Highways And Labor Markets II

Figure 2 shows the relationship between roadway lane miles and GDP. It indicates that regions with less roadway supply tend to be more economically productive.

Economic productivity declines with more roadway supply, an indicator of automobile-oriented transport and land use patterns. (Each dot is a U.S. urban region.)

Figure 3 shows the relationship between per capita transit ridership and GDP. It indicates that regions with higher transit ridership tend to be more economically productive.

 Figure 3          Per Capita GDP and Transit Ridership

GDP tends to increase with per capita transit travel. (Each dot is a U.S. urban region.)

There is plenty of econmic theory to support the conclusion that multi-modal transportation systems support economic development more than automobile dependent transport systems. Travel demands are diverse: some goods and activities are accessed most efficiently by automobile, but others are most efficiently accessed by walking, cycling or public transit. As a result, an efficient transport system supports diverse mobility options and gives travelers incentives to use the most efficient mode for each trip, through efficient pricing of roads, parking, insurance and fuel.

Like most economic imputs, roadway investments can have deminishing marginal benefits. Although the first highways built in a region tend to provide large productivity benefits, once the basic roadway system exists, further expansion provides less incremental benefit. Figure 4 illustrates the result of a U.S. Federal Highway Administration study which indicates that, although highway construction provided very high return on investment during the 1950s and 60s, when the Interstate Highway System was connecting regions, economic returns subsequently declined, because the most productive projects (those linking regions) had been completed, leaving less productive links to be added.

Although that analysis did not continue to the following decades, it is likely that economic returns from highway expansion continued to decline.

Figure 4          Annual Highway Rate of Return (Nadri and Mamuneas 1996)

Highway investment economic returns were high during the 1950s and 60s when the U.S. Interstate was first developed, but have since declined, and are now probably below the returns on private capital, suggesting that highway expansion is generally a poor investment.

Automobile transportation is costly to governments (for roads), businesses (for parkling subsidies), consumers (to own and operate automobiles), and economies (to import vehicles and fuel). These are true resource costs which burden an economy. Automobile-dependent transport systems are particularly harmful to physically, economically and socially disadvantaged people who either cannot drive, or are significantly burdened by the financial costs of driving.

This is not to suggest that automobile transportation should be eliminated altogether, but it does indicate that transport policies that create more diverse and resource efficient transport systems do more to support economic development, provide more consumer benefit, and provide more economic opportunity to disadvantaged people than further highway expansion.

For More Information

Marlon Boarnet (1997), "New Highways & Economic Productivity: Interpreting Recent Evidence," Journal of Planning Literature, Vol. 11, No. 4, May 1997, pp. 476-486; also available as Working Paper 291, University of California Transportation Center, www.uctc.net/papers/291.pdf.