Friday, September 30, 2011

Third Lane's a Charm?

Wayne Laugesen, controversial editorial page editor of the Colorado Springs Gazette and a self-proclaimed libertarian, published an article in the Opinion section of the paper on September 29th urging Gazette readers (mainly Colorado Springs, but also Denver residents) to support the “long overdue widening of I-25” one lane in each direction.

According to the article, the Colorado Transportation Commission will meet on October 20th to decide whether they will spend $215 million in unanticipated funds (from federal and state governments and various local sources) on widening I-25 or on widening the eastbound tunnel of I-70.

Laugesen asserts that “any bottleneck along the I-25 corridor impedes the economic advantages that all of Colorado would gain from high-volume travel between the state’s two economic powerhouses”, and that widening the highway between Woodmen and the Douglas County line north of Monument would “speed economic activity by reducing congestion.” We have frequently discussed this topic in class, but I found it especially interesting to discover a situation that directly affects us.

Economists would use the theory of latent demand to counter this assertion by explaining why widening highways acts counterproductively on congestion; as the supply of road capacity increases, the price of traveling on the road decreases. This decrease in the price of traveling (which includes the cost of fuel and the opportunity cost of time spent on the road) encourages people to live further and further away from their workplace and economic activities, and consequently, traffic congestion increases and returns to the original state to begin the cycle over again. Laugesen neglected to consider this very basic theory of economics in his reasoning for supporting this quick fix to highway congestion.

Additionally, after our discussion in class about renowned libertarian, Murray Rothbard, I am surprised that Laugesen claims to be a libertarian. While Rothbard strongly supported the privatization of streets and roads, Laugesen seems to be an adamant proponent for government intervention as a solution for traffic congestion. I am curious as to why Laugesen would not be more interested in promoting a solution, such as the privatization of highways in the form of public-private partnership toll roads, instead of lane expansion.

Public-private partnership toll roads safeguard against the creation of projects that possess larger costs than benefits. Elected officials usually choose to initiate projects that yield political benefits. In the case of PPP toll roads, people will only invest in the project if they can expect a positive return on their investment. Additionally, the private company assumes the responsibility of both building and maintaining the toll road once it undertakes the project. Thus, unlike traditional highway projects, which are built by the lowest bidder and usually require costly repairs over time, private companies build PPP toll roads correctly in the beginning to minimize total life cycle cost. This also protects taxpayers from bearing the costs of schedule delays and cost over-runs such as with traditional highway projects. Finally, toll roads avoid the vicious cycle of increasing congestion by providing sustainable congestion relief through variable pricing instead of lane expansion.

Contrary to Laugesen and the 86% of Gazette readers who showed their support for the widening of I-25 in the online poll, I do not support the “long overdue widening of I-25.” In this case, the old adage “Third time’s a charm” does not apply. As long as I-25 is a free good, congestion will exist. Indubitably, a third lane will not solve this issue.


Megan Trujillo said...

Link to Laugesen's article on the Gazette website--

Larry Eubanks said...

You probably should add at least one point to your analysis. If a lane is added each way, then as you suggest the cost to travel a mile along northbound I-25 will decrease. You describe the resulting incentives and you describe the outcome after a period of time. You should probably add that in the short run more economic activities will locate north of Colorado Springs (something the editorial writer also says). Perhaps there are reasons to support such locational changes, even though, as you point out congestion won't go away in the long run without pricing peak load access.