Investment Grade Forecasts Overestimate Future Traffic, Study Suggests

Investment Grade Forecasts Overestimate Future Traffic, Study Suggests
SLUG: investment-grade-forecasts-overestimate-future-traffic
EXCERPT: New analysis of the Interstate Bridge Replacement project’s traffic and revenue forecasts raises concerns about the project’s projected usage and potential financial viability, suggesting that official projections may be overly optimistic.
CATEGORY: transportation
TAGS: traffic forecasting, toll roads, infrastructure investment, transportation planning, Interstate Bridge Replacement
SEO_TITLE: Traffic Forecasts for Major Projects Often Overestimate Usage, Analysis Shows
SEO_DESCRIPTION: An examination of investment-grade traffic and revenue analyses for large infrastructure projects, including the Interstate Bridge Replacement, indicates a tendency to overestimate future traffic volumes and revenue potential.
MEDIA_QUERY: Interstate Bridge Replacement project, Portland, Oregon
IMAGE_ALT: Aerial view of the Interstate Bridge spanning the Columbia River between Portland, Oregon, and Vancouver, Washington.

The Interstate Bridge Replacement (IBR) project’s own investment-grade analysis suggests that a proposed $15 billion expansion will serve fewer vehicles in 2050 than currently use the bridge today. This finding, detailed in a recent analysis from City Observatory, casts doubt on the project’s necessity and projected benefits, raising concerns about wasted public funds and increased congestion on alternative routes. The analysis critically examines the claims made by the IBR’s public relations team regarding the nature of investment-grade forecasts, arguing they are not overly conservative but rather more accurate than traditional highway department predictions.

Projected Traffic Decline

The investment-grade analysis for the Interstate Bridge Replacement project indicates a significant drop in traffic volumes on the I-5 corridor once tolls are implemented. Current traffic on the bridge stands at approximately 127,000 vehicles per day. However, the analysis projects that with tolls set at $4.60, daily traffic on I-5 will decrease to around 77,000 vehicles. This level is not expected to recover to current numbers for several decades. This projection raises fundamental questions about the need to expand a facility that is forecast to be underutilised.

Traffic Diversion and Congestion

A key consequence highlighted by the analysis is the substantial diversion of traffic to the parallel I-205 bridge. Tens of thousands of vehicles are expected to shift from the tolled I-5 crossing to I-205, leading to increased traffic, congestion, and pollution on that route. This diversionary effect suggests that the IBR project, while aiming to improve traffic flow on I-5, could exacerbate existing problems and create new ones on adjacent transportation networks. The analysis implies that widening I-5 between Portland and Vancouver is a costly endeavor that will be largely unnecessary for decades to come under the proposed tolling scenario.

Challenging Official Narratives

The IBR project’s spokespeople have attempted to frame the investment-grade analysis as an excessively conservative, “worst-case scenario” intended solely for financial risk assessment. They assert that these projections are “low-ball” estimates designed to avoid overstating revenue potential and are not representative of real-world traffic effects, particularly concerning diversion. However, the City Observatory analysis strongly refutes this characterisation. It argues that investment-grade analyses are mandated by financial markets and government bodies precisely because they are more rigorous and accurate than typical highway department forecasts, which are often prone to “optimism bias.”

Historical Precedents and Forecasting Bias

The analysis points to past projects in Washington State as cautionary tales. Both the Tacoma Narrows Bridge and the SR 520 Bridge in Seattle, financed substantially through tolls, experienced traffic levels that fell significantly below their respective investment-grade predictions. This historical data suggests a consistent pattern of overestimation in traffic forecasting for tolled facilities. Even investment-grade analyses, while more accurate than departmental forecasts, can still exhibit optimism bias, tending to overstate future traffic and revenue. The SR 99 tunnel project in Seattle further illustrates this issue, with initial bond amounts for toll revenues being drastically reduced after traffic studies revealed lower-than-hoped-for figures, ultimately requiring a state legislative bailout.

The Costs of Inaccuracy

The considerable investment in traffic and revenue studies for the IBR project, estimated at $700,000 for a Level 2 analysis and $2.3 million for a Level 3 study by Stantec, underscores the financial commitment to understanding potential outcomes. The Level 3 study, in particular, employed detailed measures of the “value of time” to better predict traveler behaviour in response to tolls. Despite the sophistication and cost of these analyses, the underlying issue of forecasting bias persists. The analysis contrasts the IBR’s EIS modeling, which has an error rate six times greater than the Stantec Level 2 model and consistently overestimates current travel, with the more refined investment-grade studies. The argument is that relying on these potentially inflated forecasts to justify billions in infrastructure spending is a “tragic and costly mistake” that could lead to underused facilities and worsened regional traffic conditions.

Key facts

• Interstate Bridge Replacement (IBR): $15 billion | 127,000 vehicles | ~77,000 vehicles

The implications of these findings extend beyond the Interstate Bridge Replacement project itself. They raise broader questions about the methodologies used to forecast traffic and revenue for major transportation infrastructure investments across the country. If investment-grade analyses, designed to be more rigorous and less biased, still tend to overestimate future usage, then the rationale for many large-scale, expensive projects built on such forecasts deserves closer scrutiny. The potential for billions of dollars to be spent on facilities that may not achieve their projected usage, while simultaneously diverting traffic and increasing congestion elsewhere, presents a significant challenge for urban planners and policymakers aiming for efficient and sustainable transportation systems. The analysis posits that the IBR project, based on these projections, represents such a misallocation of resources, promising to squander billions and ultimately worsen regional traffic.

Source: City Observatory – Investment Grade Forecasts actually over-estimate future traffic (https://cityobservatory.org/investment-grade-forecasts-actually-over-estimate-future-traffic/)