Abstract:Regulatory agencies in the energy field have successfully used incentives to encourage electric and gas utilities to implement conservation measures. We develop a method for allocating federal and state funds to reward local governments that adopt effective travel demand management measures and reduce the need for expenditures on expanded roadway capacity. This method is applied to Sacramento using the region's travel demand models to forecast, for twenty and fifty year time horizons, the effects of two travel demand management scenarios: a congestion pricing scenario and a comprehensive scenario that includes congestion pricing, parking pricing, and a fuel tax. Estimates of the capital, operation, and maintenance costs were obtained from local data and are used in the financial analysis of cost savings. We found that in the Sacramento region travel demand management implementation could defer roadway projects for a minimum of 7 yr and a maximum of 24 yr, resulting in a total savings to federal and state agencies of least $100 million and at most $223 million in 1992 $, which could be used to make annual payments of at least $16 million or at most $31 million a year to local governments. Issues surrounding the technical and political feasibility of funding incentives to local governments are addressed and further research is suggested.