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Transportation Policy Studies

FHWA Home / Policy & Governmental Affairs / Transportation Policy Studies / Summaries - Office of Transportation Policy Studies

Macroeconomic Perspectives: Report Summaries

Title: Production, Consumption and the Rates of Return to Highway Infrastructure Capital
Author(s): Theofanis P. Mamuneas and M. Ishaq Nadiri
Date: 2003
Publication information: Report prepared for U.S. Department of Transportation, Federal Highway Administration.
Summary: This work integrates the benefits and costs experienced by consumers and producers as a result of highway capital investments. Using a simple general equilibrium model the researchers estimate the net rate of return for highway capital investment over the period from 1949 to 2000. The net rate of return is found to be about 34 percent on average from 1949 to 2000. This rate of return however is found to be only 14 percent in the period 1990 to 2000 implying that there is not an underprovision of highway infrastructure capital.

Title: A Report on the Effects of Highway Capital on Consumption Demand
Author(s): M. Ishaq Nadiri and Theofanis P. Mamuneas
Date: 2000
Publication information: Report prepared for U.S. Department of Transportation, Federal Highway Administration.
Summary: Consumers benefit in a variety of ways from a well functioning highway network. Using a macroeconomic model with data from 1960 to 1995 this paper looks at the effect of highway investment on consumer expenditure and estimates the social benefit of highway capital to consumers. They estimate the net rate of return was 26 percent in 1960 to 1970 period and 16 percent in the 1991 to 1995, much less but still high compared with interest rates. The authors argue that this shows that consumers receive very high rates of return from highway network investment and improvement.

Title: The Effects of Public Infrastructure and R&D Capital on the Cost Structure and Performance of the U.S. Manufacturing Industries.
Author(s): M. Ishaq Nadiri and Theofanis P. Mamuneas
Date: 1994
Publication information: Review of Economics and Statistics, 76, 1, 22-37.
Summary: This paper examines the effects of publicly financed infrastructure and R&D capital on the cost structure and productivity performance of twelve two-digit U.S. manufacturing industries. The results of the research indicate that there are significant productive effects from both types of capital. Those effects differ widely across the 12 industries. This report also calculates the marginal benefits and social rates of return for the two types of capital investment in each of the 12 industry sectors.

Microeconomic and Industry Analysis: Report Summaries

Title: FHWA Freight BCA Study: Summary of Phase II Results
Author(s): ICF Consulting and HLB Decision-Economics
Date: 2004
Publication information: U.S. Department of Transportation, Federal Highway Administration available at: http://ops.fhwa.dot.gov/freight/freight_analysis/bca_study_phase2/index.htm.
Summary: This report provides an explanation of FHWA's Benefit-Cost Study, Phase II for a non-technical audience. The purpose of Phase II is to establish the long-term benefits of highway-freight improvements by examining the dynamic interactions between freight transportation demand, transportation costs, and the condition and performance of the Nation's highway system. The methodology allows for the quantification of the effects of transportation system improvements in relation to (1) immediate cost reduction to carriers and shippers, (2) the impact of improved logistics while keeping output fixed, and (3) additional gains from re-organization such as increased demand, new or improved products. The results show that the benefits found in current benefit-cost models should be increased by about 15 percent to account for the benefits to shippers of highway improvements.

Title: Benefit-Cost Analysis of Highway Improvements in Relation to Freight Transportation: Compilation of the Literature
Author(s): ICF Consulting, HLB Decision Economics, and Louis Berger Group
Date: 2001
Publication information: U.S. Department of Transportation, Federal Highway Administration, available at: http://www.ops.fhwa.dot.gov/freight/freight_analysis/econ_methods/comp_lit/index.htm.
Summary: This report reviews literature regarding the measurement of the benefits and costs of infrastructural improvements for freight transportation. This report is part of FHWA's Freight Benefit-Cost Study. The ultimate goal of the larger study is to develop an analysis tool that captures the full array of benefits and costs of freight transportation improvements.

Title: Benefit-Cost Analysis of Highway Improvements in Relation to Freight Transportation: Microeconomic Framework
Author(s): ICF Consulting, HLB Decision Economics, and Louis Berger Group
Date: 2001
Publication information: U.S. Department of Transportation, Federal Highway Administration, available at: http://www.ops.fhwa.dot.gov/freight/freight_analysis/econ_methods/microecon_frmwk/index.htm.
Summary: This portion of FHWA's Freight Benefit-Cost Analysis study presents a microeconomic framework to be used to measure the benefits and costs of transportation improvements. The framework explicitly recognizes the economic benefits derived from industry's propensity to adopt advanced logistics systems in response to transportation improvements. The framework developed is intended to be empirically practical for the next phase of the research.

Title: Capturing the Full Benefits of Freight Transportation Improvements: A Non-Technical Review of the Linkages and the Benefit-Cost Analysis Framework
Author(s): ICF Consulting, HLB Decision Economics, and Louis Berger Group
Date: 2001
Publication information: U.S. Department of Transportation, Federal Highway Administration available at: http://www.ops.fhwa.dot.gov/freight/freight_analysis/econ_methods/non_tech_review/index.htm
Summary: This report provides an explanation of FHWA's Benefit-Cost Study for a non-technical audience. The study aims to incorporate in a benefit-cost analysis the economic benefits derived from industry's propensity to adopt advanced logistics systems in response to transportation improvements. The framework developed is intended to be empirically practical for the next phase of the research.

Title: Transport and the Economy: Full Report SACTRA
Author(s): Department for Transport (United Kingdom)
Date: 1996
Publication information: Report prepared by The Standing Advisory Committee on Trunk Road Appraisal, available at: http://www.dft.gov.uk/stellent/groups/dft_econappr/documents/page/dft_econappr_610277.hcsp.
Summary: This report seeks to determine the economic effects of transportation policies and infrastructure investments. It addresses four main questions: (1) Do transport improvements lead to increased economic activity? (2) Is it possible to 'decouple' growth in traffic levels from growth in the economy, in order to obtain the positive benefits of greater wealth, while reducing some of the negative effects of congestion and environmental impacts? (3) Are economic impacts fully captured in the procedures for estimating benefits and costs currently used by the Department of the Environment, Transport and the Regions? (4) What recommendations follow for the Department's procedures and practice for transport appraisal? One section of the report evaluates whether current analysis methodologies capture all the effects of infrastructure projects. Improvements are suggested to correct potential shortcomings identified in evaluation methodologies.

Title: Economic Analysis Primer
Author(s): U.S. Department of Transportation, Federal Highway Administration
Date: 1993
Publication information: Washington, DC, available at: https://www.fhwa.dot.gov/infrastructure/asstmgmt/primer.cfm.
Summary: A primer on the role of economic analysis in highway decision making oriented toward State and local officials. It presents economic analysis as an integral component of a comprehensive infrastructure management methodology that takes a long-term view of infrastructure performance and cost. The primer is nontechnical in its descriptions of economic methods, but it encompasses a full range of economic issues that are of potential interest to transportation officials. Among other things, the primer outlines benefit-cost analysis, life cycle cost analysis, and economic impact analysis.

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