Induced Demand from Operational Efficiency, and the Impact on GHG Emissions (Part 1 -- Synthesis)

Focus Area

Climate Change


Air Quality, Environmental Process




Under $99k



Research Idea Scope

Induced demand – also referred to as latent demand – is the phenomenon that after supply increases, more of a good is consumed. In economic terms, the demand for use of a transportation facility is a function of the overall price to use that facility. The largest element of that price, or “generalized cost”, is travel time – when the travel time to use that facility – and by extension, the price to use it – is reduced. A common indicator is “demand elasticity”, which is an economic measure of how much demand changes when the price changes.
The induced demand resulting from additional roadway capacity (e.g., new roads, added lanes to existing roads) has been well documented, with estimated long-term travel time elasticities for travel demand ranging from 0.4 to as high as 1.0, suggesting that the offsetting impacts of additional induced traffic may be significant. What is not well known is if improved efficiency and reliability of the roadway network – particularly resulting from transportation systems management and operational strategies and the supporting ITS technologies – also induces additional demand. While such operational improvements do not add capacity, per se, they can reduce travel time (and costs) of the trip, and /or enhance reliability allowing travelers to retime trips nearer to their preferred time. This improved efficiency and decrease in travel times likely does induce additional demand, thereby resulting in an increase in vehicles miles traveled and offsetting (over time) some of the greenhouse gas (GHG) emission and energy consumption benefits of the traffic flow improvements and increased efficiency. However, the context and user perception of operational improvements as compared to capacity increases may be very different, resulting in different elasticities.
Two phases are envisioned for this project. The initial phase – the subject of this needs statement – is synthesis of existing information, including:
·      Summarize existing research and assumptions regarding the issue of induced demand, examining the differences between additional “lane-miles” and reduced “travel time” (and the associated elasticities) when addressing induced demand. This effort should investigate if induced demand from operational improvements and ITS does exist, to what extent (i.e., the elasticity of traffic demand to improved efficiency and reliability), and under what circumstances (e.g., does the level of latent demand differ depending on the type of strategy and / or the type of congestion targeted by these strategies). Both short term and long term impacts should be considered. As part of this review, this should include a consideration of how operational improvements affect both travel time and travel reliability.
·      Identify how operational strategies and ITS technologies may be configured and managed (e.g., reduced free-flow speed limits as part of active traffic management, integrated multi-modal traveler information), and combined with other GHG reduction approaches (e.g., pricing), to minimize any induced demand.
Related Work
·      “Moving Cooler – An Analysis of Transportation Strategies for Reducing Greenhouse Gas Emissions, Urban Land Institute, 2009.” This study incorporates induced demand in the analysis of “System Efficiency Strategies”
·      “Reducing Transport GHG Emissions – Opportunities and Costs”, International Transport Forum.” This document indicates that “traffic management will induce additional traffic in many circumstances, but even overall traffic increases, overall emissions may still be less than before if operating speeds are more efficient.”
·      Eno Foundation Report Eno Foundation report “Working Together to Address Induced Demand
·      “Energy and Emissions Impacts of a Freeway-Based Dynamic Eco-Driving System”, Matthew Barth and Kanok Boriboonsomsin
Many assumptions have been made regarding latent demand resulting from improved operational efficiency. Moreover, there exists within some segments of the environmental community a belief that reducing congestion is not a viable approach for addressing climate change; that the latent demand resulting from reduced congestion and improved reliability will, in the long term, increase vehicle miles traveled (VMT) such that the net effect of reducing congestion will be to increase GHG emissions overall.
 The results of this effort are very important in terms of accurately estimating the long-term reduction in GHG emissions resulting from the deployment of transportation systems management and operational strategies, and subsequently in developing transportation greenhouse gas reduction plans and prioritized lists of projects to support plan (as required by proposed federal legislation). The information will also be useful in working with the Environmental Protection Agency to promote transportation systems management, operational improvements, and the supporting ITS as part of the overall solution for reducing greenhouse gas emissions.

Urgency and Payoff

The findings of the proposed research could be implemented in several ways by local and state transportation agencies and MPO’s, including:
·      Analyzing, selecting, and justifying operational strategies and supporting ITS technologies for inclusion in “transportation greenhouse gas reduction plans” and the prioritized lists of projects to support the plans (and subsequently integrated into TIPs.)
·      Identifying current and future operational improvements and quantifying the reduced emissions as possible “offset credits” under a cap and trade system.
EffectivenessThis research would promote greater understanding in the transportation and environmental communities of the relationship (if any) between operational strategies / ITS technologies and induced demand resulting from improved roadway efficiency and reliability, and the long term impact on GHG emissions. It would provide transportation planners and system owners with a more rational basis for selecting cost-effective transportation systems management and operations strategies – perhaps in concert with other transportation strategies – with the goal of reducing GHG emissions.

Suggested By

RNS. Sponsoring Committee: A0020T, Special Task Force on Climate Change and Energy Source Info: Special Task Force on Climate Change and Energy January 2010 Workshop