It's Time For Transportation Planning to Account for Economic Uncertainty
Choosing between different mixes of long-term transportation infrastructure investments for such an uncertain future is a bit like trying to walk ashore in a rising tide. As soon as you find your path, it disappears!
The cost of over-build on an asset or transportation system can have life cycle costs that jeopardize an agency’s ability to respond to new challenges. However the societal costs of under-build in terms of safety, congestion and environmental loss can be even more taxing. It is time for transportation planners and engineers to consider the implications of different economic trajectories when assessing future traffic volumes and investment needs.
What if energy prices (including motor fuel) rise at triple the price currently anticipated? What if foreign trade policies or changes in exchange rates significantly alter the purchasing power of the US dollar and the sourcing of American freight? What if the economy faces another major recession, or changes in trade volumes overwhelm the capacity of US ports? Changes of this type can alter the fundamental assumptions that transportation plans hold about commuting levels, freight traffic, trip patterns, highway and inter-modal capacity and overall system performance.
New tools and data sources are being developed to enable planners to build such considerations into their forecasting and scenario planning. It is increasingly possible to consider aggressive, moderate and conservative estimates of transportation needs, as well as to create investment scenarios that balance and account for different economic possibilities. Incorporating economic possibilities into planning can transform the planning process by:
(1) Adding a level of credibility and relevance to salient economic issues
(2) Responding to tough questions from business stakeholders and elected officials
(3) Enabling plans to account for up-side and down-side risk of proposed projects
(4) Demonstrating how the rationale for prioritization may change with the economy
(5) Clarifying the appropriate overall size of transportation programs
(6) Showing ways to “Right-Size” the life-cycle preservation cost for existing assets
It’s time for a conversation about serious ways to integrate economic uncertainty into the transportation planning and decision making process.