Surface transportation spending can have significant economic and societal benefits. Transportation infrastructure underlies the entire U.S economy and contributes to economic growth, job creation, corporate profits and worker productivity. Good transportation systems connect people to jobs. New projects can encourage livable communities and promote business development. As noted in a recent study by the Eno Transportation Foundation:
Transportation improvements foster improvements in the business environment. Cheaper transportation increases the size of markets. With larger markets, firms can realize greater economies of scale in production. Inputs to the production process may become cheaper because of lower transport costs. The size of the labor pool expands. Inventory management becomes easier. New land and new resources can be put to productive use, and greater specialization can occur.3
It is estimated that each $1 billion in federal spending on transportation infrastructure supports approximately 47,500 jobs.4 According to APTA, every $1 invested in public transportation projects generates between $4 and $9 in local economic activity.5 More-over, public transportation helps reduce overall fuel consumption and improves safety for travelers. TRIP estimates each $1 invested in the nation's highway system yields $5.40 in economic benefits from reduced delays, improved safety and reduced vehicle operating costs.
As reported by the Eno Transportation Foundation in a 1999 study, a $1 billion investment in Maryland highways during five years in the 1990s yielded 23,000 additional jobs and an increase of $2.7 billion in the output of Maryland goods and services.6 Over time, the annual rate of return on highway investment was estimated to be 17 percent.
A study by the Appalachian Regional Commission on the effects of the creation of 3,000 miles in the Appalachian Development Highway System found that, by the time of completion of the system in 2015, 42,000 jobs would be created in all sectors of employment, most notably construction and retail trade and services.7 Total economic benefit to the region over the time period was estimated to be $2.7 billion, with an investment return of $1.32 for every $1 invested.8
Iowa's "Revitalize Iowa's Sound Economy" program, created in 1985, promotes economic development through construction, improvement and maintenance of certain roads and streets. Funded by a 1.55 cent per gallon fuel tax, it raises approximately $30 million per year. It is estimated to have helped create more than 3,500 jobs in 2004 and to have leveraged almost $600 million in private capital.
It should be noted that estimating the precise economic effects of transportation investment is an inexact science; however, enough work has been done in recent years to indicate that the government's expenditure of tax dollars on transportation infrastructure benefits the economy in many ways, some of which are difficult to measure. Economists and researchers continue to refine models that will more accurately portray the effects of transportation investment on the economy.9