MODEL FOR PREDICTING THE IMPACT UPON ECONOMIC DEVELOPMENT RESULTING FROM HIGHWAY IMPROVEMENT PROJECTS

The Nebraska Department of Roads (NDOR) has an interest in integrating state economic development impact as another factor in prioritizing transportation investments. Such efforts require the development of a comprehensive model that can be used to estimate a consistent final measure of economic development impact that can be readily integrated into existing prioritization formulas. This report summarizes the efforts of the University of Nebraska-Lincoln Bureau of Business Research (UNL-BBR) to develop such a model, by measuring the impact of expressway, viaduct, and other major investments projects around the state. Specifically, UNL-BBR developed an economic model to predict the economic impact of transportation investments based on relevant factors such as the magnitude of the investment and the region’s population or economic activity. This report summarizes the model and explains how it was developed. The model itself is contained in a separate Excel workbook which can be utilized to make estimates of the economic impact of highway investments. We estimated that the economic impact of the highway investment projects in Nebraska based on 47 major investment projects in the state from the last two decades. We found mixed evidence that highway capital investments led to faster growth in manufacturing wages and total wages in the decades that followed. Generally speaking, larger investments taking place in larger counties tended to yield a positive economic impact; that is, growth in the county receiving the investment was faster than growth in control counties. Small investments in smaller counties, however, did not clearly generate an economic impact. These empirical findings were used to generate an economic model to predict the economic impact of highway investments in Nebraska. This model can be utilized by NDOR in the coming years and can be readily updated for continued use in the future