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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 217