Measuring and Mitigating Traffic Externalities
Abstract:
Denser housing construction can alleviate rising housing costs, but opponents frequently cite car traffic as a primary concern. We quantify these heterogeneous traffic costs from new residents across the Boston Combined Statistical Area. Using data on households’ intra-metro-area travel, the road network, road speeds, and routing decisions, we estimate monthly traffic counts on every street. We find that moving a house from the 25th percentile of the distribution of nearby street traffic to the 75th percentile decreases its value by 20%, while adding the same number of monthly trips to the street of a similar house at the 75th percentile only decreases its value by 2.7%. We estimate a structural, hedonic model of households’ residential choices and visits to points of interest and find that households are willing to pay to avoid both car traffic on their street and travel time, but that these preferences vary widely across the population. Using the model and estimates of how traffic volumes affect road speeds, we simulate the traffic externalities caused by adding new residents in different locations. We find that a Massachusetts state law targeting a 10% housing stock increase to land near public transit stops causes $3.3 billion in traffic externalities from these new residents, an $820 million reduction relative to spreading those homes uniformly across space. Building those units on thoroughfares instead would decrease welfare costs by an additional $520 million.