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

Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2
The National Highway and Traffic Safety Administration (NHTSA), in its
preliminary regulatory impact assessment for the CAFE standards rulemaking,
reviewed 22 studies of the rebound effect and found effects ranging from 10 to
30 percent (i.e., the gains from regulated vehicle efficiency improvements
would be reduced by this amount over the long run due to increased travel)
(NHTSA, 2008). Table A.1 also shows Small and Van Dender’s estimate of the
rebound effect. Consistent with the NHTSA review, they estimate that this
effect is about 21 percent historically; however, they also find a significant
reduction (to about 6 percent) based on data from the most recent time period.
Small and Van Dender note that the estimates of the rebound effect are very
sensitive to the time period considered and treatment of CAFE regulations, and
further, that there is no agreement on how to control for CAFE standards in
these studies.
The NHTSA study also acknowledges and places credibility on the findings that
the rebound effect has become smaller over time. The NHTSA used a 10
percent rebound effect in its analysis of fuel savings and other benefits from
higher CAFE standards for MY 2012-2016 vehicles. The Agency’s judgment is
that the apparent decline over time in the magnitude of the rebound effect
justifies using a value for future analysis that is lower than historical estimates,
which average approximately 25 percent. Because the lifetimes of vehicles
affected by the alternative CAFE standards considered in the rulemaking will
extend from 2012 until approximately 2050, a value that is significantly lower
than historical estimates appears to be appropriate. Recognizing the uncertainty
surrounding the 10 percent estimate, the Agency analyzed the sensitivity of its
benefits estimates to a range of values for the rebound effect from 5-to-15
percent (NHTSA, 2009).
Induced Demand
Induced travel demand can be defined as any increase in travel resulting from
improved travel conditions (Hunt, 2002). These improved conditions include
reduced travel time, reduced costs, improved safety, or improved comfort.
Since most roads are empty at most times of day—the average density of traffic
on all U.S. roads over 24 hours per day is one vehicle per lane every 90
seconds—induced demand is an issue that is applicable to a small minority of
road miles and only during a portion of the day. These capacity issues,
however, are important because they arise on the most heavily traveled roads at
the most heavily-traveled times.
Induced demand is related to the basic economic concept of elasticity: if the
price of something falls, its consumption will increase. Thus, if congestion is
reduced (for example, because highway capacity is increased, or some people
have chosen to work from home instead of commute), travel times and traveltime
costs will decrease, and an induced increase in vehicle miles traveled
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