The main reason why Economists forecast future transport demand growth is so that limited resources can be provided for the construction or purchase of our long term transport needs. For example an extra road lane, more buses with higher capacity or more airports due to increases tourism. It also allows us to make financial decisions. For example bow the government will find the money to finance these improvements. Should they start saving now by making cuts this year or next year? This is an example of the instrumental questions data from the forecast can help to answer. It’s extremely important that estimations are made early considering the time and planning needed to develop the previously suggested infrastructures.
If Economist fail to plan for rises in future demand, the current infrastructure will be inadequate so as a result serious congestion will occur. Such events are not ideal for firms as some goods have strict periods in which they have to be transported or goods will become unmarketable. Examples include fresh fruit and takeaway meals. Therefore delivery delays could potentially increase cost, making goods more expensive (inflation) to both domestic and foreign consumers and therefore less internationally competitive. This can worsen the current balance of payments position which is already in a deficit. Therefore it’s absolutely essential that the transport system is appropriate. Also increased prices will make real incomes fall, so the level of potential consumption will fall therefore the quality of life will drop too. As a result incumbent politicians are unwilling to make such mistakes as it can persuade citizens to vote elsewhere.
Lastly forecasting is important for global warming reasons. This is because expected transport behaviour in the future can be used to judge possible carbon dioxide emissions amounts, so allows plans to be drawn that is most effective in trying to reduce these unwanted emissions that result in negative externalities. This is important especially since countries are now under increasing pressure from green campaigns and the European Union. The European Union plans to impose expensive fines on members who produce excessive emissions. Emissions can't be dealt appropriately in the future if we don't know information about the future now.
Good future demand predictions for transport can stimulate transport investment from firms due to improved business confidence and the worry of being inadequate to meet consumer demand, therefore the inability to make maximum profit. This surge in investment can result in short term economic growth as unemployment will fall and possibly even more due to the multiplier effect.
Lastly forecasting is important for global warming reasons. This is because expected transport behaviour in the future can be used to judge possible carbon dioxide emissions amounts, so allows plans to be drawn that is most effective in trying to reduce these unwanted emissions that result in negative externalities. This is important especially since countries are now under increasing pressure from green campaigns and the European Union. The European Union plans to impose expensive fines on members who produce excessive emissions. Emissions can't be dealt appropriately in the future if we don't know information about the future now.
Good future demand predictions for transport can stimulate transport investment from firms due to improved business confidence and the worry of being inadequate to meet consumer demand, therefore the inability to make maximum profit. This surge in investment can result in short term economic growth as unemployment will fall and possibly even more due to the multiplier effect.
Lastly I must add that forecasts are simply predictions about the future, which may not be true due to the complex nature of the economy. Therefore major financial decision shouldn’t be made solely on this. Also the question doesn’t specify which country or type of transport. Forecast will be used and predicted in different ways. For example in 3rd world countries, even if transport demand is expected to increase, infrastructure can’t be paid for, as Healthcare for example will be considered more important.
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