1. REMI® TranSight™: An In-Depth Look
Regional Economic Models, Inc.
Amherst, MA

2. Overview of Presentation
TranSight
REMI Policy Insight
Travel Demand Models
Modeling Transportation Impacts
Viewing Results

3. Regional Economic Models, Inc. (REMI) provides…
Policy Insight: A macroeconomic forecasting model that shows the total economic, demographic and fiscal effects of policy initiatives on local regions
TranSight: A model that integrates Policy Insight with transport planning and travel demand models to show the total economic, demographic, and fiscal effects of transportation infrastructure projects

4. Comparison of models TranSight Policy Insight
Transportation
demand model
Policy
variables
EDFS-53
EDFS-53
Project and region
specific data
Transportation “What If’s”
General “What If’s”
Forecasting

5. REMI TranSight™
First and foremost, REMI TranSight integrates REMI Policy Insight®—the world’s leading economic and fiscal policy analysis and simulation model—with the transport planning and travel demand models used most often by government and private sector planners.

6. REMI TranSight™
And because REMI Policy Insight® embodies the latest research advances in economic geography, REMI TranSight can show transportation planners and policy makers the total economic effects of new investments in highways, transit, and other transportation infrastructure.

7. REMI TranSight™
In particular, REMI TranSight can quantify the unique contribution transportation investments make toward creating and expanding industry clusters, some of the main drivers in diversifying and sustaining regional economic development.

8. How a REMI TranSight simulation works
Alternative Forecast
Control Forecast

9. TranSight™ Structure

10. Transight™ Structure Complex

11. REMI TranSight Results: Sample Results by Industry
Sector Employment (to 3 digits)
Intermediate Output Demand Empl
Local Consumption Employment
Investment Activity Employment
Government Demand Employment
Export Employment (Gross)
Relative Production Cost
Relative Composite Labor Cost
Relative Fuel Cost
Relative Capital Cost
Relative Composite Input Cost
Relative Factor Productivity
Regional Purchase Coefficient
Labor Intensity
Average Annual Wage Rate
Industrial Mix Index
Demand, Imports, Self Supply
Exports: Region, US, World
Sector Output (to 3 digits)
Value Added
Wage & Salary Disbursements

12. More Results of REMI TranSight
Aggregate Variables:
Age/Gender/
Cohort Variables:
Personal Income
Transfer Payments
Taxes
Disposable Personal Income
Price (PCE) Index
Real Disposable Income
GRP (by 22 final demand
categories, & by sector)
Empl (by demand, & sector)
Population
Migrants
Natality Rate
Survival Rate
Labor Force
Participation
Rate

13. REMI EDFS-53 Features Applies economic theory, inter-industry links:
Includes New Economic Geography Theory
Is calibrated & estimated using regional data
Is dynamic and predicts when results will occur
Cause & effect model structure explains results
Alternative structures allow sensitivity tests
Is the leading Policy Analysis model in the U.S.

14. REMI EDFS-53 Structure (2002 - ) WITH ECONOMIC GEOGRAPHY LINKAGES
Output
Population & Labor Supply
Market Shares
Labor & Capital Demand
Wages, Costs & Prices

17. Integrated Modeling Approach
The REMI model integrates key aspects of several economic modeling tools:
Model
Aspect
I/O
Inter-industry processing sector
CGE
Equilibrium tendencies in factor and material input markets
Econometric
Estimates derived from panel data
Economic Geography
Labor and product agglomeration

18. New Economic Geography
Based on monopolistic competition
Increasing economies of scale for firms (decreasing marginal costs).
Access to product varieties from different regions.
Different delivered prices in the same industry due to transportation or other distance deterrence costs.
Cross hauling, cluster agglomeration, and labor productivity are explained by microeconomic gains from having choice and variety.

19. New EG Features Labor Productivity Concepts
Labor Access Index
Occupation & industry effects of selecting best workers
Composite Labor Cost
Relative wage rate adjusted for labor access index
Includes commuter distance cost blended into wage rates
Occupation Codes
Standard occupation codes (SOCs) are implemented
Better groupings with sectors for analysis & display

20. New EG Features Commodity Price Concepts
Delivered Price (wtd avg by sector at place of use)
Source production cost + transport cost to place of use
Production & transport costs reflect every source location
Commodity Access Index (by sector at place of use)
Producer & consumer effects of better commodity choice
Reflects market share changes due to composite price changes
Composite Price (by sector at place of use)
Delivered price adjusted for commodity access index
Production Cost (by sector at place of use)
Includes intermediate inputs from all sectors & locations
Local production cost captures intermediate input composite prices; composite labor cost; and capital and fuel costs

21. New EG Features Trade Flows and Market Shares
Trade Flows Treatment
Shows trade flows from each region to each other region in the model, plus rest of US and rest of world
Domestic Market Shares Display
Shows share of local demand met by regions in model

22. New EG Features Transportation Costs Matrix
There are three components of the matrix:
Commuting costs
Accessibility costs
Transportation costs
The three components respond to changes in the effective distance between regions.

23. Multi-Regional Price and Wage Linkages
Occupational Labor Access Productivity
At market accessibility
estimated costs based on
dynamically estimated price elasticity
Composite Labor Costs
Industry Labor Access Productivity
Delivered Prices and Costs
Based on commuting in hours per day at one-half of the daily wage
Based on estimated
transportation costs
Composite and Production Costs
Commodity Access
Industry Labor Access Productivity
Industry Labor Access Productivity
Commodity Access
Commodity Access
Composite Labor Costs
Composite and Production Costs
Composite and Production Costs
Occupational Labor Access Productivity
Composite Labor Costs
Occupational Labor Access Productivity
Delivered Prices and Costs
Delivered Prices and Costs

24. Travel Demand Models
TranSight can be tailored to use outputs from a variety of commercially-available or custom travel demand models. These include:
TranPlan
TP+/Cube
TransCAD
HERS-ST
Customized models
The selected model should be run under both a baseline scenario and an alternative scenario that factors in the proposed transportation improvement

25. Travel Demand Models
Variables from the travel demand models that are integrated with TranSight to calculate the effects of a transportation project include:
Vehicle miles traveled (VMTs)
Vehicle hours traveled (VHTs)
These inputs are needed for the following:
Each model region
Each forecast year
Road types (e.g. freeway, arterial) if available
Time-of-day (e.g., AM/PM Peak) if available
Both the baseline and alternative scenarios

26. View Transport Model Details

27. Construction and Maintenance Costs
Overview:
Projected annual costs incurred by government for construction, maintenance and repair are entered by user
Project financing can be split between federal, state, and local government
Work is usually contracted out to private construction firms, which creates jobs and demand for intermediate inputs
Operation and maintenance costs more significant for public transit than roads

28. Construction and Maintenance Costs
The EDFS-53 connection:
Increased annual sales by the construction industry, to reflect expenses on construction and upkeep
Government expenditures, apportioned to federal, state and local levels according to financing percentages

29. Enter construction cost data

30. Emissions Costs/Benefits
Overview of theory:
Two countervailing effects of road upgrades
Increased miles traveled (emissions increase)
Increased average speeds (emissions decrease)
balance depends on speed changes of pre-existing traffic relative to percentage of new traffic
Dose-response functions connect emissions rates to incidence of various health maladies
Costs of health problems include lost work days and leisure activities, lower productivity, medical expenses
Public transit reduces emissions via substitution away from cars ar

31. Emissions Costs/Benefits
Overview of data:
Emissions rates (grams/mile) vary by speed for each of five pollutants:
Carbon Monoxide (CO)
Volatile Organic Compounds (VOCs)
Nitrogen Oxides (NOx)
Sulfur Oxides (SOx)
Small Particulate Matter (PM-10)
**EPA’s MOBILE6 and PART5 models are
used to estimate these emissions rates. ar

32. Emissions Costs/Benefits
Overview of calculation:
Health costs (per gram of emissions) for each pollutant derived from nationwide or local impact studies, and may vary by year
Change in emissions costs computed as follows:
…where:
ECj = Change in emissions cost for pollutant j ($)
ERj = Emissions rate for pollutant j (gram/mile)
CPGj = Emissions cost per gram for pollutant j ($/gram)
VMTalt = Vehicle miles traveled under the alternative scenario
VMTbase = Vehicle miles traveled under the baseline scenario ar

33. Emissions Costs/Benefits
The EDFS-53 connection:
Non-pecuniary amenities accruing to laborers and their dependents, which stimulates migration into or out of the region where the transportation project is completed, depending upon whether the benefits are net positive or negative ar

35. Safety Costs/Benefits
Overview:
Benefits/costs of a transportation project include the following aspects
The values of injuries and lives lost*
This value may increase due to a gain in miles traveled
This value may decrease due to safety improvements
Property damage**
Delay due to automobile accidents**
May vary by year to reflect rising medical and insurance costs
*Value taken from U.S. DOT estimation of the value of life (currently $3 mil/life)
**Value taken from National Highway Traffic Safety Administration, The Economic Cost of Motor Vehicle Crashes 1994; Lawrence J. Blincoe, 1996

36. Safety Costs/Benefits
Overview of calculation:
Accident rates (per mile) should be derived from local data by road type, and can vary by year and time period (e.g., A.M. Peak) if data availability permits
Changes in safety costs computed as follows:
…where:
SCj = Change in safety cost for road/accident type j ($)
ARj = Accident rate for road/accident type j (accident/mile)
CPAj = Safety cost per accident for road/accident type j ($/accident)
VMTalt = Vehicle miles traveled under the alternative scenario
VMTbase = Vehicle miles traveled under the baseline scenario

37. Safety Costs/Benefits
The EDFS-53 Connection:
Non-pecuniary amenities to households, which stimulates migration into or out of the region where the transportation project is completed, depending upon whether the benefits are net positive or negative

39. Fuel Tax Changes Overview
Change in fuel tax revenues proportional to change in gallons consumed, which can move two ways following a road upgrade:
Incremental travel demand: gallons increase
Higher average speeds of existing traffic: gallons decrease
New or expanded public transit will induce substitution away from cars; magnitude of switch will determine tax revenue change

40. Fuel Tax Changes Overview of calculation
Fuel efficiency varies by average speed, which may increase due to transportation improvement
Changes in fuel tax revenue computed as follows:
…where:
FRi = Change in fuel tax revenues for region i ($)
FTi = Fuel tax rate for region i ($/gallon)
Avg(MPG) = Average fuel efficiency (miles/gallon)
VMTalt = Vehicle miles traveled under the alternative scenario
VMTbase = Vehicle miles traveled under the baseline scenario

41. Fuel Tax Changes The EDFS-53 Connection:
The policy variable effect can be tailored to the client’s specifications: say, a change in funds available for government spending, or an adjustment to the model’s fiscal balancing mechanism

43. Commuter Cost Savings Includes the following aspects
The amount of commuting cost saving for the entire county or counties over the average work day.
The value of commuting time is rated at half the wage rate.
This is adjusted for VHT changes (from the travel demand model), and based on average commuting time
Source: Census for county commuting patterns

44. Commuting Costs The EDFS-53 Connection:
Commuting costs affect the effective distance in the occupational labor access productivity equation (by adjusting labor cost relative to the average wage rate), which feeds into industry labor access productivity and from there into composite wage rates
This ultimately affects both the composite cost of production by industry and the relative wage rate in the economic migration equation.

45. Transportation Cost Savings
Includes the following aspects
The cost savings in transporting goods and services due to increase in transportation efficiency
These are calculated from changes in VMT and VHT between the alternative simulation and baseline control
Source: Travel demand model

46. Transportation Costs The EDFS-53 Connection:
Transportation costs affect the effective distance in the delivered price equation for each sector (relative to time and to wage rates, or only to time if wage rates are unchanged), which feeds into the composite input cost equation to producers by sector and also into the consumption equation to consumers by commodity
This ultimately affects both the composite cost of production by industry and the consumption access index in the economic migration equation.

47. Accessibility Cost Savings
Includes the following aspects
Access to more diverse consumer goods and services by households
This affects economic migration by making a region more or less attractive
Access to broader array of intermediate inputs by employers
Adjusted by changes in VMT and VHT between and within regions

48. Accessibility Costs The EDFS-53 Connection:
Accessibility costs affect the effective distance in the intermediate input access index, which reflects a price elasticity of demand (price is sensitive to distance) and which feeds into the moving average commodity access index.
The commodity access index feeds the composite input cost equation and the consumer access equation, ultimately affecting both the composite cost of production by industry and the consumption access index in the economic migration equation.

49. Choose which results to view, and options, e.g., charts, tables, etc.

52. Choose report options

53. Viewing the results, and the total economic effects:

54. Employment rises…
Total and private non-agricultural employment rises…

55. …delivered prices fall…

56. …industry production costs fall…

57. …business and consumer access to commodities rises (red line)…

58. …industries have access to a larger and more diverse labor force…

59. …and Gross Regional Product rises.

60. Why REMI TranSight?
Integrating transportation with economic and fiscal simulation models requires a sound theoretical basis.
REMI models are structurally complete, and built upon widely accepted economic theory published in rigorously refereed academic journal articles.
Yet the economic theory behind REMI TranSight is accessible to any thoughtful person.
Sample report

61. Why REMI TranSight?
REMI has been involved in transportation planning for years. Below, a few examples (papers available upon request):
An Evolutionary New Economic Geography Model”; Wei Fan, Department of Economics, University of Michigan, Ann Arbor; Frederick Treyz and George Treyz, Regional Economic Models, Inc; Journal of Regional Science, Vol 40, No. 4, 2000 pp
“Monopolistic Competition Estimates of Interregional Trade Flows in Services”, Frederick Treyz and Jim Bumgardner; Regional Cohesion and Competition in the Age of Globalization, June 2000.
“Productivity and Accessibility: Bridging Project-Specific and Macroeconomic Analyses of Transportation Investments”, Glen Weisbrod and Frederick Treyz; Journal of Transportation And Statistics, Vol. 1, No. 3, October 1998.
“NCHRP Report 463: Economic Implications of Congestion”; Glen Weisbrod, Donald Vary, George Treyz; Transportation Research Board – National Research Council; 2001.