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CHAPTER 9. ECONOMIC DEVELOPMENT
OVERVIEW
Transportation projects have long been identified with economic development. By changing the
pattern of accessibility, highway projects can facilitate trade between locations, allow consumers
to more easily shop or sell wares at particular places, and even change commuting patterns in
ways that might facilitate the growth of employment centers.
These economic impacts often are distributive in nature. The shopping malls locating along a
beltway might represent commercial activity that to some extent comes at the expense of stores
in a downtown area. Similarly, a highway bypass can facilitate the growth of employment
centers, but at the expense of other employment locations. Inner city mayors and downtown
business interests have often expressed concern that outlying highway projects can draw jobs and
economic development away from central areas, but the distributive effects of highway projects
are much more general. Many highway and road projects can generate differential economic
impacts across places, and if those differential impacts correlate with the spatial pattern of low-
income or minority populations, this can require an environmental justice analysis.
STATE OF THE PRACTICE
The idea that the economic impacts of highways are distributed across the landscape has a long
basis in theory. Mohring and Harwitz (1962) argued that many of the economic development
impacts observed near highways come at the expense of slower growth in other areas.
Forkenbrock and Foster (1990) suggested that a proposed new highway from St. Louis to St.
Paul would provide employment growth near the corridor in large part by shifting jobs and
economic activity from areas more distant from it. Boarnet (1998a) analyzed data for highway
capital stock, employment, private capital, and economic output in California counties from 1969
through 1988. The results suggested that increases in highway capital stock were associated both
with higher levels of economic output in the county receiving the additional capital and with
lower levels of economic output in other counties. Boarnet concluded that this evidence
confirmed the idea that highways redistribute economic activity across the landscape. While
some theory suggests that such redistributions need not be zero sum, Boarnet interpreted the
magnitudes of the statistical associations as suggesting that the redistributive impacts of highway
infrastructure can be at least as important as any aggregate increase in economic growth
associated with highways.
Many authors have argued that transportation planners should avoid double counting highway
project benefits. Economic benefits flow from changes in accessibility; and, partly for that
reason, counting both economic benefits and the underlying changes in accessibility will double-
count (and hence inflate) true project benefits. An example of double counting is as follows:
suppose a highway improvement reduces the cost of shipping tomatoes to market. Also suppose
that, because of these savings, tomatoes are sold at a lower price that exactly reflects the lower
shipping costs. The lower market price simply reflects the reduced shipping cost and thus is not a
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