This paper discusses the nature, and magnitude, of externalities associated with automobile use, including local and global pollution, oil dependence, traffic congestion and traffic accidents. It then discusses current federal policies affecting these externalities, including fuel taxes, fuel-economy and emissions standards, and alternative fuel policies, summarizing, insofar as possible, the welfare effects of those policies. Finally, we discuss emerging pricing policies, including congestion tolls, and insurance reform, and we summarize what appears to be the appropriate combination of policies to address automobile externalities.

Automobile Externalities and Policies

We investigate the effect of lane kilometers of roads on vehicle-kilometers traveled (VKT) in US cities. VKT increases proportionately to roadway lane kilometers for interstate highways and probably slightly less rapidly for other types of roads. The sources for this extra VKT are increases in driving by current residents, increases in commercial traffic, and migration. Increasing lane kilometers for one type of road diverts little traffic from other types of road. We find no evidence that the provision of public transportation affects VKT. We conclude that increased provision of roads or public transit is unlikely to relieve congestion. (JEL R41, R48)

/pdf/the-fundamental-law-of-road-congestion-evidence-from-us-3zffe2s5ge.pdf

The Fundamental Law of Road Congestion: Evidence from US Cities

This paper discusses the nature, and magnitude, of externalities associated with automobile use, including local and global pollution, oil dependence, traffic congestion and traffic accidents. It then discusses current federal policies affecting these externalities, including fuel taxes, fuel economy and emissions standards, and alternative fuel policies, summarizing, insofar as possible, the welfare effects of those policies. Finally, we discuss emerging pricing policies, including congestion tolls, and insurance reform, and summarize the appropriate combination of policies to address automobile externalities.

This paper analyzes aggregate personal motor-vehicle travel within a simultaneous model of aggregate vehicle travel, fleet size, fuel efficiency, and congestion formation. We measure the impacts of driving costs on congestion, and two other well-known feedback effects affecting motor-vehicle travel: its responses to aggregate road capacity ("induced demand") and to driving costs including those caused by fuel-economy improvements ("rebound effect"). We measure these effects using cross-sectional time series data at the level of US states for 1966 through 2004. Results show that congestion affects the demand for driving negatively, as expected, and more strongly when incomes are higher. We decompose induced demand into effects from increasing overall accessibility of destinations and those from increasing urban capacity, finding the two elasticities close in magnitude and totaling about 0.16, somewhat smaller than most previous estimates. We confirm previous findings that the magnitude of the rebound effect decreases with income and increases with fuel cost, and find also that it increases with the level of congestion.

/pdf/induced-demand-and-rebound-effects-in-road-transport-fbykapgndv.pdf

Induced demand and rebound effects in road transport

This paper reviews recent research into the demand inducing effects of new transportation capacity. We begin with a discussion of the basic theoretical background and then review recent research both in the UK and the US. Results of this research show strong evidence that new transportation capacity induces increased travel, both due to short run effects and long run changes in land use development patterns. While this topic has long been debated amongst transportation planners, the fundamental hypothesis and theory has long been apparent in studies of transportation economics and planning that evaluated different issues (e.g. travel time budgets and urban economic development effects). We summarize much of this work and relate the theoretical issues to recent empirical research. We then proceed to examine recent changes in transportation and environmental policy in the US and the UK. The role of the new knowledge of induced travel effects would be expected to lead to changes in the conduct of transportation and environmental policy. Changes in policy and implementation of those policies are still occurring and we provide some suggestions on how to move forward in these areas.

A review of the evidence for induced travel and changes in transportation and environmental policy in the US and the UK

The hypothesis of induced travel demand is investigated. County level data from Maryland, Virginia, North Carolina, and Washington, D.C. are used to estimate "fixed-effects" cross-sectional time series models that relate travel levels, measured as daily vehicle miles of travel, to roadway capacity in lane miles. This includes analysis of a difference (or growth) model estimated using a two-stage least squares procedure with an instrumental variable to account for simultaneity bias. Individual models for each state, a combined-state model, and a model with data from the Washington, D.C./Baltimore metropolitan area are estimated. Average elasticities of vehicle miles of travel (VMT) with respect to lane miles are estimated. The results build on recent research in this area by confirming both the range of elasticities found in other studies and the robustness of these estimates by accounting for simultaneity bias.

http://rosap.ntl.bts.gov/view/dot/34162/dot_34162_DS1.pdf

J Thomas

Papers

A statistical analysis of induced travel effects in the u.s. mid-atlantic region