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Economic Impact Study of the I-86 Corridor

2.0 Analysis Framework

This study seeks to follow guidelines for data collection and analysis laid out in Volume 2 of the FHWA report: Using Empirical Information to Measure the Economic Impact of Highway Investments. (See footnote 2 in Ch.1.) These guidelines include (a) measurement of gross changes over pre-completion and post- completion time periods, (b) use of a control or comparison area to help net out exogenous factors causing changes over time, and (c) use of multiple measures of impact, to cover a range of short-term and long-term effects spanning land development and business investment, including surveys of informed local sources to help establish causal factors.

This section defines the study design in terms of: (1) project and study area definition, (2) time periods of observation, (3) measurements of impact, (4) definition of the comparison area, and (5) assessment of similarities and differences between the study area and the comparison area.

2.1 Definition of the Project and Study Area

The Southern Tier West Regional Planning and Development Board is the regional economic development agency serving Allegany, Cattaraugus, and Chautauqua Counties in New York State. (See Exhibits 2-1 and 2-2) That three-county region accounts for over 3/4 of the distance of the current I-86 corridor, and comprises the "study area" for this report. It is a generally rural region with significantly higher unemployment and lower income levels than most of the rest of the state, as discussed later in this chapter. A photo of the region's terrain is shown in Exhibit 2-3.

Exhibit 2-1. General Location of New York's Southern Tier West Region

Map showing that location of the Southern Tier West Region in southwestern New York State.

Exhibit 2-2. Details of New York's Southern Tier West Region and I-86

Map showing that I-86 is an east-west highway passing through southern Chatauqua and Cattaraugus counties and central Allegany county in New York State.

Exhibit 2-3. Scene Along the Southern Tier Expressway Corridor

Photo of of I-86 between Olean and Cuba, showing hilly terrain. A truck stop sign is also visible.

Newly-completed portion of I-86 between Olean and Cuba, (photo, 2000). Note that the presence of hilly terrain, park land and Seneca Nation lands affect the nature of development along the corridor. A truck stop sign is also visible.

2.2 Definition of the Time Period

It is important to define pre-completion and post-completion time periods, so that observed impacts can be defined in terms of the difference between economic conditions occurring after completion of the project and economic conditions occurring prior to completion of the project. (Other considerations, such as controlling for outside factors, are discussed in section 2.5.)

For the Southern Tier Expressway, there was work on widening portions of the highway to four lanes and completion of some new four-lane interchanges spread out over two decades. However, there was not a complete freeway connection to the Interstate Highway System until 1999. At that time, the bridge across Chautauqua Lake was finished and opened, making a continuous freeway link all the way to I-90. There were also no highway signs denoting the route's status as an Interstate Highway until the declaration on December 3, 1999. The route did not start appearing on printed maps of the Interstate Highway System until later in the year 2000.

Based on availability of data, we define the years from 1990 onward as the study period. And within this study period, we define 1990-1999 as the pre-completion period, in which the latter half (1995-1999) may reflect trends occurring in anticipation of the project finally being completed. We define the period from 2000 -2002+ as the short-term, post-completion period. A subsequent study will be able to apply census and employment data for a longer period to observe additional longer-term economic changes.

2.3 Measurement of Impacts

It is also important to recognize that economic impacts may evolve and be observed in a number of different ways over time. The review of prior research noted that economic development impacts of highways can up ultimately show as increases in business activity (sales or output, and value added or GDP), and associated increases in jobs and worker income. However, even when such impacts occur due to completion of a highway, they may not become apparent until ten years or more after completion of highway construction. In the meantime, long-term impacts may be preceded by the unfolding of a series of intermediate impacts. The progression of intermediate and ultimate impacts may include the following observable elements, listed in order of expected first occurrence:

Since this study is examining initial impacts after only two years following completion of the freeway, it is important to focus on those impacts likely to be observable over that time period. It would not be surprising to see that early effects would be focused more on the initial steps (a-d) than on the more advanced steps (e-g). A later study may find a different pattern of impacts. Since some of the impacts may indeed not unfold until future years, we refer to this study as an analysis of preliminary economic impacts.

Finally, we note that in order for any of these impact measures to be considered evidence of changes caused by the highway, we also need to establish:

pre/post difference - that these changes occurring since completion of the highway are different from those occurring before completion of the highway, comparison area difference - that these changes in the study area are not similarly occurring in other areas lacking such highway access, and causality - that the nature of the changes are consistent with the conclusions of locally knowledgeable observers and patterns of change in travel patterns.

The time period and comparison area issues are discussed next. The causality issue is addressed within a survey of local and regional officials, which is shown in the Appendix.

2.4 Definition of the Comparison Area

A frequent criticism of simple pre/post comparisons is that they fail to distinguish whether observed changes in economic conditions are due to completion of the highway project or other factors (such as economic cycles) that can also cause changes in economic conditions over time. The FHWA guide recommends use of a "comparison area" as a way to control for such changes. Ideally, the comparison area and study area should share common features, but differ in that the study area had a new highway completed while the comparison area had no changes in transportation conditions during the period. In that case, factors affecting broad economic conditions would then be expected to affect both areas in similar ways, so observed changes in the economy of the study area over the pre/post time period would be attributable to highway completion only insofar as they are not also observed in the comparison area.

Based on those considerations, staff of Southern Tier West recommended the selection of a comparison area based on four key criteria:

Based on these criteria, staff of Southern Tier West recommended that the central part of New York's North Country region be selected for use as a comparison area. That area was deemed to be similarly depressed, similarly rural in nature, and facing the same New York statewide tax and workers compensation structure as faced by the Southern Tier West. The central part of New York's North Country is comprised of St. Lawrence and Franklin Counties. This area has the added appeal that it is the only portion of New York State (outside of the Adirondack Park) that lacks access to the US Interstate Highway System within 35 miles from its border, though it has had a proposal for a major highway to be built following the US 11 corridor (See Exhibits 2-4, 2-5 and 2-63.)

Exhibit 2-4. General Location of New York's North Country Central Region

Map showing that New York's North Country Central Region is defined as located in the northeastern part of New York State.

Exhibit 2-5. Details of New York's North Country Central Region and US11 Corridor

Map showing that the New York North Country Central region and the US-11 route, which is an east-west highway corridor passing through the northern part of St. Lawrence and Franklin Counties

Exhibit 2-6. Scene in the Comparison Area

(Typical 2-Lane, minimal-shoulder highway in the North Country Region, photo, 2000)

 Scene in the Comparison Area -- typical 2-Lane, minimal-shoulder highway in the North Country region, photo 2000.

2.5 Similarity Between the Study Area and Comparison Area

The charts and tables that follow provide a comparison of the Southern Tier West region, the North Country Central Region and the New York State averages for various population and economic indicators. Overall, they indicate that the two areas share common characteristics of a generally rural setting with economic distress.

Rural Setting. Exhibit 2-7 and Table 2-1 shows that all of the Southern Tier West counties and all of the North Country Central counties have population densities less than 1/3 of the statewide average. Table 2-2 also shows that the largest communities in both regions tend to be small.

Exhibit 2 -7. Low Population Density of Both the Study and Comparison Areas

Graph showing that both the Study Area and Comparison Area havelow population density relative to the statewide average. See Table 2-1 for text version.

Table 2-1. Comparison of County Population and Density Levels

County Population Land (sq.mi.) Pop per sq.mi.
Allegany County, NY 49,927 1030 48.5
Cattaraugus County, NY 83,955 1310 64.1
Chautauqua County, NY 139,750 1062 131.6
Southern Tier West 273,632 3402 80.4
Franklin County, NY 51,134 1631 31.3
St Lawrence County, NY 111,931 2686 41.7
North Country Central 163,065 4317 37.8
New York State Total 19,011,378 47214 401.9

Source: US Census, 2000

Table 2-2. Most Populous Communities in Each County

County Name of Community Population
Southern Tier West    
Allegany County, NY Cuba (town) 3,392
Cattaraugus County, NY Olean (city) 15,347
Chautauqua County, NY Jamestown (city) 31,730
North Country Central    
Franklin County, NY Malone (town) 14,981
St Lawrence County, NY Potsdam (town) 15,957

Source: US Census, 2000

Note: New York "towns" are sub-county areas that include "villages" and the surrounding area

Economic Distress. Exhibit 2-8 shows that both the study area and the comparison area have high unemployment rates and low median income levels compared to the statewide average. Tables 2-3 and 2-4 break down these comparisons by individual county. The first table shows that all of the Southern Tier West counties and all of the North Country Central counties have unemployment rates consistently higher than the statewide average, as well as median income levels at least 25% below the statewide average. The second table shows that homes in all of the study area and comparison area counties average less than half of the statewide average value for new homes sold (even after excluding the New York City area).

Exhibit 2-8. Summary of Economic Distress for Study Area and Comparison Area

(A) Unemployment Rates and (B) Median Household Income (data from Table 2-3)

Graph showing that both the Study Area and Comparison Area have high unemployment relative to the statewide average. See Table 2-3 for text version. Graph showing that both the Study Area and Comparison Area have low average income relative to the statewide level. See Table 2-3 for text version.

Table 2-3. Comparison of County Unemployment and Wage Rates

County Labor Force(All Workers) Unemployed Workers Unemployment Rate Median Household Income
Allegany County, NY 22,285 1,274 5.7% $32,106
Cattaraugus County, NY 39,414 2,631 6.7% $33,404
Chautauqua County, NY 64,029 3,466 5.4% $33,458
Southern Tier West 125,728 7,371 5.9% $33,209
Franklin County, NY 21,399 1,500 7.0% $31,517
St Lawrence County, NY 49,284 3,732 7.6% $32,356
North Country Central 70,683 5,232 7.4% $32,099
New York State Total 8,831,771 429,341 4.9% $43,393

Source: US Bureau of Labor Statistics for 2001 and US Census for 2000

Table 2-4. Comparison of Residential Home Sales and Median Values

County Home Sales Median Value
Allegany County, NY 486 $45,000
Cattaraugus County, NY 1,432 $57,700
Chautauqua County, NY 816 $55,000
Southern Tier West 2,734 $54,637
Franklin County, NY 903 $55,000
St Lawrence County, NY 436 $52,000
North Country Central 1,339 $54,023
New York State Total Excluding NY City $140,000

Source: NY State Office of Real Property Services, data covering year 2001

The economic position of the study area is also reflected in classifications of the Appalachian Regional Commission (ARC). The Southern Tier West counties are classified by ARC as "transitional", which means that they are sufficiently depressed to fail ARC's criteria for "competitive," but better than the lowest-performing category of "distressed" counties found elsewhere in Appalachia. New York's North Country is geographically outside of the ARC region, though it has a level of economic performance roughly similar to that of the Southern Tier West.

Altogether, these comparisons indicate the appropriateness of using the North Country Central region to represent trends for a comparison area that lacks freeway access but is otherwise similar to the Southern Tier West in terms of having both a rural setting and economic distress. The fact that both areas are in New York State is also advantageous since it means that both areas face the same state tax rates, unemployment insurance and workers compensation rates.

Updated: 05/04/2012
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