Economic Development Effects of INDOT Transportation Projects

The evaluation of transportation projects has traditionally been carried out in the context of economic efficiency, in terms of savings in travel time, vehicle operating cost, and safety. The wider and longer-term effects on economic development (i.e., job, income and business growth) are a concern of transportation planners and decision-makers but have been often overlooked due to the lack of a reliable impact estimation methodology and/or data. Information on economic development impacts is valuable for understanding the total effect of projects and therefore, for a more balanced justification of proposed transportation infrastructure investments. This study extends the traditional transportation impact framework by examining how different types of highway improvements that have been programmed for implementation in the State of Indiana can affect the state’s economy, and how project- and location-specific factors interact to stimulate economic development. Temporal, spatial, and project characteristics are duly considered. The end product of this research is a quantitative tool that can be used at the project development phase by INDOT staff to estimate the economic development effects of different types of highway investments and make better decisions regarding highway investment. The study results provide a better understanding of the interrelationships among economic development, type of highway improvement and geographical location, and how investments in highway infrastructure can be ranked and prioritized based on sound economic development criteria. This study illustrates the types of data necessary to document these effects, and demonstrates how analysis can be carried out and ultimately improved. The study results can also assist INDOT to develop a quantitative approach to establish weights for the economic development criterion in a bid to rank and select projects based on their economic development potential and increase the efficiency of highway investment. Finally, the questionnaire survey targeted to transportation agencies and organizations across Indiana that have interests in economic development aspects could improve the understanding of economic development practices in the state. The survey results shed light into the circumstances under which economic developers and transportation agencies assess such effects, the measures that are or should typically be used, their associated weights, and the strategies/tools that are most often used.