The National Academies

TCRP H-39 [Completed]

Methodology for Determining the Economic Development Impacts of Transit Investments

  Project Data
Funds: $400,000
Research Agency: Rutgers the State University and University of California, Berkeley
Principal Investigator: Dan Chatman and Robert Noland
Effective Date: 11/11/2008
Completion Date: 6/20/2012

The importance of economic development linked to transit investments is well recognized, and that importance is reflected in the Federal Transit Administration’s (FTA’s) project approval process.  As a result of recent legislation, Congress requires FTA to evaluate the economic development benefits (among other criteria) of proposed transit projects to determine their merits and impacts. To comply with this requirement, a methodology is needed that project sponsors can use to generate reliable estimates of development impacts and associated benefits for New Starts, Small Starts, and major investments in more mature transit systems.  While much work has been done describing the relationship between transit system investment and economic development, it is not clear how an approach to prepare a reliable forecast of economic development benefits of transit projects can be applied systematically to all proposed projects.

In preparing project evaluations, FTA and others have traditionally identified and measured mobility benefits.  Economic benefits can be more inclusive, however, and defining and measuring a broader class of benefits has been the subject of numerous studies.  Adding broader economic development impact measures—in the form of land prices, occupancy rates, development densities, relocated jobs and residences, or similar measures—to those associated with mobility and accessibility can increase the risk of double-counting.  Therefore, the challenge in all of these efforts is to identify where double counting might occur and eliminate it to the extent possible. 

In addition, local communities and transit agencies require a greater understanding of the effects of system investments on land use and development.  These entities need to enhance their ability to integrate an understanding of these impacts into an effective decision-making process.  A critical problem is that methodologies currently used to measure economic impacts are not able to distinguish the degree to which the measure of broader effects exceeds or is distinct from those associated with mobility effects.   

Research is needed to develop an improved methodology for estimating economic impacts of transit investments.  This methodology should be reliable and reproducible.  It should allow users to measure economic development impacts in addition to and distinct from mobility-related economic impacts, and it needs to be structured to enable decisionmakers and stakeholders to distinguish among alternative investment strategies. 

The objective of this research is to develop and validate through test applications a useable, efficient, and cost-effective economic impact analysis methodology to evaluate proposed transit improvement projects.  This methodology should identify, quantify, and forecast economic effects of investments in New Start and Small Start transit projects, as well as major investments in existing transit systems.  To the greatest extent possible, the methodology must distinguish between economic benefits derived from mobility changes and economic benefits derived from other project impacts to avoid double counting.  The research should also determine whether there are additional agglomeration benefits over and above the mobility-related and possible other economic benefits. 

Status:   The study has now been completed and published as Web Only Document 56. 

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