Economic Analysis of Freeway Speed Limit Policy Alternatives

Recently, nationwide speed limit policy modifications have resulted in a general upward trend in many states, including Michigan. In Michigan legislation has been proposed to raise posted speed limits on limited access freeways for passenger vehicles and for trucks and buses. In response, research was performed to assess the economic impacts associated with speed limit policy alternatives under consideration. The economic assessment included estimation of the agency costs and user benefits and disbenefits for each proposed policy alternative, including those related to infrastructure modifications, fuel consumption, travel time, and fatal crash occurrence. Calculation of the benefit–cost ratios indicated several findings. First, scenarios that increased only the freeway truck and bus speed limit from 60 mph to 65 or 70 mph had favorable benefit–cost ratios (i.e., greater than 1) as long as diesel prices remained below approximately $3 per gallon and fatal crashes did not increase by more than one per year systemwide. However, implementation of the 75 or 80 mph maximum freeway speed limit for passenger vehicles (70 mph for trucks and buses) in general resulted in unfavorable benefit–cost ratios. The reasons in large part were the expected increase in fatal crash occurrence, coupled with substantial infrastructure costs associated with geometric modifications that ultimately would be necessary to achieve compliance with state and federal design speed requirements. Therefore, freeway speed limit increases should be considered only for segments that have low historical crash rates and where design speed compliance can be maintained in general without costly geometric upgrades.