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

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Page 1: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

1

The Economics of Congestion

Brian Gregor

PSU Transportation Seminar

3/12/04

Page 2: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

Economic considerations are central to people’s lives.

0123456789

101112

1970 1975 1980 1985 1990 1995 2000

Year

Per

cent U

nem

plo

yed

Oregon National

Business cycles as revealed by unemployment data

Page 3: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 4: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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..

Page 5: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 6: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 7: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 8: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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

Page 9: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 10: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

Growth of income was concentrated in the top most income brackets.

Source: Kevin Phillips, Wealth and Democracy

Top Quintile

Page 11: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 12: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

CommutingIncreases

More workers meant more commuters and more vehicle travel.

VehicleTravel

Increases

Page 13: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 14: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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

Page 15: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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

Page 16: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 17: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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

Page 18: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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

Page 19: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 20: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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

Page 21: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 22: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 23: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 24: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 25: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 26: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 27: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 28: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04
Page 29: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04
Page 30: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 31: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 32: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 33: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

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.

Page 34: 1 The Economics of Congestion Brian Gregor PSU Transportation Seminar 3/12/04

STATEWIDE CONGESTION

OVERVIEW FOR OREGON

Prepared by

OREGON DEPARTMENT OF TRANSPORTATION

Transportation Planning Analysis Unit

[email protected]

http://www.odot.state.or.us/tddtpau/papers/cms/CongestionOverview021704.PDF