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Gridlock and Growth: The Effect of Traffic Congestion on Regional Economic Performance

How reducing traffic congestion can add billions of dollars in economic growth to local economies
Policy Study 371

David T. Hartgen and M. Gregory Fields
August 27, 2009

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.

David T. Hartgen is Senior Fellow, Reason Foundation

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