Out of Control Policy Blog

Ending Traffic Congestion Would Really Stimulate the Economy

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:

  • Reducing Atlanta's Congestion Could Boost Economy by $15 Billion, Produce $1 Billion in New Tax Revenues
  • Reducing Charlotte's Congestion Could Give $22 Billion Boost to Economy, $1 Billion in New Tax Revenues
  • Reducing Dallas' Congestion Could Boost Economy by Over $40 Billion, Add $3 Billion in New Tax Revenues
  • Reducing Denver's Congestion Could Boost Economy by Over $38 Billion, Add $2 Billion in New Tax Revenues
  • Reducing Detroit's Congestion Could Boost Economy by Over $7 Billion, Add $500 Million in New Tax Revenues
  • Reducing Salt Lake's Congestion Could Spur $700 Million In Economic Growth
  • Reducing the Bay Area's Congestion Could Boost Economy by Over $10 Billion, Add $750 Million in New Tax Revenues
  • Reducing Congestion Around Seattle Could Bring $13 Billion Boost to Economy

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


« New at Reason: Public Options… | Main | Good Signs in the Economy »

Comments to "Ending Traffic Congestion Would Really Stimulate the Economy":

Tolboy | August 31, 2009, 1:37am | #

2 points: Why no mention of congestion pricing to cut congestion? Why no figures for such congestion havens as Los Angeles, Chicago and New York City?



Out of Control Policy Archives