The impact of transport on development and equity.

Planners and policy makers often assume that increased mobility -- facilitated by rising rates of car ownership and use and constant road expansion -- spurs economic growth, a rising standard of living and improved quality of life from which most Israelis will ultimately benefit. (1)

In fact, however, car-oriented development induces a wide array of negative impacts on the economy, on the quality of life and on equity, impacts that are explored in this chapter.

* In terms of economic opportunity and equity, car dependency squanders national resources and may impede, rather than spur, economic growth. Road oriented development tends to favor more powerful corporate monopoly over small and independent business. It limits the access of urban dwellers to shops and to social opportunities that develop in the suburbs.

* In terms of land use, road-oriented development fosters sprawl and more long distance travel, which irreversibly degrades the social and economic vitality of Israeli cities.

* Finally, the increased traffic and dispersal of homes, stores and businesses in a mode of automobile-oriented development diminish non-motorized travel, particularly walking. This impedes the mobility of disadvantaged groups for whom walking is an essential travel mode, degrades quality of life, lowers physical fitness, and impinges on community life and social interactions.


Since economic security is an important factor in promoting social equity, it is important that transport systems contributes to a strong and efficient economy. Yet while basic infrastructure development may be regarded as essential to economic development, particularly in peripheral regions, the link between road building and economic prosperity is tenuous. Road building often redistributes economic activity, undermining the economic vitality of central business districts, and contributing to urban decline and flight, an issue to be explored in Chapter 4.

In terms of macro-economic growth, it is far from certain that road development creates the long-term job and economic benefits generally assumed. (2) Notably, David Aschauer, one of the main proponents of the theory that infrastructure investment promotes growth, has himself recently documented the far greater economic benefits of public transit investment over that of highways. (3)

The National Cost of Car and Gasoline Imports

A road dependent economy also spurs private vehicle imports -- which constitute a major Israeli foreign currency expenditure contributing to the balance of trade deficit. In 1995, more than one quarter of Israel's foreign trade deficit could be attributed to the cost of vehicle imports and vehicle related fuel imports.

Road Development and Economic Prosperity

Contrary to what is normally assumed in Israel, road-building in a developed country does not necessarily lower transport costs -- or spur significant economic growth.

A recent survey of logistics costs in Europe found that manufacturers spend on average only 1.5-2 percent of sales revenue on transport, so that even if a road-building program reduced transport costs by a full 10 percent, and ALL of this was translated into lower prices, the price of manufactured goods would fall by less than 0.2 percent on average - and would have a negligible impact on overall economic activity. (5_6)

The landmark "SACTRA" report commissioned recently by the British Department of Transportation, determined that "transport investment has little detectable effect on the overall level of economic activity." (7) Similarly, another British study determined that the contribution of road building to economic growth was small:

"... given the small per cent of transport costs in total production costs and the small difference in transport costs between accessible and inaccessible areas, it is implausible that road schemes will lead to a significant net increase in GDP (over and above user resource savings)"--i.e. the time and user operating costs of the highway already considered as "benefit" factors by highway planners. (8)

Studies around the world have also determined that the investment cost of a rail-oriented public transit-oriented system is less, over the long term, than a road-oriented, car-dependent system.

"If all costs are considered, a car-based system is around 50 % more expensive than a transit system (Newman, Kenworthy and Vintila, 1992) and light rail is cheaper than buses after 10 years of operation (Flood and Newman, 1993)."--Peter Newman, Murdoch University, Western Australia. (9)

In Israel, a preliminary assessment by the Israel Institute for Transport Research and Planning of transport options for Israel until the year 2020 determined that a rail and bus-oriented system would cost about $35-40 billion--$10 billion less than investment in a car-oriented system--even without a calculation of the "external" costs such as the increased air pollution, traffic accidents, water contamination, congestion and inefficient land use that road-oriented development spurs. Outright, direct savings would be gained through relatively lower land acquisition costs; a diminished need to build very sophisticated highway systems, including interchanges and multi-leveled expressways, not to mention the longer life span of rail systems as compared to roads and bus systems. (10)

Moreover, road development does not necessarily redistribute economic growth more equitably between affluent and less affluent regions. The British Royal Commission report on Transport and the Environment notes that "road building is not the key to economic growth in the regions...Indeed, it seems that good roads can sometimes speed the decline of less prosperous areas by allowing their needs to be met conveniently from sources outside the area." (11)

Thus road projects like the Trans Israel Highway, build to facilitate national population dispersion, may in fact promote more centralization towards a stronger economic center. Rather than spurring growth in the Galilee and the Negev the north-south network could accentuate the pre-existing economic advantages of the central region--albeit on its suburban fringes.

Roads and Jobs

Too often, public transport systems are viewed as unprofitable drags on the government and the economy, while road construction is perceived as an expedient way of creating jobs. In fact, a public transit-oriented infrastructure investment generates more local "value-added" economic benefits than car-oriented infrastructure. For instance, while major road projects serve as a temporary source of employment -- particularly for imported foreign "guest" workers, a road does not in and of itself create the kind of permanent, skilled job opportunities for Israel's citizens that the Egged and Dan bus systems create, or that the Israel Rail Authority potentially could -- regardless of current inefficiencies.

One study in California, for example, determined that 85 cents out of every dollar spent by local residents on gasoline leaves the regional economy -- much of it going to pay for oil imports. In contrast, out of every dollar spent on public transport fares, an estimated 80 cents goes towards transit workers' wages, which in turn buys more than $3.80 in goods and services in the region. (12)

Roads and Time-Savings

Congestion relief is another economic benefit that is mistakenly credited to road-building. In fact, highway expansions generate new travel demands that absorb the additional road capacity within a relatively short period -- without alleviating congestion. This phenomenon, called "induced traffic," has been well documented internationally in reports such as the 1994 British SACTRA Commission report, Trunk Roads and the Generation of Traffic. (13)

One of the major sources of "induced traffic" is the fact that new roads and road improvements trigger massive changes in lifestyles, and as a result, in travel patterns. Road improvements stimulate development of highway oriented malls, superstores and business complexes which are dependent primarily on automobile access, and developers find ways to circumvent even strict land-use regulations seeking to curtail such development. Freight haulers change warehouse and loading points to take advantage of the new or improved route. (14)

Lured by the new "improvement" in the road and the new superstore or mall development at road interchanges, people begin making longer trips to shopping or entertainment centers, and commuters may opt to live further from work than they would have before the improvement was made. In the end, travelers eventually spend as much, or more time on the road as they did before the improvement. (15)

Recently, critics of the country's escalated road-building plans have raised the issue of induced traffic in Israel as a phenomenon that undermines the logic of more road expansion. (16)

The unique financing structure of the Trans-Israel Highway project, in which the government has committed itself to compensate the private road concessionaire annually for any shortfalls in projected revenue from the toll-road's operation, will actually create a perverse incentive to promote traffic growth via government land use, pricing and public transport policies, rather than to reduce traffic growth, since a reduction would mean financial losses for the road company -- costs which would be borne by the government.


Road expansion tends to redistribute economic activity, creating single unit shopping sites at decentralized highways located at city outskirts or highway interchanges. (17)

Developers who seek out vacant highway parcels take advantage of numerous hidden government "subsidies" They enjoy the benefit of new roads and interchanges, built at government expense, as well as the economies of scale generated from large rural land parcels...

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