AnAlyzing the economic impActs of trAnsportAtion projects

september 2013

A report bythe connecticut AcAdemy of scienceAnd engineering

forthe connecticut depArtment of trAnsportAtion

AnAlyzing the economic impActs

of trAnsportAtion projects

A report by

the connecticut AcAdemy of science And engineering

Origin Of inquiry: The COnneCTiCuT DeparTmenT Of TranspOrTaTiOn DaTe inquiry esTablisheD: sepTember 1, 2012

DaTe respOnse releaseD: sepTember 13, 2013

Copyright, 2013. ConneCtiCut ACAdemy of SCienCe And engineering, inC. All rightS reServed

analyzing the economic impacts of transportation projects

ii connecticut academy of science and engineering

this study was initiated at the request of the Connecticut department of transportation on September 1, 2012. the project was conducted by an Academy Study Committee with the support of Karthik Konduri, phd, Study manager and nicholas lownes, phd, Study Advisor. the content of this report lies within the province of the Academys transportation Systems and economic development technical Boards. the report has been reviewed by Academy members Sten A. Caspersson and herbert S. levinson, pe. martha Sherman, the Academys managing editor, edited the report. the report is hereby released with the approval of the Academy Council.

richard h. Strauss executive director

disclaimer

The contents of this report reflect the views of the authors who are responsible for the facts and accuracy of the data presented herein. The contents do not necessarily reflect the official views or policies of the Connecticut department of transportation. the report does not constitute a standard, specification, or regulation.

the uS government and the Connecticut department of transportation do not endorse products or manufacturers.

analyzing the economic impacts of transportation projects

iiiconnecticut academy of science and engineering

Technical Report Documentation Page

Form DOT F 1700.7 (8-72) Reproduction of completed page authorized

1. Report No. CT-2279-F-13-13

2. Government Accession No. 3. Recipients Catalog No.

4. Title and Subtitle Analyzing the Economic Impacts of Transportation Projects

5. Report Date September 2013 6. Performing Organization Code SPR-2279

7. Author(s) Karthik Konduri, Study Manager Nicholas Lownes, Study Advisor Jamie Angueira, Research Assistant

8. Performing Organization Report No. CT-2279-F-13-13

9. Performing Organization Name and Address Connecticut Academy of Science & Engineering 805 Brook Street, Building 4-CERC Rocky Hill, CT 06067-3405

10. Work Unit No. (TRIS)

11. Contract or Grant No. CT Study No. SPR-2279

13. Type of Report and Period Covered Final Report September 2012 September 2013 12. Sponsoring Agency Name and Address

Connecticut Department of Transportation 2800 Berlin Turnpike Newington, CT 06131-7546

14. Sponsoring Agency Code SPR-2279

15. Supplementary Notes Partners: Connecticut Department of Transportation: Bureau of Engineering and Construction and Bureau of Policy and Planning; Connecticut Academy of Science and Engineering; Connecticut Transportation Institute, UCONN. Prepared in cooperation with USDOT, Federal Highway Administration. 16. Abstract: The main goal of the study is to explore methods, approaches and analytical software tools for analyzing economic activity that results from large-scale transportation investments in Connecticut. The primary conclusion is that the transportation system and users of transportation infrastructure interact with the economy in complex ways, causing economic impacts. Therefore, in order to effectively analyze the economic impact of transportation projects, ConnDOT should consider: establishing the role of economic impact analysis in the states strategic transportation planning process; adopting an objective, independent and consistent process for conducting economic impact analyses that incorporates the states regional, economic and political considerations; building capacity of ConnDOT staff including their understanding of economic impact analysis and the tools used to conduct such analyses for use in the strategic planning process and to support and manage analysts that conduct the analyses; utilizing analysts well versed in the principles of transportation planning/engineering and economic theory, and knowledgeable about the interrelations between the two for the purpose of ensuring validity of the results; establishing a partnership with an organization or consultant with the capacity to conduct economic analyses to achieve consistency in analyses over time; selecting an economic analysis software model to analyze the economic impact of transportation projects. Of the models considered in this study, currently REMI TranSight and TREDIS are recommended for ConnDOTs consideration; and customizing and communicating the results of the analyses in meaningful terms for various audiences (e.g., decision makers, stakeholders and the public).

17. Key Words Economic Impact Analysis; Economic Development; Estimating and Evaluating Economic Impacts of Transportation Projects

18. Distribution Statement No restrictions. This document is available to the public through the National Technical Information Service, Springfield, VA 22161

19. Security Classif. (Of this report)

Unclassified

20. Security Classif.(Of this page)

Unclassified

21. No. of Pages 162

20. Price N/A

analyzing the economic impacts of transportation projects

iv connecticut academy of science and engineering

analyzing the economic impacts of transportation projects

v connecticut academy of science and engineering

MEMBERS OF THE STUDY COMMITTEE On analYzIng THE ECOnOMIC IMpaCTS OF

TRanSpORTaTIOn pROjECTS

joseph (Yossi) Berechman, phDChairman, department of economics

the City College, the City university of new york

alison premo Black, phDvice president of policy and Chief economist managing director of research and education

American road and transportation Builders Association

Terry Clower, phDdirector, Center for economic development and research

university of north texas

john FischerConsultant, transportation policy

a. george Foyt, ScD (Academy Member)manager of electronics research

united technologies research Center (ret.)

john n. Ivan, phD (Academy Member)professor and Associate department head

department of Civil & environmental engineeringuniversity of Connecticut

Todd litmanfounder and executive director

victoria transport policy institute

alan pisarskiWriter, Analyst, Consultant on transportation policy

joshua l. Schank, phDpresident and Ceo, eno Center for transportation

Martin Seifert (Academy Member)president, nufern, inc.

Martin Wachs, phDSenior principal researcher, rAnd Corporation

Shirley YbarraSenior transportation policy Analyst, reason foundation

analyzing the economic impacts of transportation projects

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reseArch teAm

CONNECTICUT TRANSPORTATION INSTITUTE, UCONNSTUDY ManagER

Karthik Konduri, Assistant professordepartment of Civil and environmental engineering, uConn

STUDY aDVISOR

nicholas E. lownes, phD, pE, Assistant professor department of Civil and environmental engineering & director,

Center for transportation & livable Systems, uConn

RESEaRCH aSSISTanTjamie angueira, research Assistant, uConn

CONNECTICUT ECONOMIC RESOURCE CENTER

STUDY COnSUlTanTSDale Shannon, Senior economist/Consultant

alissa K. Dejonge, vice president of researchCarmel Ford, research Analyst

aCaDEMY pROjECT STaFFRichard H. Strauss, executive director

Terri Clark, Associate directorann g. Bertini, Assistant director for programs

analyzing the economic impacts of transportation projects

viiconnecticut academy of science and engineering

TaBlE OF COnTEnTS

tABle of ContentS ........................................................................................... vii

Key definitionS ..................................................................................................ix

liSt of ACronymS ................................................................................................xi

eXeCutive SummAry ........................................................................................ xiii 1.0 introduCtion ...............................................................................................1

1.1 need for analyzing economic impacts of transportation investments .11.2 Study considerations .................................................................................21.3 project objectives ........................................................................................4

2.0 ChArACterizing eConomiC impACtS due to trAnSportAtion inveStmentS ...................................................................................................7

2.1 dimensions of the transportation System and economic impacts .......72.2 processes Characterizing economic impacts due to transportation investments ................................................................................................8 2.3 economic development due to transportation investments ................82.4 transportation investments as a facilitator of economic development impacts ............................