Do better roads mean more jobs? elected officials are turning to FHWA for advice on the impact of highways on economic development and funding - Federal Highway Administration

Public Roads, May-June, 2002 by Ellen Schweppe

If you build a highway, jobs will come.

Well, maybe--so how do transportation planners predict whether a highway project will boost an area's economy? Some studies show links between better roads and more jobs. But most often planners lack the data they need to determine whether proposed projects will actually produce desired economic benefits, according to Martin Weiss, who has studied the issue for the Federal Highway Administration (FHWA) for nearly a decade.

Planners are turning to FHWA for the answers they need.

The economic benefits of highway improvements have long been a subject of debate. Proponents of highway investment point to such expected paybacks as job creation, income growth, and business expansion. Opponents argue that new roads merely increase traffic to the detriment of the environment and redistribute jobs without creating net economic benefit. In fact, Weiss maintains, too little research has been done to develop a base of information that can be used to project the economic effects of individual highway proposals. In addition, too little research has been done to assess the quality of life and other environmental issues related to the economic development impacts.

FHWA is working on several fronts to develop information that the transportation community can use to make better decisions on highway projects aimed at economic expansion. The efforts include before-and-after-studies of projects to determine the effect of highway improvements on local economies, as well as prospective studies to find out what motivates sponsors of highway projects.

"Completing these studies will help us understand the mechanisms by which different types of highway improvements actually result in growth," says Weiss, principal program official for FHWA's National Corridor Planning and Development and Coordinated Border Infrastructures (NCPD/CBI) programs and the Economic Development Highways Initiative. "Once we know the mechanisms, we think we can better sort economic development proposals into those that are 'very promising,' 'promising,' and 'other.' "And planners can use the results to make investment decisions.

What about statewide planning? Factors such as traffic commute patterns? If we can sort the proposals, planners can make better investment decisions, and statewide plans and programs can be better supported. Eventually, traffic projections, particularly those related to commuting and tourism, can be more accurate.

Highway projects that fall into the economic development category are those that are expected to result in a sustained increase in employment or an increase in wages, profits, sales, and similar indicators-but are not justifiable by traffic.

"Funds that go into such projects may not be a large percentage, but it's not an amount to be sneezed at, particularly if State planners can improve on how it gets spent," says Weiss.

Many local, State, and regional transportation officials agree. Elected officials are turning to FHWA for advice and funding on highway economic development with increasing frequency. Sometimes four or more high-level delegations visit FHWA headquarters in a single week.

"People are struggling to put together impact studies," says Weiss. "They don't really know what to say about whether a project will or won't accomplish economic development. There's a potential to develop valuable information for transportation planning."

The Better Roads-More Jobs Connection

Studies starting back in the era of interstate construction demonstrated a connection between highway improvement and economic growth. A 1970 study that looked at employment trends between 1958 and 1963 found dramatically higher job growth in urban areas with interstate access. A 1980 report on the impact of the interstate system on rural areas found similar results.

By the 1990s, new interstate construction had slowed, making the continued usefulness of the earlier research questionable. Four regional studies, however, shed light on the relationship between transportation improvement and economic development. Two of the studies focused on the 13-state Appalachian region.

The first Appalachian study looked at counties with per capita incomes of less than two-thirds of the national average to see which of them succeeded in climbing out of the low-income category between 1969 and 1993. West Virginia and Kentucky exhibited relative lack of success compared to other states. The study identified several reasons, two of which relate to highways: The low-income counties in those two states were more distant from metropolitan areas than low-income counties in other states, and scheduled highway improvement projects in the two states had not yet been completed.

The other Appalachian study compared income growth in 391 counties with demographically similar counties outside the region. The study showed that per capita income increased 17 percent more m the Appalachian counties than in their counterparts. But the increase was 32 percent greater in counties with at least 3 miles (4.8 kilometers) of new highways constructed under the Appalachian Development Highway Program.