The National Academies

NCHRP 20-65/Task 52 [Completed]

Selected Indirect Benefits of State Investment in Public Transportation
[ NCHRP 20-65 (Research for the AASHTO Standing Committee on Public Transportation) ]

  Project Data
Funds: $50,000
Research Agency: Cambridge Systematics
Principal Investigator: Paula Dowell
Effective Date: 4/22/2013
Completion Date: 4/21/2014

The economic impact of transportation investments, including transit projects and services, has been of great interest in recent years.  Studies have typically focused on three aspects of economic impacts:  job creation through capital and operating spending; effects on local development patterns; and direct benefits to riders (e.g., time and cost savings) and resulting impacts on business costs and productivity.  An additional, indirect impact that has seen less consideration in transit program and project planning is the potential cost savings to other gov­ernment programs that result from the benefits provided by transit.  These indi­rect benefits can result from improved access to jobs, health care, and education, which can reduce the demand for government services.

This research broadens the range of transit-related economic benefits that may be considered by providing information on the state of knowledge regarding these indirect benefits as well as tools available to estimate these benefits.  The research also proposes a framework for how they might be incorporated into program and project evaluation.  The research began with a literature review.  The review determined that the relationships between transit access and indirect cost savings have been quantified to varying degrees, with some documented more reliably than others.  Findings include:

· Transportation is a critical factor for employment.  The literature found a con­nection between transit and job access, where job participation increased for low-wage workers following the start of new transit services.

· Transit can improve access to educational opportunities, indirectly sup­porting increased employment.  Literature has found that more and better education leads to lower unemployment, better chances of reemployment, and higher wages.

· Increased employment reduces demand for other government services such as unemployment transitional assistance.  Limited available research found that individuals’ lifetime earnings and wage growth trajectories were poten­tially affected by transit and other job access transportation programs.

· Improved access to preventive health care can provide cost savings in health care services, by avoiding the need for costlier emergency care visits as well as costs associated with home health care visits.

For example, a study in Michigan found social benefits of $1.24 per public transit trip, for all trips.  Public transit in Wisconsin is estimated to provide a benefit of about $1.55 per work-related trip, $4.03 per educational trip, and $5.66 per health care-related trip.  Studies of transit services specifically designed to provide job access have consistently found benefit/cost ratios greater than 1.0.  The benefits of a particular transit service, however, can vary widely depending on the type of service, geographic context, and populations served.  Benefits expressed in terms of cost per trip may be more generalizable than studies reporting an overall benefit/‌cost ratio or cost savings, which may vary greatly depending upon service utilization and rider characteristics.

A framework for evaluating the indirect benefits was created that includes three analysis tiers:

1. Transit Program Development and Resource Allocation – At this level, esti­mates of indirect benefits may be based on sketch-level data and analysis of potential populations served.

2. Project Development – At this level, evaluation of more detailed project area data can help influence route selection, frequency, or other characteristics of the proposed transit services.

3. Monitoring and Performance Evaluation – Ongoing evaluation can measure the effectiveness of the service, assist in evaluating future service needs, and provide insight into service changes to maintain long-term indirect benefits.

Data that must be considered at each level include:

· The number of new riders using the service;

· The percent of these riders that previously participated in social assistance programs;

· Trip purposes of riders; and

· The percent of these riders that will reduce use of other social benefits due to improved transit access to jobs, education, and/or health services.

These factors may be estimated from ridership forecasts, analysis of the socio­economic characteristics of target populations, evidence from surveys conducted of the target populations, and/or survey data from populations using similar services elsewhere.

Guidance is also provided on how the indirect benefits described here relate to the benefits quantified in traditional economic impact analysis and benefit/‌cost analysis.  These benefits are not additive; rather the indirect benefits analysis should be seen as another data point to inform decision-making.

Implementation of these methods in an analysis tool could assist agencies in documenting a more complete range of benefits when evaluating future transit investments.  Two tools were identified, developed for the Michigan and Wisconsin Departments of Transportation, to evaluate indirect benefits along with other economic benefits of transit.  However, these tools are not publicly available and their use by other agencies would require customization for local data sources and other modifications.  A new tool could also be developed that would include “default” data from existing studies along with options for user-input local data.  The framework described in this report could potentially serve as the basis for such a tool.

STATUS:  Completed. Published as NCHRP Research Results Digest 393

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