1 the economics of congestion brian gregor psu transportation seminar 3/12/04
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1
The Economics of Congestion
Brian Gregor
PSU Transportation Seminar
3/12/04
Economic considerations are central to people’s lives.
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101112
1970 1975 1980 1985 1990 1995 2000
Year
Per
cent U
nem
plo
yed
Oregon National
Business cycles as revealed by unemployment data
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
1970 to1980
1975 to1985
1980 to1990
1985 to1995
1990 to2000
Annual
Per
centa
ge
Incr
ease
Average Annual RateFrom 1970 to 2000
Average Annual RateOver 10-Year Period
e.g. 1972 to 1982
But economic considerations have often been overlooked in developing transportation policy.
The rapid rise of per capita VMT during the 1980s was atypical and influenced by the state’s economic recovery.
Policy makers focused on this growth rate.
Travel and economic data show some strong associations.
0
50
100
150
200
250
300
350
400
1970 1975 1980 1985 1990 1995 2000
Year
The ratio of total statewide VMT to total statewide personal income in real dollars has changed little over 30 years..
Changes in travel and the economy appear to be closely linked.
100%
110%
120%
130%
140%
150%
160%
1970 1975 1980 1985 1990 1995 2000
Year
Per
cent of 19
70 V
alue
VMT per Capita Indexed Real Income per Capita
Changes in VMT tend to follow changes in total personal income.
The fundamental principle of comparative advantage explains the linkage between economic
development and travel.
Specialization
Trade
Market SizeTransportationCommunication
ActivityClustering
Comparative advantage leads to specialization and trade.
Trade requires transportation.
Activities cluster to reduce transport
costs.
Market size affects the potential for
trade.
A number of structural changes in the economy increased the amount of specialization and trade, resulting in economic growth and increased travel.
• Baby boomers entering workforce.• Increased labor force participation by women.• Increased hours of work.• Transfer of time from unspecialized household economy to specialized market economy.
WorkingIncreases
1970 – 2001Workers doubledPopulation increased by 65%
1975-2001Percent of population 16+ increased from 72 to 76Percent of women in labor force increased from 48 to 62 percent
1973-2001Average weekly hours worked increased from 41 to 50
Average annual wages stagnated.
0
10000
20000
30000
40000
1970 1975 1980 1985 1990 1995 2000
Year
Yea
r 20
00 D
olla
rs
Average annual wages (year 2000 dollars) in Oregon.
Growth of income was concentrated in the top most income brackets.
Source: Kevin Phillips, Wealth and Democracy
Top Quintile
Median family incomes stagnated.
0
10000
20000
30000
40000
50000
60000
1974 1979 1984 1989 1994 1999
Year
Yea
r 20
00 D
oll
ars
Median income (year 2000 dollars) for 4-person households in Oregon.
CommutingIncreases
More workers meant more commuters and more vehicle travel.
VehicleTravel
Increases
HouseholdTime
Decreases
More household time in paid labor meant less time for household activities.
1969-1987Average annual hours spent by women on household work declined by 249 hours.Average annual hours spent by men on household work increased by 151 hours.
ConsumptionIncreases
Households purchased goods and services to replace what they no longer provide and consumption increased.1977-1992: Number of paid childcare workers in nation increases from 190,000 to 468,000.
1970-1997: Proportion of household food expenditures spend on eating out increase from 26 to 38 percent.
1969-1995: Shopping trips increase from 29% to 44% of all trips.
1970-2000: Consumption per capita doubles (in real dollars).
1980-2002: Truck VMT doubles while light vehicle VMT increases 78%.
VehicleTravel
Increases
VehicleOwnershipIncreases
Increase in work and decrease in household time increased the need for households to economize on travel time. This encouraged increased vehicle ownership.
On average, people who commute in private vehicles spend half the time of people who commute by public transit.
1975-2001: Number of vehicles per driving age person increased 18%.
VehicleTravel
Increases
TripChainingIncreases
Decreased time and increased vehicle availability encouraged trip chaining.
People save time by linking non-work trips with their commute trips.
Women in particular chain work and non-work trips.
20 to 30 percent of work trips are chained.
Proportion ofTransit/Rideshare
Decreases
Increased vehicle availability and increased trip chaining reduced the competitiveness of ridesharing and public transit.
1980-2000: Percentage of commuters who rideshare declines from 17.6 to 12.6.
Biggest declines in carpooling have come from the reduction in the number of carpools of three persons or more.
Commuter carpools increasingly composed of workers from the same household. Vehicle
TravelIncreases
Sprawl and “induced travel” probably were not significant causes of increased travel in Oregon.
1985 1990 1995 2000
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
Year
Pro
porti
on o
f 198
2 V
alue
VMTPopulationSizeSprawl (Size/Population)Speed
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
1955 1960 1965 1970 1975 1980 1985 1990 1995 2000
Year
Per
cent
Although the economy and travel grew, the proportion of the economy invested in highways
declined
Using up the capacity coming from investments made in earlier decades.
Demand grew faster than supply, so crowding (congestion) increased.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
Year
Ave
. D
aily
Tra
ffic
per
Lan
e
Interstate Freeways Other Freeways & ExpresswaysOther Principal Arterials Minor Arterials
How you view congestion depends on the measures used to assess its impacts.
Data from the Urban Mobility Study by the Texas Transportation Institute provides examples.
The following slides compare Portland/Vancouver area measures with other similarly-sized urbanized areas.
1985 1990 1995 2000
02000
4000
6000
8000
Year
Peak
Period V
ehic
les
per Lane
SeattleSacramentoSan DiegoPhoenixSan JosePortlandOtherAverage
The Portland area experienced large increases in peak period travel demand relative to road supply.
1985 1990 1995 2000
1.0
1.1
1.2
1.3
1.4
1.5
Year
Tra
vel T
ime
Inde
x
SeattleSacramentoSan DiegoPhoenixSan JosePortlandOtherAverage
Consequently, the amount of time required to travel an equivalent distance grew much more than average.
1985 1990 1995 2000
020
40
60
80
100
Year
Annual H
ours
of D
ela
y P
er P
eak
Period T
rave
ler
SeattleSacramentoSan DiegoPhoenixSan JosePortlandOtherAverage
Portland area peak period delay did not grow much more than average though.
1985 1990 1995 2000
05
10
15
20
Year
Daily
Mile
s P
er P
eak
Period T
rave
ler
SeattleSacramentoSan DiegoPhoenixSan JosePortlandOtherAverage
Lower delay growth was a consequence of more moderate growth of average peak period trip lengths.
1985 1990 1995 2000
05
01
00
15
02
00
25
03
00
Year
An
nu
al H
ou
rs P
er
Pe
ak
Pe
rio
d T
rave
ler
SeattleSacramentoSan DiegoPhoenixSan JosePortlandOtherAverage
Total travel time grew even less. The Portland area was well below average.
1985 1990 1995 2000
0.0
00
.05
0.1
00
.15
Year
Do
llars
of T
rave
l Co
st p
er
Do
llar
of I
nco
me
SeattleSacramentoSan DiegoPhoenixSan JosePortlandOtherAverage
The effect on the economy appears to have been even less. The ratio of travel cost to income changed little.
Implication 1: Travel in the future is likely to grow as the state's economy grows, but the nature of economic growth may change.
• On average, every new job in Oregon adds about 15,500 vehicle miles annually. Every $1,000 increase in total state personal income adds about 360 VMT annually.
• As the economy grows in the future, similar changes can probably be expected.
• How the economy will grow may be different, however, and the social and economic changes that resulted in the shift of household time into paid labor may not continue to the same degree in the future. For example, there has been very little change in the female labor force participation rate since 1993.
Implication 2: Congestion is expected to get much worse if economic growth continues to greatly exceed capital investment in the road system.
• To a large extent, the levels of mobility and accessibility enjoyed by Oregonians over the past three decades is a result of highway investments made at the beginning of that time.
• Since then, the rate of investment dropped and lagged growth of the economy and VMT significantly. Congestion increased as the capacity of the system was used up and not replaced.
Implication 3: Since congestion is most likely to get worse in the future, it is important to recognize how people cope with congestion and take actions that improve their ability to cope.
• Helping people reduce the impacts of congestion on their lives requires knowledge about how people manage the conflicting time demands of their jobs, households and travel.
• The experience of the past several decades shows that people substantially limit the effects of rising congestion on their travel time budgets through their own actions.
• The availability of choices allows them to shift routes, change travel times, chain trips, change how they travel, and change where they live or work.
• Failure to recognize the significance of these coping strategies could result in policies that are counterproductive.
Implication 4: Congestion relief should be directed towards activities that provide the most benefits to Oregonians.
• Different activities are affected to varying degrees by congestion. Congestion levels that shoppers and retail storeowners are willing to tolerate may be unacceptable to some manufacturers and other businesses.
• With limited dollars available to address congestion problems, it is important to do analysis that goes beyond simply estimating how vehicles are affected by a proposed improvement. It is also necessary to estimate how different households and businesses will be affected.
• The ability to direct congestion relief would also be improved by offering value pricing options in congested freeway corridors.
STATEWIDE CONGESTION
OVERVIEW FOR OREGON
Prepared by
OREGON DEPARTMENT OF TRANSPORTATION
Transportation Planning Analysis Unit
http://www.odot.state.or.us/tddtpau/papers/cms/CongestionOverview021704.PDF