Induced traffic can be an important partof the economic appraisal particularly when the objective ofthe investment is to stimulate economic development;it's importance, however, is not restricted to suchsituations. The omission of induced traffic from theeconomic appraisal, or its incorrect treatment, may lead toeither over or underestimations in the user benefits(consumer surplus) of an investment. In addressing thisissues, this note, considers: the importance of inducedtraffic for the economic appraisal (Section 1); whatconstitutes induced traffic (Section 2); the situations inwhich induced traffic is likely to be relevant (Section 3)and the manner in which it can be modeled (Section 4) anduser benefits calculated when it is present (Section 5). Theannexes show the relative importance of including thebenefits of induced traffic in the evaluation of an urbantransport project; where the standard "rule of onehalf" breaks down in some situations that are oftenpresent in Bank projects, while another shows a numericintegration technique that can be used as a validalternative to the rule of one half in many of thesesituations (and coincidently, provides a more preciseevaluation even where the "rule of one half" givesan acceptable estimation).
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