Inducing Demand


This Washington Post article on severe traffic problems in Northern Virginia is perhaps a good opportunity to try to explain the concept of "induced demand." I feel like transit advocates sometimes talk about this like it's a mysterious phenomenon where you build the roads and, mystically, the road calls into existence its own traffic. Realistically, it is, of course, true that if you widened the major NOVA highways the traffic would start flowing faster on them.

But you need to consider what happens next. Right now, many Virginians commute to work by taking Metro or the VRE commuter rail or one of several buses. If there were less traffic, fewer of those people would be inclined to do so. Similarly, right now the very long commute is one reason people might not want to move to certain parts of Prince William or Loudon Counties. But if the commutes got shorter due to reduced traffic, them more people would move. Soon enough the roads are congested again. This isn't necessarily a bad thing, it just illustrates the point that the purposes of building new roads is to expand the area under development not to relieve traffic congestion. Small dirt roads rarely feature traffic jams, not because they have high capacity but because nobody wants to drive on them. You replace a small dirt road with a better paved one not to improve the flow of traffic, but to encourage people to locate stuff -- homes, businesses, etc. -- along the route of the road. The goal, in short, is to induce demand for driving on the road.

At the end of the day, an uncongested road is an excellent thing and driving on one is a fast and convenient way to get places. And when you have a valuable commodity that's not priced, over the long run people wind up over-consuming it and creating shortages. If the government set up a "french fries trust fund" to cook that were then given away for free, they'd soon enough run out of french fries. It's the same with the effort to build uncongested highways. Over the long run, it only really works for absurd pork barrel schemes that involve building giant roads in places nobody wants to go. If you want an uncongested road in a desirable location, you need to put a price on using the road during peak times and then you need to take the funds raised by the congestion charge to finance alternatives.

Photo by Flickr user ethandb used under a Creative Commons license