Congestion deterioration and transportation project evaluation

Transportation projects may lead to deterioration in the average travel time of the urban area because projects reduce travel cost and thus stimulate additional demand caused by migration. Transportation benefits are conventionally measured by the total surplus based on the general equilibrium demand curve for trips. Applying the conventional measurement method to the above paradox of increased congestion results in a negative measured benefit. The present paper explores the economic conditions that lead to this paradox. The study concludes that the necessary condition is the existence of both migration and positive external agglomeration economies. Accordingly, the conventional benefit measurement method is not applicable in this case. Last, the paper shows the benefit measurement formula corresponding to this case and some numerical simulations.