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51 Economic trends indicate increasing demand for trans- indirect, and induced output, income, and employment of portation. Globalization and international trade are increas- the Kansas Comprehensive Transportation Program from ing the amount of goods moved across borders. Freight is 1999 to 2004. This study did not consider user benefits moving over longer distances as companies decentralize and (Babcock, 2004). outsource their manufacturing processes. Just-in-time pro- Economic performance measurement should differentiate duction technology and an increase in small, lightweight, between net growth and redistribution of wealth. Though high-value goods are increasing the importance of travel time the literature overwhelmingly asserts that transportation and reliability. Intermodal goods movement is increasing, not investments have a positive and significant impact on economic only as a result of international trade, but also as businesses outcomes, it cautions decision makers to discern between eco- seek the most efficient combinations of modes. Business and nomic growth and redistribution of wealth (Lewis, 1991; GAO, leisure air travel is increasing as long-distance business rela- 2005). For example, investments targeting congestion in a tionships increase and as wealth and personal incomes rise central business district (CBD) may benefit the CBD only, (Cambridge Systematics, Inc., 2002b). while investments targeting congestion in an industrial Agencies should attempt to consider the full range of costs zone or in the suburbs may have positive cascading effects and benefits in their analyses. Monetization of performance throughout the entire metro area (Weisbrod et al., 2001). measures relating to mobility, safety, system preservation, Congestion reduction efforts greatly benefit companies with environmental quality/health, and economic development highly specialized input and labor requirements and those holds promise, though measures relating to customer satis- companies that engage in a great deal of truck shipping. faction, environmental justice, quality of life, security, and Redistribution of benefits may be spatial, temporal, or socio- sustainability are more difficult to monetize (Economic Devel- economic in nature (Lakshmanan and Chatterjee, 2005; Weis- opment Research Group, Inc., 2007). In addition, some state brod et al., 2001). transportation agencies may be resistive to economic analy- Outcome evaluations should be conducted to gauge accu- ses for several reasons: racy of predicted costs and benefits. Though transportation projects are often selected based on perceived indirect bene- Skepticism concerning accuracy of the available technical fits, the literature suggests highway and transit projects rarely methods due to perceived uncertainties in valuing costs meet projected outcomes of cost and usage. It is likely they fall and benefits; short of achieving indirect benefits as well, but outcomes of Perception that the workload is excessive relative to agency transportation projects are rarely monitored so it is not known resources; and for certain. The Federal Transit Administration recently Concern the results could conflict with preferred or man- instituted a requirement for before-and-after studies of tran- dated outcomes. sit projects funded under New Starts, however, there are no requirements for economic analysis of highway projects These concerns are largely unwarranted as known uncertain- because those are funded under a formula program (GAO, ties may be managed, BCA becomes easier with practice (espe- 2005). Practitioners in the United States can look to other cially for less complex projects), and objective and independent developed countries such as Canada, Australia, Japan, and assessment of economic consequences can only contribute New Zealand for their use of before-and-after studies valuable information to a decision process (FHWA, 2003). (MacDonald et al., 2004). Benefit/cost analysis and economic impact analysis are two distinct methods. BCA, and the related net present value Economic Performance (NPV), demonstrate whether a project is worth the resources Factors and Objectives that will be invested in it. Economic impact analysis (EIA) demonstrates how these benefits and costs will be distributed Transportation investments have significant potential eco- throughout the economy. The results of these studies are nomic benefits and impacts that are often considered in complementary, not additive (FHWA, 2003). Two recent analyses of potential capacity expansion projects. Transporta- statewide studies demonstrate the difference. Colorado DOT tion infrastructure plays a vital role in the economy at local, adapted benefit/cost analysis methodologies from several regional, and national levels and investments in this infra- agencies and organizations to estimate user benefits and structure provide benefits through improved accessibility, costs for three alternative investment scenarios based on its reduced travel times, and similar changes. Infrastructure 2030 long-range transportation plan. The study did not quan- investments also can disrupt economic activities by restrict- titatively consider wider impacts on the economy (Pickton ing access to businesses during construction or taking local et al., 2007). Conversely, Kansas DOT sponsored a study businesses as part of right-of-way acquisition. The framework that used an input/output model to approximate direct, considers two economic factors:

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52 1. Economic Impacts These impacts include monetized user The SHRP 2 Capacity program is conducting research into benefits such as travel-time savings and fuel and nonfuel cost economic factors and potential performance measures as part savings, improvements in reliability, and safety benefits. of the C03 project, Interactions between Transportation 2. Economic Development Economic development captures Capacity, Economic Systems, and Land Use and Economic the broader economic benefits that can accrue as a result of Considerations in Project Development. Measures for this transportation investment. This factor includes productiv- section of the framework will be developed as part of the C03 ity effects driven by supply chain improvements, accessibil- effort. ity benefits, and more general macroeconomic impacts such as regional economic output and employment.