Highways, streets, railroad lines, transit systems, ports, and other transportation infrastructure constitute one of the most important economic resources of the United States. Transportation is a capital-intensive activity, and transportation infrastructure supports the economic activities of households, transportation companies, other private firms, and governments. The infrastructure is built and owned by federal and local governments (e.g., streets, highways, airports, and transit systems), as well as by the private sector (e.g., railroads, pipelines, and support infrastructure, such as terminals).
This chapter focuses on measuring the value of infrastructure, discussing current measures of physical infrastructure as well as the more challenging measurement of the benefits that society derives from using the infrastructure. The physical measures of transportation infrastructure include Value of Transportation Capital Stock, produced by the Bureau of Economic Analysis (BEA); and Value of Construction Put in Place, produced by the Census Bureau. These measures estimate the value of transportation infrastructure in terms of the resources used to construct and maintain it. Estimating the value of transportation infrastructure in terms of the mobility it provides to businesses and individuals, however, is more difficult and is the subject of study by a Transportation Research Board (TRB) task force.
Value of Transportation Capital Stock for Infrastructure
BEA measures the value of transportation infrastructure by estimating the value of the Nation’s transportation capital stock (box 8-1). As of 2014 the Nation’s capital stock for transportation infrastructure has an estimated value of $5.31 trillion (figure 8-1).1 BEA’s estimates use a weighted average of expenditures to expand capacity (by building new infrastructure) and expenditures to maintain, repair, and replace existing infrastructure, minus estimated depreciation. The depreciation estimates assume that a fixed percentage of the stock depreciates each year. These estimates are done separately for different assets such as roadways, bridges, railroad tracks, waterway locks, and other fixed network assets. Transportation rolling stock, such as locomotives, automobiles, buses, and boats, is not included in BEA’s estimates of the capital stock. The estimates also do not include the value of land where the infrastructure is placed.
Figure 8-1 shows public and private transportation capital stock by mode. Federal, state, and local governments own 76 percent of the Nation’s transportation capital stock by value, with an estimated value of $4.07 trillion in 2014. Highways and streets, which account for 83 percent of that value ($3.37 trillion), serve many users and modes—passenger vehicles, freight and service trucks, transit buses, pedestrians, and cyclists. Governments also own other transportation infrastructure such as transit systems and airports, with an estimated value of $700 billion.
The private sector owns the remaining 24 percent of transportation infrastructure, with an estimated value of $1.24 trillion in 2014. The largest amount ($403 billion) is owned by the railroad companies, which own, maintain, and operate their own tracks, railroad yards, and associated facilities. Pipeline companies also own and operate their own infrastructure ($225 billion). Finally, the transportation companies that use public infrastructure, such as trucking companies and airlines, own support infrastructure such as maintenance facilities, warehouses, and other buildings.
Value of Construction Put in Place
The Value of Construction Put in Place survey program, administered by the U.S. Census Bureau, provides monthly estimates of the value of construction work done in the United States. These estimates cover new structures and improvements to existing structures in the private and public sectors, and are used by the BEA to measure the current value of capital stock for infrastructure. Construction costs include labor, materials, equipment rental, architectural and engineering work, overhead, interest and taxes, contractor profits, and miscellaneous overhead and office charges.
In 2015 private and public spending on transportation construction totaled $134 billion (figure 8-2). Public transportation construction accounted for 90 percent of that amount ($121 billion), and private transportation construction accounted for the remaining 10 percent ($13.2 billion). Highway and street construction accounted for 74 percent of public spending on transportation construction ($89.6 billion), and construction for air, land, and water transportation facilities accounted for the remaining 26 percent ($31.5 billion). Although the amount and composition of construction varies from year to year, the value of transportation construction put in place has increased an average of 4 percent per year since 2002, dropping slightly in 2011 but increasing to a peak in 2015.
Estimating the Benefits of Transportation Infrastructure
The previous two approaches are useful for understanding what it costs to construct and maintain transportation infrastructure, but they do not reveal the value that the infrastructure provides to society. For example, it may cost $100 million to construct a new bridge, but the value of the bridge comes from the benefits which result from connecting businesses and individuals to jobs, markets, and social functions. Two approaches are typically taken to estimate the benefits that society derives from using transportation infrastructure. One approach is bottom-up from the project level (a microeconomic approach); the other is top-down from the national account level (a macroeconomic approach).
In theory, the two approaches should yield similar estimates, but the approaches do not completely overlap. Project-level analysis potentially understates the effects that a project will have on the national economy. For example, a new interchange near an international port may attract additional international trade, creating national economic benefits beyond the project zone. At the same time, however, the project- level analysis will include freight shipments which shift from other U.S. ports to the upgraded port facility and therefore have no net effect on the national economy. Both sets of shipments would need to be measured accurately to estimate the national economic benefits of the interchange.
The macroeconomic approach, in contrast, uses the BEA’s National Income and Product Accounts (NIPA), which provide aggregate measures of the Nation’s economic output at the national, regional, and industry levels. Econometric analysis links project-level effects to changes in GDP or changes in the value of capital stock. However, the analysis is complicated and measures only large transportation investments, such as the Interstate Highway System.
The government and the private sector invest in building new infrastructure, maintaining existing infrastructure, and expanding capacity to improve connectivity and address congestion. These investments provide individuals and businesses access to jobs, markets, and other opportunities. Measuring these accessibility benefits requires another approach to estimate the benefits of transportation infrastructure and evaluate whether transportation systems meet the needs of residents.
More research is necessary to quantify and link transportation accessibility to wages, consumer prices, and the well-being of individuals. The Texas Transportation Institute, Federal Aviation Administration, and others have made advances to estimate the cost of reduced accessibility from travel delays, but individuals also receive benefits when they reach their destination. Data sources, like the National Household Travel Survey, the American Community Survey, and the Longitudinal Employer-Household Dynamics, allow researchers to measure these benefits by matching household locations to the locations of employment, consumer markets, and social connections.
Task Force on Value of Transportation Infrastructure
In MAP-21 (Moving Ahead for Progress in the 21st Century Act, 2012), Congress required the Bureau of Transportation Statistics (BTS) to provide “a national accounting of expenditures and capital stocks on each mode of transportation and intermodal combination.” In FAST (Fixing America’s Surface Transportation Act, 2015), Congress continued to voice interest in measuring the value of transportation. To ensure that the national accounting is robust, reliable, and up-to-date, BTS is leading a 3-year research effort to develop new data and methods to quantify the value of transportation to the economy. BTS funded the TRB’s Task Force on Value of Transportation Infrastructure (AB020T), which includes leading experts on economics and transportation infrastructure from industry, academia, and state and federal governments, to conduct the research. In 2014 the task force hosted a workshop to review existing methods to estimate the value of transportation infrastructure and its role in the economy.2 The task force continues to extend existing methods and develop new methods to allow BTS to provide more meaningful statistics for decision makers.
1 Other categories of transportation capital stock include personal vehicles and parts, in-house transportation, and commercial truck transportation. In 2014, the nation’s transportation capital stock has an estimated value of $8.06 trillion.