Discussion-piece #5

Ridership and User Benefits from Variable Trip Ends

(Land Use and Economic Development)

Federal Transit Administration

June 6, 2006

1.  [Motivations.]{.underline} A frequently cited goal for major transit
    projects is that they serve as tools to help shape patterns of
    growth in metropolitan areas. FTA's evaluation of New Starts
    projects has for a decade required that forecasts of ridership and
    mobility benefits be prepared with "fixed trip tables," effectively
    precluding any recognition of changes in land use that the projects
    might help to produce. FTA's evaluation criteria have included the
    transit-friendliness of the land-use and development
    [setting]{.underline} for the proposed project, but with very little
    reference to the development benefits of the project. Over the past
    several years, FTA has been working to include "economic
    development" among the benefits credited to projects. That work has
    included sponsored research on the nature and size of
    transit-related development benefits and an invitation to project
    sponsors to attempt to quantify the (mobility) benefits generated by
    refocused development.

2.  [Double counting.]{.underline} A challenge in all of these efforts
    is the avoidance of double counting -- that it, sufficiently careful
    accounting of benefits that counts underlying benefits only once and
    avoids counting again different manifestations of those same
    benefits. This issue is particularly difficult for the economic
    development benefits of transit because, the research concludes,
    economic benefits are caused by accessibility improvements.
    Accessibility improvements are already well recognized in FTA's
    methods for rating projects in the various mobility measures -- user
    benefits in total, per project trip, and for transit dependents, as
    well as in the cost/hour measure of cost-effectiveness. The addition
    of economic development benefits risks the recounting of those same
    benefits -- in the form of land prices, occupancy rates, development
    densities, jobs and households relocated to station areas, or
    similar measures.

3.  [Mobility benefits from refocused development.]{.underline} A
    largely separate class of benefits, however, is the reduction in
    expenditures on travel made possible by the relocation of
    households, jobs, and activities. For example, a household may
    locate near a new transit station in a relatively dense area --
    rather than in a less dense area with less transit accessibility --
    so that one of its workers can take transit to work. Because of that
    decision, the household accrues the direct benefits from better
    transit accessibility to its worker's workplace. However, it also
    accrues benefits for its other trip-making if the denser area
    provides higher accessibility in general to jobs and other
    activities -- and requires, on average, shorter trips to those
    activities. Further, the entire metropolitan area benefits from the
    lower generation of auto vehicle-miles of travel by the household
    (reducing congestion and air pollution) because of a higher transit
    share of its trips, possibly a higher non-motorized share, and a
    lower average distance per trip. Similar benefits accrue from the
    more efficient locations chosen by employers, retail, and other
    activities that are trip attractors. (The opposite impacts might be
    the consequence of other kinds of relocations. Households that
    locate near new commuter rail stations in pursuit of suburban
    amenities may experience increases on their total expenditures on
    travel and impose higher travel impacts on others.)

4.  [Capturing these benefits.]{.underline} The relocations of trip
    productions and trip attractions in response to a major transit
    project mean that (1) more trips would enjoy the direct mobility
    benefits of the project itself, (2) better-located households, jobs,
    and other activities may require lower expenditures on
    [all]{.underline} travel compared to a less focused development
    pattern and (3) fewer indirect impacts may be imposed on others in
    the metropolitan area. So, the question is whether current
    analytical methods can capture these benefits reliably.

5.  [Location choices of households and businesses.]{.underline} Two
    alternative methods are commonly used in metropolitan planning to
    predict future development patterns: land-use models that predict
    changes in population and employment at the small-area level, and
    cooperative forecasting that relies on negotiations among local
    jurisdictions to reconcile local growth projections with regional
    control totals. Either method might be used to prepare a revised
    growth forecast associated with a major transit project. The revised
    forecasts would appear -- on the surface -- to offer a way to
    compute the change in overall expenditures (time and cost) on travel
    using generalized prices of travel from various locations. The
    generalized price of travel to all possible destinations might be
    derived from (the denominator of) a trip distribution or destination
    choice model. Residents of some locations face relatively low prices
    because they are proximate to dense employment and activity
    locations and/or have good access to high-quality transportation
    facilities. Residents of other areas face high prices because they
    live in outlying areas and/or face severe highway congestion with
    few or no transit options. Any shift of households from a
    higher-priced to a lower-priced location would reduce total
    expenditures on travel -- and potentially represent the locational
    benefits of a transit project. This approach encounters three
    difficulties, however:

-   First, it provides no analytical way to differentiate among
    projects. Policy changes to encourage particular growth patterns can
    be implemented with -- or without -- major transit projects. It is
    therefore unclear how this approach might reliably predict the
    likely outcomes of similar policies applied to arterial BRT,
    streetcars, light rail, and other transit modes (including existing
    local bus services) -- and alternative alignments.

-   Second, the approach may suggest benefits of such magnitude that
    they overwhelm the direct transportation benefits of projects. A
    negotiated forecast might be that 10,000 additional households would
    locate in the station areas of a proposed project where the average
    trip distance if 5.0 miles, and that these households would
    otherwise have located across far-flung areas where the average
    distance is 15.0 miles. That population relocation would generate
    large reductions in expenditures on travel -- much larger than the
    mode-choice benefits from shifts of travelers from the stations
    areas from auto to transit. Assuming that it is accurate, such a
    forecast would confirm the importance of frequently cited the goals
    for transit. But the forecast would say much more about the
    importance of land use planning and smart growth than about the
    transit project itself.

-   Third, the approach is easily manipulated to contrive benefits for
    proposed projects. Manipulations are straightforward for both the
    number of relocated households and jobs, and the locations from
    which they are relocated.

    Consequently, for the purpose of evaluating proposed major transit
    projects, the quantification of benefits arising from redistribution
    of population and employment growth does not appear promising.
    Substantial barriers to its implementation exist in the absence of
    analytical tools, risks of easy manipulation, difficulties in
    application to alternative investments, and problems differentiating
    the individual contributions of land use policies and proposed
    transit projects.

6.  [Conclusion.]{.underline} Given the absence of a promising approach
    to the valuation of the potential relocation impacts associated with
    major transit projects, FTA has suspended further work on this facet
    of "economic development" impacts.