European Transport Conference Glasgow, 11 October, 2011

1. Defining Economic Impact and Benefit Metrics from Multiple Perspectives:Lessons from Both Sides of the Atlantic Glen Weisbrod Economic Development Research Group Boston, MA, USA David Simmonds David Simmonds Consultancy Cambridge, England European Transport Conference Glasgow, 11 October, 2011

2. Why US-UK Comparison ? • Different approaches to evaluation / appraisal • Different roles for various levels of government • Yet same metrics & concepts, though applied differently • Universality of lessons drawn, applicable elsewhere MCA= Multi-Criteria Analysis

3. Topics • Different Metrics and Motivations • Productivity & Wider Economic Benefits • Inclusion in Appraisal & Prioritisation • Incorporating Spatial Scales & Access Factors • Implications for Planning & Decision-making

4. Different Metrics & Motivations Motivation • Economic Impact - money flow in economy, change in jobs and GVP or GDP (in a specified area) • Economic Benefit- welfare gain, money + non-money benefits (“willingness to pay”) for CBA • Productivity Benefit - growth in VA per worker or investment unit, due to WEB … (welfare gain and economic impact net of spatial redistribution) Metric Support Key Industries Regenerate Target Areas Enhance Competitiveness Value for Money Return on Investment

5. Case Example: Intermodal Freight Facility Motivation • Project Goals (PPP) • Open intermodal truck/rail container yard • Public improvement of truck routes • Private improvement of freight rail infrastructure • Adjacent industrial development • Economic Goals • Reduce costs & competitiveness for area manufacturers (via enhanced efficiency & market access/scale) • Expand warehouse/distribution activities • Attract manufacturing with high paying jobs • Public return on use of public funds

6. Productivity & WEBs Krugman (1995) concept of agglomeration economies as disproportionate concentrations of specific industries at specific locations, enabled by access to wider markets, including: • Labour markets: “commuting” • Intermediate markets: “supply chains” • Final demand markets: “delivery” Labour Market - Chicago(40 min commute area) US Auto Parts Supply Chain Corridors Same Day Delivery Market – Portland , OR (3 hr. trip)

7. Case Examples: Market Access (US) Completing the Appalachian Development Highway System (cross-mountain connectors): Areas with Change in Gateway Market Access Labour Markets Int. Air Gateway Markets Intermodal Rail Markets Intl. PortMarkets Same Day Delivery Mkts

8. Case Example: Productivity & Market Scale (US) For Trans Equip Mfg… • Access to truck delivery markets has largest impact on productivity, esp. in medium and large business markets • Access to labour & airport markets have smaller but constant impacts on productivity For tourism industry… • Increasing productivity with access to larger population markets • Same-day drive market and airport access have the strongest incremental impact on this industry, esp. in medium size markets.

9. Appraisal & Prioritisation Wider Outcomes: CBA (incl. productivity) Macro-Econ (jobs, GRP, GVA) Transport Drivers of WEB – reliability, market access, inter-modal connectivity Economic Considerations • UK –WEB productivity in CBA, Local Outcomes in Appraisal Table • US DOT– CBA allows for WEB productivity, local outcomes in qualitative considerations • US States – most recognize drivers of WEBs and local outcomes in MCA; others model WEB productivity for scoring points or macro-econ outcomes Non-User Econ Effect – productivity Local Outcomes: Regeneration, Land Devel, Industry Growth Targets, Private Investment

10. Case Example: Economic Factors in Appraisal X = factor explicitly included as an element of the rating system; (x) = factor implicitly allowed via calculation of additional productivity benefit in CBA (a) = factor implicitly included as a component of the macroeconomic productivity calculation (using TREDIS in US and agglomeration benefit guidance for DfT and Transport Scotland); (b) = factor included in travel efficiency benefit shown above “ - ” = factor not formally recognized as a separate element of the rating system, but may still be considered through other elements of the project appraisal and selection process

11. Spatial Scales & Access Factors • Scale: Macro (national), Meso (region, metropolitan), Micro (neighborhood) • Error propagated by assuming housing and labor markets respond similarly (towards equilibrium) at all spatial scales • Error propagated by assuming national transport investment impacts (on industry-wide technology, labor intensity and wage rates) transfer similarly to single project impacts. • Increasing market access (and raising effective density) should be reconciled with travel models (forecasts of induced VKT) and land use models (scenarios for business location and clustering)

12. Planning & Decision-making:moving forward or backward? • Value to generalised agglomeration factors, but sometimes also value to recognizing productivity differences by mode, spatial scale, element of the economy • Useful to identify local/regional as well as national effects on productivity & competitiveness • Value in analysing effects on gross value added as well as net productivity • Same types of models may not be equally appropriate for policy, planning, prioritisation, and project design alternatives analysis.

13. Thank you Glen Weisbrod gweisbrod@edrgroup.com David Simmonds david.simmonds@davidsimmonds.com