Impact Methodologies

Economic Development

Overview

Economic development impacts may be measured through job creation, total or per-capita personal income, business growth and attraction, business productivity, or other means. Transportation investments can provide economic development benefits by reducing the cost of transportation for businesses and by expanding the accessibility of firms to suppliers, labor, and consumer markets. Transportation investments can also induce businesses to locate in areas served by the investment. At the scale regional or national scale, productivity improvements resulting from transportation improvements can result in overall economic growth.

The primary determinants of economic benefits include:

• The accessibility benefits of the transportation improvement. Accessibility can be measured through the number of suppliers, buyers, workers, etc., that can be reached within a given travel time or cost.

• Safety improvements, which can also reduce travel-related costs to people and businesses and result in corresponding positive economic impacts.

• Expenditures on transportation, including capital, operating, and maintenance costs. This category includes consumer expenditures as well as expenditures by the provider of the transportation facility or service. In the short term, construction and operation expenditures may provide a boost to the local economy, especially if project funding flows from outside the region. Long-term economic benefits, however, result primarily from improvements in transportation efficiency rather from than the construction and operation of the project itself.

When measuring economic impacts, it is important to distinguish growth impacts (a net benefit to the economy) from redistribution impacts (where activity is shifted from one location to another). Construction of a new highway, for example, may cause retail activities to locate at the highway's interchanges. This new development may not reflect an increase in total economic activity, however, but rather a shift in the location of the retail establishments following changes in traffic patterns.

Transportation, economic development, and land use form a three-way relationship since land use is driven by economic activity. Measuring or forecasting the impacts of alternative land use policies and development scenarios on economic activity, however, is an issue that has received relatively little attention. Development patterns may have economic implications through their impacts on transportation accessibility. At the same time, policies to channel the location of development to certain areas will have implications for the location and cost of various economic activities.

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