The Economics of the I-49 Connector, Part 1

Click to read the report

Click to read the report

What would you do with an additional 3.2 minutes each day? What would you do with an additional 53 cents a day? If you had an additional 3.2 minutes each day, would your day be $0.53 better off?

These are the questions that the Northwest Louisiana Council of Governments (NLCOG) is answering in its report, "Economic Impacts of I-49 Completion, Inner City Connector."

Before I get too far into this, let me give a disclaimer of sorts. While I'm going to show you, in a three part series, how the conclusions of this report are nothing but propaganda -- outright fiction that should outrage everyone -- I'm going to point out that this isn't the fault of the report's authors. They are merely following standard industry practice which, in this case, is largely determined by the federal government.

You can look at federally funded projects from around the country and they are going to contain the same fictions spun into a seemingly-rigorous narrative for project proponents to use. It's an industry problem, so direct your outrage accordingly.

The report on economic impacts details three ways in which the I-49 Inner City Connector project in Shreveport is going to have economic benefits. Those are:

  1. Travel time and vehicle operation cost savings,
  2. Differentials in economic output from real estate development, and
  3. Impacts from differentials in agglomoration economies.

For those not used to industry jargon, the report is claiming that the Inner City Connector is going to save people time, allow more land development and make it easier for people to find the best job in the region and that each of these has economic benefits that can be measured and predicted. Today I'm going to focus on the first: travel time and vehicle operation cost savings.

Long time readers of Strong Towns have seen me discuss this before. Project proponents convert very small amounts of time savings into cash equivalents to show all the benefit a project is creating. Here's how I put it in a piece last fall called "Project Propaganda": 

This is not cash. I called it “social value” for lack of a better term. We can’t pay for the project with it and it doesn’t show up on anyone’s bank statement.
Let's say we have a congested stretch of roadway. We're going to add another lane in each direction. We estimate that this will allow traffic to flow more smoothly and, through that stretch of roadway, save the typical driver 30 seconds a day. That doesn't seem like much, but take 30 seconds and multiply it by 50,000 cars per day and then multiply that by 365 days per year and then multiply that by 50 years for the full project life and then multiply that by $30/hr in salary and benefits of the typical employee and, all of a sudden, that half a minute is worth nearly $10 million in social value.

Note that this is not cash. I called it "social value" for lack of a better term. We can't pay for the project with it and it doesn't show up on anyone's bank statement, although the economic report for this project claims (on page 4) that, "The savings from shorter commutes is equivalent to an increase in household incomes." Not exactly. Try paying your mortgage with $0.53 worth of saved time.

You're joking....How Many Trips?

Usually when this kind of economic propaganda is used, we're dealing with transportation improvements impacting tens of thousands -- sometimes hundreds of thousands -- of trips. Those little $0.53 trips add up when multiplied over those kind of large numbers. That's why I was dumbstruck -- and had to go through this many times -- when I read the volume of traffic they are modeling here.

From the report (page 5):

In addition to daily commuters, the completion of I-49 will impact truck traffic and passenger traffic traveling through Shreveport in a north-south direction. The NW LA COG has estimates of this through traffic based on traffic counts. The 2015 estimate of north-south through traffic is 235 vehicles/day or 86,000 vehicles/year. The Inner City Build Alternatives is a shorter route for through traffic than the Build Alternative 5. The differential is 2.56 miles.
In a time where we have a national infrastructure crisis, there is serious consideration — and broad local political support — being given to a $700 million project that will impact fewer cars than travel alleyways in some major cities.

There are 235 vehicles that are projected to traverse this entire stretch per day. In addition, the report suggests an additional 3,374 commuter vehicles that will travel to one of the planned interchanges. That's a total of 3,609 trips per day. (Note: not a typo.)

The project cost is $700,000,000. 

Yes, in a time where we have a national infrastructure crisis, there is serious consideration -- and broad local political support -- being given to a $700 million project that will impact fewer cars than travel alleyways in some major cities. I live in a city with 5% of the population of Shreveport and we have local streets that get more traffic than this interstate expansion is expected to get.

For context, if we assumed that all these trips were made during just the peak half of the day -- let's say 6AM to 6PM -- then the I-49 Inner City Connector would see one car pass every 26 seconds. 

And this saves us how much money?

The report includes a number of tables (pages 30 and 31) calculating how much the total increase in "household income" is going to be when you add up each of those cars that pass by one every 26 seconds. In 2018, for those 3,609 trips, it's a projected $1.4 million in time and decreased vehicle wear and tear.

When you add this windfall each year, "the aggregate savings for the first 20 years of the Inner City Build Alternatives is $45 million" (page 5). That's $45 million dollars worth of saved time and wear-and-tear converted into hard cash.

But do people really value their time and resources this way? Joe Cortright at City Commentary recently published an analysis looking at a situation where drivers had a choice about to whether to pay to cross a bridge that would reduce their travel time, or save their money and spend extra time in congestion. Despite pro-build industry assumptions, dramatically more people than models would suggest chose to sit in traffic rather than pay. Cortright suggests that about 80% of the value derived with this method is not actually there. He writes:

If travelers attach so little value travel time savings, this calls into question the rationale for investing public funds in highway projects. Benefit-cost analyses used to justify highway projects count the estimated travel time savings, often valued at around $15 per hour, as the benefit of the project. If the real value of travel time savings is something like $3 an hour, that reduces the benefits by about 80 percent. 

If that were the case -- and I think it might be too generous still -- the time value provided by this $700 million project would be only $9 million. 

Putting it in Perspective

What would you be willing to pay in order to experience an additional 3.2 minutes, or an additional 53 cents, each day? Let's revisit the numbers:

  • The project is projected to cost $700,000,000.
  • Shreveport's population is 200,000 people.
  • That's a $3,500 investment per resident.

At 53 cents per day, impacting 3,600 cars per day, it will take 1,005 years to make the investment back. And that's assuming the 53 cents a day is real, which it is not.

At this point, project advocates would likely argue that the time savings component of the economic analysis is not as important as the other two, the development potential and the agglomeration effects. I'm going to focus on those components in Part 2 and Part 3 later this week, but here's a preview: The time savings is the best case made in this report. The best.

(Top image from page 52 of Economic Impact Report)

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