Determinants of Motorization and Road Provision

Abstract

The authors survey past trends in vehicle ownership and road network expansion to analyze determinants of their growth at the national and urban level. Surprisingly, they find that: Nationally, income is a major determinant of both vehicle ownership and road length. Nationally, paved road length and vehicle ownership has been increasing about as fast as income, while total road length is increasing less rapidly than income. In urban areas vehicle ownership increases as fast as income, while total road length increases very slowly with income. Because national paved road networks are expanding about as fast as national motor vehicle fleets, national congestion is unlikely to be worsening. But because urban road length is growing more slowly than the number of urban motor vehicles, urban congestion is rising with income over time. Increased urban congestion is stimulating decentralized urban growth. Income elasticities are greater than price elasticities in absolute terms, for both vehicle ownership and use-an important finding because prices are often used as an instrument to control motor vehicle ownership and use. If price elasticities are half as large as income elasticities, pries would have to grow twice as fast as incomes to stabilize vehicle ownership. Breaking the link between income growth, rising congestion, and urban decentralization will be difficult: Restraining auto ownership in urban areas requires high tax rates, and increasing the supply of urban roads is costly. Elasticity estimates vary, but a good point estimate for the income elasticity of fleet growth is 1. This means country motor vehicle fleets grow in proportion to country incomes. More than half the world's annual increase in motor vehicles is likely to occur in high-income countries until 2025 (assuming GNP growth of 3 percent in high-income countries, 5 percent in low- and middle-income countries). The motor vehicle fleet is in low- and middle-income countries is not projected to exceed that in high-income countries until after 2050. Carbon dioxide emissions are likely to be distributed similarly.