org/gentraf.pdf.
Todd Litman (2010), Changing Vehicle Travel Price Sensitivities: The Rebounding Rebound Effect, VTPI (www.vtpi.org); at www.vtpi.org/VMT_Elasticities.pdf.
Robert B. Noland and Lewison L. Lem (2002), “A Review of the Evidence for Induced Travel and Changes in Transportation and Environmental Policy in the US and the UK,” Transportation Research D, Vol. 7, No. 1 (www.elsevier.com/locate/trd), January, pp. 1-26.
Robert Noland and Mohammed A. Quddus (2006), “Flow Improvements and Vehicle Emissions: Effects of Trip Generation and Emission Control Technology,” Transportation Research D, Vol. 11 (www.elsevier.com/locate/trd), pp. 1-14; also see www.cts.cv.ic.ac.uk/documents/publications/iccts00249.pdf.
TRISP (2005), “Treatment of Induced Traffic,” Economic Evaluation Notes, UK Department for International Development and the World Bank (www.worldbank.org). Available at: http://go.worldbank.org/ME49C4XOH0. Summarizes transport project evaluation methods suitable for developing country applications.
UKERC (2007), 'Rebound Effects' Threaten Success of UK Climate Policy, UK Energy Research Centre (www.ukerc.ac.uk); at www.ukerc.ac.uk/MediaCentre/UKERCPressReleases/Releases2007/0710ReboundEffects.aspx.
UKERC (2009), What Policies Are Effective At Reducing Carbon Emissions From Surface Passenger Transport? UK Energy Research Centre; at www.ukerc.ac.uk/ResearchProgrammes/TechnologyandPolicyAssessment/0904TransportReport.aspx.