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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. 65

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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.