Why Economic Analysis for Transportation Projects Makes Sense

As Congress haggles over a new transportation bill, a report out last week argues that all stakeholders would be better served if state and federal governments conducted rigorous economic analysis before spending money on transportation projects.

Ryan Holeywell summarizes the findings of the report, published by the Eno Center for Transportation, a nonpartisan think tank. "It's an argument that seems painfully obvious – which the author concedes – yet it isn't the norm in government. Even as the states and feds struggle to find money to pay for transportation projects, they typically don't conduct the planning needed to ensure they're getting the best return possible when they invest in infrastructure, argues author Nicolas Norboge, an assistant researcher at the Texas Transportation Institute."

You would think that cost-benefit analysis of transportation projects would be the norm to help officials prioritize projects and to assist transportation advocates in making their case for funding. However, because "most federal surface transportation funding is distributed to states and localities based on formula grants, and not a process that targets investment," there is no incentive to conduct rigorous economic analysis.

"While the pending highway bill currently being negotiated in Congress has some reforms when it comes to promoting performance metrics and economic analysis, most funding would continue to be formula-based."

Full Story: Study: States, Feds Don't Target Transportation Spending



Irvin Dawid's picture

You gotta be an economist to read this!

Better Use of Public Dollars: Economic Impact Analysis in Transportation Decision Making. "Authored by Texas A&M Graduate Nick Norboge, the paper focuses on the economic impacts of the transportation decision-making process."

On the other hand, one not be an economist to know that the gas (funding the Highway Trust Fund) provides insufficient revenue to pay for todays transportation needs - and that it was last raised in 1993.

Trivia about the Eno Center - from Planetizen: Cars, Culture & New York City (July 2010) on an exhibit at the The Museum of the City of New York:
"The exhibit includes much memorabilia including a "1909 book, Street Traffic Regulation, by William Phelps Eno, who also, we are told, wrote the world's first city traffic code, for New York, in 1903 and is credited with the invention of the stop sign, the crosswalk, the one-way street and the taxi stand."

Yep, same guy!

Irvin Dawid, Palo Alto, CA

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