Economic Impacts, Benefits and Costs of 

Completing the ADHS

Ryan Brumfield & Dan Hodge

FHWA Webinar

December 13, 2017
Speakers

2

Dan Hodge, 

Principal,

Hodge Economic Consulting

Stefan Natzke, Team Leader, 

FHWA National Systems 

and Economic Development

Everett Matias,

Senior Transportation 

Engineer 

FHWA Office of Program 

Administration

Ryan Brumfield, 

Senior Transportation Advisor

Appalachian Regional 

Commission (ARC)
ADHS Economic Study – Today’s Presentation

• Appalachian Regional Commission (ARC) and Appalachian 

Development Highway System (ADHS) Context

• Back-casting to estimate transport and economic impacts of 

ADHS system through 2015

• Forecasting of economic impacts, benefits, and costs of ADHS 

system completion

• Analysis of major ADHS corridors and impacts of accelerated 

completion
• ARC is an economic development agency of the federal 

government and 13 state governments focusing on the 

Appalachian Region

• In 1965, Congress established the ARC to address the profound 

economic and social problems that made Appalachia a “region 

apart” from the rest of the nation

• The Appalachian Regional Development Act established a 

mandate to focus resources on reducing the socioeconomic 

gap between Appalachia and the nation

About the Appalachian Regional Commission (ARC)
Appalachian Region

• Follows the spine of 

Appalachian Mountains from 

southern NY to northeastern MS

• Mountainous terrain, isolation, 

historical underinvestment 

• 13 States, 420 counties

• 205,000 sq. miles

• Disproportionately rural

• Region of economic contrasts

• Tremendous assets:

• Natural (forests, water, 

agriculture) 

• Cultural (arts, heritage),

• Structural (leaders and 

institutions)
Strategic Goals:

1. Economic Opportunities

2. Ready Workforce

3. Critical Infrastructure

4. Natural and Cultural Assets

5. Leadership and Community Capacity

Mission: Innovate, partner, and invest to build community capacity and 

strengthen economic growth in Appalachia

Vision: Appalachia is a region of great opportunity that will achieve 

socioeconomic parity with the nation

ARC – Vision, Mission, and Strategic Goals

Appalachian Development Highway System (ADHS)

• Established by Congress in 1965

• System of corridors totaling 3,090 miles within the 13 Appalachian states

• Designed to generate economic development in previously isolated areas, connect 

Appalachia to the interstate system, and provide access to regional, national and 

global markets

• Between 1965 and 1999, funds were provided through annual appropriations

• TEA-21 and SAFETEA-LU provided annual authorizations of between $450 Million 

and $520 Million through FY 2012

• MAP-21 and the FAST Act did not provide specific authorization of funds for ADHS 

but did increase eligible share to 100% for remaining ADHS funds
ADHS Today and Corridors to Complete
ADHS Status of Completion as of 9/30/2017
• Back-cast: What have been the transportation and economic impacts of ADHS 

investment so far (1965-2015)?

• Forecast: What are the economic impacts, benefits, costs and ROI of completing 

the ADHS (2016-2045)?

• Travel Impact: Modeling highway network with vs. without ADHS segments in 

place, to assess:

– Travel Efficiency Performance (travel times, distances, costs) and 

– Travel Accessibility (labor market, same-day delivery market, intermodal 

terminal connectivity)

• $ Value of Travel Time & Cost Savings

• Economic development: forecasting model calculates effects on job growth, GDP 

and wages

11

Study Objectives and Key Impact Concepts
12

Table 1: ADHS Historic Development Periods

1965‒1983 1983‒1999 1999‒2015 All Periods

ADHS Investment($M) $3,255 $1,661 $6,287 $11,203

ADHS Lane Miles Added 4,356 267 496 5,119

Back-casting – ADHS Projects 1965-2015
ADHS Investments Concentrated in NonMetro and Distressed Areas
Travel Efficiency Benefits to 2015

14

Travel time 

and reliability 

improvement 

by location of 

occurrence

For all projects completed  As of 2015

Total VHT Time Savings in 2015 (millions) 231.0

Car and Light Trucks 199.5

Freight Trucks 31.5

Total Reliability Time Savings in 2015 (millions) 129.1

Car and Light Trucks 111.5

Freight Trucks 17.6

Total Hours Saved (Reliability and VHT) 360.1
Labor Market Access Benefits to Date

15

% Increases in Workforce Access in 2015 from 1965-2015 ADHS Investment 
Same-Day Delivery Market Access to Date

16

Size of Same-Day Market Accessible from 

Appalachian Counties as of 1965

Percent Increase in Same-Day Market from 

Past ADHS Improvements (1965-2015)
Connecting to Intermodal Terminals in (and just 

beyond) Appalachia

17

ADHS Ties Appalachia to Air & Rail intermodal terminals

Greer, SC

Huntsville, AL
Examples of Appalachia Intermodal Facilities

18

Corridor V: 

Huntsville Intermodal Center (AL)

Connects Huntsville Airport, intermodal rail + truck distribution 

centers via Corridor V to I-65 

(Nashville and Birmingham)

Corridor W: 

Greer, SC Inland Port

Connects Spartanburg/Greenville (BMW, 

Michelin) via shuttle train to Charleston 

Port. Corridor W truck access to Tennessee 

(John Deere, Eastman Chemical). 
$ Value of Travel Benefits as of 2015

19

Table 4: Value of Travel Efficiency Savings from Completed Projects as of 2015 ($ millions/yr.) 

Category of Value Freight Truck Car + Lt. Truck Total

Vehicle Operating Cost Savings $930 $2,473 $3,403

Business Travel Time Cost Savings $1,431 $2,261 $3,692

Shipper/ Logistics Cost Savings $555 $0 $555

Personal Travel Time Savings $0 $3,059 $3,059

Total $2,916 $7,793 $10,709
Economic Impact Modeling of ADHS 

Investments
Economic Impact: Appalachia and States

21

Table 5: Impact of ADHS Projects on the Economy of Appalachia and Appalachian States

Increase compared to “no build” case As of 1983 As of 1999 As of 2015

13-State Appalachian Region

 Business Output (Revenue) in $M/year $9,959 $15,207 $24,183 

 GRP (Value Added) in $M/year $4,611 $7,037 $11,173 

 Worker Income in $M/year $3,006 $4,587 $7,282 

 Employment level (single year) 69,385 105,897 168,336

 Lane-Miles Built to date 4,356 4,623 5,119

Appalachian Region

 Business Output (Revenue) in $M/year $8,063 $12,312 $19,578 

 GRP (Value Added) in $M/year $3,733 $5,697 $9,046 

 Worker Income in $M/year $2,434 $3,714 $5,895 

 Employment level (single year) 56,174 85,734 136,284

 Lane-Miles Built to date 3,527 3,743 4,144
Economic Impact over Time (1965-2015)

22
Reduction in Appalachian Poverty by County –

1960 to 2010/2014
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Table 6: Future Completion of the ADHS by Investment and Miles Over Time

2016‒2025 2026‒2035 2036‒2045 Total

ADHS Cost to Complete ($M) $3,374.0 $2,192.4 $5,348.4 $10,914.8

Highway Miles to be Completed 120.6 57.3 117.4 295.3

Forecasting Analysis – ADHS Completion: 2016 

to 2045
Same-Day Delivery Market Access by 2045

25

Percent Increase in Same-Day Delivery 

Market, 2016-2045

Percent Increase in Same-Day Delivery 

Market, 1965-2015
Value of Travel Benefits by 2045

26
Economic Impact 2045: Appalachia & 13 States

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Table 10: Annual Economic Impacts of ADHS Completion (In Constant Dollars)

Annual Economic Impact of 

Completing ADHS *

Appalachia Appalachian States

As of 

2025

As of 

2035

As of 

2045

As of 

2025

As of 

2035

As of 

2045

Business Output ($M Sales) $2,982 $4,855 $6,717 $3,875 $6,299 $8,704

Value Added ($M GRP) $1,450 $2,356 $3,269 $1,883 $3,056 $4,236

Wage Income ($M Earned) $909 $1,474 $2,063 $1,181 $1,913 $2,673

Employment (Jobs) 19,821 29,674 36,156 25,751 38,502 46,849

Top industries impacted by ADHS completion: professional and business services, 

leisure and hospitality, education and health care, retail trade, manufacturing, 

warehousing and transportation
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Benefit and Cost Elements

Regional 

Perspective

National 

Perspective

with 7% 

discount rate

with 7% 

discount rate

Vehicle Operating Cost Savings $1,053 $1,659 

Travel Time Saved $5,602 $8,622 

Reliability Time Saved $1,589 $2,526 

Safety Benefit $637 $950 

Environmental & Emissions Benefit $223 $358 

Logistics and Supply Chain Savings $986 $1,786 

Market Access (Productivity Gain) $1,994 $419 

Total Cumulative Benefits $12,083 $16,320 

Total Cumulative Costs $4,471 $4,471 

Benefit-Cost Ratio 2.7 3.7

Discounted net present value of 2016-2045 benefits and costs

ADHS Completion: Benefit-Cost Analysis

Benefit-cost ratios increase to 5.1 for the region and 7.1 for the US if using a 3% 

discount rate
Impact of Accelerating ADHS Completion – 2035 

versus 2045 – Large Projects Accelerated

29

Corridor Name State

Estimated 

Completion Year

(2045 or sooner)

Assumed Completion 

Accelerated Schedule 

(2035 or sooner)

Estimated Cost

(Undiscounted)

$M

Corridor H West Virginia 2042 2035 $810.0

Virginia 2026 2026 $138.3

Corridor K Tennessee 2025 2025 $535.5

North Carolina 2028 2028 $760.5

Corridor M Pennsylvania 2045* 2035 $1,477.1

Corridor N Pennsylvania 2045* 2035 $510.1

Maryland 2022 2022 $183.9

Corridor Q Virginia 2021 2021 $474.1

Kentucky 2019 2019 $371.2

Corridor X1 Alabama 2045 2035 $2,966.4

Other Corridors Multiple States varies varies $2,687.7

All Corridors Multiple States varies Varies $10,914.8
Impact of Accelerating ADHS Completion – 2035 

versus 2045

30

 

Benefit and Cost Elements

Cumulative Value

(2015-2035)

Cumulative Value

(2015-2035)

2045 Completion 2035 Completion

Vehicle Operating Cost Savings $820 $1,537

Travel Time Saved $4,396 $8,231

Reliability Time Saved $1,231 $2,315

Safety Benefit $505 $944

Environmental and Emissions Benefit $125 $243

Logistics and Supply Chain Savings $732 $1,382

Market Access (Productivity Gain) $2,511 $3,497

Total Cumulative Benefits $10,320 $18,149
Major Corridor-Specific Analysis: Impacts & BenefitCost Analysis 

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H K N Q X1

Investment Cost ($ mil) 948 1,296 694 845 2,966

Benefit-Cost Analysis

Societal Benefits ($ mil, discounted 7%) 761 1,623 373 1,458 3,078

Cost ($ mil, discounted 7%) 278 887 239 739 727

Benefit-Cost Ratio 2.7 1.8 1.6 2.0 4.2

Economic Impact Analysis

Gross Regional Product (after 10 yrs) ($ mil) 166 205 61 97 1,395

Employment Change (after 10 Yrs) 1,852 2,368 700 987 13,937

The estimated benefit-cost ratio is over 1.0 for all major corridors, meaning 

benefits are expected to exceed costs, resulting in a positive ROI
Corridor H – WV and VA
Corridor H – WV and VA: Strong ROI

89.8 0.9 10.8 14.9 29.7

0% 20% 40% 60% 80% 100%

miles

Completed

Remaining Stage Construction

Construction Under Way

Design & ROW Stage

Location Study Stage

The estimated benefit-cost 

ratio is 2.7 to 4.8 (depending 

on discount rate assumption)
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ADHS Investment to Date

• Significant travel time, reliability, labor access, business delivery gains

• Cost savings + productivity gains of $10.7 billion/year as of 2015

• 20% of car benefits, 31% of truck benefits are outside of the 13 states

• Accountable for 168,000 jobs and $11 billion of GRP/yr. as of 2015

Forecast ADHS Completion

• Expect 121 million hours of more time savings/year by 2045

• Cost savings + productivity gains of $1.8 billion/year as of 2015

• Present value of benefits/costs = 3.7 return on investment (ROI)

• Expected to enable +47,000 jobs and +$4.2 billion of GRP/yr. by 2045

(77% of gains in Appalachian counties, rest elsewhere in 13 states)

(jobs concentrated in knowledge industries, also tourism)

Summary of Findings
Questions? Contact

Ryan Brumfield, rbrumfield@arc.gov

Dan Hodge, dan@hodge-econ.com 

Final report documents online at: 

https://www.arc.gov/research/researchreportdetails.asp?REPORT_ID=135

Research Consultant: EDR Group and WSP / Parsons Brinckerhoff
Resources – links available in download pod

• FHWA: https://www.fhwa.dot.gov/specialfunding/adhs/

• ARC: https://www.arc.gov/adhs

• ADHS technical report documents: 

https://www.arc.gov/research/researchreportdetails.asp?REPORT_ID=135

• FHWA economic development resources 

https://www.fhwa.dot.gov/planning/economic_development/

– Recordings of previous webinars

– Case studies

– Link to ITED information

• International Transportation and Economic Development (ITED) conference, June 6-

8 in Washington, DC