Economic Impacts on Transportation of the US/Canada Border

1. Economic Impacts on Transportation of the US/Canada Border Transportation leadership you can trust. Workplan & Expected Study Outcomes presented toBorder Transportation Working Group presented byMichael FischerCambridge Systematics, Inc. April 22, 2008

2. Overview of Project • Main objective of study is to assess the impact of delay at border crossings and resulting changes in user benefits and broad macroeconomic measures • Key issues: • Definition and measurement of delay • Trends of delay patterns at border crossings • Breakdown of impacts across different modes • Truck traffic • Passenger vehicles [if data available] • Outputs of analytical task are user dis-benefits by mode and macroeconomic impacts

3. Progression of Study Tasks Task 1: Work Plan • Phase I: Methodology and Background Research • Collection of available/relevant data • Assessment of trends • Case study comparisons • How can impacts be measured and modeled using economic impact tool? • Phase II: User Dis-benefits and Macroeconomic Impacts • Employment • Income • GDP Task 2: Overview of Trade Data Task 3: Literature Review Task 4: Development of Methodology Task 5: User Dis-benefits & Macroeconomic Impacts (TREDIS)

4. Task 1: Detailed Work Plan • Workplan defines the specific tasks and deliverables of Phase I • Deliverables are technical memoranda for each task and a final report that combines individual documents • Workplan outlines how individual tasks will feed into each other and allow for the quantifiation of economic impacts of border delay

5. Task 2: Overview of Economic Trade Data • Aggregate Economic and trade data obtained from a variety of sources [Global Insight, Statistics Canada, BTS, US Census, etc] • Trade data by commodity & time series • Border Crossing Information • Data measured in dollars [trade] and vehicle movements [traffic] differentiated by surface mode • Passenger trip purpose unlikely to be available • Aggregate trade forecasts between US and Canada to be obtained from Global Insight

6. Task 3: Literature Review • Literature review captures previously completed studies on border delay and transportation costs • Emphases gathered from previous studies: • Selected methodologies • Available and collected data • Outputs from previous studies [performance measures] • Impacts of new border security measures on delay • Typical cost of delay based on previous studies • Task will guide the development of the methodology [Task 4] and calibration of economic model [Task 5]

7. Data Requirements • Literature review allows for assessment of available data sources and how data was used in other studies • Methodology includes separate impacts for passenger and truck traffic • Source of any passenger traffic data is still uncertain whereas data exists on truck traffic • Development of Methodology will determine specific data requirements for economic model • Definition of “delay” at the border • Congested vs. free flow conditions • Changes in traffic performance measures [VMT, VHT]

8. Data Requirements [cont.] • Truck data for different ports of entry will likely be obtained from ATRI • Data can be differentiated by time-of-day and distance from border • Data obtained for main border points of entry • ATRI/Qualcomm data on truck traffic • Captures approximately 10% of truck traffic in US • Average day measure of delay compared to uncongested conditions [peak vs. off-peak] • Reliability Index • Access to data as part of FHWA data sharing process

9. Task 4: Development of Methodology Increased travel time as a result of delay • Scope of Methodology: • Population and Employment • Business and Industry • Tourism and Visitor Industry • Impacts differentiated • Passenger Impacts • Freight Impacts • Measurement of Impacts using TREDIS Higher user dis-benefits, such as travel costs for passengers and businesses Passengers alter trips & business experience lower productivity Higher product prices and resource costs Macroeconomic Impacts on GDP, Employment, Income

10. Task 4: Development of Methodology [cont.] • Definition of Study Area • Consideration of four different regions handling in excess of 70% of all truck traffic • Michigan/Ontario • New York/Ontario • Lacolle/Champlain • Pacific Highway • Each border crossing region is likely to have a different mix of passenger and freight traffic, and different mix of commodities • Different sensitivities to recurrant and non-recurrant delays

11. Task 4: Development of Methodology [cont.] • Measurement of impacts based on microeconomic theory • Border delays affect households and businesses by increasing their respective direct and indirect travel costs and therefore cause shifts in supply/demand • Passenger trips may be altered which will affect consumption expeditures at travel destination • Passengers have different sensitivities depending on purpose of travel [commuting, leisure, vacation, business] • Impact on commuters as a result of delay affects the access to labor pool by employers

12. Task 4: Development of Methodology [cont.] • Businesses experience impacts as a result of delay: • higher costs • lower productivity • Impact also felt on reliability due to just-in-time delivery schedules • Depending on relative cost and price elasticities, impacts increase wages and subsequently product prices • Changes in product and resource markets [labor & materials] impacts overall trade patterns • Exchange rate fluctuations provide additional complication

13. Task 5: Estimation of Economic ImpactsPhase 2 – currently not included in WP • Inputs to model are travel-related changes resulting from new [security] policy or changing in infrastructure • TREDIS is based on: • Travel Cost Response Module [VHT and VMT turned into user benefits] • Market Access Response Module [measures changes in accessibility and connectivity] • Economic Adjustment Module [estimated indirect and induced effects] • Benefit Cost Module [accounting of all benefits/costs and computation of B-C ratios] • Evaluation of different scenarios possible

14. What will we learn from this analysis? • Determination of the economic impacts of delay on freight and passenger traffic • Estimation of wait time/delay • User dis-benefits • Impacts on different type of travellers • Freight [Impacts by industry] • Passenger [vacation, recreational, commuting, business] • Trends in border delays and future projections

15. Decision-points and next steps • Revision of detailed workplan • Development of specific schedule & timeframe for tasks deliverables • Adjusted cost estimate • Obtain feedback and direction from Transportation Border Working Group regarding: • Other sources of critical data for analysis • Direction & outputs of study