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Economic Impact Tools and Models: Are they Useful?

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Infrastructure investment proposals can generate intense public discussion , and when it occurs, there is almost inevitably talk about how the project will (a) hurt the local economy, (b) save the local economy or (c) both. When the latter occurs, it is often because there are two factions – supporters and opponents. Of course, what is often missing is objective information to help guide and control these fears, hopes and allegations. That is where economic models and tools both come in. What is the difference between models and tools? EDR Group has been working in this field for 20 years now, and yet we still see ample confusion on this topic. Here’s a try at answering the question: A TOOL helps people carry out a function, so a “decision support tool” can be any method or process that helps people assess alternatives. In the case of transportation investments, this includes...
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3 Reasons to Invest in a Transit Economic Blueprint

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The President’s federal budget proposal proposes $2.4 Billion in transportation spending reductions – including significant cuts in federal transit programs. Meanwhile, states from  Georgia  to  Oregon  and places in-between have looked to increase state transit funding and there is growing discussion about the role of public-private-partnerships (PPP)’s in funding transit improvements. These changes create an environment in which transit systems and proponents must make a more compelling case than ever before to business and economically savvy audiences demonstrating their economic role. It is time for states and regions to take stock of what is really at stake in transit investment.  A State or Regional Transit Economic Blueprint  can be understood as a regional study showing the role of transit in the economy, and mapping out the rationale for future investment strategies. Areas like  Hampton Roads , Virginia,  Fairbanks Alaska  and  Austin Texas  in the last year have undertaken significant efforts to define...
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Beyond the Usual Suspects: Looking Past Typical Measures Used in Prioritization and Performance Measurement

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We all know some variation of the saying, what you measure is what you get . At EDR Group, we work with States and regions to help choose the right things to measure – whether for performance management over time or to support project evaluation and prioritization – and to understand how those choices affect long-term policy implementation. Two EDR Group efforts, one recent and one ongoing, address this directly: Freight Accessibility Measurement . Naomi Stein and Glen Weisbrod presented a poster titled Freight Accessibility and Economic Development, Case Studies in Practical Measurement at this year’s TRB annual meeting. Walter Hansen famously defined accessibility as the potential of opportunities for interaction.” The poster focuses on different approaches to measuring freight accessibility, using readily available information, and argues that freight accessibility is an important performance measure and indicator of economic development and growth potential. Examples of common metrics include the number...
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It's Time For Transportation Planning to Account for Economic Uncertainty

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Changes in the administration, debates in Washington, and  ongoing developments in technology, climate change and infrastructure costs make it harder than ever to undertake meaningful transportation plans, corridor studies and prioritize public investments.   Choosing between different mixes of long-term transportation infrastructure investments for such an uncertain future is a bit like trying to walk ashore in a rising tide. As soon as you find your path, it disappears!  The cost of over-build on an asset or transportation system can have life cycle costs that jeopardize an agency’s ability to respond to new challenges. However the societal costs of under-build in terms of safety, congestion and environmental loss can be even more taxing. It is time for transportation planners and engineers to consider the implications of different economic trajectories when assessing future traffic volumes and investment needs.  What if energy prices (including motor fuel) rise at triple the price currently anticipated? What if foreign trade...
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Quantifying Uncertainty in Real World Decision-Making: Making Smarter More Grounded Choices

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It is the often untold story of project evaluations: We can never be fully certain about the results. Whether it is about the selection of the best alternative for a project or about setting priorities among different projects, the results depend to a considerable extent on assumptions we make. Assumptions are embedded in our analytical choices and results : what are the appropriate weights for each factor in a multicriteria analysis? How about the discount rate in a BCA? How accurate are the data sources we rely on? Do we truly know how much a project will cost or the level of future demand? To be unaware of uncertainties in evaluation results means missing important pieces of information that can help support smart decision-making . Tackling this challenge, Mark Sieber, Chandler Duncan and Naomi Stein of EDR Group presented a poster at the TRB Annual Meeting in D.C., whose purpose...
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Innovative Infrastructure Finance

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Every four years, the American Society of Civil Engineers (ASCE) grades the condition of U.S. infrastructure on a scale of A through F. Since 1998, America’s infrastructure has earned persistent D averages. Underinvestment is a much-studied topic. EDR Group’s recent report on this issue to ASCE "Failure to Act: Closing the Infrastructure Investment Gap for America’s Economic Future” found that the most significant investment gap across all types of infrastructure is in the transportation sector, where $1 trillion in additional investment is needed over the next ten years.  The U.S. funds federal spending on highway and transit projects through a variety of user fees that pay into the Highway Trust Fund (HTF). Fuel taxes contribute the largest share of revenues by far. In FY 2014 they constituted 87% of the HTF’s tax revenues . However, over the past 10 years spending from the HTF began exceeding revenues, a condition forecast...
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Urbanization vs. Sprawl: New Findings for a Swiss Study

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  The Swiss Federal Offices for Spatial Development, Roads, Transportation, the Environment and Energy jointly released the new Transport Outlook 2040. Ernst Basler + Partner ( www.ebp.ch ), based in Zurich and an affiliate of EDR Group, worked on this project in collaboration with two other companies. The firm performed the passenger transportation forecast and for the modelling of impacts. The report offers intriguing findings that may be of interest for transportation and land use planners in the US and worldwide. One finding concerns the decoupling of population, economic and transport growth. Switzerland has a fast growing population and a strong economy. Already the retrospective analysis at the beginning of the project showed that these are the two principal forces for a growing transportation demand. Thus, the kilometers travelled will continue to increase substantially (+25% between 2010 and 2040), but less than the population (+28%) and the economy (+46%). A saturation...
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Securing Grant Funding for your Rural or Freight Project

To secure funding for projects through the federal TIGER or FASTLANE grant programs, it is critical to demonstrate not only a great project in terms of benefit-cost ratio, but also why the project has economic consequences. Successful TIGER grants for highway or bridge projects have tended to go to applicants who can show community or regional benefits. The new FASTLANE grant program seeks applications that can demonstrate national freight significance and visible economic outcomes. Rural and freight projects can easily be overlooked if the sources of benefits are not understood to go beyond the regular travel time, reliability and mileage savings. In rural areas, where traffic volumes are often low – a strong accessibility and livability case can be essential to a strong application. In 2014 EDR Group performed the Benefit-Cost analysis for the largest TIGER award given that year – the Kentucky Mountain Parkway Extension. Access to state parks,...
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Improving Regional Economic Analysis: A Case Study

Input-output (I-O) analysis is an important technique used to estimate how changes in one sector of the economy affect employment, wages, and overall production in other sectors. An economist named Wassily Leontief developed the technique decades ago, receiving the 1973 Nobel Memorial Prize in Economic Sciences for doing so. Today, analysts customize national I-O “accounts” produced by the U.S. Bureau of Economic Analysis in order to study regional (sub-national) effects. These accounts describe how industries, households, and government exchange goods and services, and regional models, in turn, use this information to simulate the magnitude, direction, and timing of economic impacts. 
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Don't Forget It's About More Than Just Safety

On June 17th, 2013 a WSJ article entitled “Rail Safety and the Value of a Life[1]” highlighted the financial struggles that regional transit transportation authorities are facing to address safety concerns: both avoiding train crashes and improving deteriorating bridges.   A federal requirement to install anti-crash gear (Positive Train Control – PTC) for all transit systems that carry over 564 million passengers by 2015 is currently being discussed by the Senate Commerce Committee.   While there is debate over prioritizing schedules of investing in PTC versus the backlog of needed bridge renovations, it highlights the urgent need for overall additional investment in transit infrastructure

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Choosing Economic Analysis Software

How would you rank the following tools –hammer, screwdriver and pliers? Now you might ask: Why would anyone ask such a silly question …for each is appropriate for a different use (even though I could bang a nail with a pliers or screwdriver). Well, it is not very different when someone catalogs all of the various types and brands of “economic” software tools and throws together tools for evaluating user benefits, regional economic impacts, land use impacts and economic development targeting into the same list. Yes, they may all have some common economic element (like putting a $ value on time or access), but each has a different intended use.

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Is Infrastructure all it is Cracked up to be?

The idea of infrastructure as a necessary ingredient for U.S. economic growth is as old as the republic. Recently, EDR Group completed a series of studies for the American Society of Civil Engineers where we looked at different types of infrastructure and addressed the question of what would happen in the national economy if the infrastructure we have in place decays. The real stories in all four studies are in dollars that will be lost to the nation. The country’s infrastructure is aging, and not keeping pace with population and employment growth. This jeopardizes clean water delivery, sewer and wastewater services, and access to reliable electricity and transportation. These impacts in turn affect locations of businesses and households, and will cost them money as they compensate for poor services.

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Fear, Black Boxes and Economic Impact Shortcuts

Drivers of Behavior: Needs and Fears. Infrastructure planning and policy calls for decision-making that must be justifiable and stand up to public scrutiny. And that means considering not only impacts on users or customers, but also consideration of other factors such as wider economic benefits. And herein lies a problem, for one of the greatest fears of public agency staff is being caught unable to explain the justification for a decision or the logic process by which the wider benefits and costs were estimated.

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Job Impacts – what are they all about anyway?

“Can’t live without them, and we can’t get enough of them” has been a constant public sector mantra since the call to action in early 2009 through the federal stimulus known as ARRA (American Reinvestment & Recovery Act). The need for validation and evaluation in turning public monies into job retaining/creating activities actually predates the ARRA era and should be a perennial question for any civic leader interested in maintaining or improving the well-being of its working-age residents – through income generation - and the businesses that pay taxes.

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