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American Focus > Blog > Economy > The “problem” of induced demand
Economy

The “problem” of induced demand

Last updated: November 11, 2024 2:53 pm
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The “problem” of induced demand
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An Analysis of the Pacific Northwest’s Largest Highway Project

Recently, a highway project in the Pacific Northwest has sparked a debate regarding induced demand and the potential effects of expanding infrastructure. The proposed expansion of I-5 in the Vancouver, Washington and Portland, Oregon corridor has raised concerns among opponents who believe that increasing roadway capacity will only lead to more traffic, rather than alleviating congestion as promised by supporters of the project.

Induced demand, a concept often overlooked in infrastructure planning, suggests that building more roads will only attract more drivers seeking faster routes, ultimately negating any benefits of reduced congestion. This issue has become a focal point in the discussions surrounding the proposed bridge expansion between Vancouver and Portland.

Supporters of the project argue that a larger bridge would not result in an influx of new drivers, while opponents claim the opposite. This dichotomy mirrors a scenario where a popular movie theater considers expansion – some believe that a larger theater would attract more patrons, while others argue that it would not increase attendance.

However, the crux of the matter lies in understanding the law of demand – when supply increases, demand typically follows. In the case of the bridge expansion, denying induced demand could overlook the potential for increased traffic and congestion, impacting both current users and future commuters.

Environmental concerns also play a significant role in the opposition to the bridge expansion, with calls for a Pigovian toll to account for externalities such as congestion, pollution, and sprawl. This toll could provide a clearer cost-benefit analysis of the project and its long-term impacts.

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Ultimately, the decision to build the bridge hinges on a thorough evaluation of its implications, including induced demand, environmental factors, and the broader economic considerations. Balancing the needs of commuters, environmental sustainability, and efficient infrastructure planning is essential in addressing the challenges posed by this ambitious highway project.

As discussions continue, it is crucial to consider all perspectives and weigh the potential benefits against the risks associated with the Pacific Northwest’s largest highway project.

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