Multi-Regional Economic Models in Transportation Planning Chandler Duncan Derek Cutler Economic Development Research Group, Inc. 18 April 2017

A New Generation of Models “Travel Model, Meet Economic Model…” Travel Demand Models and Economic Models inform one another. Increasingly feedback loops are possible between the two. Models must integrate different assumptions linking Network Performance to Network Demand: The Role of Cost in Stimulating Induced Demand Sources and Distribution of Induced Traffic Linking Network Performance to Network Demand.

Travel and Economic Models Represent Different Perspectives Travel Models Focus on Trip Making, or Activites Focus on I to J Trip Pairs (validated by surveys and traffic counts) Dimensions are spatial and modal Analysis of network links, or network areas Economic Models Focus on transactions an trade Focus on buyer-supplier linkage (trips are incidental) Dimensions are spatial and industry Analysis of the trade relationship between places or industries

Different Perspectives…. A furniture factory doubles its access to labor and increases production by 25% It therefore buys more furniture paint, doubling production at the paint factory. Furniture Employment and Furniture Sales Also Increase. Locations & Magnitudes Shown by Economic Models Shown in Travel Model

Why Transportation Planners should care Up to 1/3 of the economic impacts and induced demand from a transportation improvement occur in places not even shown on the trip or skim table as being affected by the project!

A Tale of Two (or More) Cities 1 hour of daily travel time is saved on I-15 between St. George, UT and Cedar City, UT Really Old Models: All effects are in area between St. George and Cedar City, AZ (no induced, no wider impact) Old Models: Benefits are distributed between St. George and Cedar City (and elsewhere) based on trip table. All induced traffic or wider impacts occur at trip origins or destinations. Multi-Region Models: Benefits are counted where trip ends occur, but are passed through value chains to trading partners. Hence St. George firm enjoy savings and buy more from partner in Salt Lake City, spreading induced employment & traffic to areas not in the trip or skim table for that section of I-15.

Regional Vs. Multi-Regional Models Really Old Models Economic Effects Occur where improvement occurs No difference between passenger and freight Prevent a crash in the Mojave desert = benefit to the cactus! Old Models Economic Effects Occur at Trip Ends Freight Effects Occur at Destination Commuter Effects Occur at Origin Induced Effects are Simply Distributed based on TAZ shares of population or Employment

Regional Vs. Multi-Regional Models Old Models Economic Effects Occur at Trip Ends Freight Effects Occur at Destination Commuter Effects Occur at Origin Induced Effects are Simply Distributed based on TAZ shares of population or Employment New Models Economic Effects Spread Out to Reflect Value Chains Greatest Impacts may Occur Far Away from trip-ends Distribution of Impacts depends on who trades with zones where costs or savings accrue

A Real World Example: Illinois Waterway Authority Deferred Maintenance Impeding Reliability of Lock & Dam Facilities Effects of Reliability Cost affect not only shippers, but their larger value chains. Traditional Network & Distribution Models can show the location of deficiencies and initial incidence of costs Wider economic relationships are at stake Source: EDR Group Analysis using Wiser Trade, ArmyCorps of Engineers Data and TREDIS

Improving Lock & Dam Facilities: Where Savings Accrue Distribution of monetary savings among affected Counties is readily knowable from simple impedance/cost tables Source: EDR Group Analysis using Wiser Trade, ArmyCorps of Engineers Data and TREDIS

Composition of Scenario Cost Savings Economic model using Army Corps of Engineers Data shows which commodities experience the savings. This composition could reveal significantly more than the mere county where savings directly accrue. Composition of freight experiencing the savings forms the basis for understanding true impact, and induced demand. Source: EDR Group Analysis using Wiser Trade, ArmyCorps of Engineers Data and TREDIS

Economic Leakage and Its Effects Much of the savings from the Lock & Dam improvements “Leak” outside of the origin & destination counties. A large Percentage of the economic impacts are also experienced by suppliers and customers not experiencing any direct transportation savings. Source: EDR Group Analysis using Wiser Trade, ArmyCorps of Engineers Data and TREDIS

Diverse Industries Affected (within and beyond O-D Counties) Output Value Added Income Employment Brown 0.2 0.1 0.0 Bureau 2.1 0.7 0.3 2.8 Calhoun 0.4 1.0 Cass 0.5 Cook 37.9 15.9 5.9 59.4 Fulton 0.8 Greene Grundy Jersey LaSalle 5.5 2.0 0.6 4.9 Marshall Mason Morgan Peoria 2.4 0.9 2.5 Pike Putnam Schuyler 1.2 Scott Tazewell 1.9 1.6 Will 15.7 5.6 14.9 Woodford Combined 74.5 28.9 10.0 94.4 Source: EDR Group Analysis using Wiser Trade, ArmyCorps of Engineers Data and TREDIS

Distribution of Economic Impacts Across 22-County Region Will Multi-Regional Economic Model of Project Savings Economic Impact ($m output) of $137m of Cost Savings to 21-County Region Economic relationship of Chicago (Cook County) freight economy to Joliet (Will County) intermodal center EDR Group: Economic Impact and Cluster Analysis of Illinois River Lock and Dam Facilities, 2015

Geographic Distribution of Impacts Many Impacts Occur in areas where there aren’t even waterways. The job creation from the waterway improvements induces new jobs, which stimulate traffic on other modes. Models accounting for this find different traffic volumes, transportation needs and performance outcomes than other models. Source: EDR Group Analysis using Wiser Trade, ArmyCorps of Engineers Data and TREDIS

Wider Geographies Different Investment Scenarios Distribute Impacts to Different Geographic Markets

Practical Application of Multi-Region Economic Modeling Passenger Trip Gen Passenger Mode Choice Distribution Assignment Truck Trip Gen TREDPLAN: Economic & Trade Scenario Variablity Re-Allocation to TAZ System Net New Jobs & Housing TREDIS: Regional Economic Benefits & Impacts Loaded Networks & Congested Skims (Base Vs. Build) Grant Application BCA’s Prioritization Scores Scenario Comparisons Moda/Corridor Dependency Analysis Long Range Plan/Investment Needs

Thank You! Chandler Duncan EDR Group (617) 338-6775 x 203 cduncan@edrgroup.com