Jan 15, 2015
The aim of this review was to gain a better understanding of the factors driving road transport demand for both passengers and freight in the UK by reviewing the literature on elasticity of road traffic demand, with a particular focus on key economic and demographic factors: namely, population growth, income growth and changes in fuel costs. The primary aim was to identify, by means of a rapid evidence assessment, what elasticity estimates were available in the literature with respect to these variables and, where evidence exists, how these elasticity values have changed over time, if indeed they have changed at all. The range of estimated fuel price elasticity values reported in the studies in this review is quite small (-0.1 to -0.5), although a variety of data types and methodologies were used. Fuel price elasticities will be expected to vary by distance, area type and trip purpose.
For passenger transport, reported income elasticity values are predominately in the range 0.5 to 1.4. The evidence indicates that car ownership has a strong, positive, indirect effect on the income elasticity of demand. For freight transport, elasticity estimates of economic activity are mainly in the range 0.5 to 1.5 for an aggregate commodity sector but there the evidence suggests a much greater variation between sectors.
The evidence on changes in fuel price and income elasticities of car demand over time is limited and for freight transport, the evidence is mixed. Much of the data for the UK on car traffic is rather old. This has implications for the use of elasticities in forecasting and strategic planning.
Rapid Evidence Assessment Methodology
Conclusions and recommendations