The President’s federal budget proposal proposes $2.4 Billion in transportation spending reductions – including significant cuts in federal transit programs. Meanwhile, states from Georgia to Oregon and places in-between have looked to increase state transit funding and there is growing discussion about the role of public-private-partnerships (PPP)’s in funding transit improvements. These changes create an environment in which transit systems and proponents must make a more compelling case than ever before to business and economically savvy audiences demonstrating their economic role.
Changes in the administration, debates in Washington, and ongoing developments in technology, climate change and infrastructure costs make it harder than ever to undertake meaningful transportation plans, corridor studies and prioritize public investments.
To secure funding for projects through the federal TIGER or FASTLANE grant programs, it is critical to demonstrate not only a great project in terms of benefit-cost ratio, but also why the project has economic consequences. Successful TIGER grants for highway or bridge projects have tended to go to applicants who can show community or regional benefits. The new FASTLANE grant program seeks applications that can demonstrate national freight significance and visible economic outcomes.
When funds are short, agencies are often challenged to justify decisions about which projects to do and not to do. One way that agencies address this situation is by conducting cost-benefit analysis, which quantifies all of the potential benefits of projects relative to their costs and compares which investments seem to offer the best outcomes for the money. Agencies may use cost-benefit analysis to justify a particular project (showing its benefits are more than its costs) or to rank projects based on which ones offer the most benefits per dollar spent (often regarded as a ‘prioritization’ process). Using economic methods to compare the benefits of projects can be an extremely useful and powerful tool both for decision making and for explaining choices to stakeholders. However, challenges arise when agencies find that there are “intangible” (or difficult to quantify) outcomes which are known to be important.
Increasingly, agencies are interested in understanding the benefits of their investments in terms of the "triple bottom line" or (TBL). TBL is often presented as a new and important type of analysis in transportation and economics. It is important for planners, economists, and others involved in transportation decisions to understand what this means, and how it relates to the current state of the practice in transportation economics.