being developed (and thus not included in the original estimates of the potential ‘range’ of expected emissions associated with the implementation of the program or network).

- _‘Indirect’_ c _reation of additional long-lived capital stock_ to complete and extend the backbone network, leading to additional emissions. One example is the construction of arterial roads by individual States to feed into an Interstate Highway system (and not part of the original design); and the additional transportation demand they generate.<sup>50</sup>

- _Modifications in the development of other long-lived capital stock_ made possible by the development of the network. For example, the change in land use associated with suburbanization in the U.S. was made possible, in part, by the Interstate Highway System. In turn, suburbanization generated increased commuting times, increased demand for transportation, and thus higher transport-related emissions (this was compounded by the decline in the share of traffic on public transit systems in U.S. cities because, in part, low density suburbanization made them less cost-effective)—these induced effects of suburbanization related to the transport sector are separate from the energy demand for e.g., heating and cooling, generated by lower density development associated with suburbanization.

- _Indirect macroeconomic effects on economic growth that generate emissions_ . For example, it is estimated that by making trade easier, the U.S. Interstate Highway System has contributed to an increase in economic growth relative to what it would have been in the absence of the System (Cox and Love, 1996). As a result, total U.S. GHG emissions are likely to have been higher with the Interstate Highway System than they would have been in its absence.<sup>51</sup>

78. Induced emissions are external to the program and difficult to predict. But induced emissions cannot be ignored because they would not have been possible without the core program. **The historical examples provided in section 1 suggest that indirect and induced emissions can be significant, but empirical measures are scarce.** Laird et al. (2005) review empirical evidence of the combined network + induced effects on total economic benefits of transportation projects in Europe. They show that taking these externalities into account can effect total benefits positively _or_ negatively (the latter, for example, when congestion effects are significant). The modeling studies they cite find in fact an increase in benefits on the order of +10% to 30% in most cases. They do not, however, provide figures on the resulting additional _emissions_ . Indirect and induced effects might be very difficult to estimate when a new network is initially established (e.g., in the case of the U.S. Highway System, which was only the second of its kind in the World after the German highway system pre-World War II). But patterns emerging from the first example need to be taken into account when subsequent similar networks are established (e.g., a new highway system in China). This underlines the importance of backcasting studies using ex post data, and the learning from and sharing of experience from other countries or regions.

> 50 The observed increase in annual rate of growth of VMTs after the Interstate Highway System was built was the result of the combination of the two effects discussed previously (increased demand for transportation on the network + creation of complements to the network).

> 51 This is a positive, and not a normative statement. We do not evaluate here whether or not the welfare gains associated with higher GDP in the U.S. have been greater than the value of the externality created by the higher GHG emissions.

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