Why the “induced demand” argument against roads is no good.

I read a lot of forums and articles about transport policy where most of the people agree with each other. The splintering of discussion into groups that agree is a common and well-understood phenomenon that is amplified on the internet.

Listen up, Melbourne

As well as getting excited by optimal stop spacing, one thing people in these circles agree on is that roads are bad. The most common argument made against roads goes like this:

“Essentially, if you widen roads to reduce congestion, people who were avoiding the road because of congestion will find it more convenient and take more trips, thus increasing traffic again.

So what do you have then? A big expensive project to eliminate traffic, and more traffic.” Streetsblog

“New roads will create new drivers, resulting in the intensity of traffic staying the same.

Mann explains how this counterintuitive reality can possibly be true: “As it turns out, we humans love moving around. And if you expand people’s ability to travel, they will do it more, living farther away from where they work and therefore being forced to drive into town. Making driving easier also means that people take more trips in the car than they otherwise would.” Planetizen

“Research indicates that generated traffic often fills a significant portion of capacity added to congested urban road. Generated traffic has three implications for transport planning. First, it reduces the congestion reduction benefits of road capacity expansion. Second, it increases many external costs. Third, it provides relatively small user benefits because it consists of vehicle travel that consumers are most willing to forego when their costs increase.” Victoria Transport Policy Institute

While I support many of the ideas this argument is rolled out to support, I find the argument itself utterly unconvincing. If you want to argue against investing in roads, you’ll need a better argument. Here’s why.

1. Public Transport will behave exactly the same.

If you widen a road, it will encourage more people to drive on it, bringing congestion to an equilibrium level* on that road, and spilling congestion into other parts of the network.

Likewise, if you increase the frequency with which a public transport service runs, it will attract more people to ride on it, bringing congestion to an equilibrium level and spilling congestion into other parts of the network.

This means that induced demand operates as an argument not to invest in any popular/crowded transport where crowding levels may be deterring travel. I’m not sure that’s what proponents of the induced demand argument intend.

*The equilibrium level is not necessarily the same amount of congestion as before, it’s the level where congestion deters travel.


2. Induced demand is good.

Induced demand means previously people had latent demand for travel, but they were unable to satisfy it. Now they are able to access jobs, get to shops that sell items that match their needs better, visit friends and family more. Any argument about transport investment that objects to people doing more travel should be treated with suspicion, if not contempt.


3. Focusing on congestion is the wrong way to look at transport policy.

If your approach to solving a city’s transport problem is to seek out choke points and jams and try to untangle them, you may end up fighting unwinnable battles against geometric problems. You will become frustrated, growing ever more sure that transport is a zero sum game with no easy answers.

But the answer is not necessarily eliminating every queue – there are planners who believe congestion is perfectly acceptable, a sign of popularity and even of success. (1, 2, 3,)

Forget congestion. If you make your yardstick access, you focus on what people want: What places can I get to?

A rational approach to transport planning in a city would be to measure access: From each address, a sum of all the jobs, services and other addresses that can be accessed, averaged across a time period encompassing peak and off-peak.

That number would be aggregated across the entire city to create a total score. Then, you would provide incentives for bureaucrats to improve that number. These bureaucrats must have more than just transport levers at their disposal.

They should also be able to make decisions on zoning and land-use, and road pricing. Improving access can as easily mean moving jobs to people as people to jobs. If a particular investment is expected to have spill over effects that worsen transport times in a far-flung part of the network, the access measure should pick this up and permit that effect to be compared to its positive local effect.

Build a new school, access improves. Add traffic light priority for buses, access improves for some at the expense of others. Price a road, access improves for high-value trips at the expense of lower value trips. Add a new lane on a freeway, access improves locally and probably diminishes elsewhere.

Focusing on access allows trade-offs and comparisons to be made. But often, improved access will involve turning latent demand for travel into real trips. We shouldn’t object too loudly to that.

The point of a city is that people want access to other people, and services. Let them at them.

More on this topic:

Trevors in Traffic: a PR strategy for congestion charging.

Selling the street: A land use hypothetical…

New competition report tries to go hard on road pricing, but is naive

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Thomas the Think Engine is the blog of a trained economist. It comes to you from Melbourne Australia.

6 thoughts on “Why the “induced demand” argument against roads is no good.”

  1. Interesting post, makes some good points.

    I suppose the thing to keep in mind is that yes, both better roads and PT induce trips, and that improves access, and economic growth… but which is more efficient in terms of space/capacity (particularly in big cities)?

    For instance, a rail line carrying a train every ten minutes each way (nowhere near full track capacity), can carry well over the maximum capacity of a 3-lane (each way) freeway, has far less impact on its surroundings, and is probably cheaper to build. Of course both train lines and freeways rely on appropriate feeder systems to get close to capacity, but the transport choices made in cities need to consider that yes, whatever they provide will induce trips — so, how much capacity is being provided for the dollars, and how quickly will they fill up again?

    The point of focusing on access is a good one, and it does directly drive how a city develops. There are entire segments of the economy — I’m thinking specifically about Australia’s capital city CBDs — which would never have been created in their current form if everyone relied on private cars to get around.


  2. Of course induced demand is a true phenomenon for any form of transport link, so instead the question should be: “what type of transport should city builders encourage?”

    The answer in my opinion at least should certainly be: the sustainable modes, that promote health, well-being and public spaces. That means make our cities places that are not hostile to pedestrians or cyclists; and promote public transport for journeys too long to be made on foot or bike.


    1. I completely agree. There’s a lot of great arguments against building roads without leaning on the fact that they make people travel more. That’s probably the worst argument against them, but the one I see most. Perhaps the counter-intuitive nature of it makes it appealing, but it doesn’t make it persuasive.


  3. Great post. I agree 2 and 3 quite readily but like the other commenters not sure applies quite as equally to public transport as you suggest. The main reason being PT benefits more than roads from high fixed costs (of operation not just initial investment) so the more volume you can throw at the network the better it can perform and finance investment in future capacity (or lower prices to induce demand even further). Roads can’t achieve this in the same way because of the high capital costs incurred by motorists themselves and the increase in variable costs on the motorist (time and fuel) as volume increases.


  4. Another argument against induced demand I and the build it they will come is that there are many examples where it hasn’t happened. Various empty toll ways across the country being obvious examples. A new road will only get congested if there is a trip need and the alternative modes or routes are inferior.


  5. It’s all about the externalities.

    Induced demand for public transit and cycling have mostly positive externalities – better health, agglomeration benefits from intensified land use etc.

    Induced demand for motor vehicle travel has mostly negative externalities – noise, danger, obesity, pollution, climate change, social dislocation, lower economic growth due to less agglomeration etc.

    When these are your starting assumptions then it’s obvious why induced demand for roads (and not other transport modes) is bad.


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