Transport demand management can be defined as a set of policies, strategies and action plans at the international, national and local levels, directed at optimizing the use of motor vehicles, supporting more sustainable travel and improving the efficiency of transport infrastructure, taking into account social, economic and environmental effects of transport.

Traffic and transport volumes have grown significantly in Europe.  Freight and passenger volumes have more than doubled during the past 30 years in Western Europe. Road transport is responsible for the major part of this increase and accounts today in many countries for up to 90% of total passenger transport (half of it in urban areas), and up to 75% in total freight transport. In addition, air transport, and in particular passenger air transport, has grown very noticeably. In virtually all European countries, the share of railways and inland water transport, where available, has decreased considerably during the past years.

These trends are likely to persist despite the so-called increasing “dematerialization” of the economy and an increasing share of the service sectors. Key factors driving these developments are the increasing national and international division of labour, i.e. the mobility of goods, services, and labour “globalization” and the increase in household incomes, a reduction in the relative costs of mobility, particularly the use of the private car, and the promotion of leisure air travel. The important projected increases in road and air transport are also due to changing patterns in logistics (smaller and “just-in-time” shipments), the abolition of border crossing procedures in Europe (not applicable in the same manner to rail transport due to interoperability problems) and urban dispersion. In South-Eastern European and in EECCA  countries the trend towards increased use of private cars is not only due to freedom of choice and ownership, but is also fostered by the sometimes drastic decline in the quality of once well-functioning public transport systems.

Currently, only a few regulations and policies exist that permit a reduction of the environmental and health impacts of transport by redirecting the transport demand towards more environment and health friendly modes of transport (such as public transport, walking and cycling) or by influencing individual travel behaviour and consumption patterns through a combination of "push" (e.g., reducing the availability of parking places) and "pull" measures (e.g., providing incentives to use public transport and other sustainable modes of  transport). In order to induce the modal shift from the use of private cars to public transport, and to increase the incentives for individuals to combine the use of different modes of transport, conditions that increase customer friendliness, safety, comfort and speed of public transport have to be created. Measures can, for instance, include integrated scheduling for several modes, tariff integration, making public transport more flexible and attractive to use and park-and-ride schemes. Urban and land-use planning are other key tools of demand-side management. Intermodality, which allows for both persons and goods to effect a user-friendly, efficient and economical change from one transport mode to another on the same journey, needs to be further promoted.

CO₂ emissions from transport have increased by 18% in the EU between 1990 and 2000. The transport sector contributed more than 20% of overall greenhouse gas emissions in the EU countries in 2000. In other European countries this share is less (around 8%) and it is far smaller in EECCA countries.
These developments, particularly the continuing modal shift to road and air transport, have negative implications for air quality, health, nature, and landscape - and for the environment in general. A few problem areas may be singled out in this respect:

1. Health problems due to degradation of air quality (NOx and PM emissions). People living next to busy roads for a long time double their risk of dying prematurely from heart or lung diseases;
2. Acidification of the environment damages nature, farm crops and buildings and decrease biodiversity. Road traffic is responsible for two thirds of all nitrogen oxides (NOx) emissions and almost one fifth of SO2 emissions;
3. Greenhouse gas emissions contribute to climate change. By 2010, land transport will be responsible for around one fifth of all greenhouse gas emissions and this share may increase further;
4. Transportation is the largest source of noise pollution and nuisance, sleep disruption and health problems associated with it. Measures to cope with these problems are often difficult to implement and usually lead to high costs for acoustic baffles, restrictions in spatial developments, etc.;
5. Road traffic accidents, while on the decline in Western European countries, still claim the lives of around 100,000 people every year in all European countries;
6. Physical activity issues (cardiovascular and obesity related health problems resulting from the inactivity) – might be improved by promoting walking and cycling as public transport.

Thus, policies need to be developed and implemented that can mitigate these negative implications and ensure that future transport patterns and mobility in general become sustainable. Given the importance of transport and mobility for the economy and social life, such policies must ensure that the transport sector makes a fair contribution to achieving environment and health objectives. In doing so, transport, environmental and health issues should be viewed together, i.e. looked at in an integrated manner. For example, a reduction of CO₂ emissions should not be achieved at the expense of citizens’ health, for example, by leading, to more NOx emissions (diesel) or less safe vehicles (light-weight vehicles).

Some key policy areas that could be addressed to make transport demand more sustainable are explicitly described under the demand management part of the Clearing House information tree. They comprise changes in the present modal split with the objective to shift transport demand from road to alternative, more sustainable transport systems. Such changes require effective information and knowledge management to ensure that transport users can take rational decisions and are aware of alternatives. Economic instruments play a major role in such policies and should, if possible, be applied simultaneously in several countries or regions, and could address these problems for passengers and freight as well as for urban and inter-urban transport.  Examples are subsidies, measures to support a decoupling of transport demand from economic developments and sustainable investment policies. Preferably, policy packages should be devised in such a way as to combine both “push” and “pull” measures discouraging transport-intensive behaviour (such as road and air transport) and, at the same time, promoting alternative modes of transport.  In order to measure impact and to be able to modify unsuccessful policies as soon as possible, effective monitoring and assessment tools need to be put in place.

While rail, maritime transport and aviation have been singled out as important fields to be looked at in this respect, policies aiming at mitigating environmental and health effects within the road transport sector are not grouped under road transport, but are addressed in a number of policy areas, such as taxation and eco-driving. Efficient road transport is, of course, indispensable for economic development and mobility, and this sector has very substantial technical, organizational and behavioural possibilities to reduce its negative impact on health and the environment.

Transport and land use planning policies are also important elements of sustainable transport policy packages. In this context, adequate land use plans and specifically sustainable urban transport plans as well as local and regional plans need to be devised and implemented. The private sector can contribute to these tasks by developing adequate enterprise mobility management schemes.

In the fields of taxation and regulations that provide economic incentives and restrictions with the aim of reducing transport demand, one of the primary goals is the internalization of external costs caused by transport users. Car ownership taxes as well as fuel taxes are fiscal instruments that are applied in many countries to this effect.  The same holds true for regulations on road traffic that need to go along with effective control systems to ensure compliance.

Finally, eco-driving campaigns, focusing both on driver behaviour and technical maintenance standards are important elements towards “greening” of road transport.

THE PEP policy:

Demand side management and modal shift is one of the four priority areas constituting the policy framework for THE PEP as adopted by the High-level Meeting on transport, environment and health at its second session. It includes:

• Elaboration of investment strategies influencing modal split towards sustainable transport;
• Development of measures influencing the modal split towards modes of transport which are sustainable for health and the environment for both freight and passenger transport;
• Promotion of the elaboration of sustainable transport plans e.g. by large private and public enterprises as well as other organizations for both passenger and freight transport;
• Promotion, implementation and review of policies designed to internalize the health and environmental externalities (external costs) generated by transport activities.