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Ending Traffic Congestion Would Really Stimulate the Economy

David T. Hartgen
August 27, 2009, 7:00am

People and businesses waste time, fuel and money stuck in traffic. How much would regional economies grow if traffic conditions were free-flowing instead of jammed?

My new Reason Foundation study, written with Gregory Fields and Adrian Moore, looks at how reducing gridlock would increase economic output and worker productivity in eight cities across the country. The results show how much cities stand to gain if they increase mobility around key destinations like universities, suburbs and retail shopping centers. Once free-flow conditions were achieved, the Gross Regional Product of these areas would see major annual gains:

From the report's policy summary:

Traffic congestion increases costs to American businesses, workers and families. It increasingly takes more time and fuel to get where we want to go, costing us time and money. As traffic congestion worsens, it will significantly undermine the economic competitiveness of U.S. cities and regions.

Perhaps one reason policymakers have not done more to reduce gridlock is a lack of understanding about how congestion negatively impacts our cities and their competitiveness. What would be the benefits of achieving free-flow travel conditions on a regional scale?

This study examines the economics of congestion relief. The report, authored by David Hartgen and Gregory Fields, finds that reducing congestion can add billions of dollars in productivity and economic output for cities. Free-flowing traffic increases regional productivity, which also increases tax revenues for local governments.

Most major cities will find that wise infrastructure investments that eliminate gridlock and produce free-flowing road conditions will more than pay for themselves by boosting the region’s economy, and thus tax revenues. The study shows that reducing congestion and increasing travel speeds enough to improve access by 10 percent to key employment, retail, education and population centers increases regional production of goods and services by 1 percent. While seemingly small in percentage terms, this leads to tens of billions of dollars for a region’s employers and workers due to productivity and efficiency benefits.

Full Study (.pdf)

Shorter Policy Summary (.pdf)

David T. Hartgen is Senior Fellow, Reason Foundation

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