Claims that roadway investments spur new travel, known as induced demand, and thus fail to relieve traffic congestion have thwarted road development in the United States. Past studies point to a significant induced demand effect. This research employs a path model to causally sort out the links between freeway investments and traffic increases, using data for 24 California freeway projects across 15 years. Traffic increases are explained in terms of both faster travel speeds and land use shifts that occur in response to adding freeway lanes. While the path model confirms the presence of induced travel in both the short and longer run, estimated elasticities are lower than those of earlier studies. This research also reveals significant "induced growth" and "induced investment" effects-real estate development gravitates to improved freeways, and traffic increases spawn road investments over time. Travel-forecasting models are needed that account for these dynamics.
