Supporting car traffic doesn’t help the economy, quite the opposite.

For a long time, it was believed that the more we invest in roads, highways, and parking spaces, the better it is for the economy. However, a new Canadian study — The Mobility and Productivity Paradox by Todd Litman from the independent research institute Victoria Transport Policy Institute — shows that the opposite is true: the more kilometers people drive, the lower the economic productivity tends to be.

Does it sound paradoxical? Yes, but the data speaks clearly. A Canadian study shows that productivity tends to increase in areas where mobility is limited – for example, due to higher road tolls, traffic congestion, or lower parking availability. In other words, exactly where you might not expect it.

The Myth of Fast and Cheap Transportation

Most transport policies—such as building urban highways, mandating minimum parking requirements, or maintaining low fuel taxes—are based on the assumption that faster, cheaper, and more intensive car travel will lead to greater prosperity. But according to Litman’s analysis, it’s time to rethink that assumption.

The study shows that in places where there are:

• more cars and higher per capita vehicle mileage,
• more traffic lanes,
• cheaper fuel and easily available parking,

there is, in fact, a decline in economic efficiency.

When traffic volumes are low, travel typically serves higher-value purposes such as freight transport, essential services, or public transportation. As mobility increases, benefits do grow—but at a diminishing rate, because the most valuable trips have already been made. Each additional kilometer traveled becomes progressively less productive, while costs continue to rise linearly. As a result, at high levels of mobility, an increasing share of travel becomes economically inefficient: marginal costs exceed marginal benefits, reducing overall productivity.

Not Every Trip Is Beneficial

Sure, some trips are necessary and efficient—for example, those made by farmers, tradespeople, or nurses. But the more we drive, the greater the share of trips that are of low value or entirely unnecessary. And it’s these trips that generate enormous costs:

For individuals – the purchase, operation, and maintenance of vehicles
For governments and businesses – the construction and upkeep of roads and parking facilities
For society – traffic congestion, accidents, noise, emissions, and negative health impacts
The result? A growing share of economically inefficient transport. Its costs exceed its benefits—and that doesn’t help the economy.

Where Did Things Change?

In the 20th century, more cars meant higher productivity. But in the 21st century, that relationship has reversed. Thanks to digitalization, remote work, e-bikes, and other innovations, we no longer need to travel as much to get things done. The economy continues to grow, even as mobility stagnates—or even declines.

Everyone ends up paying for these constructions

Where’s the Problem?

Todd Litman identifies three key issues in current transport policy:

1. Underinvestment in Non-Motorized Transport

Up to 40% of people cannot or choose not to drive. Yet most public funds are spent on automobile infrastructure. Walking, cycling, and public transport remain chronically underfunded.

2. Hidden Costs for Society

Half the cost of roads—and most parking costs—are not paid by drivers, but by taxpayers. Drivers don’t cover the externalities they cause: congestion, crashes, noise, and pollution. Parking requirements inflate the cost of housing, goods, and services.

3. Urban Planning That Promotes Car Dependency

Cities often limit density, mandate off-street parking, and ignore the true costs of sprawl. All of this artificially increases the need for cars—even for short distances.

What Can Be Done?

According to Litman, the key is fair pricing of transport. If people pay the true cost of driving—and have quality alternatives—they’ll start making more efficient choices.

A real-world example: In places where parking is priced, car trips drop by an average of 20%. That means fewer traffic jams, accidents, and emissions.

Fewer Cars, Greater Efficiency

The bottom line? More cars don’t equal more prosperity. In fact, it’s often the opposite. Truly efficient transportation is about what makes sense—not just economically, but socially and environmentally too. It’s time to stop blindly subsidizing car mobility and start investing where it really counts: in walking, cycling, and public transport.

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