Tuesday, June 27, 2023

Induced Demand debunked

I've wanted to write for a while about "induced demand", the specious argument that expanded roads just fill up with new traffic so why should we bother?

Two articles below debunk the induced demand argument in their own ways, but here's my own TL;DR summary: Which type of infrastructure should government invest in: transit almost nobody will use, or lanes everybody will use? Induced demand is a false argument. Nobody says "don't build a new airport terminal or runway - it will just fill up with new flights" or “don’t build a new port terminal – it will just fill up with ships” (🙄 eye roll)

The first is from the well-known Matthew Yglesias: What does "induced demand" really amount to? - We should build infrastructure that people use. Key excerpts:

"The New York Times recently did a big feature grounded in induced demand theory headlined “Widening Highways Doesn’t Fix Traffic. So Why Do We Keep Doing It?” which skirted around the kind of obvious answer that we do it because it lets more people drive to more places.

In other words, I think the idea of induced demand is just somewhat less paradoxical than people make it out to be.

Consider the traffic impact of a mass transit project rather than highway widening. In the aforementioned Los Angeles, a project is currently underway to extend the little stump of a purple line in the map below and extend it west to Beverly Hills, then down Wilshire Boulevard into Santa Monica and to the Pacific Ocean. This may never happen due to the usual litigation and delays, and it’s conceivable that once completed the project will be a low-ridership white elephant. But let’s stipulate that it gets built and that lots of people take advantage of this transit option. 

Well, what happens next? 

Some of the people riding the new Wilshire Metro will be making trips they wouldn’t otherwise have made, taking advantage of new opportunities and making their life better. 

Some of the people riding the new Wilshire Metro will be making trips they otherwise would have made by car, reducing traffic. 

But now that there’s less traffic, some people throughout Los Angeles will make trips they otherwise would not have made due to fear of traffic jams, bringing the system back to congested equilibrium.

In other words, “Ambitious Mass Transit Projects Don’t Fix Traffic. So Why Do We Keep Doing Them?” ...

But “inducing” extra demand would be part of the point — the only thing worse than a new highway project that only causes people to drive more would be a new highway project that didn’t cause people to drive more and wasted a bunch of money." 

The second is from Planetizen: Induced Travel Demand Induces Media Attention - Induced demand is a popular concept among urbanists, but does its pervasiveness obscure the true costs of mobility? Key excerpts:

Most new demand on expanded roads comes from new population, new employment and economic activity (some or all of which may have been attracted by enhanced transportation infrastructure), traffic rerouted from neighborhood streets or congested roads, or travel that has shifted in time to the benefit of the traveling public now that more capacity is available to undertake activities during desired travel times.  


Since approximately 2005, U.S. vehicle travel per person has not grown and the amount of travel on roads with newly increased capacity attributable to additional or longer induced trips is likely modest. The National Household Travel Survey documents declining trip rates as telework, e-commerce, and other communications substitution opportunities further dampen travel demand growth pressures, particularly for urban households. If travel expanded to fill all capacity, we would not have any low-volume highways.  

More importantly, characterizing induced travel as bad or wasted is a misrepresentation of the value that people derive from engaging in travel. It’s not just wealthy folks making superfluous trips. Residents having access to better jobs or businesses with better selection and lower prices isn’t bad. Businesses having access to a bigger labor pool and potential customer and supplier bases because people can travel farther in a tolerable amount of time isn’t bad. Making supply chains work better isn’t bad. Getting emergency vehicles where they need to go faster isn’t bad. Pulling cut-through traffic out of neighborhoods to travel on a safer highway facility isn’t bad. Having more direct and less congested—and thus environmentally greener—trips isn’t bad. Enabling parents to get home and share a meal with the family isn’t bad. Using transportation infrastructure to shape development or improve economic competitiveness isn’t bad. Being able to engage in social interactions and recreational activities isn’t bad, and contributes positively to physical and mental health.


Overplaying induced demand arguments as a pretext for discouraging roadway expansion or presuming travel demand can be accommodated by investing in alternative modes can be disingenuous and ill-informed. The presumption that directing resources to transit, bike, or pedestrian options can meet the mobility needs of all people and goods seldom works out as a real solution that is financially sustainable, environmentally superior, or offers comparable mobility, accessibility, or other benefits.

That yellow highlight is my favorite, crisply articulating all the benefits of expanded highways. Keep it in mind next time you hear silly "induced demand" arguments being thrown against new projects.

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Monday, June 19, 2023

$2 billion for 2mph, Houston beats Dallas for pandemic in-migration and home construction, Phoenix growth stopped by a lack of water

 Some smaller items this week:

"Arizona has determined that there is not enough groundwater for all of the housing construction that has already been approved in the Phoenix area, and will stop developers from building some new subdivisions, a sign of looming trouble in the West and other places where overuse, drought and climate change are straining water supplies.

The decision by state officials very likely means the beginning of the end to the explosive development that has made the Phoenix area the fastest growing metropolitan region in the country. …

The decision means cities and developers must look for alternative sources of water to support future development — for example, by trying to buy access to river water from farmers or Native American tribes, many of whom are facing their own shortages. That rush to buy water is likely to rattle the real estate market in Arizona, making homes more expensive and threatening the relatively low housing costs that had made the region a magnet for people from across the country.

“Housing affordability will be a challenge moving forward,” said Spencer Kamps, vice president of legislative affairs for the Home Builders Association of Central Arizona, an industry group. He noted that even as the state limits home construction, commercial buildings, factories and other kinds of development can continue."

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Tuesday, June 13, 2023

"Urban doom loop" coming for cities with commercial real estate crash

From "The Next Crisis Will Start With Empty Office Buildings" in The Atlantic (no-paywall link), which discusses the rapidly declining value of office buildings in a remote work world, with follow-on property tax revenue declines for cities:

“Many cities face a difficult choice. If they cut certain services, they could become less attractive and trigger a possible “urban doom loop” that pushes even more people away, hurts revenue, and perpetuates a cycle of decline. If they raise taxes, they could alienate wealthy residents, who are now more mobile than ever. Residents making $200,000 or more contributed 71 percent of New York State’s income taxes in 2019. Losing wealthy residents to low-tax states such as Florida and Texas is already taking a toll on New York and California. The income-tax base of both states has shrunk by tens of billions since the pandemic began.”

As more leases and loans come due, the bulk of the pain is still ahead of us. Over the next two years, many downtowns will find that dozens of buildings are no longer fit for purpose. Municipal services will likely deteriorate, and more people might leave. The worst-case scenario is a return to the 1970s, with bankrupt municipal governments, rising crime, and the flight of (primarily white) upper-middle-class residents. Landlords like to point out that “New York always comes back.” But some cities—like Detroit or Pittsburgh—never recovered from the previous waves of technological change. And even in New York, a comeback may take decades.”

“In the ’90s, the internet helped cities come back. As the economy became more dependent on innovation and creativity, many of the largest and densest downtowns boomed. In 2007, the world’s preeminent urban economist, Ed Glaeser, called it a “central paradox of our time” that cities remain “remarkably vital despite ever easier movement of goods and knowledge across space.” Economists have been busy explaining this paradox up until the current crisis. As the theory goes, companies require the rapid exchange of ideas and specialized division of labor that large cities provide. In addition, companies want access to the largest possible talent pool, and top talent likes to live in large cities because of lifestyle considerations.

The consensus among economists was that as technology and media expanded, economic activity would consolidate within a select few superstar cities. But even before COVID, the theory started to crack as some of the top-performing cities saw population decreases, tech giants started distributing their offices across smaller cities, and the office market was propped up by WeWork’s irrational, venture-capital-funded expansion.

The pre-COVID consensus wasn’t wrong, but the leading thinkers did not consider the full implications of their own theories. Once the quality of online collaboration crossed a crucial threshold, the internet itself became the largest talent pool and the premier facilitator of human interaction. And once highly educated individuals could earn a nice living from anywhere, lifestyle preferences became more diverse. This does not mean that superstar cities are doomed, but it does mean that their previously captive audience now has more options.

Cities will have to survive and adapt. In a world of consumer choice, locations must think like consumer products. One way to win is to double down on what only the biggest cities can offer—walkable streets, car-free transportation, and cultural and intellectual diversity. But smaller cities can emphasize shorter commutes, ample parking, proximity to nature, better schools, and lower taxes.

Honestly, I think that last part is why the suburbs of Houston are booming so much - they get some of the best of both worlds. Fortunately for us, I don't think the City of Houston is quite as dependent on office building property taxes. Our office values weren't as over-inflated either, our return-to-office rates are higher, and we continue to grow quickly (which should fill in some of that office space over time).

As far as New York and other "superstar cities", Glaeser and Ratti have a big NYT essay - "26 Empire State Buildings Could Fit Into New York’s Empty Office Space. That’s a Sign." (gift link bypasses paywall) - proposing the conversion of NYC to a “Playground City”. It also graphically shows how "Houston’s vacant office space could fill 29.7 JPMorgan Chase Towers." Lots of interesting thoughts in it. I’m not sure how viable it is, but it sure is an interesting read… and the top comments are really insightful as well.

We could be at a major inflection point for cities in the next few years...

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Sunday, June 04, 2023

TX Transportation Update - legislature, projects, NHHIP, Inner Katy MaX lanes, Austin should convert rail to BRT

This week we have an excellent detailed update on multiple Texas transportation projects from Oscar Slotboom (bold highlights mine).
Texas Legislature
The regular session ended on Memorial Day. Transportation-related issues were mostly low priority, and the Senate focused mainly on a few important long-term funding bills.
Houston-specific issues (no bills passed):
  • SB 2515 would have required HCTRA to use its revenue for road improvements only, but the bill made no progress after introduction. SB 1727, signed into law in 2021, placed some restrictions on the ability of Harris County to harvest toll money for non-transportation purposes. Generally speaking, the legislature had little interest in toll issues, passing only two minor bills relating to billing and preparation for icy conditions.
  • Texas Central high-speed rail received much less attention than in previous sessions, with only three bills filed and none making much progress. With Texas Central moribund, the project opposition did not put effort into anti-project bills.
Bills approved (statewide):
Three bills provide long-term funding for TxDOT into the early 2040s. This is especially important since recent inflation has extended project timelines, with NHHIP now scheduled for completion in 2042.
  • HB 2230 extends Proposition 1, which provides funding from surplus money in the rainy day fund. Amount is variable depending on oil prices, and is usually $1 to 2 billion per year. Expiration is extended 8 years from 2035 to 2043.
  • SCR 2 extends proposition 7, which provides $2.5 billion plus a percent of auto sales tax each year. The $2.5 billion is extended 10 years to 2042, and the auto sales tax funding is extended 10 years to 2039.
  • SB 505 imposes a $200 annual road use fee on electric vehicles, in recognition that electric cars don't pay any fuel tax for road maintenance. Although this will generate a small amount of revenue in the near term, it could become a substantial revenue source in the future.
  • HB 3297 ends vehicle safety inspections on December 31, 2024. But emissions testing will continue, so in Houston we still need to take our cars to a testing center.
Inner Katy Managed Lanes
In May I provided an update on the status of the Metro's Inner Katy (Loop 610 to downtown) BRT. A TxDOT presentation on May 18 says that construction on the separate managed lanes could begin in 2026 or 2027 (page 19). This is good news! However, there is much work still to be done, including environmental clearance, so 2026-2027 seems optimistic. There is not yet a recommended design option, but all the documents suggest that an elevated structure in the center of the freeway is the leading candidate. Future public meetings will influence the recommended design. The scope of the project includes reconstructing the main lanes and increasing the minimum vertical clearance to 18.5 feet. (It is currently around 15'4"). This will be an expensive project.
Big Projects in Dallas and Austin move ahead of NHHIP
While NHHIP has been engulfed in controversy, the $1 billion I-345 project in Dallas and the $5 billion I-35 project in Austin are moving forward and are now scheduled to be completed much sooner than NHHIP, even though planning for both the Dallas and Austin projects started much later than NHHIP. Dallas City Council recently unanimously approved TxDOT's plans to sink the elevated I-345 freeway into a trench. The DEIS for I-35 in Austin was released in February and TxDOT is moving toward construction as fast as possible. While there has been plenty of controversy for both the Dallas and Austin projects, local officials did not file lawsuits or request federal reviews.
Project Planning Started Work Starts Scheduled completion
NHHIP 2004
2010 detailed
2025 2042
I-35 Austin 2013 preliminary
2020 detailed
2026* 2032*
Dallas I-345 2016 preliminary, 2020 detailed 2028 or 2029* soonest 2033
*Schedule tentative and subject to change.
So if I-35 and I-345 continue to progress as expected, they will be completed in 2032 or 2033. Only three small sections of NHHIP are scheduled to be complete at that time (including I-69 south of I-45, and the I-10/I-45 interchange). The vast majority of work including downtown work and all of I-45 north of downtown would be just getting started or not even started.
Austin's New Plan for Light Rail
In April 2022 Austin's original light rail plan including a subway was estimated to cost $10.3 billion, with the tunnels costing around $1 billion per mile. Those estimates were before recent severe inflation in construction costs.
Austin's revised plan (map with data) is now entirely at street level, running in the middle of streets just like Houston's MetroRail. Depictions of the new plan look very familiar to Houstonians. Costs, however, remain outrageously expensive.
  • 9.8 miles, all at street level, taking away traffic lanes
    For comparison, Metro rail is 23 miles, all at street level, and Dallas has a 93-mile system mostly on dedicated right-of-way including a subway
  • Project cost: $4.5 to $4.8 billion, $459 to $490 million per mile (!)
    Cost includes a new bridge over Lake Lady Bird and startup costs such as a train maintenance facility. The original Red Line in Houston, opened in 2004, cost $43 million per mile, and the Green and Purple lines, opened 2015-2017, cost $153 million per mile.
  • Speed: 13.6 miles per hour from north to south; 14.9 miles per hour from north to southeast.
  • Estimated weekday ridership: 28,500
Depiction of Austin's plan. This design looks familiar to Houston's.
Fixation on Rail: Austin is Repeating Houston's Mistake
Houston's $1.41 billion Green and Purple lines have very low ridership, easily handled by bus rapid transit (BRT). If the lines had been built as BRT, they could have easily reached Hobby Airport with the $1.4 billion budget, likely with plenty of money left over. The Silver line BRT cost $46 million per mile and the University line is expected to cost $63 million per mile.
If Austin uses BRT instead of light rail, the cost per mile would be drastically reduced. They could build the unfunded extensions shown in the map, and provide service to the airport with no transfer. They could also potentially use the savings to build a tunnel under Lake Lady Bird instead of an undesirable new bridge. Once again, fixation on light rail causes money to be wasted and transit service to be limited.

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