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Case Study:
Portland, Oregon
Economic Impacts
The REMI Model
The REMI modeling system, developed by Regional Economic Models, Inc., is an economic simulation and forecasting system designed for project and policy impact analysis within the U.S. The model is custom calibrated for regions consisting of one or more counties. The model predicts the impact of a proposed project on employment and business output for each of 53 industry categories and 94 detailed occupational categories. The model also predicts other variables such as changes in personal income, population, business competitiveness, wage rates, and value added at a similar detailed level. The model is dynamic, meaning that changes to the economy and adjustments to these changes are predicted on a year-to-year basis.
REMI was used in this study to translate transportation user benefits accruing to businesses within the region (freight and on-the-clock travel) into economic benefits for the region as a whole. The procedure for converting user benefits from STEAM into the appropriate REMI inputs is described below.
In addition to considering user benefits, it is also possible to use REMI to measure the impacts of expenditures and funding sources for construction and operation of transportation facilities. (In the I-5 study, construction impacts were viewed as a short-term impact and were therefore not measured in computing overall regional benefits.) Construction expenditures could be entered over the appropriate period of project construction. This is easy to do, since REMI contains "policy variables" that map overall dollar amounts for factors such as highway construction into increases in sales in the appropriate industries.
The flip side of the expenditure analysis is that any local (within-region) sources of funding for the project should be entered into REMI as well. The mechanism for entering local costs depends on the assumed source of funding for the project. A sales tax increase, for example, could be entered as a reduction in consumer spending. Utilization of general government funds could be entered as a reduction in general government expenditures.
Preparing REMI Inputs
In order to model the impacts of the project alternatives on the regional economy, user benefits from STEAM must be converted into appropriate values to be input into the REMI model. The general approach to this process is shown in Figure 5 and described below.
Figure 5. Analysis Procedure
Determine Local User Benefits. The direct economic benefits of each alternative are the share of the user benefits that increase the flow of money due to reduced costs (or increased sales) for businesses. For the most part, this would represent benefits accruing to trucks operated either by for-hire motor carriers or as part of private fleets. The direct user benefits for commuters (i.e., SOV and HOV home-based work trips) are not included in the estimation of economic benefits in this study.
In this analysis, only economic benefits to the six-county Portland region are measured. In order to calculate the regional extent of economic gain, the proportion of user benefits that will be realized as monetary gains by regional businesses must be determined. The approach to separating these regional benefits from the total trucking benefits is as follows:
- Exclude all through (external to external) trips, based on the truck trip tables provided by Metro.
- Exclude a portion of the internal-to-external and external-to-internal truck trips, recognizing that some of these benefits will be gained by businesses based in other regions. The factor used to scale these benefits was arrived at by determining the percentage of trips to and from external zones in the model.
- Include all internal-to-internal truck trips.
Map Commodity Groups into Industry Groups. The truck-related user benefits, which were defined by the 10 commodity groups produced by Metro (eight heavy truck and two medium truck), were then mapped into the 53 industries defined in the REMI model. This was done in three steps:
- The benefits for medium trucks (non-freight) were allocated among service and trade industries as a function of the following:
- Real output per industry, which is derived from the REMI control forecast;
- Percent of business activity by industry spent on vehicle-related costs, which are defined as expenses for the purchase, maintenance, and fuel of company-owned vehicles (from the BEA's input-output technological matrix) and labor costs for company-employed drivers and mechanics (from the Census' industry-occupation matrix); and
- Percent of total highway travel by the group benefiting from the highway improvement, which is obtained from any available business shipping surveys. The default assumption is to assume that this value does not vary across industries.
- The benefits for medium trucks (freight) were allocated among all industries, including for-hire trucking and manufacturing, as a function of the same factors as the non-freight medium trucks.
- The benefits for the eight heavy truck commodity groups were allocated in two steps:
- The Bureau of Transportation Statistics' Transportation Satellite Accounts (TSA) were used to allocate benefits for each commodity group among for-hire trucking and private fleets.
- The benefits experienced among private fleets were allocated from commodity group to industry groups as a function of a) real output by industry in the region; and b) production of each commodity by that industry, as determined by the national input/output technological matrix.
Estimate Intermediate Versus Value-Added Benefits. These benefits were then distributed between intermediate inputs
and value-added. Industry output is a combination of intermediate inputs (i.e., purchase of commodities or services) and value-added (labor, taxes, and profits). The benefits were totaled by industry and distributed between intermediate inputs and value added based on the national input/output technological matrix. Enter Benefits into REMI Model. The benefits related to intermediate inputs were then entered into the REMI model as a reduction in operating costs, while the benefits related to value-added were entered as an increase in total factor productivity.
REMI Outputs
The REMI model was then run for each alternative and the simulation results were compared to the baseline to determine the employment, output, and income changes associated with each alternative. Figure 6 provides sample output produced by the REMI model.
Figure 6. Sample REMI Output
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