economic significance of the border: a perspective at the regional and national levels for both...
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Economic Significance of the Border:
A Perspective at the Regional and National Levels for both Passenger and Freight
Movements
Bruno Penet
HDR | Decision Economics
Canada - United StatesTransportation Border Working Group (TBWG) Meeting
2
Recognizing the economic significance of the northern border
Understanding the changes in freight movements caused by border delays and their economic impacts at the regional and national levels
Understanding the changes in passenger crossings caused by border delays and their impacts on the cross-border economy
Discussion Points
3
Source: North American Transborder Freight Data, U.S. Department of Transportation, Research and Innovative Technology Administration
Top Trading Partners of the U.S.
Year Measure Canada China Germany Japan Mexico World
1993
Imports ($ Billions) $111,216.4 $31,539.9 $28,562.1 $107,246.4 $39,917.4 $580,659.4
Exports ($ Billions) $100,443.7 $8,762.8 $18,932.2 $47,891.5 $41,581.1 $465,091.0
Total Trade ($ Billions) $211,660.1 $40,302.8 $47,494.3 $155,137.9 $81,498.5 $1,045,750.3
% of World Total 20.2% 3.9% 4.5% 14.8% 7.8% 100.0%
Rank 1 7 5 2 3 -
2000
Imports ($ Billions) $230,838.3 $100,018.4 $58,512.8 $146,479.4 $135,926.4 $1,218,022.0
Exports ($ Billions) $178,941.0 $16,185.3 $29,448.4 $64,924.4 $111,349.0 $781,917.7
Total Trade ($ Billions) $409,779.4 $116,203.7 $87,961.2 $211,403.8 $247,275.4 $1,999,939.7
% of World Total 20.5% 5.8% 4.4% 10.6% 12.4% 100.0%
Rank 1 4 5 3 2 -
Annual Growth Rate 9.90% 16.30% 9.20% 4.50% 17.20% 9.70%
2010
Imports ($ Billions) $276,477.8 $364,943.8 $82,679.7 $120,347.8 $229,654.6 $1,912,091.6
Exports ($ Billions) $248,194.1 $91,878.3 $48,201.2 $60,545.5 $163,320.8 $1,277,503.9
Total Trade ($ Billions) $524,671.8 $456,822.1 $130,880.9 $180,893.3 $392,975.4 $3,189,595.6
% of World Total 16.4% 14.3% 4.1% 5.7% 12.3% 100.0%
Rank 1 2 5 4 3 -
Annual Growth Rate 2.5% 14.7% 4.1% -1.5% 4.7% 4.8%
4U.S.-Canada Trade by Transportation Mode (2010)
Source: North American Transborder Freight Data, U.S. Department of Transportation, Research and Innovative Technology Administration
5U.S.-Canada Trade by Truck, by Commodity Group (2010)
Source: North American Transborder Freight Data, U.S. Department of Transportation, Research and Innovative Technology Administration
6U.S. Exports to Canada by Truck, for Selected POEs
Source: North American Transborder Freight Data, U.S. Department of Transportation, Research and Innovative Technology Administration
7U.S. Imports from Canada by Truck, for Selected POEs
Source: North American Transborder Freight Data, U.S. Department of Transportation, Research and Innovative Technology Administration
8Incoming Trucks for Selected POEs
Source: Border Crossing/Entry Data, U.S. Department of Transportation, Research and Innovative Technology Administration
9Wait Times at the Canada-U.S. Border
group by CROSSING, YEAR
2 Way Total Delay in Minutes
Cost of Delay, Driver & Truck $75/hour (OTA)
CROSSING YEAR
Ambassador 2002 371 10.1 31.0 20.9 612 7.6 15.5 7.9 12.8 12,576 $53,131,691 3,322,367
Ambassador 2003 223 10.0 24.8 14.8 770 7.6 16.5 8.9 10.2 10,137 $41,482,553 3,250,744
Ambassador 2004 169 9.3 19.9 10.6 408 8.0 18.9 11.0 10.9 6,273 $45,814,212 3,371,397
Bluew ater 2002 1,061 6.2 21.7 15.5 788 5.7 14.0 8.4 12.5 23,025 $26,191,767 1,682,645
Bluew ater 2003 1,718 6.0 25.7 19.7 1,008 5.8 13.0 7.2 15.1 41,123 $32,539,187 1,725,603
Bluew ater 2004 1,794 6.4 27.5 21.1 1,518 5.8 14.8 9.0 15.5 51,469 $34,953,098 1,799,371
Detroit Windsor Tunnel 2002 53 10.9 15.2 4.3 99 5.0 10.2 5.2 4.9 739 $929,972 152,963
Detroit Windsor Tunnel 2003 296 10.9 19.6 8.7 373 4.9 10.3 5.4 6.9 4,597 $1,454,036 169,278
Detroit Windsor Tunnel 2004 198 10.9 21.4 10.5 249 5.0 10.2 5.2 7.5 3,372 $1,506,695 159,786
Peace 2002 1,659 4.2 33.3 29.2 1,068 5.7 14.9 9.3 21.4 58,314 $35,994,785 1,346,612
Peace 2003 4,523 4.1 41.5 37.4 3,358 5.7 12.2 6.6 24.3 191,179 $39,718,330 1,309,855
Peace 2004 6,542 4.0 33.2 29.2 4,929 5.6 11.3 5.7 19.1 218,974 $31,020,950 1,300,029
Queenston-Lew iston 2002 118 7.3 43.4 36.1 144 4.5 11.0 6.5 19.8 5,194 $25,950,672 1,047,192
Queenston-Lew iston 2003 780 6.2 42.4 36.1 928 4.1 7.9 3.8 18.6 31,703 $23,456,096 1,010,956
Queenston-Lew iston 2004 2,023 5.2 26.6 21.4 1,266 4.0 9.0 5.0 15.1 49,629 $18,987,728 1,006,688
Thousand Island 2002 11 7.3 58.7 51.4 6 33.0 33.0 0.0 33.3 566 $22,537,936 541,812
Thousand Island 2003 538 7.7 35.2 27.5 393 4.0 8.2 4.2 17.7 16,473 $10,825,279 489,461
Thousand Island 2004 143 6.8 47.6 40.8 58 4.3 8.7 4.4 30.3 6,087 $18,145,297 479,343
Canada to USA USA to Canada
2 Way Weighted
Delay
Yr Truck Vol
Trucks
average minimum
time
average time
average delay Trucks
average minimum
time
average time
average delay
Source: Border Wait Time Measurement Project, Transport Canada, 2006
10
HDR Study: Key Steps
Comprehensive review of existing studies Assessment of existing traffic and trade data Interview of border’s stakeholders such as
metropolitan planning agencies, U.S. Customs and Border Protection, trucking industry and major industries in the region
Estimated incremental impacts on both sides of the border
Risk analysis framework Continuous involvement of panel of experts
and stakeholders
11
Socioeconomic Data
Roadway Network
Architecture
Travel Time Forecast
Traffic Forecast
Elasticities of Productivity w.r.t.
Transportation Costs
Congestion Costs:- Delay- Vehicle Operating Costs
Logistic Costs by Industry
Industries Using the Crossings
National
Regional
LocalMultipliers
(U.S.)
Impact on Productivity by
Industry Category (U.S.)
National
Regional
LocalImpact on Earnings
(U.S.)
National
Regional
LocalImpact on
Jobs (U.S.)
National
Regional
LocalImpact on
Output (Trade) (U.S.)
National
Regional
LocalImpact on
Taxes (U.S.)
Economic Analysis Framework
Detroit-Windsor Crossings
0.0
10.0
20.0
30.0
40.0
50.0
2000 2005 2010 2015 2020 2025 2030 2035 2040
Sp
ee
d (
mp
h)
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$ p
er
Mile
Average Vehicle Speed
Travel Cost per Mile - Cars (Right Axis)
Travel Cost per Mile - Trucks (Right Axis)
12
Speed and Travel Cost per Mile for Trucks and Passenger Cars
Annual Economic Impact
YearImpact Metric
Direct Impact
Indirect Impact
Induced Impact
Total Impact
2020 Output ($649) ($185) ($135) ($970)
Earnings ($236) ($93) ($84) ($413)
2030 Output ($3,317) ($911) ($696) ($4,924)
Earnings ($1,229) ($463) ($431) ($2,123)
Cumulative Employment Impact
Year Direct Impact
Indirect Impact
Induced Impact
Total Impact
2020 -3,292 -1,415 -1,698 -6,406
2030 -18,148 -7,104 -8,725 -33,977
Annual Tax Impact Year
Employee Compensation
Proprietary Income
Household Expenditure
Enterprises (Corporations)
Indirect Business
Taxes
Total Tax Impact
2020 ($29) ($1) ($38) ($13) ($23) ($104)
2030 ($149) ($4) ($197) ($65) ($121) ($536)
13
Impact on Michigan (Freight)
Annual Economic Impact
YearImpact Metric
Direct Impact
Indirect Impact
Induced Impact
Total Impact
2020Output ($828) ($720) ($672) ($2,219)
Earnings ($307) ($351) ($401) ($1,058)
2030Output ($4,288) ($3,644) ($3,504) ($11,436)
Earnings ($1,626) ($1,790) ($2,089) ($5,504)
Year Direct Impact
Indirect Impact
Induced Impact
Total Impact
2020 -5,166 -5,149 -7,029 -17,345
2030 -28,096 -26,456 -36,642 -91,194
Year Employee
CompensationProprietary
IncomeHousehold
ExpenditureEnterprises
(Corporations)
Indirect Business
Taxes
Total Tax Impact
2020 ($71) ($4) ($96) ($28) ($73) ($272)
2030 ($369) ($19) ($500) ($146) ($381) ($1,415)
14
Impact on the United States (Freight)
Cumulative Employment Impact
Annual Tax Impact
2020 2030
OUTPUT (ANNUAL)
Final Domestic Expenditure ($883) ($4,461)
Indirect Taxes on Final Demand ($17) ($91)
Direct Foreign Imports $501 $2,434
Indirect Foreign Imports $109 $530
Inventories and Other Leakages $8 $41
Inter-provincial Imports $68 $396
Inter-provincial Exports ($6) ($33)
Total ($220) ($1,184)
EMPLOYMENT (CUMULATIVE)
Direct -2,429 -13,634
Indirect -1,190 -6,454
Total -3,619 -20,088
15
Impact on Ontario (Freight)
2020 2030
OUTPUT (ANNUAL)
Final Domestic Expenditure ($1,293) ($6,576)
Indirect Taxes on Final Demand ($25) ($134)
Direct Foreign Imports $733 $3,589
Indirect Foreign Imports $183 $912
Inventories and Other Leakages $16 $82
Inter-provincial Imports $115 $671
Inter-provincial Exports ($115) ($671)
Total ($387) ($2,127)
EMPLOYMENT (CUMULATIVE)
Direct -3,870 -22,013
Indirect -2,336 -12,913
Total -6,206 -34,926
16
Impact on Canada (Freight)
17
Freight Stakeholders’ Inputs
Trade, truck volumes & congestion have grown significantly over the years
Physical infrastructure constraints at various POEs For some industries, modern rail is key to lower
transportation costs Delays mean higher logistics costs and therefore lost
economic opportunities There is willingness to pay (toll road) if there is a
significant travel time saving Extremely sensitive supply chain No inventories Parts go back and forth across the border several
times Companies must build buffers in production cycles
due to transportation delays
1. Obtained crossing projections for passenger cars (in both directions)
2. Estimated the annual percentage change in travel costs (travel time and vehicle operating costs) associated with increased congestion
3. Applied demand elasticity coefficients to the estimated changes in travel costs and derive the potential annual loss of crossings, by trip purpose, due to increased congestion
4. Estimated the expected loss of revenue (spending from vacationers, shoppers and other travelers) associated with the foregone trips
5. Adjusted for changes in local demand (e.g., vacation money spent in Canada instead of the U.S., and vice versa)
6. Derived the net direct impacts of foregone spending on national and regional output, earnings and employment
18Economic Impact Estimation Process for Personal Trips
19Lost Cross-Border Trips, Personal Trips
Year Impact Lost Trips Direct Indirect Induced Total
2020
Output
Recreation & Shopping $37.3 $19.2 $36.6 $93.1
Vacation $25.1 $14.4 $24.2 $63.7
Total $62.4 $33.5 $60.9 $156.8
Earnings
Recreation & Shopping $25.0 $11.2 $21.8 $58.0
Vacation $15.7 $8.7 $14.4 $38.8
Total $40.6 $19.9 $36.3 $96.8
Employment
Recreation & Shopping 859 199 383 1,441
Vacation 440 143 253 836
Total 1,299 341 636 2,277
2030
Output
Recreation & Shopping $194.5 $99.8 $190.8 $485.1
Vacation $130.7 $74.9 $126.2 $331.7
Total $325.2 $174.6 $317.0 $816.8
Earnings
Recreation & Shopping $130.0 $58.4 $113.7 $302.2
Vacation $81.7 $45.1 $75.2 $202.0
Total $211.7 $103.5 $188.9 $504.1
Employment
Recreation & Shopping 4,476 1,036 1,995 7,507
Vacation 2,292 743 1,319 4,354
Total 6,768 1,779 3,315 11,861
Impact on the United States (Personal Trips)
20
Year Impact Lost Trips Direct Indirect Total
2020
Output
Recreation & Shopping ($103.0) ($50.2) ($153.2)
Vacation ($196.8) ($107.1) ($303.8)
Total ($299.8) ($157.3) ($457.1)
Earnings
Recreation & Shopping ($68.8) ($27.9) ($96.7)
Vacation ($123.0) ($61.1) ($184.0)
Total ($191.8) ($88.9) ($280.7)
Employment
Recreation & Shopping -2,134 -494 -2,627
Vacation -3,105 -1,006 -4,111
Total -5,239 -1,500 -6,739
2030
Output
Recreation & Shopping ($536.7) ($261.4) ($798.1)
Vacation ($1,024.9) ($557.7) ($1,582.6)
Total ($1,561.6) ($819.1) ($2,380.8)
Earnings
Recreation & Shopping ($358.6) ($145.1) ($503.7)
Vacation ($640.5) ($318.2) ($958.6)
Total ($999.1) ($463.3) ($1,462.3)
Employment
Recreation & Shopping -11,113 -2,573 -13,686
Vacation -16,174 -5,240 -21,414
Total -27,287 -7,813 -35,100
Impact on Canada (Personal Trips)
21
Year
Impact on the State of Michigan and the Province of Ontario
(Values are in millions of 2000 Dollars)
Impact on the United States and Canada
(Values are in millions of 2000 Dollars)
US$ CAN$ US$ CAN$
2020 ($1,234) ($1,898) ($2,611) ($4,017)
2030 ($6,323) ($9,728) ($13,549) ($20,845)
YearImpact on the State of Michigan
and the Province of Ontario(Jobs)
Impact on the United States and Canada
(Jobs)
2020 -14,355 -28,012
2030 -76,621 -149,359
Annual Foregone Production
Cumulative Foregone Employment
Combined Economic Impacts (Personal Trips)
22
23
Concluding Remarks
Trade is a key contributor to regional and national economic growth
Border delays impact the competitiveness of both the region and the nation as a whole
Border delays are responsible for significant economic losses on both sides of the border
Economic assessment should take into consideration both sides of the border as the supply chain tend to be well integrated across the border
Economic assessment must be conducted with the involvement of various stakeholders to scrutinize assumptions and account for uncertainty
Economic assessment allows policy makers to assess the implications of policies, infrastructure, and technology on the regional and national economy