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Studies have shown that pollution ejected by automobiles does damage the environment and it directly impacts air quality. So it follows that traffic congestion would be damaging to the environment as well. Coupled with the fact that oil is a finite resource, this is why we need to develop and use electric cars.
Research suggests that the greatest rise in environmental temperature over the past 100 years parallels the rise of the automobile. This suggests that traffic congestion is damaging the environment. At the very least, it is damaging the breathable environment since it is one of the primary contributors of smog. Smog is increasingly become a health threat to urban dwellers all over the world.
Traffic congestion is bad for the environment. The air is polluted by emissions from cars, so when lots of cars are sitting idle for periods of time it adds to the amount of time they are on the road. This wastes gas and puts more pollution into the air and environment.
Congested traffic can more than double the pollution released from vehicles which use up more gas and idle longer. The individual amount by each person may not be very significant, but the combination of thousands of vehicles running on idle no doubt increases pollution. This can be solved by developing more efficient roadways and increasing the use of some hybrids which do not use up as much energy when idling, accelerating, or decelerating.
Of course traffic congestion causes environmental degradation, both cumulatively on a macro scale and, even more dramatically on the immediate climate nearby. I remember my first trip to LA, we made the mistake of letting the cabbie take the highway. The fumes were so awful even with the car sealed, it could make a grown man dizzy.