Why plan?

• To prepare for future contingencies, lowering the cost (in money, time, political effort) of dealing with anticipatable future outcomes. If the forecast is for rain, it is prudent to carry an umbrella.
• To establish a vision of the future to guide present action. To graduate with a Bachelor's degree in Civil Engineering, I must take CE3201.

Why plan transportation?

Transportation is, for better or worse, a public enterprise with long lasting consequences for decisions. There exist economies of coordination which may (but not necessarily) be difficult to achieve in the absence of planning. For instance, we want to ensure that roads from two different counties meet at the county line.

Why plan land use?

Owners of developed land have a right to service from public and private infrastructure. As infrastructure is costly and the economics of financing it are crude (though they need not be), planning is a substitute for the market.

Plans help order and regulate land use in an efficient and ethical way, thus preventing land-use conflicts. Governments use land-use planning to manage the development of land within their jurisdictions

Economic rationales

To invoke microeconomic theory:

In a market, equilibrium (${\displaystyle P_{p}}$, ${\displaystyle Q_{p}}$) occurs where marginal private cost equals marginal willingness to pay or demand. However if there are externalities, costs that are not borne by the parties to the transaction (e.g. noise pollution, air pollution, and congestion), there is a marginal social cost that is higher than the marginal private cost, leading to overconsumption. The first best solution is to price goods at their marginal social cost, imposing an additional charge. However, the same effect can be achieved by establishing a restrictive quota on demand (${\displaystyle Q_{s}}$).

There are other approaches to the problem besides directly increasing taxes or restricting demand. The libertarian approach for instance is the use of lawsuits, and fear thereof, to bring about good behavior. If you create a nuisance for your neighbors, they could sue you and the courts could force you to behave better. This shifts the problem from legislators and bureaucrats to judges and juries, which may or may not be an improvement. However, while this is easy to do for some kinds of obvious nuisances, it poses more problems for widely distributed externalities like air pollution.

The favored transportation economist solution to congestion is road pricing, charging a higher toll in the peak to provide the right price signal to commuters about their true costs. More radical solutions include road privatization. The central issue with most externalities is the lack of well defined property rights:

Ronald Coase (1992) argues that the problem is that of actions of economic agents have harmful effects on others. His theorem is restated from George Stigler (1966) as "... under perfect competition, private and social costs will be equal." This analysis extends and controverts the argument of Arthur Pigou (1920), who argued that the creator of the externality should pay a tax or be liable, what is now called The Polluter Pays Principle. Coase (1992) suggests the problem is lack of property rights, and notes that the externality is caused by both parties, the polluter and the receiver of pollution. In this reciprocal relationship, there would be no noise pollution externality if no-one was around to hear. This theory echoes the Zen question ``If a tree falls in the woods and no-one is around to hear, does it make a sound?. Moreover, the allocation of property rights to either the polluter or pollutee results in a socially optimal level of production, because in theory the individuals or firms could merge and the external cost would become internal. However, this analysis assumes zero transaction costs. If the transaction costs exceed the gains from a rearrangement of activities to maximize production value, then the switch in behavior won’t be made.

There are several means for internalizing these external costs. Pigou identifies the imposition of taxes and transfers, Coase (1992) suggests assigning property rights, while government most frequently uses regulation. To some extent all have been tried in various places and times. In dealing with air pollution, transferable pollution rights have been created for some pollutants. Fuel taxes are used in some countries to deter the amount of travel, with an added rationale being compensation for the air pollution created by cars. The US government establishes pollution and noise standards for vehicles, and requires noise walls be installed along highways in some areas.

Legal rationales

Bruce Spear has written:

Here are some general comments about requirements for travel modeling at MPOs.

Contrary to popular belief, there are no requirements either in Federal legislation or in the joint FHWA/FTA planning regulations that an MPO must specifically have a travel model for transportation planning. The regulation's only requirement is that forecasts of future travel used in an area's transportation plan be based on an "analytical process." The sophistication of that analytical process is generally left to the discretion of the local planning agency.

MPO's representing urbanized areas of less than 200,000 population may self-certify that they are in compliance with the joint planning requirements. MPO's representing urbanized areas of over 200,000 population are designated as Transportation Management Areas (TMAs). TMAs must undergo a more formal certification review by FHWA and FTA field staff every three years. While it is theoretically possible for even a TMA to satisfy its "analytical process" without a travel model, it is not likely to have an adequate transportation planning process without one.

Beyond the Federal joint planning requirements, an MPO may need a travel model to satisfy two other Federal requirements. First, if a TMA is also an air quality nonattainment area that is serious or above for either ozone or carbon monoxide, EPA's Conformity Rule requires that forecasts of regional vehicle emissions must be based on a estimates of VMT derived from a network-based travel model meeting certain minimal modeling requirements. Second, FTA's new start criteria for major transit investment require forecasts of future transit demand that can only be derived using travel models.

There are numerous technical guidance documents and summaries of current practice that have been developed over the years. Many of these documents are available on-line from DOT's Travel Model Improvement Program (TMIP) website "