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.
June 9, 2012, 9am PDT | Jonathan Nettler | @nettsj
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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."

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Published on Thursday, June 7, 2012 in Governing
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