Urbanization is a strong global trend. It is universal and is expected to continue into the foreseeable future. Increasing traffic congestion is thus a challenge for future economic growth particularly in Europe, but also across the world.
Denmark is also undergoing this process of strong urbanization, driven by powerful economic forces. This agglomeration, the spatial concentration of activity, leads to increased productivity through a number of mechanisms, including the better accessibility of firms to both their markets and supply of specialized labor. Agglomeration, however, also leads to traffic congestion, and the costs of traffic congestion are large relative to GDP. Addressing traffic congestion is therefore important to ensure economic growth and the stakes are correspondingly high.
Interaction between agglomeration and congestion
Very little is currently known about the interactions between agglomeration and congestion. Policy measures such as pricing and traffic control remain almost unused in the management of congestion.
Current policy analysis concerning the taxation of cars is disconnected from the issues of agglomeration and congestion. The URBAN project addresses these points by making economic analyses available that can inform transport and urban policy making.
URBAN: new approach
Current Danish transport policy relies mostly on infrastructure investment, guided by economic appraisals in a standardized procedure carried out within the Ministry of Transport, as well as regulation and general taxation. At present, the economic appraisals conducted do not take into account the impact of these agglomeration-productivity effects. The URBAN project will deliver a new approach that does.
There is strong interest in incorporating wider economic effects into transport policy analysis: The Ministry of Transport has adopted a strategy that calls for the research proposed here.The primary user of the research output will therefore be the Danish Ministry of Transport. The results will be implemented in the current framework for transport policy analysis, and the relevant actors, the Road Directorate and Incentive Partners, are partners in the URBAN project. Through this channel, this project will directly and concretely influence Danish transport policy and consequently enhance Danish economic growth.