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APPENDIX F
Economic Development
in Statewide Corridor Planning
Transportation Investment and the Economy
Transportation is the backbone of the economy--it connects markets and provides for
the movement of people and goods. Maintaining and increasing the level of service of the
transportation system through the efficient and intelligent investment of transportation
capital is necessary to retain existing businesses and attract new ones. As shown in Figure F-1,
investments that lead to efficiency gains (i.e., reduced travel times and costs) lower business
costs and increase market access. This gives rise to productivity gains, which enhance economic
competitiveness.
In today's business environment, cost-effective and time-sensitive multimodal transportation
services have increasingly become part of the competitive advantage in manufacturing and service-
oriented industries. A state's transportation system includes highway, rail, transit bus, intercity
passenger rail and bus, airports, and potentially water ports and international border crossings.
They all provide crucial transportation services to residents and businesses.
Measuring Economic Impacts
of Transportation Investments
The purpose of economic impact analysis is to study economic trends and the impacts of a state's
transportation system on the state economy. The analysis should also identify any gaps in the
transportation infrastructure that may be adversely affecting the state's economy and provide a
context for understanding key changes and decisions in the transportation system with respect
to the state's economy.
The economic impact analysis will conceptually identify key elements of the transportation
system from an economic perspective and estimate the comparative impacts of different
improvement scenarios. A model might consist of the following:
· Defining the study regions,
· Analyzing transportation system impacts on the state's economy,
· Identifying strategic corridors and facilities,
· Analyzing comparative advantages and challenges,
· Identifying gaps in the transportation system,
· Analyzing mode and freight movements,
· Evaluating alternatives, and
· Identifying technical linkages between modes.
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66 A Guidebook for Corridor-Based Statewide Transportation Planning
Efficient Transportation
Infrastructure Investment
Increased Transportation Capacity,
Efficiency, Safety, Reliability, and Level of
Service
Transportation Transit Time Savings Attraction,
Cost Savings, (Reliability Improvement) Creation,
Greater Access Expansion, and
to Activities for Retention of
Households, and Increased Productivity Businesses and
Businesses and Participation in Workforce
Markets
Increased Competitiveness
Increased Economic Growth
Source: Adapted from FHWA Office of Freight Management and Operations, 2004.
Figure F-1. Transportation and the economy.
Defining Study Regions
For the purposes of economic impact analysis, a state should be divided into distinctive analysis
regions based on both geographic and economic considerations. Dissecting the state into "regions"
will facilitate the analysis and presentation of different regional and inter-regional dynamics that
may be affected by transportation system development.
Analyzing Current Transportation Impacts on the Economy
The initial overview of the economic significance of the transportation system should
provide context for the subsequent assessment of impacts of different future investment
scenarios and should support intuitive interpretation of the overall economic outlook from
a transportation perspective. This element of the economic analysis will include the following
three sub-elements:
1. Economic and demographic trends and outlook: a synopsis of trends in employment,
population, personal income and tax revenues for a state with respect to the United States
as a whole.
2. Defining key supply chains: a brief assessment of the state's industrial base and an examina-
tion of the supply chains necessary to the economic competitiveness of these key industries.
Understanding the multimodal global supply chains of key industries within the state will
provide insight into the private-sector system needs and requirements.
3. Transportation and travel demand: mapping trends in population and industry employment
in a GIS environment, using available economic forecasts, as well as future no-build travel
demand forecasts to pinpoint emerging sources of personal and commercial transportation
demand throughout the state.
Identifying Strategic Economic Corridors and Multimodal Facilities
The next step involves extracting trip and commodity flow distribution patterns from the
statewide traffic model (or other source) and information regarding key supply chains. This will
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Economic Development in Statewide Corridor Planning 67
help identify major trade flows and workforce commuting patterns not only within the state, but
also between state trade centers and the remainder of the United States. For U.S. border states,
this also includes patterns between the state and international trading partners. When mapped
in conjunction with the location of major transportation corridors, intermodal facilities, and
employment centers, these flows will highlight key corridors and facilities of strategic significance
to the state's economy.
Analyzing Comparative Advantages and Challenges
Information assembled from the above economic sub-tasks will provide a basis for comparing
trends, industry supply chains and economic transportation needs among the state's regions and
between the state and points outside the state. These comparisons will form the basis for identifying
the state's regional and statewide economic strengths, weaknesses, threats, and opportunities
(SWOT) from a transportation perspective. The SWOT evaluation will be an important tool
for understanding how economic changes are leading to decisions by major participants in
addressing the emerging role of the state's transportation system in relation to the overall economic
competitiveness of the state.
Identifying Gaps in the Transportation System
From the SWOT evaluation, key emerging weaknesses associated with a state's changing
economic needs will become evident. This information could be useful as an input for the stake-
holder involvement process and for the overall needs and performance assessment of the overall
plan-development process.
Analyzing Mode and Freight Movements
Using freight/commodity flow data and models, the comparative tonnage and value of freight
moving into, out of, and through a state by mode can be estimated. The tonnage and value of
top commodities and origin and destination (O-D) pairs for each mode should be identified and
quantified in this process, along with changes in tonnage and value by mode forecast through
the time horizon of the study. These movements will then provide insight into the context of
key changes, decisions, and participants pertaining to intermodal and multimodal freight
transportation needs in a state.
Evaluation of Alternatives
Using economic analysis, the economic impacts of corridor improvement scenarios can be
evaluated. Each scenario should be compared against a baseline (no-build) economic forecast.
Economic impacts will be derived by comparing anticipated levels of earnings, output, and
employment for the state and its respective economic analysis regions under each scenario against
anticipated conditions under a no-build baseline.
Using the comparative congested VMT and VHT estimates from the scenarios, a regional
economic model will be used to estimate economic impacts. The economic analysis will yield future
estimates of earnings, output, and employment under each of the four scenarios in comparison
to a "no-build" baseline scenario. This information can then be used to identify which of the
improvement scenarios will yield the greatest benefits. Figure F-2 demonstrates the basic economic
analysis approach linking VMT and VHT estimates of the scenarios to the economic impact
analysis methodology.
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68 A Guidebook for Corridor-Based Statewide Transportation Planning
Corridor
Transportation
Change in VMT and VHT
Change in Transportation
Passenger User Business User
Economic Model Economic Model
Economy Change
· Gross Regional Product
· Personal Income/ Real Disposable
Income
· Employment
Figure F-2. Modeling economic impacts
of transportation investments.
