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

David T. Hartgen is Emeritus Professor of Transportation Studies at UNC Charlotte. Professor Hartgen is widely known in transportation circles. He established UNC Charlotte's Center for Interdisciplinary Transportation Studies in 1989 and now teaches and conducts research in transportation policy and planning. He is the author of about 330 studies on a wide variety of topics in transportation policy and planning, is the U.S. editor of the international academic journal Transportation, and is active in professional organizations. He is a frequent media interviewee in local and national outlets. Before coming to Charlotte he directed the statistics, traffic forecasting and analysis functions of the New York State Department of Transportation and served as a Policy Analyst at the Federal Highway Administration. He holds engineering degrees from Duke University and Northwestern University. He has taught at SUNY Albany, Union College and Syracuse University and lectures widely. His studies of the comparative performance of transportation systems have received nation-wide attention. He has also recently completed a major component of Reason's Mobility Study that estimates the cost of significantly reducing road congestion nation-wide, a comprehensive study of congestion in North Carolina, and a comparative study of the 50 state highway systems . His current research includes an assessment of the economic impact of highways in South Carolina, a review of transportation performance for the provinces of Canada, a national study of business impacts of congestion, and an assessment of congestion in mid-sized cities.