Standards for Economic Benefits of FreightTom Trulove

Economics Department, Chair Eastern Washington University

Doubt that IMPLAN style economic impact analysis will work for projects

• Each is too small a part of the overall economy to be significant.

• The economic benefits will extend to the distant future and be virtually impossible to model very well in impact analysis (be far too speculative).

Economic Impact Analysis(continued)

• Projects can change the future economic possibilities and performance in unpredictable ways which will be missed by impact analysis.

• Impact analysis would be heavily weighted to

effects of the first few years.

• Could miss broader regional values.

Concerns with economic impact analysis

• Only good might be statewide sum of projects.

• What exactly do each of our audiences really care about? How do these things differ audience to audience?

• Is there any economic metric(s) that would better inform our choices on bodies such as FMSIB than the ones we already use?

Concerns with economic impact analysis

• TIB – considered how to attach economic values to their projects even going so far as hiring an economic consulting firm to help them.

• They have been told and have decided that this is not a possible task. Results can only be very speculative and the cost of generating these speculative results is high.

Concerns with economic impact analysis

• Choice of measure can disadvantage some projects and advantage others, but with no logical reason why one is better than the other.

• One set of measures might reinforce current industry location and miss entirely industry shifts taking place which will determine future growth and opportunities.

• Some measure might tend to freeze industrial

structure by benefiting existing industries.

Concerns with economic impact analysis

• Should we be looking at current tons shipped or value of shipments. – Here preferred mode of transportation might be in

play.

– Some measures would cut out smaller jurisdictions in favor of the big cities and counties

– There are many such issues and how to decide

who is correct?

Concerns with economic impact analysis

• Considering bulk cargo. Tons shipped? Value? Does this get at through trade?

• Value is not a good freight mobility measure. How does low weight to value or volume to value fit into freight mobility?

• Reliable and predictable freight movement (rather than speed) might be a good value measure for both public and private values.

• Percentage reduction in accidents might be a good measure of value to the public.

• Public benefit value might be reduction in time for first responders. Private

value reduction in time over a route.

Economic Impact Analysis

• What about income growth. Probably no way to determine what freight mobility on any one project delivers.

• Maybe can better estimate employment effects, but

here we have a time horizon problem and usually end up with figures gamed by project proponents and consultants

• Will project create jobs? Retain jobs? What sectors?

Economic Impact Analysis• Will jobs created pay well? Have benefits? How do wages/benefits

compare to statewide average? County average? National average?

• What economic benchmarks would we use? TIB projects? Some national norm? How do we know (speculate) if we are doing better or how much better due to a project. How does this help us rank and chose projects?

• If we devised some specific/calculable economic measure how much would this change our selection process from the measures FMSIB already uses? Would the extra benefit (if there is any) be at least as great as the extra cost?

Economic Impact Analysis• The current FMSIB process starts with a freight threshold to screen out non-

freight projects.

• It then looks at measures such as traffic volumes, congestion, regional system effects, etc. All at base are some part of economic considerations.

• Perhaps we call it the bottleneck approach and reducing bottlenecks delivers

economic value wherever applied. Simple. Also, it does not favor or discriminate among transportation modes. Why waste time pursuing the economic value calculation approach?

• But, if we do, we need to start with a focused discussion of who the target groups are who want this information and what information they think they want. Then we explore whether or not we can get it for them.

Discussion: