Any stimulus should also aim for sustainability

Author: Kumares Sinha
Can an investment in transportation infrastructure, either for new construction or renewal, have an impact on the economy? If so, how do we measure the impact and how can the information be used in making investment decisions?

These are questions my colleagues and I have been asking for more than a quarter of a century. The short answer is, yes, investment in transportation infrastructure does have an impact on local, state, and even multi-state regional economies at a varying degree and the impact can be quantified.

Nearly 30 years ago, I had the opportunity to take the lead on a project to identify transportation improvement and related strategies that could assist in the economic revitalization of a major industrial region like northwestern Indiana, where a mature multimodal freight transportation system exists.

Such regions are in transition with declining manufacturing industry and the emergence of a service sector and small-scale, high-tech industries. In order to attract and nurture this economic shift associated with high-value, low-bulk products as well as white collar workers, the existing transportation infrastructure geared to heavy manufacturing is not adequate. Getting information technology and biomedical businesses to either start up or relocate in northern Indiana would require good access to air transportation. But the quality of life issues
becomes more important, as the workers of this new economy seek good neighborhoods and housing, quality schools, and good local transportation. These findings were further confirmed in a subsequent study where the interaction between public infrastructure including transportation and economic vitality of an urban area was investigated.

Over the years, we have done extensive research to determine what exactly a road improvement can do for an area. Analyzing the historical data from counties in Indiana, we found that highway mileage density was indeed positively related to employment and personal income growth and the impact of multi-lane highways was 5 to 10 times more than that of other highway types.

In a recent study, we developed a quantitative tool that can be used to estimate the long term economic development effects of different types of highway investments including added travel lanes, new roads, and interchanges, in terms of statewide employment. This tool can be used to see what sort of stimulus can come, for example, out of turning a two-lane road into a four-lane road, or adding an interchange to provide access to a facility like the Honda plant in Greensburg, Indiana, or expected additional jobs under various scenarios of the I-69 corridor in southwestern Indiana. The underlying question is, “If you build it, will they come?” After all, transportation is a necessary, but not a sufficient condition to generate economic growth. Also, there is the issue of the chicken or the egg—which comes first?

The bottom line is: infrastructure investments should be made with long-term, sustainable impact in mind. Under the current economic relief program of stimulus spending, we can put people to work simply digging ditches and paving roads just about anywhere, thus jumpstarting the economy, as was done in Japan a decade or so ago to address similar immediate economic needs. But we must take into consideration where the roads will lead to 10 and 20 years in the future, if we want to avoid the predicament that Japan now faces of having a significant part of its road system underused and economically unsustainable.

Kumares Sinha, the Edgar B. and Hedwig M. Olson Distinguished Professor of Civil Engineering
Kumares Sinha, a Purdue faculty member for 35 years, is the director of the Joint Transportation Research Program, a collaboration between Purdue and the Indiana Department of Transportation. His research interests are transportation infrastructure planning and policy analysis. He is a member of the National Academy of Engineering.