Resilience Economics in Action: The Example of US-101 in California

Resilience Economics in Action: The Example of US-101 in California

Resilience Economics in Action: The Example of US-101 in California
Many MPO’s and state DOT’s are beginning to assess not only their vulnerability to transportation system failures caused by natural disasters and weather-related events, but also the wider economic consequences of potential future infrastructure system failures. As such events may increase in frequency with aging facilities and climate change, understanding the economic consequences of these events should be at the core of any resiliency analysis.

To address this issue, two fundamental questions need to be considered:

  • What are the economic consequences of failures in a transportation system caused by weather or other natural disaster events?
  • What cost-effective transportation solutions can best avoid, mitigate, or quickly respond to these potential failures?

Quantifying the scale of economic losses due to a disruption in the transportation system highlights how much of the economy is exposed to natural or weather-related disasters.  This assessment can be used as a benchmark to evaluate the cost-effectiveness of various solutions oriented to improve resilience. 

One of the many agencies taking initial steps in this emerging field of study is Caltrans, the California Department of Transportation.  Concerned with the economic losses due to potential landslides in Northern California due to heavy rainfall, Caltrans funded EDR Group to assess the potential impacts and economic consequences of such an event, and our findings were recently published in the report:  “Last Chance Grade. Economic Impact of US 101 Closure.”  Last Chance Grade (LCG) is a 3.5-mile segment of US Route 101 and serves as an arterial gateway for residents, visitors and businesses located along California’s North Coast.  Located above the Pacific Ocean and among redwood forests, this roadway segment is geologically unstable and prone to landslides and slip outs which has occurred frequently in the past.  Businesses and the community in Del Norte County have expressed their concern about this segment of Highway 101 because a closure would require travelers going to and from Del Norte County to take a 320-mile detour adding an extra six hours to their travel time.

The purpose of the study was to create community awareness and build interest among regional stakeholders to consider various options to repair Last Chance Grade.  The data sources, methods, and assumptions used to evaluate the economic losses in Del Norte and Humboldt Counties in California and Curry County in Oregon can be applied to other resiliency studies to better understand the size of the economy at risk due to natural and climate related events. The study included:    

  • an economic profile of surrounding counties
  • economic development reports
  • interviews with businesses and industry associations
  • traffic impact assessment (including forgone trips)
  • transportation & economic impact modeling (TREDIS)

The study concluded that if the closure of Last Chance lasted for a full year, there would be a 90% reduction in passenger car trips and a 50% reduction in truck trips.  Passenger cars and trucks would incur $236 million in additional travel costs due to the detour.  Travelers that choose to forgo this trip due to the higher travel costs would experience a disbenefit of $417 million due to the detour.  Because Del Norte County is a popular tourist destination, the loss in visitors and increase in truck-reliant business costs in Curry County, Oregon and Humboldt County, California are expected to generate an economic loss of over 3,800 jobs, $145 million in labor income, and $456 million in business output as shown in Table 1. Figure 1 provides an illustration of how these various economic impact measures are related to one another. 

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The modeling of economic impacts was built upon and bolstered by stories and insights gathered from interviews regarding the many ways in which individual businesses would be affected by a highway shutdown.  These stories can resonate across a wide audience by providing real-life examples of hardships businesses would face from a long-term closure of US 101.  Because the area around Crescent City attracts visitors coming to see the Redwood forests, the detour would significantly impact tourism and hospitality industries.  For crab harvesting, the limited transportation-life for live crabs after they are extracted from the ocean would put the quality of their shipments at risk.  Similarly, California law requires wholesale milk be used within a 72-hour period, which constrains cheese production schedules when accounting for a detour delay and federally mandated truck driving hours of operation.  Certain businesses indicated they would not be able to absorb sales loses for more than a year.    

Quantifying these expected economic losses due to a landslide establishes the foundation for a robust resilience analysis and provides a benchmark to accurately evaluate proposed solutions to mitigate, reduce, or quickly respond to the risks these events threaten to generate.  Using these sources of data, approaches and methodologies can contribute to a defensible and comprehensive resilience analysis that can generate value for interested audiences and result in decisions that help protect the economy from these devastating events.  EDR Group has been working to compile scenarios showing how future changes in demographics, business, climate and transportation requirements will combine to amplify the economic consequences of some resiliency risks, while reducing the consequences of others. For more information on this analytical approach, contact .