Transportation's Role in Reducing U.S. Greenhouse Gas Emissions ...

Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1
Induced Travel Demand
Induced travel demand can be defined as any increase in travel resulting from
improved travel conditions. The induced VMT generally results from longer trips,
as well as additional trips and shifts of travelers from other modes. Over the longer
term, improved travel conditions can also impact land use, further impacting trip
lengths and modal shifts. It is an important consideration for system efficiency and
travel activity strategies, affecting the impacts on travel and corresponding GHG
benefits of most of these strategies.
In particular, bottleneck relief, traffic management, and traveler information
strategies lead to additional travel by reducing congestion and travel times; this
additional travel reduces and, in the long run, potentially eliminates the
effectiveness of these measures in reducing GHG emissions. To a lesser extent,
travel behavior strategies that reduce on-road trips also result in induced demand,
since the initial reduction of highway travel times will draw some additional traffic
back onto these facilities. Induced demand is related to the basic economic concept
of elasticity, meaning that a decrease in cost (such as travel time) results in an
increase in consumption. Sources referenced in this report applied short- and longterm
elasticities to estimate induced demand effects, and used adjusted travel
volumes to calculate fuel consumption and GHG emissions. Strategies that reduce
VMT by making highway travel more expensive – such as mileage-based fees,
congestion-based tolls, or increased gas taxes – are assumed to result in no induced
demand, since the increase in monetary costs suppresses the demand for additional
travel. Use of “congestion pricing” in connection with bottleneck relief strategies
may limit offsets from induced demand.
While the concept of induced demand is widely acknowledged in the transportation
profession, estimates of its magnitude are a source of uncertainty and debate. A
range of plausible estimates from the literature would significantly impact induced
demand and GHG calculations for many strategies. U.S. DOT is designing research
to provide a better understanding of the role of induced demand in offsetting GHG
improvements from congestion reduction strategies.
This study used the same induced demand assumptions as those recently used in
the Federal Highway Administration’s (FHWA) Highway Economic Requirements
System (HERS) model. The version of HERS used for the 2008 U.S. DOT Conditions
and Performance Report uses an elasticity of VMT with respect to total travel cost of
-0.4 for the short run and -0.8 for the long run. To compare an elasticity for fuel
prices to an elasticity for total travel costs, one would need to multiply the fuel price
elasticity by a factor of three to ten, since fuel cost represents only about a tenth to a
third of total operating costs. Small and Van Dender (2007) estimate an elasticity of
VMT with respect to fuel prices of between -0.02 and -0.03 for the short-run and of
an elasticity between -0.11 and -0.15 for the long-run. For short- to medium-run
responses of VMT to changes in fuel prices, Ewing et al. (2008) estimated an
elasticity of -0.17. The question of how strongly VMT responds to changes in travel
costs is far from settled, with ongoing research continuing to produce new estimates.
Additional details on the calculations performed by the sources cited in this study
can be found in Section 4.1.4 and 4.2 of Volume 2 and Appendix A.
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