Practices for Evaluating the Economic Impacts and Benefits of Transit (2017)

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60 chapter six ConClusions Motivation for transit EConoMiC iMpaCt and BEnEfit analysEs • A growing number of transit agencies are now using economic analysis methods to quantify the economic impacts and benefits of funding transit infrastructure investments and operating services. Some studies show the outcomes of transit investment in terms of economic impacts ( jobs and income in the broader economy) and others show the economic value of societal benefits (the value of social, environmental, and economic benefits). This report shows that both types of analysis are being applied, often in tandem, as complementary concepts that together support the business case for transit investments. This is an important finding, for it emphasizes that studies of economic impacts and societal benefits are not substitutes, but rather need to be seen as complements. • There are many reasons for conducting these types of studies; however, the most dominant one is to make the funding case for transit. This is done by effectively showing the business case (both the strategic goal achievement and return on investment) associated with continued and new investments. • To make that funding case in a rigorous fashion, it is necessary to clearly define the study area and also define scenarios to be analyzed or compared. This also calls for a realistic understanding of the costs of building, maintaining, and operating a transit system, and the incremental changes in service characteristics and costs associated with alternative scenarios. MEthods for MEasuring transit iMpaCts and BEnEfits • Transit is unique among surface transportation modes because it is a publicly supported service operating vehicles, relying in part on the facilities of other modes (road and rail corridors). As a service, it serves three purposes: (1) as a modal source of transportation efficiency improvement that also extends the effective capacity of existing road and rail systems, (2) as a social service for dependent populations, and (3) as a strategic planning tool that affects the spatial and economic development of metropolitan areas and rural regions. • This unique multifaceted aspect of transit leads to a wide variety of broader consequences, which can be viewed from different perspectives. Consequently, the economic analysis methods used to measure these outcomes also vary. They include various forms of both economic impact analysis and analysis of societal benefits. The latter may be conducted either in the format of a benefit–cost analysis or as a cataloguing of societal benefits, which is sometimes referred to as multiple account evaluation. • The different economic analysis methods lead to a variety of different metrics. The economic impact analysis metrics include effects on jobs, income concepts (including wage, Gross Domestic Product, and business revenue), and land value concepts (prices or rents). The societal benefits include the valuation of cost savings, productivity gains, and “willingness to pay” for non-money benefits including environmental and quality of life factors. Evolving issuEs in MEasuring transit iMpaCts and BEnEfits • Methods to measure the multi-modal transportation efficiency effects of transit are generally well understood and widely applied, using transportation models together with economic impact models or statistical relationships.

61 • Additional methods that show the value of transit as a source of enhanced labor market access have more recently come into mainstream use and are now also widely accepted. • Methods to show the value of public services are less well defined; however, there is general agreement that it is possible and useful to calculate the avoided costs that would otherwise be incurred by households and/or government to enable work, education, and health care access for those who cannot afford to drive or are unable to drive. This still understates additional potential benefits of transit in bringing greater social inclusion to neighborhoods where access is deficient. • Methods to show the strategic value of transit as a tool for urban land development and eco- nomic development are emerging. Statistical studies and economic impact models can now assess the incremental effects of transit improvement on land values and economic growth. However, there is significant room for improvement to better capture the strategic value of transit to help achieve broader economic development and community development goals. • It can be important to recognize and report on the public service and strategic (urban and economic) development effects of transit. Part of the problem that transit agencies have faced to date is that the value and importance of transit is understated when studies rely only on the methods used for highway network analysis, which rely primarily on tracing consequences of transportation efficiency improvement. • Past studies have shown that traditional benefit-cost studies can work as justification for new tran- sit lines serving highly congested corridors in major urban areas. However, that narrow analysis approach is insufficient to capture the benefit of more diverse bus services and transit investments in medium and smaller size urban areas or rural areas. In particular, benefit–cost studies often focus on performance effects related to congestion mitigation, while not always fully describing the social importance of maintaining access to employment, health care, and education. • Newer APTA-funded research studies are pointing to the increasingly important role played by transit in enabling the growth and development of high tech clusters, which are an engine for America’s economic future. This line of economic development impact research can be applied together with methods for assessing urban land development impacts (e.g., discussed in Ewing and Cevero 2010) to establish a broader concept of transit goals and corresponding transit benefits. nEEd to Expand usE of EConoMiC iMpaCt and BEnEfit analysis • Most transit operating agencies and agencies that do transit planning have never sponsored either an economic impact study or a societal benefit study, although they are well aware of those topics as they are often covered (though often superficially) in environmental impact studies. • The literature review showed that the economic impact and economic benefit studies have been carried out by a variety of transit agencies that are small, medium, and large in size. That finding runs counter to a commonly held belief by staff of other agencies that only large agencies have the resources to conduct such studies. • There are notable examples of small- and medium-sized transit agencies that have conducted economic impact or benefit studies despite a lack of in-depth modeling resources. They accom- plish this by relying on a defensible body of research demonstrating how data on transit travel characteristics (and transit-oriented developments) can be used to show economic development benefits and community benefits. There are also notable examples of how descriptive studies of transit markets (including descriptions of the role of activities supported by transit) may be used to show transit benefits. • There are few examples of transit economic impact being integrated with the economic impact of other modes in statewide, regional, or metropolitan planning organization programmatic investment or multi-criteria ranking processes, despite established methods that could enable such inclusion. However, there are notable examples (e.g., case examples in chapter five) that show how economic impact and benefit studies can be an integral part of broader planning and policy discussions. • Despite growth in the use of both economic impact and benefit studies, and the existence of tools to conduct these studies, there is still evidence of remaining confusion concerning the difference between the types of studies, their terminology, and interpretations.

62 dirECtions for futurE aCtion • There is a need for the development of further guidance for transit agencies of all sizes to appropriately apply economic impact methods and communicate their findings. Topics to be covered include: (1) the difference between economic impact and benefit studies, (2) the different contexts in which each may relevantly be applied, (3) ways that the two can be used in tandem to support the broader business case for transit investment, (4) how calculation processes can be adjusted for different situations and study areas, and (5) how findings can be interpreted and communicated to different public audiences. The guidance might include a simple primer that defines concepts and methods, and more detailed guidance that can offer methodological examples and resource references, as well as a decision tree showing how to set up and structure economic studies. • There is a need to expand coverage of economic studies for small and rural systems, as well as larger transit systems that have not yet undertaken economic impact and benefit studies. To do so, transit agencies will need advice on methods that can make more effective use of their existing resources including transit-demand analysis, service performance, ridership data, and customer surveys. This information can be used to establish profiles of the economic activities supported by transit, the business markets that depend on transit access, and emerging growth clusters and areas that are likely to benefit from (or depend on) transit in the future. This type of analysis can support a rich narrative concerning the full nature of transit impacts and benefits, and that can be more compelling than merely reporting total dollar or job numbers. • Transit market information and impact analysis methods can together help make the case for a more strategic view of transit as integral to the achievement of economic development and community development goals for areas. It can be used to help establish the full cost of “second best” alternatives to transit, when considering economic outcomes and broader societal benefits. There is a need for research concerning approaches to more clearly establish these connections. • Ultimately, there is a need for the development of more consistent standards regarding metrics for reporting on economic impact and benefit analysis results, so that results can be understood used across agencies and modes.