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TED2006 Speaker Summary Abstracts

Abstracts (Alphabetically Ordered by Title)

A Production-based Model for Capturing Transportation Efficiencies

Transportation planners and economists have long struggled for ways to measure the effects of transportation investments on business output, jobs, income, and taxes within local, regional, state, and national economies. Efforts to study and measure economic growth that may be attributable to changes in transportation infrastructure and demand management have been mixed. Part of the problem lies with researchers’ inability to isolate the key independent variable – travel time improvement. Instead researchers have been relegated to using its proxies, such as lane miles of highways, construction costs, or average speeds. . Research on highways, for example, has shown that investments over the past 30 years have had but a marginal effect on population and job growth in areas as large as metropolitan areas for states. This research notwithstanding, investigations have provided little pedagogical fodder to practical general equilibrium assessments of specific project investments (the influence of an increase in lane-miles on travel times depends upon the utilization of existing capacity; construction costs vary instead with difficulty of building in surrounding terrain; and the use of average metro-area wide speeds masks major changes in intra-area travel behavior) and, therefore, fail to capture fully the efficiencies that obviously exist and generate economic growth. Hence, as congestion mounts on interstate highways, principal arterial systems, and key border crossings, decision makers, their business constituencies, and taxpayers overall want to know the extent to which the few new transportation investments selected for funding will enhance productivity of various stakeholders; just who those stakeholders are likely to be; and, in general, how these stakeholders will exploit the efficiencies they are able to reap form taking advantage of the new investment..

In this paper, ongoing research and project-specific applications are used to derive a production-based model for capturing transportation efficiencies. Using travel time as the independent variable, we measure producer responses to changes in transport costs and market reach. We focus on direct effects upon the manufacturing sector, but also examine concomitant indirect effects on all other economic sectors (using the R/Econ I-O’s [formerly PC I-O] multi-regional input-output model). Possible applications to assessing the effects of travel time changes directly within other economic sectors are addressed. Based on extensive interviews conducted with carriers and producers over many studies, we present the rationale, derived equations, and applications to support the notion that improved travel times lead producers to extend their market areas at competitive costs. Both microeconomic theory and engineering cost analysis of the pertinent industries support our findings that increases in production accrue to embracing economies as a result. Problematic issues encountered in data base development are addressed, and suggestions are proffered for research to further test the paper’s central hypotheses and extend our empirical work.

The paper discusses success factors and contrasts these with instances where TOD did not occur. The paper identifies various success factors, including activist public policy, a favorable real estate market, and specific market niches that were exploited to generate TOD.

The tourism sector has a highly significant role in the economy of the Valais, some of its resorts, such as Zermatt, Verbier, Crans Montana, Leukerbad and Saas Fee, being well known over the world.

Some figures will show the importance of tourism in the canton: in 2000, the share of jobs related to the sector was 18.7%, against an average for all Switzerland of 9.8%. The share of tourism (hospitality, restaurants and transport) in the cantonal GDP in the Valais is 12.6%, again twice the Swiss national level.

The Valais does not have an international airport, so land transport (by road and train) is the most important for tourism frequencies.

The local topography is characterized by mountains and the river Rhône. Tunnels and passes are very present in the transportation network, e.g. the Grand San Bernard Tunnel and the Simplon Tunnel.

One very important route linking the Valais to Geneva Airport is the national highway containing a tunnel, namely the Glion tunnel.

This was partially closed twice for 4 months (from April to November) in 2004 and 2005. The Glion tunnel consists of two separate tunnels, one for each direction; during the works, one was completely closed, while traffic flowed through the other in both directions.

The closure raised several questions for cantonal policy-makers and tourism planners. How many overnights did cantonal tourism lose as a result? Did tourists choose another mode of transport, like trains?

The main aim of this research is to answer these two questions using only public data like route counting, national tourism statistics, and the frequency of trains.

The research is organized as follows: firstly, we study the dynamic of land transportation in relation with tourist overnights. Secondly, we estimate the overnights which the Valais would have had if the Glion tunnel had been not closed. Thirdly, using the results of the former, some changes in transport behaviour between the first closure (2004) and the second are showed. Finally, an estimate of the loss of revenue from tourism which the canton incurred is calculated.

The statistical method uses Harvey’s structural time series model Harvey (1990). As indigenous variables, the causal version of the method uses the monthly series of tourism overnights and, as exogenous variables, the transportation data, also with monthly frequency.

This method has already been applied in a similar study regarding transport to the canton of Ticino in Scaglione (2002).

In order to show the differences in behaviour before, during and after the closure of the tunnel, the models have been recalculated with several final adjustments, and also, using the Chow test to identify breaking points, the approximate moments when certain changes in behaviour become significant.

Transportation infrastructure is an integral piece of the economic growth puzzle. The proper alignment of needed infrastructure with economic opportunity enhances the return on investment from that infrastructure investment. Decision tools to assist in this alignment activity are not readily available. The development of a transportation model that accurately shows the current state of Alabama’s infrastructure and allows for predictive analysis of the impact that relocating or developing industries has on economic regions was developed during this research. A survey was conducted to determine freight volume and movement for a select group of industries. Data from published government sources were also used. Regression analysis was performed to study the relationships between industry size and type and the volume of freight that moves using different modes of transportation. The model was developed using TRANPLAN and can be used to determine the expected effect of a new business on the local transportation infrastructure. This information can be used by agencies to either identify target industries that can promote economic growth while have little negative effect on congestion or examine infrastructure needs based on projected industry growth.

Public officials recognize the need to prioritize transportation projects based on their effectiveness as demonstrated through quantitative analysis. Above all, businesses and individuals are concerned about jobs, income, and the ability to compete in a global economy. Thus, we need to extend traditional cost/benefit analysis to incorporate total economic effects in order to fully evaluate transportation investments.

This paper provides a comprehensive cost/benefit comparison of two separate north-south highway improvement alternatives within the Central Puget Sound region. The REMI TranSight model, which integrates travel demand and project-specific data into a regional macroeconomic policy analysis model, was used in conducting this analysis. The modeling approaches incorporated into the REMI model allow for the evaluation of total effects of direct costs and benefits. In particular, structural equations based on the “new economic geography” drive the economic competitiveness benefits that result from commuting and business transportation cost reductions and accessibility improvements.

The goals of these highway projects are to improve safety, relieve congestion, increase network speeds, improve freight movement, and provide a positive economic benefit. Emme/2 travel-demand model simulations provide vehicle hours traveled (VHT) and vehicle miles traveled (VMT) estimates used as inputs in TranSight. TranSight uses the VMT and VHT changes to calculate changes in transportation costs, commuting costs, and accessibility costs. TranSight calculates emissions changes using the Emme/2 output and detailed EPA emissions factors, and safety data using the travel model output in conjunction with FHWA safety factors. Safety and emission calculations are then used to drive amenity-based migration labor force equations. Additionally, a fiscal impact module shows tax and revenue effects due to economic changes as well as direct project financing.

The dynamic aspect of the TranSight model allows multi-year estimates to be evaluated, demonstrating the full life cycle of each project from engineering, planning, and funding through the construction, operation, and maintenance phases. Additionally, we considered the demographic responses as local tax increases to finance the projects result in a decline in in-migration in the short-term; as user benefits accrue and taxes decline, positive population growth ensues. Long-term economic benefits result from lowered commuting and transportation costs and increased access. This improvement raises labor and business productivity, resulting in improved regional competitiveness and expanding sales to local, domestic, and international markets.

Developed as a comparison between two projects, the analysis shows the usefulness of a comprehensive cost-benefit analysis. Although the interstate project (I-405) provides greater short-term economic and long-term travel improvement effects than the state road (SR509), I-405 is nearly three times as expensive as SR509. Thus, from a total cost/benefit ratio, SR509, with a cost/benefit ratio of 6.31, dominates I-405 with a cost-benefit ratio of 2.73.

Beware of Labels in Economic Development: The Case of Kosova

In terms of percent of households or population, Kosova is one of the most rural and agrarian areas in Europe. Over half of its population lives in rural areas. The very large majority of these own land and engage in agricultural activities. Not unexpectedly, considerable stress is given by donors and Kosova’s government to advancement through rural development and promotion of agriculture, including protective or, at least, ‘level playing field’ approaches to customs. In this paper, it is argued that this view is wrong. The potential of Kosova’s agriculture is severely limited and both, the large majority of its people, as well as its most important agricultural industries, benefit from low or no barrier polices. Moreover, while over half of Kosova’s households are categorized as rural and have some agricultural production, the very large majority of these are in close proximity to large urban centers, derive the bulk of their incomes away from home, and produce food solely for own consumption. Though masked by poverty, these households are, in reality, suburban with large gardens and development efforts should be viewed in this light. At the heart of the development problem for Kosova, is assuring well functioning markets within metropolitan areas and their hinterlands. Vital, in these regards, is a well-functioning transportation system.

The effects congestion on personal and business travel are often used to justify investments in transportation infrastructure. However, the true cost of congestion for businesses often extends beyond cost of travel time related to delays on the transportation system. In the short-run, it affects the way in which businesses make decisions about how they deploy their resources during both congested and uncontested periods of time. In the long-run, it can influence location, expansion and investment decisions and can ultimately affect the economic growth and development of a metropolitan region.

Through interviews with representatives of major Portland, OR area businesses spanning a wide range of activities, several important trends and long-range effects of increasing congestion were identified. These included (a) costs of doing business, (b) design of business operations, and (c) market competitiveness of operating businesses initially established to serve broad regional and national markets. Results obtained from these interviews provided a basis for further documenting the economic stakes involved when considering options for addressing future traffic congestion levels.[1]

This paper will present the results of this series of interviews and summarize findings used in a broader analysis of the economic impacts of congestion. The interviews showed that there are differing transportation needs among manufacturers, distributors, retailers, utilities, health care services and other types of business. Most successful businesses adjust for congestion through some combination of changes in hours of operation, adding vehicles and drivers, increasing inventory, increasing distribution centers, or relocating business operations to less congested areas. However, some businesses are running out of options and have already begun relocating some of their production or distribution facilities out of the region. If this trend continues, new jobs in transportation, logistics and manufacturing that are serving growing markets outside of the Portland region will tend to migrate outside of the region.

The lessons learned from these interviews provide a benchmark for both decision-makers in the Portland, OR region and those responsible for transportation infrastructure investment decisions in every metropolitan region in the US. With competitiveness now an issue of survival in a Global economy, there are very few regions that can afford to ignore the costs of congestion on their business community.

The CODATU (Cooperation for urban mobility in the developing world) was born from the world conference on the urban transport, organized in Dakar in 1980. Since then, the organization has pursued a continuing international dialogue on development and transportation issues for growing urban communities in developing countries. Much has been learned from a series of information sharing experiences on common urban development issues among developing countries and industrialized countries. This presentation will give an overview of findings from Codatu XI in Bucharest (Romania) and an earlier conference in Togo, as well as more recent experience. Special attention will be given to the issue of direct cooperation between local governments worldwide, and factors that have held back improvement in the urban transport sector. Presentation of case studies will provide a basis for discussion.

Economic Benefits of State Assistance to Short Line Railroads in Kansas

Approximately 4,400 miles of railroad have been abandoned in Kansas from 1920 to the present – 1,600 between 1991 and 2002. This trend has been particularly alarming, given the importance of short line railroads in the transportation of agricultural and other products, and the role that the short line railroads play in the economic viability of Kansas’s rural areas and small towns. In addition, concerns exist regarding the negative consequences of large scale mode shift of agricultural and other products from rail to truck, particularly the additional wear and tear and maintenance costs that would be imposed on the state and rural roadway system.

To help address the problems of Kansas’ short line railroads, the Kansas legislature approved a short line railroad financing program in 1999. The program was intended to assist Kansas’ undercapitalized short line railroads with track rehabilitation. By 2001, a more immediate need arose. The State of Kansas and the KDOT were faced with the pending abandonment of a significant number of miles of the Central Kansas Railway (CKR). A regional railroad in Kansas approached KDOT about the possibility of receiving State assistance in its attempt to acquire the CKR. In order to prevent the abandonment of this mileage, KDOT agreed to use a portion of the Program funds to assist in the acquisition of the CKR to maintain and improve service on approximately 750 miles of railroad.

The paper will describe methods and results of a recently completed economic analysis of the State’s short line rail funding program, including loan and grant funds for extensive track rehabilitation throughout the entire short line system, as well as the acquisition of the CKR system. In particular, the paper will describe economic modeling procedures and results, including:

§ Operational benefits (shipper transport cost savings)

§ Local and regional economic benefits due to avoided business closures, including employment, business earnings, and wage income, as well as multiplier effects

§ Public sector benefits, including highway maintenance cost savings and state and local tax revenues

These assessments were made in the context of the logistics of wheat and other agricultural transport in Kansas, as well as other non-agricultural products which comprise a large share of short line railroad shipments.

In addition to the quantitative assessments, which will be presented to the legislature for consideration of the renewal of the KDOT program, qualitative assessment was made of the potential rural business development opportunities that would be supported by a viable and efficient short line railroad system. These and other qualitative factors information regarding the economic importance of the short line railroads were obtained in large part through extensive interviews of shippers, public officials, and the railroads themselves.

The paper concludes with recommendations for further research, including a more rigorous assessment of the causes of short line railroad abandonment.

Trade between the United States and Mexico has grown by more than 150 percent since the North American Free Trade Agreement (NAFTA) was ratified in 1994. Much of that growth has occurred on existing transportation corridors that link the two countries. Future NAFTA trade will be affected by capacity constraints on existing corridors and by other factors, including international trade policy, evolving production and supply chains, changing consumer demand, and transportation infrastructure investments. These issues have the potential to significantly influence NAFTA corridors and affect regional and local economies. The intent of this paper is to identify emerging trends for NAFTA transportation corridors and discuss their associated implications to trade and local economic development.

This paper summarizes interviews with shippers, brokers, and carriers moving freight between the U.S. and Mexico. The data were collected as part of a NAFTA study for the Texas Department of Transportation. Private sector companies and agencies interviewed include national truckload (TL) and less-than-truckload (LTL) carriers, shippers (manufacturers), customs brokers, freight forwarders, waterborne ports, inland ports, and railroads. Maps, tables, and observations summarize the findings of these interviews and provide insight into existing and future trade patterns, the relationship between transportation infrastructure and trade, and the economic development implications, including potential impacts on business expansion and job creation.

Special attention is given to the role of intermodal transportation in community economic development, including the emergence of Mexican ports as potential global gateways to North America. The impacts of other NAFTA issues, including fully internationalized U.S.- Mexican trucking operations, inland port development, and maquiladora trends are also presented in the context of transportation and economic development planning.

Economic Development Effects of Highway Added-Capacity Projects

The evaluation of transportation projects and programs has traditionally been carried out in the context of economic efficiency in terms of savings in travel time, vehicle operating cost, and safety, and to a lesser extent, indirect effects such as air quality, noise, and the ecology. The wider and longer-term effects on economic development on the basis of jobs, per capita income, business growth, etc. are a concern of transportation planners and decision-makers, but have been often overlooked due to the lack of a reliable impact estimation methodology and/or data. As transportation projects become larger and more complex, and as public participation plays an increasingly critical role in transportation project decision-making, information on economic development impacts is becoming more and more valuable for understanding the total effect of projects, and therefore for justifying proposed transportation infrastructure investments.

The role of different transportation infrastructure types in promoting economic development is therefore of great importance. Of particular interest are the added-capacity highway projects that require relatively large capital outlays. Using general economic principles as a basis, the present study defines a specific structure for measuring the economic impacts associated with expanded highway capacity investments. Temporal, spatial, and project characteristics are included. The study utilizes data from added-capacity projects programmed for the State of Indiana. Both short and long-term economic impacts are considered. The results of the study are expected to expand the existing knowledge base and to provide a quantitative assessment of economic development impacts of highway projects.

Comprehensive Development Agreements are public/private partnerships that allow private sector equity and innovation in project construction. The biggest contribution of CDA’s is that they impact project programming process in the sense that they allow projects to be started and completed much earlier than would otherwise have been possible using traditional finance. While the theoretical literature indicates that there is a clear linking between private finance and economic impacts, the empirical literature is sparse or non-existent in this area. This study will attempt to bridge this gap, by examining using a case study approach, the detailed economic impacts associated with a CDA project in Dallas, TX. The impact of the CDA project will be examined using several economic and financial indicators and by examining the lost economic opportunities or avoided costs.

Key Words: Comprehensive Development Agreements, Public Private Partnerships, Economic Impacts.

There is a close interaction between transportation activities and international trade, economic growth, economic development efforts, various public policies, and geographic endowments. This study assesses both the short-term and long-term effects of trade in the NAFTA area on future transportation needs. We estimate a gravity model of trade flows using US-Mexico and US-Canada trade data disaggregated by commodity, mode of transportation, state/province of origin, and state/province of destination for five US Southern states. Using this model along with forecasts of state/province GSP and population, we forecast future trade flows. The overall impact of trade is assessed using a regional input-output model.

The Massachusetts Turnpike Authority (MTA) conducted an in depth report on the economic and transportation impacts of the MTA as the owner and operator America’s largest public works project, the Central Artery/Third Harbor Tunnel Project (CA/T) known as Boston’s Big Dig. Now, that the CA/T project has reached substantial completion we will be releasing this study to the general public. Following is a short summary of our proposed presentation.

This presentation will describe the economic impact of the MTA as a transportation provider and the physical transformation of Boston as a result of transportation improvements, beginning with the ten mile extension of the Turnpike from Route 128 into Boston’s Back Bay and ending with the “Big Dig.” The presentation includes the economic impacts of the Turnpike west of Boston and the impacts due to new transportation infrastructure and services in the city from CA/T Project, and ensuing changes of traffic volumes, traffic patterns and travel efficiencies. Moreover, the original Turnpike extension was built in the early 1960s and was intertwined with air rights development of the Prudential Center, which later led to the development of Copley Place and Back Bay as a high end shopping, hotel, dining and office district. This presentation will briefly review this history and discuss parallels to current conditions forty years later, removal of the elevated Central Artery has opened up the long suppressed development potential of Boston waterfront as well as the Rose Kennedy Greenway above the depressed highway, and is creating demand for office and residential development with waterfront views.

Encouraging Development through Better Integration of U.S. and Canadian Transportation: The Open Prairies Proposal

It is common knowledge that the two largest economic blocks in the world are the European Union (EU) and the NAFTA and that both were formed to exploit efficiencies inherent in having larger markets which permit the freest possible flows of capital, labor, and goods and services. In this spirit, a French motor carrier can deliver a load from Metz to Dusseldorf and thereafter make hauls within Germany, on the same footing as its German counterparts, before returning to France. In other words, throughout much of the EU, member state motor carriers enjoy cabotage. The reality is much different in North America. Clearly, the EU system offers potential gains over the more restricted system among the North American nations, albeit not without potential problems.

In this paper, we explore the feasibility and likely benefits and costs of a limited experiment in motor carrier cabotage in North America, we call Open Prairies. Open Prairies would allow cabotage for U.S. and Canadian carriers throughout the Prairie Provinces and several Upper Great Plains U.S. states. The plan would include a sunset provision to require both nations to reaffirm the arrangement after a specified period. Two variants of the plan addressed are: 1. limiting/not limiting these rights to carriers based in the Open Prairies provinces and states, and 2. allowing/not allowing cabotage if only an origin or destination, but not both, is in the Open Prairies area. Potential problems addressed include impacts from cross-national differences in labor laws, weight and size limits, and tax regimes. Security implications are also discussed.

The HEAT model (Highway Economic Analysis Tool) represents the first fully integrated GIS tool to evaluate highway investments from project identification through transportation and economic development impacts to benefit-cost analysis within a single program. Using HEAT, transportation agencies may forecast the comprehensive economic benefits and costs of highway investments anywhere within their state or region. HEAT combines seven automated and linked modules into a software package designed to be operated in-house by transportation agency staff. These seven modules begin with a GIS-based network assignment routine and proceed through transportation performance evaluation, commodity flow forecasting and industry analysis, economic modeling, cost estimation, and finally benefit-cost analysis. Based on local data and industry trends, HEAT estimates three elements of direct economic impacts due to highway investments: 1) business cost savings from truck and on-the-clock auto travel benefits; 2) potential business attraction due to market accessibility changes; and 3) visitor spending effects from increased tourism. While HEAT is stand-alone software, existing data or programs that agencies have may be substituted for any of its modules. In its current configuration, for example, HEAT has an embedded REMI model but could work as well with the TREDIS or ReDyn models. Also, its Arc-GIS network assignment module could be replaced by a four-step travel demand model. HEAT was originally developed for Montana to evaluate the full range of economic benefits from major corridor highway proposals and has been used as part of the state’s Performance Programming Process (P3). HEAT has also been applied in Georgia to evaluate the economic benefits of its long-range transportation plan.

This study follows in the tradition of the seminal work of Isserman and Rephann (1995), which established definitively that ARC counties grew faster than “matched” counties with similar characteristics, but in general, could not determine the reasons for their superior growth rates and specifically, could not demonstrate any strong relationship between highway investments and relative economic performance.

This study is based on the hypothesis that the indeterminate relationship between highway investments and economic growth can be traced, at least in part, to the poor measure of highway investment used in the original study. To improve this measure, we surveyed state transportation agencies in the ARC region and developed a county-level database of highway characteristics. Using these improved measures, we are able to find a correlation between highway investment and economic growth.

The study proceeds in three parts. First, we attempt to reproduce the findings presented by Isserman and Rephann (I&R) in their 1995 article--which examined the impacts of ARC programs on economic development in the 1965-1991 period--and to extend their analysis to cover the entire 1965-2000 period. Second, we refined I&R’s single “highway” variable by decomposing it into its component parts, which represent ADHS and interstate investments, and present regression results using this approach. Third, we further refined the ADHS highway variable based on the results of the survey of state DOTs conducted by EDRG for this study, and present regression results using this approach.

This paper investigates the importance of commuting pattern to the economic growth. The authors want to show the dynamics of journey to work pattern in the Federal 8th District and implication of this to the regional economy. Besides the growth, inequality pattern is also affected by the commuting pattern.

Improve WisDOT's Image as a Catalyst for Economic Development

On November 2003, during a strategic planning event held at the department's state patrol training facility, one of the subcommittees identified a new strategic goal related to the Governor's Grow Wisconsin Initiative. This initiative concentrated on four areas:

• Fostering a competitive business climate, to create fertile conditions for growth
• Investing in people, to help families climb the economic ladder
• Investing in Wisconsin businesses, encourage job creation
• Making government response, to reform regulations and unleash the economic ingenuity of our businesses without sacrificing our shared values

The department established a committee to plan and implement ways to illustrate how the agency was involved and contributed to economic development in the state. Programs and activities were identified; a new Website and video were created to help illustrate how transportation plays a contributing role in growing the state's economy.

The presentation will highlight the processes the agency used to arrive at creating an interactive Website. The Website lists and describes all for the various DOT activities and programs related to economic development. By using examples and case studies, the end users can see how these program areas and activities can be applied for their specific economic development project. The program will conclude by showing a video, “Transporting Wisconsin's Economy” that illustrates the linkages between transportation and the economy from the testimonials of businesses and organizations that have benefited from transportation programs. WisDOT's economic development Website and introductory video can be found at: www.dot.wisconsin.gov/business/econdev

In particular, this paper identifies the key sources of supply chain program benefits used by industries such as metals, chemicals, pulp & paper, energy, machinery & equipment, vehicles & parts, mechanical & electrical devices, utilities, packaging, logistics, and transportation, and retailing. And, it groups industries by NAICS code into six Supply Chain Types™: Extraction, Process Manufacturing, Discrete Manufacturing, Design-to-Order Manufacturing, Distribution, and Re-Selling. Finally, and perhaps most importantly, this paper provides preliminary estimates of the supply chain and logistics benefits to industries from improvements to the freight transportation system. These benefits are in addition to direct transportation efficiency effects and are grouped by impact and Supply Chain Type™ for ease of application. These estimates were derived from numerous real-world business logistics analyses and represent a credible foundation for future research and refinement.

The Interstate Highway System (IHS), constructed since 1956, has changed the lifestyle of Americans, advancing personal mobility and enhancing economic productivity. In 2003, IHS expanded to 46,508 miles, connecting metropolitan areas and industrial centers for economic development and national defense. Though one major function of IHS is to move goods easily among regions, no empirical research ever looked into how intercity trade flows changed in response to Interstate Highway expansion.

Convincing evidence of the causal effect of roads on economic activity has been impeded by the endogeneity of road construction. First, given limited resources, only the routes with the greatest expected economic gain would ever become realized. And second, there is concern of reverse causality since economic prosperity may lead to more highway investment. This paper uses an instrumental variable strategy to identify highway construction, tests whether IHS stimulates regional growth by facilitating intercity trade, and considers heterogeneous responses of regions to interstate highway growth.

The analysis examines the rapid expansion of the IHS between 1963 and 1972. Major data sources are the Commodity Transportation Surveys (CTSs) in 1963, 1967 and 1972, issued by the Bureau of Transportation Statistics, and unpublished Interstate Highway Construction Records between 1956 and 1993, provided by Federal Highway Administration.

Unlike most related literature, this paper focuses on the construction priorities of highway segments, rather than public investment. Although a close linkage exists between 1956 Interstate Highway plan and economic prosperity, historical evidence shows that the difference among construction priorities of highway segments partly depended on ease of construction (such as the number of bridges), which is instrumental to the road construction decision but is plausibly exogenous to trade growth. The instrumental variables for Interstate Highway growth between 1963 and 1972 are 14 cost items in 1957 Interstate Cost Estimate for each segment of highway precise to 0.1 miles.

Regions may respond heterogeneously to highway growth, since (1) different regions have different industry compositions, and (2) industries with high transportation costs and high reliance on roads grow faster in response to additional highways than those with low transportation costs and low reliance on highway transportation.

Around the country, statewide and metropolitan leaders are examining a development policy generally known as “Smart Growth.” Under this strategy, economic development forces which, under a “trends extended” approach, would follow a continuing pattern of “sprawl,” are re-channeled into alternative land use and settlement patterns. In many states, economic development is being encouraged to take place on “brownfields” rather than “greenfields.” This strategy attempts to deal, either directly or indirectly, with the increasingly unsustainable transportation patterns associated with dispersed origins and dispersed destinations, and to make better use of transportation infrastructure already in place.

For the economic development strategy of Smart Growth to be effective, there must be market of people who, under their own free will, consciously choose to live in denser residential settlement patterns, or at least pockets of relatively denser settlement patterns. In urbanized areas, these clusters of residential settlements are often called “Transit Oriented Development.” For rural areas, the application of Smart Growth principles may result in the resuscitation of existing town centers, which may or may not be able to support traditional transit services.

The research question is raised, “What is the market for Transit Oriented Development?” If a statewide, or at least metropolitan-wide, economic development strategy aimed at encouraging denser residential settlement patterns is to be effective, there must be a market of individuals who want to purchase or rent their homes in such areas. The Transit Cooperative Research Program of the Transportation Research Board has recently undertaken a major study entitled, “Understanding How Individuals Make Travel and Location Decisions: Implications for Public Transportation.” The conclusions of this study could be very relevant to those charged with creating statewide or metropolitan economic growth strategies and policies.

The TCRP study undertook a survey of 865 participants who either had recently made a residential location decision, or were contemplating one. The study, under its mandate, applied state-of-the-art theories from the field of social psychology to the question of residential preferences. The study examines the interaction among various factors that come together to influence residential choice, specifically a decision to move to a neighborhood supportive of walking and transit modes of transportation. Factors ranging from environmental values to the influence of childhood experience are examined in the study. The study examined five market segments for residential choice, two of which could be considered positive to the concept, two of which are negative, and one segment whose members are “conflicted” between their declared environmental commitment and the perceived needs of their current lifestyle.

The presentation will conclude with a brief exploration of the extent to which these findings might or might not be applied to the question of Smart Growth in more rural areas. In the pursuit of a growth strategy that emphasizes existing or historical town centers, what are the trades-offs between a close-in residence and the traditional desire for large lots and more privacy? If traditional transit services are not the key elements of the transportation strategy in rural areas, then what should be? The presentation will describe the work program being developed at the New England Transportation Institute to explore the application of Smart Growth principles in rural areas.

Economists and other social scientists now have a good understanding of the issue of selection bias in program evaluation, and have developed various econometric tools, including recently the Propensity Score Models (PSM) to overcome it. The PSM solves the issue of selection bias by matching program participants (the treated) with non-participants (the control group) based on an index of common characteristics. Most of the practical application of this work, however, is done at the individual level in the evaluation of government programs designed to improve health, education and training. But PSMs are now becoming more popular for a wider range of applications including economic development programs. In this paper, we propose the use of PSMs for evaluating the impact of highway construction on economic development for the Appalachian Regional Commission. The PSM approach includes a major innovation that distinguishes it from more standard studies of transportation impacts: It explicitly incorporates an econometric methodology for addressing the important issue of self-selection that have arguably led to bias in many studies evaluating economic development program impacts. While the techniques that correct this bias are known, their application has been mostly limited to the academic realm, and one aim of this paper is to encourage their use for rigorous policy analysis.

Multi-Year Economic Optimization of Transportation Projects

In this paper a description of a multi-year optimization of limited yearly budgets is presented. This methodology is based on the Incremental Benefit Cost optimization, originally thought of in the late 1980's. This paper is an expansion on the original theory from a single-year budget to a multi-year budget, and to varying types of constraints, not just budgetary ones. The optimization deals with vast numbers of road projects, each of which have many alternatives. The consequence of this optimization is that it enables road agencies to perform multi-year planning, budgeting, according to respected engineering rehabilitation practices. A subset of this methodology sits at the core of several venerable pavement management systems, such as the World Bank's HDM-4. Nonetheless, the methodology is capable of dealing with far more intricacies than HDM-4, including the following: insuring that poorly-maintained roads will be budgeted and not put "at the end of the line"; timing the rehabilitation treatments, as a function of the road's current and expected level of service, and more.

The engineering methodology in the background of this optimization is a mix between AASHTO methodology and deterioration curves based on regressions of thousands of road samples. The economic methodology follows standard transport economics procedure, and includes savings in vehicle operation costs, the road's salvage value, the cost of the delay time when the road is being treated, and the time savings due to an improved road. The underlying economic model is based in part on the World Bank's HDM-4 methodology.

This optimization methodology basically insures that the entire budget is actually used, and no leftovers remain. The methodology is capable of implementing not only single-year budget constraints, but also multi-year budget constraints, within groups of years.

Moreover, the optimization methodology is also capable of dealing with non-budgetary constraints, such as the government's institutional ability to use its allocated budgets for roads. In other words, it is not enough that the government receive a huge budget for contracting road works. The "other side", in this case the contractors (or in some cases, self-management performed by the government), must have sufficient resources to be able to use up this budget. This constraint is sometime referred to as an "institutional constraint".

Finally, a great advantage of this methodology is that it can be implemented not only on road projects, but also on any given number of projects, which are subjected to single-year or multi-year budget constraints, and its computational applicability is vast. It has been implemented in various projects, including Pavement Management Systems, in many locations around the globe.

First, backward linkages materialize if the project procurement strategy allows market forces to work.

Second, backward linkages emerge if the local firms can bridge in an economically efficient manner the technological gap between what the project demands and the available technology.

Third, and related, backward linkages appear when local firms have a minimum level of organizational capacity and are professionally managed.

Pushing and Pulling in Rail-based Transit System Development

Northwest Arkansas (NWA) is one of the most economically vibrant and rapidly growing regions in the nation. Regional transportation infrastructure is, however, being hard-pressed as a result of rapid population growth, and increasing problems with highway congestion have become among the primary concerns of the citizenry. Regional highway systems are frequently said to be at least 10 years behind the demands on them. Mobility studies clearly show that catching up is hard to do. Quality of life is viewed as being threatened by both congestion and expanding fields of concrete and asphalt.

Dynamic tensions are flowing as I-540 transitions from an Interstate to a Main Street. An area mayor was quoted as saying that even considering light-rail transit is “chasing rainbows.” Still others fall into the traps of conventional thinking, comfort with the status quo, and subjective personal opinion – all of which are so much easier than undertaking a rigorous analysis before any pronouncement. In one sense, decision-making processes seem to be rooted in the conundrum of attempting to solve traffic congestion problems now versus capturing the upside of transit systems in anticipation of the future (an argument largely framed by perceived competition for the money required to do either, much less both).

In 2005, a grass roots push to consider rail-based transit or commuter systems began, driven in large measure by concerns for maintaining the quality of life that is in turn considered a key aspect in the region’s attractiveness. But there is also an emerging pull in the allure of the potential for positive economic development impact, revitalization of the historic core of the region, and enhanced livability coupled with decreased sprawl. Continuing exclusive reliance on the personal automobile is incompatible with achieving these goals: alternative modes of transportation are essential.

Urgent regional imperatives exist, and while certainly not unique to NWA, these imperatives are exemplified by the rapidly escalating costs of rights-of-way acquisition. Time is certainly of the essence, and the planning and development process will not be fast. On the upside, NWA has a linear rail corridor through the historical core of the two-county area, and the Arkansas Missouri Railroad, while most appropriately concerned with maintaining and growing its short-line freight-oriented business, is amendable to talking about sharing rights-of-way.

It is fortunate that notable examples of positive economic impact of large regional projects are familiar to NWA citizens. The Beaver Water District is such a project, and it is widely recognized that today’s level of regional development would not have been possible without it. More recent is the dramatic growth of air transportation as a result of the creation of the Northwest Arkansas Regional Airport (XNA), a facility that has consistently exceeded expectations in its growth in annual boardings. Direct air linkage to 16 cities—yesterday’s “rainbow”—is today’s reality. Both of these projects demonstrate that, with vision and push, forward-looking, large-scale projects can succeed.

Northwest Arkansas Regional Commuter System, Inc., a non-profit corporation, has been established to provide information and opportunities for public participation in the planning and development of forward-looking commuter systems in NWA. An “Action Committee,” a product of the November 2005 Public Forum, is active. A group of NWA citizens has been invited to D.C. to meet with FTA officials and Congressmen in whose districts rail-based transit is up and running. Understanding the hoops is progressing. The task is now to keep the push and pull going in the same direction – forward.

Transportation planners are faced with the challenge of sustaining both passenger and freight mobility in the face of substantial demand growth. Given the high cost of facility expansions in urban areas, one policy alternative is to relocate freight activities to rural locations where the costs of creating additional infrastructure can be markedly lower. Typically, this course is pursued to improve the economic efficiency of the over all freight networks. However, these infrastructure relocations can also have significant impacts on local job creation efforts if the requisite complementary inputs are also available.

The current analysis formally models the relationship between infrastructure-related economic efficiency gains and local economic benefits. The resulting model is then used to simulate the economic impacts of placing rural transportation infrastructures in communities with varying levels of public, private and human capital.

Many State DOTs recognize the potential for transportation investment to promote economic development, particularly in rural areas. Yet most state DOTs struggle to assess the potential economic development benefits of their investments. Many state DOTs also fail to fully leverage other economic development activities occurring in their jurisdictions. This presentation will review current state DOT practices for considering economic development in the transportation planning process. The presentation builds on past studies and includes new research conducted by the authors for NCHRP 8-36 Task 60. The presentation will review and assess, on a nationwide basis, the following issues:

• How state DOTs coordinate with existing economic development planning activities at the state, regional, and local level
• How state DOTs consider economic development potential in the transportation planning and programming processes
• How state DOTs use funding programs dedicating specifically toward transportation projects that support economic development
• How state DOTs conduct pre- and post-implementation evaluations of the economic development impacts of transportation projects.

While many will agree that there are significant linkages between economic development and transportation, often practitioners find that there is limited understanding between these two significant forces particularly at the local, regional, and state levels; and little ongoing communication about strategies to capture potential synergies that can help to generate new job opportunities and expanded tax base in this very competitive global marketplace. This paper will look at transportation and logistics as an economic development strategy from an economic development practitioner’s perspective and suggest strategies for enhancing the integration of long range economic development and transportation planning and as a result creating opportunities for job growth, new investment, and expanded tax base that can build a better future for communities.

More states are targeting their investment of financial resources to enhance economic development, not the “let’s build a road and surely someone will show up” notion of economic development but the near term creation of better jobs, attracting and retaining businesses with a future, and exploiting competitive advantages in new ways. In the past some economic developers were only interested in a single transportation link between the chosen location of their most recent prospect and the closest highway. In the changing global economy enlightened economic developers recognize that transportation can play a whole new role in the economic development future of a region but they must also gain a better understanding of how the changing demands of business has changed their transportation requirements as well and what must be done to continually enhance that infrastructure to meet those demands.

As the nature of work changes and the requirements that companies have for locating or expanding facilities changes as well. This paper will look at how these site selection criteria are changing and new opportunities to create a new synergy between economic development and transportation. With these changes come purposeful opportunities for new partnerships, new planning strategies, and better ways of doing business to generate a better economic development future.

There has been a large body of work completed looking at the implications of surface transportation on location patterns of industry. With the exception of a number of local impact studies rather less has been done on air transportation impacts on industrial behavior. Air transport, however, carriers a significant amount of trade by value, is an important input into attracting and retaining the "creative classes" in locations, and is extremely spatially flexible. This paper looks at the work that has been completed on the role of air transport in affecting local economic performance, and offers a critical assessment of what is actually known and the extent to which many of the studies conducted have been excessively narrow in their orientation. It looks at both the micro-analysis of particular facilities (either airports or particular air services) and at more macro-studies that seek to trace out linkages between economic development and air transportation provision. Where possible meta-analysis is conducted to assess the stability of such commonly used parameters as employment per passenger handled at airports, but inevitably it is difficult to easily identify moderator variables across very diverse studies and hence a more standard narrative review will be an accompaniment.

The Importance of Transportation Infrastructure to

In recent years researchers have considered a variety of regional models relating to the productivity of transportation infrastructure. These models are often based upon overly simplistic econometric specifications. We argue that there are serious biases in public infrastructure productivity estimates which are based on production functions or on cost functions. These biases arise because public infrastructure has important effects on demands for products, as well as prices of the factors for production. We develop a state-level spatial econometric infrastructure productivity model that contains four reduced form equations to explain energy consumption (in btus), price per btu, employment, and wages. In addition, our model uses two types of transportation infrastructure investments—highways and inland waterway navigation.

Growing sprawl and burgeoning mega-regions have made labor force location decisions and subsequent transportation analyses more complex than ever. In a recent op-ed for the New York Times, Jessica Pressler redefined Philadelphia as New York City’s “Sixth Borough” for its mounting population of inter-city commuters, an important and controversial nod to the changing nature of the commute within expanding mega-regions. This paper will explore the demographic characteristics of this population, whose unusual journey to work has become an increasingly popular choice. It will then investigate possible implications of this type of commute from a transportation and economic development standpoint, and suggests substantial areas of needed research. Using the 2000 Public Use Microdata Sample, this paper identifies the attributes of the inter-city commuting population and asks the question: who receives the benefits in this arrangement? Does one city benefit from the export of labor while reaping the rewards of an increased tax base? Does the “importing” city benefit from an expanded labor force pool? In two-worker households, what are the impacts of one partner’s inter-city commute on the other working partner and their joint location decision? What are the impacts on housing, described anecdotally by Pressler? What are the transportation improvements that have made this commute possible and/or desirable?

This paper examines the evolution and development of methods used for assessing economic development impacts of proposed transportation projects. These methods have evolved over the past three decades from the measurement of business cost savings and market attraction impacts to encompass considerations of production/supply chain, labor market and global trade impacts. These classes of impact can be particularly important for proposed projects affecting highway network connectivity, borders, intermodal terminals, logistics centers, service for export industries or multiple modes of travel.

A description is provided of emerging new directions for addressing existing problems in the measurement of economic development benefits. This paper summarizes the outcomes of a variety of recent efforts to improve the measurement of economic development benefits, especially for projects aimed at multi-modal investments, economic development clusters and international trade. It discusses how these past studies have led to the development of a range of computer analysis methods that can provide both transportation planners and economic development planners with capabilities to identify how a project’s multi-modal and spatial access impacts can also affect business market access and business attraction results. This review leads to the identification of ten factors that should be considered before deciding upon a framework for evaluating economic development impacts of proposed projects. The paper ends with description of one approach, which is the TREDIS (“Transportation Economic Development Impact System”) framework for assessing multi-modal impact factors and incorporating them into decision-making.

The Appalachian Development Highway (ADHS) system represents the only highway system explicitly authorized by Congress as an economic development highway system. As such, the ADHS represents the ideal case study for examining the criteria and evidence for evaluating the actual and potential economic development impacts of highway and other transportation investments. The relevance of ADHS is heightened by the fact that a growing number of proposed and existing federal, state and local sponsored transportation projects have been justified on economic development grounds. In this context a review of research findings on the economic development effects of the ADHS can provide a range of empirical evidence from a variety of research methodologies focused on this maturing highway system.

After providing some background on the ADHS, the presentation briefly reviews the ways in which transportation improvements can affect the development potential of a region, and then considers the criteria and measures that have been used in evaluation studies of the economic development impacts of the ADHS. It then examines several different types of research conducted to evaluate the impact of the ADHS, ranging from statistical studies of impact of the highway on Appalachian counties as compared to non-Appalachian counties, to spatial studies of the employment effects of the highway, to structural models that provide economic assessments of scenarios for a built and counterfactual un-built cases, to recent trade and transportation studies that examine the impact on export performance and the potential effects of increased national and regional demand for transportation services due globalization. In addition, current research and plans for new research designs will be discussed, including current research efforts to reconstruct historical data on the completion of corridor segments to refine temporal and spatial lag analysis of economic impacts, to the potential for network modeling impacts through extensions of GIS coupled with forecasting, and economic and social impact modeling methods.

The potential efficiency gains attributable to investment in transportation infrastructure may be expected to lead to increased clustering and the associated productivity gains at the firm and regional level. Clustering of economic activity may, in turn yield changes to local patterns of fiscal structure, both through alterations to revenue instruments and changes to expenditure patterns. This paper investigates the role transportation infrastructure plays in generating retail clustering in Indiana and Illinois. The paper further tests the impact lead firm expansion into retail clustering has influenced fiscal patterns in these two states as expressed by local government share of non-federal government employment. The model is a county level, cross sectional, time series model from 1969 through 2003 which accounts for spatial autocorrelation and corrects for endogeneity bias in the entrance of retail firms. From these results policy guidance regarding the structure of fiscal collections and local economic development are derived.

Transportation Investment and Economic Returns

Transportation investment opportunities are vital to the wellbeing of a nation. The extent to which the country can develop and operate a high quality and efficient transportation infrastructure has a direct bearing on the economy. Transport efficiency has a very important impact on the country's trade flows, the overall cost of goods delivered internal and external competitiveness and on the economic well being and quality of life enjoyed by all the people in the country. To sustain economic growth, transportation requires large investments in transportation infrastructure of all types. This means that a large amount of speculative investment prior to any returns on this transportation investments. In fact, there are usually long delays before these discounted net benefits from these investments become positive. A major component of assessing economic returns from transportation investments utilizes various applications of economic analysis In addition to the providing economic assessment of transportation projects, multi-modal approaches to evaluate these impacts of transportation investments and to maximize economic efficiency while considering equity and other social issues related to investment options.

An examination of export-oriented clusters based in Appalachia will also demonstrate how industry location patterns develop in large part due to the foreign-markets that can be reached and the availability of an efficient transportation infrastructure.

Transportation investments often increase nearby land values. This can choke off development, pushing new growth to cheaper sites remote from these investments. This “leapfrog” development creates a demand for infrastructure extension that starts the process over again. Transportation infrastructure, intended to facilitate development, thus chases it away. Resulting sprawl strains the transportation, fiscal, and environmental systems upon which communities rely. Several jurisdictions around the country utilize a value-capture technique embedded in their property tax to help finance infrastructure and motivate affordable compact development. They reduce the tax rate on assessed building values and increase the tax rate on assessed land values. The resulting compact development should facilitate better transportation and accommodate economic growth with reduced fiscal and environmental costs. This technique’s ability to foster affordable compact development might help bridge the gap between those who advocate growth boundaries and those who fear the impact of growth boundaries on affordable housing.

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