SSTI releases economic analysis guide and tool for transportation agencies

By Eric Sundquist

Demand for more accountability in the use of scarce transportation funds is pushing DOTs toward new performance measures, both to evaluate systems as whole as well as proposed projects. One key area for such analysis is economic impact, but until now agencies had no accepted toolbox – nor often the needed data or expertise – for such work.

A new guide developed for SSTI by the Center for Neighborhood Technology is designed to assist DOTs as they improve their capacity for economic analysis.

CNT interviewed staff from nine state DOTs to review current practices, and consulted with a project steering committee including representatives from Colorado, Kansas, Pennsylvania, Oregon, Minnesota, and Washington. They found that although many states had established economic development as a goal, they were struggling to establish methods for both for prediction and evaluation. Problems included lack of: data, agreement on measures, expertise, or funding for the work. Some lacked confidence in available models, seeing them as “black boxes” with suspect validity.

In general, states had made more progress in assessing the economic impact of freight investments than for personal transportation.

CNTs review also highlighted areas that are largely being ignored even in the best analyses. One example is “cannibalization”: Transportation investments often create opportunities for development, but that development might simply be business that moves from another part of the area netting little or no new economic activity or jobs.

“Interest in better economic development results from transportation projects has grown tremendously since 2009 as the downturn has put greater pressure on states to show a strong return on investment for transportation,” said CNT’s Sarah Campbell. “In the last year, the tools to measure and predict economic impacts have advanced considerably, but there are still many gaps.

“Only a handful of the thousands of projects funded each year are evaluated for their economic impact. Economic analysis is a small but growing part of project selection, but real-world evaluation of projects after they are completed is still rare.”

The new guide includes an online tool (with instructions) that can help DOTs identify the data and tools they need to provide robust and valid economic analysis covering system performance, cost-effectiveness, regional economic development, and livability at varying levels of geography.

It also includes a report that provides an overview of current practice and outlines key concepts for assessing economic development, as well as listing useful resources in an annotated bibliography. A recent webinar discussing the guide is also provided online.

Scott Richrath, performance and policy analysis manager for Colorado DOT, said in the webinar that his agency would use the new resource to make his agency’s project assessments more consistent and robust. In addition, CDOT plans to use the guide to develop processes for evaluating projects after they are built, a move cheered by the SSTI/CNT project team.

Said Campbell, “Colorado DOT is setting an example as one of several states looking to conduct economic analysis at both ends of the process.”

DOT staff may direct questions to Bill Holloway at holloway@ssti.us.

Eric Sundquist is Managing Director at SSTI.