Gridlock and Growth: Reducing Congestion Boosts Productivity

By Robert Poole, Jr.
Reason Foundation, Surface Transportation Innovations, Issue 71, Sept. 2009

If you ask most transportation planners about the “cost” of traffic congestion, they will most likely cite the estimates from the Texas Transportation Institute’s Urban Mobility Reports, now issued every other year. But the $87 billion annual cost reported in the latest report, like its predecessors, counts only wasted time and fuel due to peak-period trips taking longer than uncongested trips. That is only a fraction of the total cost.

In the 1990s, researchers Rene Prud’homme and C. W. Lee reported on studies of French and Korean metro areas, relating output per worker in an urban region to its accessibility. More specifically, they found that a 10% reduction in travel time is correlated with a one percent increase in output per worker, presumably due to better matching of employee skills to employer needs. In 2001, Robert Cervero reported on comparable effects in the United States. More recently, the Eddington Transport study commissioned by the U.K. government and published in December 2006 went into some detail on the relationship between travel time and economic growth. For the U.K. as a whole, it estimated that a 5% reduction in business travel alone could generate a GDP increase of 0.2%.

Last month, Reason Foundation released a new study on this subject, by David Hartgen and Gregory Fields: “Gridlock and Growth: The Effect of Traffic Congestion on Regional Economic Performance .” They looked at eight large U.S. urban areas (Atlanta, Charlotte, Dallas, Denver, Detroit, Salt Lake City, San Francisco, and Seattle) and in each case studied current and future (2030) accessibility of five locations: downtown, a major mall, a large suburb, a university, and the major airport. Using the traffic network model from each region’s Metropolitan Planning Organization, they developed drive-time contours (how far you can drive in X minutes) around each location, for both congested and free-flow conditions in both the base year and 2030. They also calculated the population and jobs within each drive-time contour, as well as the gross regional product (GRP) of each metro area. Then, using a regression model similar to that used by Prud’homme and Lee, they estimated models relating GRP per worker with accessibility measures. Their most commonly cited results are based on 25-minute drive-time contours, though they also used 55-minute contours (which showed somewhat stronger relationships).

While the results vary among cities and among types of location, there were strong enough correlations to suggest a number of conclusions. In general, their results are similar to those of Prud’homme and Lee, finding that reducing congestion enough to increase access by 10% would increase GRP by about 1%. That may not sound like much, but it would mean tens of billions of dollars in increased output of goods and services, many thousands of jobs, and greater tax revenue for governments.

For transportation planners, Hartgen and Fields’ more detailed results are worth paying attention to. Although the central business district in most of these regions had more jobs than any of the other sites, growth in the rest of the region over the next 20 years is likely to be far greater in the suburbs. And since reducing congestion in the suburbs is generally less costly than in the center, there may be important benefits from directing more transportation investment there.

Compatible findings emerged from a 2008 study by Kent Hymel of UC Irvine, “Does Traffic Congestion Reduce Employment Growth?”. His study used the Los Angeles metro area as its source of data, and found that a 50% reduction in the level of congestion in 1990 would have generated roughly 100,000 additional jobs by 2003, according to a summary in The Urban Transportation Monitor. Reducing congestion could be effected via either highway capacity expansion or congestion pricing, or some combination of the two.

These employment and productivity implications have not received the attention they deserve in transportation planning. There is a far stronger case for congestion reduction than most debates have recognized.

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