Appalachian Development Highway System 

Economic Analysis Study: 

Synthesis of Findings to Date 

Prepared for:

Appalachian Regional Commission 

1666 Connecticut Avenue, NW Suite 700, Washington, DC 20009 

Prepared by:

Economic Development Research Group, Inc. 

155 Federal Street, Suite 600, Boston, MA 02110

May 2016 

May 9, 2016
TABLE OF CONTENTS

Executive Summary ............................................................................................................................ 1

1. Introduction ................................................................................................................................... 3

2. The Regional Economic Context ...................................................................................................... 5

3. Region-wide Impacts of the ADHS to Date....................................................................................... 7

4. Impacts of Individual ADHS Projects .............................................................................................10

5. Impact of the ADHS on Freight Accessibility ..................................................................................12

6. Completing the ADHS ...................................................................................................................15

7. Summary of Findings ....................................................................................................................17

References .......................................................................................................................................18
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 1

EXECUTIVE SUMMARY 

Overview. This report reviews and summarizes the findings of previously published studies on the 

impacts of the Appalachian Development Highway System (ADHS) on economic growth and 

transportation connectivity in Appalachia. The collective findings of these reports cover a wide-range of 

topics including: (a) research on the ADHS role in regional economic growth and development, (b) case 

studies of impacts associated with specific ADHS corridor projects and their connection to multi-modal 

transportation facilities, and (c) emerging issues concerning the role of the ADHS network in enabling 

national highway connectivity and an emerging intermodal freight system. 

This is the first volume in an ongoing study that more broadly analyzes the ways that ADHS development 

has affected economic growth in Appalachia, and the future economic benefits and costs of completing 

the ADHS. 

Background. The ADHS is a federally designated 3,090-mile network of modern highways, comprising 32 

highway corridors spread across 13 states. It is designed to link isolated and economically distressed areas 

of Appalachia to the Interstate Highway System and major economic markets. Development of this 

network was originally authorized by a broad bipartisan majority of Congress in 1965, under the 

Appalachian Regional Development Act of 1965. This legislation set up the Appalachian Regional 

Commission (ARC), and it also designated the ADHS as a key element of ARC’s strategy to grow and 

diversify economic opportunities in a 

region underserved by transportation. 

Research Importance. Today, fifty years 

after its authorization by Congress, 

almost 88 percent of eligible ADHS 

mileage has been built (open to traffic) 

with another 76.7 miles under 

construction.1 The process of 

completing the entire ADHS has been 

slow, in part because of the high cost 

and environmental sensitivity of 

completing highways in a region marked 

by mountainous terrain. At the same 

time, the extent of long-term poverty in 

this region and the implications of 

improved accessibility enabled by ADHS 

corridors are of a large scale. As a result, 

both the potential costs and benefits for 

completion of the ADHS system are large 

and very meaningful for both the 

Appalachia Region and the U.S. That is 

the reason why research findings on the 

 

1

 As of September 30, 2015: http://www.arc.gov/images/programs/transp/ADHSFY2015StatusReport.pdf 

Appalachian Development Highway System
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 2

actual ADHS economic and transportation impacts to date are so important, and relevant to the Region’s 

plans to complete the ADHS. 

Key Findings 

1) The role of the ADHS in enabling economic development is well documented. Several historical 

studies have traced the processes whereby ADHS corridor completion to date has had a clearly 

observable effect on diversifying the economy of many parts of Appalachia, and played a pivotal role 

(along with other ARC programs) in helping to reduce poverty in the Region. However, the ADHS 

network is not complete and significant pockets of poverty still remain. 

2) There is strong evidence of a positive relationship between completion of ADHS segments and 

subsequent economic activity growth at a county level. A series of statistical studies have shown 

that these impacts are statistically significant and particularly large for economically distressed 

counties. These are statistical relationships across all Appalachian counties, which means that not 

every distressed county will automatically grow just because ADHS segments are complete. 

3) Different parts of Appalachia benefit from ADHS corridor completion in different ways. A series of 

case studies show that some areas have been able to boost tourism, others have seen industrial 

activity grow, and yet others have seen commercial/retail activity expand. Some areas have seen 

strong economic growth and others are still waiting for major economic growth to occur. The effects 

depend on the nature of the specific corridor, its population and workforce, its current economic 

profile and its location relative to surrounding business centers and markets. 

4) The importance of ADHS network connectivity is receiving increased attention as businesses move 

towards more dependence on national and global markets. Public and private organizations are 

actively working to invest in intermodal transfer facilities and global gateways both within and 

surrounding the Region, and this is increasing attention to the issue of how Appalachian 

communities connect not only to the interstate highway network, but also to intermodal rail, air and 

marine transportation facilities. 

5) Completion of remaining elements of the ADHS depends on complex issues, requiring more 

attention to the costs and stakes involved. Future research, grounded in the findings of ADHS 

impacts to date, should help to provide more information concerning the economic consequences 

of ADHS project acceleration or delay. 
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 3

1. INTRODUCTION

Overview. This report reviews and summarizes the findings of previously published studies on the 

impacts of the Appalachian Development Highway System (ADHS) on economic growth and 

transportation connectivity in Appalachia. It reviews the collective findings of previously published 

reports. This is the first volume in an ongoing study that more broadly analyzes the ways that ADHS 

development has affected economic growth in Appalachia, and the future economic benefits and costs of 

completing the ADHS. 

Background: ADHS Development. The ADHS is a designated 3,090-mile network of modern highways, 

comprising 32 highway corridors spread across 13 states. It is designed to link isolated and economically 

depressed areas of Appalachia to the Interstate Highway System and major economic markets. 

Development of this network was originally authorized by a broad bipartisan majority of Congress in 1965, 

under the Appalachian Regional Development Act of 1965.2 This legislation set up the Appalachian 

Regional Commission (ARC) to address persistent poverty and economic isolation in the Region. It also 

designated the ADHS as a key element of ARC’s strategy to grow and diversify economic opportunities for 

a region underserved by transportation: 

“In order to provide a highway system which, in conjunction with the Interstate System and 

other Federal-aid highways in the Appalachian region, will open up an area or areas with a 

developmental potential where commerce and communication have been inhibited by lack 

of adequate access, the Secretary of Transportation... is authorized to assist in the 

construction of an Appalachian development highway system and local access roads serving 

the Appalachian region... Construction of local access roads... will serve specific recreational, 

residential, educational, commercial, industrial, or other like facilities or will facilitate a 

school consolidation program.” (Appalachian Regional Development Act of 1965) 

Economic Development Goals. ARC staff and economic developers in the Region recognized that the 

process of opening up access to isolated areas, as referenced in the legislation establishing the ADHS, 

would help increase job and income opportunities for residents of the Region in several distinct ways by: 

a) expanding labor market opportunities, b) expanding access to broader domestic and international 

business markets, and c) expanding connectivity to intermodal terminals. Residents would also benefit 

from increased access to education and health care facilities. 

The need for a separate Appalachian highway system was established in an earlier 1964 report to 

Congress, which noted that “the Interstate Highway System has largely bypassed the Appalachian Region, 

going through or around the Region’s rugged terrain as cost-effectively as possible.”3 At the same time, 

the Region required better access to diversify away from its extractive, resource-based economy, 

particularly given its historic dependency on coal mining and its persistent concentration of poverty. This

required the development of new access routes that could connect the Region to wider markets, though 

these new routes did not necessarily have to be up to the full freeway design standard of the Interstate 

Highway System. 

 

2

 Appalachian Development Act of 1965, as Amended; see https://www.fhwa.dot.gov/federalaid/0633bsu1.cfm 

3

 PARC. 1964. Appalachia: A Report by the President's Appalachian Regional Commission (PARC). 
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 4

Research Importance. Even with a lower highway design standard for the ADHS (e.g., not requiring 

limited access freeways), the breadth of the Region and its rugged, mountainous terrain has meant that 

highway development is still often difficult and costly. As a result, the ADHS completion process has taken 

a long time; fifty years after its authorization by Congress, about 88 percent of the ADHS is now open to 

traffic (see Figure 1). At the same time, the extent of long-term poverty in this region and the implications 

of improved accessibility enabled by ADHS corridors are of a large scale. As a result, both the potential 

costs and benefits for completion of the ADHS system are very meaningful for both the Appalachia Region 

and the U.S. That is the reason why research findings on the actual ADHS economic and transportation 

impacts to date are so important, and relevant to the Region’s plans to complete the ADHS.

This report summarizes the findings of research studies that have examined realized and estimated 

economic and transportation impacts of ADHS completion to date. Further analysis of these issues will be 

forthcoming. 

Report Organization. The remainder of this report is organized into five sections. They discuss: 

 The role of ADHS within the economic context of the Appalachian Region; 

 Overall benefits of the ADHS network at a regionwide level; 

 Impacts of individual ADHS corridor projects; 

 Multimodal connectivity and trade effects; and 

 Forward-looking estimates of ADHS completion and key funding and implementation issues. 

Figure 1. Appalachian Development Highway System 
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 5

2. THE REGIONAL ECONOMIC CONTEXT 

Prior to isolating the specific impact of ADHS highways, it is important recognize the broader context in 

which ADHS investments have been made. This historical regionwide context includes both the challenge 

of economic distress in the Region and the role of ADHS as a pivotal part of a broader Appalachian 

economic development strategy that is clearly producing results. 

Appalachian Poverty. The Appalachian Region extends from the Southern Tier of New York State to 

northern Mississippi (see Figure 1). The Region covers 205,000 square miles and is home to approximately 

25 million people, 42 percent of whom reside in rural areas. The Region today includes 420 counties in 13 

states; when ARC was originally established it included 360 counties in 11 states (portions of New York 

and Mississippi were added later). Figure 2 shows the Appalachian Region and the extent of poverty in 

1960 and in 2010-2014. It shows that since the start of ARC infrastructure investments, areas of high 

poverty have been substantially reduced over time, though significant pockets of poverty still remain. 

Figure 2. High Poverty Counties in the Appalachian Region 

(Counties with poverty rates at least 1.5 times the U.S. average)

ADHS Role. The motivation for the ADHS was, from the beginning, to be part of a multi-pronged ARC-led 

effort to reduce poverty and enable greater economic development by improving accessibility, workforce 

skills and community infrastructure (including water, sewer, telecom and industrial park facilities). The 

intended role of the ADHS was to address the need for accessibility by reducing the isolation of many 

Appalachian communities, bringing mobility options and highway connectivity up to levels available 

elsewhere in the nation, and expanding access to markets. Such improvements would enable the 
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 6

economy to become more diversified and raise income levels while reducing dependence on stagnant or 

declining resource-based (mining and agriculture) industries. 

Economic Shifts over Time. Overall economic indicators show that the intended movement towards 

economic diversification of the Region’s economic base has indeed been occurring, though at a pace that 

still lags the rest of the nation. Changes in the economic sectors, needs, and conditions for the Region are 

described in a 2015 ARC-commissioned report: Appalachia Then and Now: Examining Changes to the 

Appalachian Region Since 1965.4 Notable trends include a shift to a more service-oriented economy and 

the increased importance of access to educational and health care resources. Further evidence of shifts 

towards service sectors dependent on labor market accessibility are described in Appalachian Legacy: 

Economic Opportunity after the War on Poverty.5 

These reports describe how Appalachia’s economy today is more diversified, with growth in sectors of the 

economy that are dependent on market connectivity enabled by the ADHS, such as wholesale and retail 

trade, transportation, and utilities; information; financial services; business and professional services; and 

health and education services. 

Closing the Economic Development Gap. While the Region’s economy has generally improved over the 

past 30 years, its job growth rate is still below the national average. Table 1 shows that over the past 

decade, the number of workers in Appalachia grew by an average annual rate of 0.41 percent, less than 

half the rate at which employment grew nationally (0.96 percent) during the same period. Private industry 

sectors (apart from agriculture and mining) experienced stronger employment growth in both Appalachia 

and the United States with flat growth in government sector jobs from 2004 to 2014. Per capita income 

in the Region is now around 81 percent of the national average, compared to 77 percent in 1960.6

Altogether, these findings appear to be evidence that the strategy of investment in Appalachian economic 

development is making progress, though there is a clear need for further improvement to close income 

and job creation gaps. 

Table 1. Employment in Appalachia and the United States by Sector 2004-2014 

Industry Sector

Employment, 2014

Appalachia 

Share, 2014

Average Annual Growth, 

2004-2014

Appalachia US Appalachia US

Agriculture & Mining 339,192 2,910,179 11.7% -0.29% 0.12%

Mfg., Trade, Utilities, Services, Other 10,961,943 158,858,621 6.9% 0.11% 0.53%

Government 1,728,593 24,030,000 7.2% 0.01% 0.12%

Total 13,029,728 185,798,800 7% 0.41% 0.96%

Source: US Bureau of Economic Analysis; Moody’s Analytics data used to estimate mining employment 

 

4

 Center for Regional Economic Competitiveness (CREC) and West Virginia University. 2015. Appalachia Then and 

Now: Examining Changes to the Appalachian Region since 1965. Appalachian Regional Commission. 

5

 Ziliak, James P. 2012. Appalachian Legacy: Economic Opportunity after the War on Poverty. Brookings Press. 

6

 Jacobsen, Linda A. et al. (Population Reference Bureau). 2013. Household Wealth and Financial Security in 

Appalachia. Appalachian Regional Commission. 
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 7

3. REGION-WIDE IMPACTS OF THE ADHS TO DATE

Economic developers recognize that highway access is a necessary but not sufficient condition to foster 

economic development. In other words, highway access can help enable economic development, but only 

when local labor force and community infrastructure assets are also in place for economic development. 

When those local factors are in place, then highway access can be the critical factor needed to enable

economic development. That is why ADHS investments are typically most effective when accompanied by 

other complementary ARC community investment programs and a range of local/regional economic 

development initiatives. 

This recognition of the interrelationship between highway investment and other economic development 

factors is embodied in a series of research studies that have been conducted to examine and isolate the 

role of ADHS development in facilitating economic development across the Region. This section focuses 

on regionwide effects of ADHS investment; subsequent sections examine more localized connectivity and 

corridor development effects. 

Empirical Research. There has been a continuing series of empirical research on the economic impacts 

of ADHS development which examined how economic development has varied over time and over 

locations within Appalachia. These studies fall into three categories: (1) descriptive analyses of the 

processes whereby highway access affects economic opportunity, (2) rigorous statistical analysis 

exercises, and (3) use of economic simulation models to calculate impact. All three types of studies have 

come to the same general conclusion -- that investment in ADHS development has led to clearly evident 

improvements in mobility and connectivity, and has helped grow and diversify the economic base of areas 

where highway network links have been completed.

Descriptive Studies of Economic Change. The book Uneven Ground provides a history of postwar 

Appalachia and describes how the ADHS helped connect “larger towns in the mountains and the foothills 

with external markets, increased access to the mountains for tourists, and facilitated the transportation 

of coal to electric power plants outside the region.”

7

 Communities within close proximity to the ADHS 

benefited the most economically, especially those located at the intersections of ADHS corridors and 

Interstate highways which became either trade centers or sites for new manufacturing. Tourism 

destinations also gained from access to broader markets. 

These descriptive findings of ADHS impacts match the findings of another study, Sources of Economic 

Growth in Non-Metro Appalachia, which examined the processes by which rural, distressed Appalachian 

communities have subsequently developed economically.8 That study noted the major “economic growth 

paths” for Appalachian communities, each of which depends on highway accessibility in a different way: 

 Trade center development – retail and service business centers that are dependent on access to a 

broad population (customer) base in surrounding areas;

 Tourism (natural amenity or cultural asset) development – visitor destination activities that are 

 

7

 Eller, Ronald D. 2008. Uneven Ground: Appalachia since 1945. The University Press of Kentucky. (see p.202) 

8

 Economic Development Research Group, Regional Technology Strategies and MIT Dept of Urban Studies and 

Planning, 2007. Sources of Regional Growth in Non-Metro Appalachia, vol. 1, Appalachian Regional Commission. 
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 8

also dependent on access to a broad population (customer) base in surrounding areas; 

 Supply chain cluster development – assembly and distribution activities that locate in areas with 

same-day access to parts suppliers, manufacturers and business customer markets;

 Agglomeration cluster development – specialized concentrations of related activities that benefit 

from access to each other and access to a labor force base with specialized worker skills; these 

include technology R&D, medical research and educational (learning) clusters.

Distributional Consequences. ADHS implementation over time has reduced access travel times for rural 

residents, allowing them to reach shopping and employment opportunities in larger trade centers and 

business clusters. However, this consequently means that some of the trade center and cluster growth 

enabled by better network access may have been at the expense of more remote establishments not 

connected to the ADHS by secondary local road networks. The net impact on business productivity and 

business output growth was nonetheless clearly positive. This was illustrated in a statistical study that 

tracked the economies of all Appalachian counties from 1977 to 1992.9 The study had two key findings: 

1) Highway investment aids the growth of economically distressed counties. Higher levels of capital 

investment in highways were associated with increased growth in business output for distressed 

counties.10 The study also found that this was real economic growth, as there was no significant 

evidence that highway investment in distressed counties had detracted from the growth of 

adjacent counties. 

2) Highway investment supports a wider rebalancing of economic activity between distressed and 

non-distressed Appalachian counties. Overall, highway capital investment in non-distressed 

counties (e.g., economic attainment based on ARC’s categorization of economic status) did not 

increase output in those same counties, but actually led to a spreading of economic output from 

the developed counties to elsewhere in the Region. 

Statistical Analysis of Economic Change. The gold standard in statistical impact analysis are studies that 

control for changes over time and differences among counties. Quasi-experimental method (QEM) studies 

match each county receiving ADHS highway improvements with a carefully selected “control group” of 

otherwise similar counties that did not receive highway improvements. The first of these studies was a 

widely published 1995 journal article by Isserman and Rephann; it compared population, per capita 

income, and earnings growth rates among ARC counties over the 1969-1991 period with a sample of 

similar (“twin”) counties matched across geographic and socioeconomic variables.11 The study found that 

“counties on the Appalachian highway system (having at least three miles of highway) grew faster than 

their twins.”

12 The study also included a multivariate regression analysis which found that counties having 

an ADHS or Interstate highway had its strongest positive impact on manufacturing growth. 

 

9

 Islam, Samia. 2010. “An Examination of the Differential Impact of Highway Capital Investment on Economically 

Disparate Appalachian Counties in the USA.” Transportation Planning and Technology 33 (5): 453-464. 

10 The study examined impacts for all highway investment and not just ADHS segments. The results indicated that 

every dollar of highway investment was generating an increase in worker income growth in those counties. 

11

 Isserman, Andrew, and Terance Rephann. 1995. “The Economic Effects of the Appalachian Regional Commission: 

An Empirical Assessment of 26 Years of Regional Development Planning.” Journal of the American Planning 

Association 61 (3): 345-364.

12 Counties with ADHS miles had 68 percent more income growth after 22 years, equivalent to 2.2 percent per year, 

compounded. 
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 9

An update of the QEM approach was published in the 2007 Sources of Economic Growth study.13 It used 

enhanced state department of transportation (DOT) data on county-level highway lane-miles of 

investment. It found that lane-miles of ADHS highways “significantly contribute[d] to the differential 

income and earnings growth experienced from 1969 to 2000 for ARC counties relative to their twins’ 

performance,” as well as growth in population and employment in the retail trade and service sectors. 

Interstate highways, by contrast, contributed to growth in per capita income and service sector 

employment only, but not job and population growth. The study also showed that new ADHS lane-miles 

had a positive and statistically significant effect on income and earnings growth, while replaced or 

widened lane-miles of highway did not create such an effect. 

The most recent use of the QEM approach was published in the 2015 Appalachia Then and Now report14 

and covered the period of 1965-2012. This study concluded that “Employment and per capita income grew 

significantly faster in Appalachian counties compared to the control counties for most of the study period.”

However, differences related specifically to ADHS investment were not covered in that study. 

Simulation Modeling. A final method for calculating region-wide impacts of the ADHS is to apply regional 

transportation and economic models to estimate what today’s economy would be if ADHS investments 

had not been made (compared to today’s economy with ADHS investments in place). 

This method, sometimes referred to as “backcasting” (as opposed to forecasting the future), was used in 

a 1998 ARC-commissioned report.15 The study used a transportation network model to calculate the 

added travel time and travel costs that would have incurred if completed ADHS segments had not been 

built over the 1965-1995 period. This information was used to calculate the economic value of the travel 

improvements and served as input to a regional economic model to estimate the effect on regional 

economic growth over that same period, as well as implications for the future. The study concluded that 

the addition of ADHS investment led to 16,270 more jobs in the Region as of 1995. 

A 2016 National Bureau of Economic Research (NBER) working paper accounted for additional 

investments in the ADHS through 2010. That updated study applied an economic model to derive an 

estimate of how the region would have evolved between 1960 and 2010 if there had never been any 

development of the ADHS system. This study compared two scenarios, both assuming the development 

of interstate highways over the time period, but one assuming that there was no ADHS. The study 

computed the difference in inter-county travel times among the two scenarios and applied a statistical 

model of inter-regional trade to capture the effect of greater inter-county connectivity enabled by the 

ADHS. The study found that without the ADHS, there would be $46 billion/year of less income generated, 

as well as a smaller population in the region. The study provides evidence that the ADHS has made a 

difference in regional economic development, though it likely understates the full impact as it did not 

address the effects of ADHS investment on intermodal connectivity (with rail, air and sea ports) and export 

trade growth. 

 

13

 Lynch, Teresa. 2007. “The Impact of Highway Investments on Economic Growth in the Appalachian Region, 1969-

2000: An Update and Extension of the Twin County Study”, v. 3, ch.3 of the Sources of Growth study (footnote 

7). 

14 See footnote 4 

15 Wilbur Smith Associates. 1998. Appalachian Development Highways Economic Impact Studies. Appalachian 

Regional Commission. 
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 10

4. IMPACTS OF INDIVIDUAL ADHS PROJECTS

The regional impact studies have all documented that the ADHS has had a measurable impact on growth 

of the Region’s economy. However, aggregate studies of regional economic growth alone do not reveal 

the multitude of ways in which local economies can be affected, which is why this section turns to case 

studies of local impacts for specific ADHS corridors. 

The economic impacts of some individual ADHS corridor projects have been documented through 

published case studies. Individual corridor case studies are important because they can “tell the story” in 

ways that cannot be accomplished by regional statistical studies. “The story” refers to the behavioral 

consequences of improving local access and network connectivity – affecting business investment, 

location, and growth patterns. In general, these case studies provide real world examples of how ADHS 

corridor projects have enabled counties and communities to follow the economic growth paths identified 

in the prior section: (a) trade center development, (b) tourism development, (c) manufacturing and supply 

chain development, and/or (d) specialized technology and education cluster development. Additional 

ADHS effects of intermodal freight accessibility are covered in Section 5. 

Overview of Case Studies. Several case studies of the economic impact of ADHS highway projects were 

developed as part of larger ARC and U.S. DOT research studies (cited below). Several more were 

developed under the federally-funded Strategic Highway Research Program (SHRP2) and are now part of 

the national EconWorks database of transportation project impact case studies.16 

In general, all of these case studies provide a narrative of how the projects have affected the economies 

of corridor communities. They also attempt to distinguish impacts on new versus retained jobs, and 

impacts attributable to the highway versus impacts associated with other (non-highway) factors occurring 

at the same time. A map showing the location of these ADHS corridors is provided in Section 1 of this 

report (Figure 1). Case study findings for five ADHS projects are summarized below; more detailed 

information is available in the documents referenced by footnotes at the end of each summary. 

 Corridor E Project (Maryland). Originally designated as Appalachian Corridor E, this project is an 82-

mile highway in western Maryland, and was upgraded in 1991 to become part of I-68. This region 

has historically relied on manufacturing, natural resource extraction, and tourism to drive its 

economy. During the middle of the 20th century, these industry sectors experienced employment 

decline. Completion of this highway link enabled the area to offset those losses by attracting: (1) 

new tourism drawing residents of the Washington, DC and Baltimore metropolitan areas, and (2) 

new manufacturing and distribution (supply chain) activities as well as back office uses that rely on 

improved transportation access from those areas. It is estimated that this highway project enabled a 

net direct increase of around 900 jobs to the corridor region.17

 Corridor D Project (West Virginia). This corridor connects I-275 in the Cincinnati metro area with 

Bridgeport, West Virginia, a community located approximately 35 miles south of Morgantown along 

 

16 EconWorks is a web site containing a searchable database of over 100 transportation project impact case studies. 

See https://planningtools.transportation.org/13/econworks.html 

17 Corridor E sources: EconWorks case study (see footnote 14) and FHWA Economic Development History of 

Interstate 68 in Maryland (http://www.fhwa.dot.gov/planning/economic_development/studies/i68md.cfm ) 
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 11

I-79. The case study focused on a 70-mile segment of Appalachian Corridor D completed in 1977, 

which connects interstates 77 and 79 and is also known as US-50. The case study found that this 

segment “supported the transition of the study area away from heavy industry and toward 

services,” with jobs created in “healthcare, education, government, and education.” Authors of this 

case study estimate that it helped to retain “indigenous manufacturing activities,” and had a direct 

impact of around 1,000 new jobs.18

 Corridor Q Project (Kentucky and Virginia). Appalachian Corridor Q passes through the mountains 

to connect eastern Kentucky with the Roanoke, Virginia area. Research findings indicate that 

Corridor Q has “improved connectivity, as exemplified by increased commuting distances along the 

corridor, and facilitated commercial development in rural areas.” Highway improvements have 

stimulated new retail development in several communities, as well as development of a new 

industrial park and small business incubator between Tazewell and Bluefield, Virginia. Overall, the 

project’s direct impact has been an increase of around 6,250 jobs along the corridor.19

 Corridor T Project (New York State). This project is a 180-mile stretch of highway along New York 

State’s rural Southern Tier, not far from the Pennsylvania border. Originally designated as 

Appalachian Corridor T, it was upgraded in 1998 to become I-86. The project upgrades took place 

over a 30-year period, over which time the project was credited with generating over 3,200 jobs in 

the region. Economic development gains includes manufacturing jobs at several industrial parks, as 

well as jobs at a ski resort, a casino and a call center. The project is considered a particularly critical 

factor behind the location and expansion of manufacturing facilities for diesel engines, furniture and 

advanced ceramics – all driven by the need for connectivity to the interstate system for national 

truck access.20

 Corridor B Project (North Carolina and Tennessee). This corridor connects Asheville, North Carolina 

with Portsmouth, Ohio, a small city situated on the border with Kentucky. The case study focused on 

an 88-mile segment of Appalachian Corridor B that was completed in 2003. It passes through the 

Blue Ridge Mountains to connect western North Carolina with northeastern Tennessee. Through its 

conversion from a winding 2-lane road to a four-lane highway with passing lanes by 2003, this 

project enabled “improved connections between major centers, and improved access to the Port of 

Charleston,” enabling a direct increase of around 4,600 new jobs in the area. A significant element 

of this impact has been new residential and commercial in the area of Weaverville, North Carolina.21

Interpretation of Case Study Literature. Considered together, these five cases reinforce the finding that 

completing or upgrading of ADHS segments can make a demonstrable difference for the growth of local 

economies. However, the magnitude of impacts on the economic development of surrounding areas, and 

the mix of economic activities that result, are very much dependent on the nature of the local area’s 

economic base, workforce and location relative to wider population and business markets. Another 

related factor is connectivity to intermodal terminals and international gateways. 

 

18 Corridor D source: EconWorks case study (see footnote 14). 

19 Corridor Q source: EconWorks case study (see footnote 14). 

20 Corridor T sources: EconWorks case study (see footnote 14), plus FHWA Economic Impact Study of the I-86 

Corridor (http://www.fhwa.dot.gov/planning/economic_development/studies/new_york_86/index.cfm), and “Detailed 

Corridor Analysis Summaries,” Ch.3 in Economic Impact Study of Completing the Appalachian Development 

Highway System (http://www.arc.gov/research/researchreportdetails.asp?REPORT_ID=69). 

21 Corridor B source: EconWorks case study (see footnote 14). 
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 12

5. IMPACT OF THE ADHS ON FREIGHT ACCESSIBILITY

The economic development impacts of the ADHS go well beyond the regionwide and localized economic 

growth effects covered in the previous sections. The ADHS also has an important impact on both the 

Appalachian economy and the larger U.S. economy by providing highway access to intermodal rail 

terminals, barge terminals, airports and marine ports that exist both within and outside of the Region. By 

connecting the Region to these broader multi-modal transportation facilities, the ADHS also becomes 

important as an enabler of regional export growth and global economic competitiveness. This section 

summarizes ARC-commissioned research concerning freight accessibility and its dependence on the 

ADHS. 

Development of Intermodal Rail Network Connections ARC has commissioned a continuing series of 

research studies that have examined the role of the ADHS in supporting broader freight movements that 

require transfers to intermodal rail, air, and marine terminals. 

A 1999 study, An Assessment of Intermodal Transportation Plans, Systems, and Activities in Appalachia,

examined the limited extent of intermodal (truck-rail) container transfer facilities in the Region. It noted 

that “While ADHS has served as the centerpiece of ARC’s economic development program, highways alone 

are no longer sufficient to help Appalachia’s communities compete in the global marketplace.”22 

The 2004 study, Meeting the Transportation Challenges of the 21st Century, Intermodal Opportunities in 

the Appalachian Region, examined opportunities for increasing connectivity to intermodal (truck-rail) 

transfer facilities, so that Appalachia’s freight system could be positioned as a link from eastern coastal 

ports to business markets in the Midwest and South.23

 

A 2010 report, Network Appalachia: Access to Global Opportunity, documented the broader multimodal 

network that connects Appalachia to global markets.24 This network consists of freight railroad corridors 

and intermodal (rail, marine and air freight transfer) facilities; each is summarized below. 

Freight Railroad Corridors. Two Class I railroads serve the region: CSX and Norfolk Southern. While early 

freight rail in the Region consisted mostly of logging and mining products, emerging corridors increasingly 

carry a variety of mixed commodities destined for both domestic and international markets. In more 

recent years, both railroads have made significant investment in modern, long-distance freight rail 

corridors that cross through Appalachia and link to an increasing number of intermodal terminals. These

corridors are intended to handle a mix of goods, including double-stack intermodal containers which is 

one of the biggest growth markets for private railroads. The corridors are shown in Figure 3 and include: 

 CSX National Gateway, a corridor connecting Northeastern Ohio with Wilmington, NC; 

 Norfolk Southern (NS) Heartland Corridor, connecting Chicago with Norfolk, VA; and 

 Norfolk Southern Crescent Corridor, connecting the Eastern Seaboard with the Gulf of Mexico. 

 

22 Appalachian Regional Commission. 1999. An Assessment of Intermodal Transportation Plans, Systems, and 

Activities in Appalachia. 

23 Rahall Transportation Institute and Wilbur Smith Associates. 2004. Meeting the Transportation Challenges of the 

21st Century, Intermodal Opportunities in the Appalachian Region, Appalachian Regional Commission. 

24 Moffatt & Nichol. 2010. Network Appalachia: Access to Global Opportunity. Appalachian Regional Commission. 
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 13

Each of these rail corridors represents significant private investment and supportive public sector 

partnerships that helped to add rail capacity and allow for double-stacking throughout the route. 

Figure 3. Intermodal Freight Corridors and Intermodal “Inland Port” Facilities

Source: Network Appalachia: Access to Global Opportunity, 2010. 

Intermodal Terminals. Within the past ten years, Appalachia has also benefitted from a significant growth 

in what are now often labeled “inland ports”. These are intermodal rail facilities that enable the transfer 

of containers from trucks to rail lines, airports or inland waterways (or often, to marine ports via rail lines). 

They effectively provide access to the global supply chain, helping to strengthen business links to both 

customers and suppliers across American and around the world. 

Figure 3 also shows the location of existing coastal ports, and inland ports that are either located in 

Appalachia, or connected to the Appalachian Region via rail. Critically, the ADHS provides many of the 

connections to these port and rail facilities. For example, Corridor V of the ADHS connects northern 

Mississippi with the region surrounding Chattanooga, Tennessee. By passing through Huntsville, Alabama, 

the ADHS opens access to and from the Alabama International Intermodal Center (IIC), an inland port 

complex with both rail (Norfolk Southern) and air (Huntsville International Airport) connections. It has 

been estimated that approximately 90 percent of the volume passing through IIC is international 
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 14

containers enabling economic transactions between American business and either suppliers or markets 

abroad. 

Other examples of these new inland port centers include facilities in Spartanburg/Greenville, South 

Carolina; multiple intermodal terminals in Birmingham, Alabama; CSX National Gateway facilities being 

developed in Pittsburgh and in-operations in Chambersburg, Pennsylvania; and Norfolk Southern facilities 

in Greencastle, Pennsylvania and the West Virginia/Ohio/Kentucky Tri-State area (Pritchard, West 

Virginia). Each Appalachian inland port is linked to the ADHS highway network, expanding access from 

businesses across the region to and from these important new centers of global commerce. 

Overall Freight Accessibility. Inland ports and other freight terminals are not ubiquitous throughout the 

Region, nor is the ADHS fully complete. As a result, there are significant disparities among Appalachian 

counties in terms of their level of freight access to outside markets. Figure 4 shows a rating of freight 

access among Appalachian counties, which was based on a composite scoring system laid out in the 

Network Appalachia study. (Green colored counties have the strongest freight system access, followed by 

yellow-shaded counties, while those shaded gray have the worst freight system access.) 

Figure 4. Appalachian Freight Accessibility Evaluation Map 

Source: Network Appalachia: Access to Global Opportunity, 2010
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 15

6. COMPLETING THE ADHS 

Challenges for ADHS Completion. The ADHS is currently authorized at 3,090 miles. As of early 2016, 2,577 

miles of highway were complete and open, and 206 miles of highway were under construction. That leaves 

307 miles (10 percent of the total) remaining to be built. ARC and the states have documented the latest 

plans to complete the ADHS, but the challenges for completion are: (a) high costs, (b) limited state funds, 

(c) changes in federal contributions, and (d) varying state-level prioritization given to completion of the 

ADHS. There are several reasons for these challenges: 

a) The high costs come from the fact that the many remaining miles of ADHS highway corridor 

involve rugged and/or environmentally sensitive areas, and will thus be expensive to complete. 

b) The state funding challenges come from the fact that state gas tax revenues are not keeping up 

with rising highway funding needs, and states are no longer receiving separate federal funds 

designated specifically for ADHS use. 

c) The federal funding process has changed. Until 2012, Congress provided the Appalachian states 

with dedicated funds for ADHS construction. Now, ADHS funding is pooled with other highway 

funding that Congress apportions to the states. However, states can apply their federal funds to 

cover 100 percent of the cost of ADHS construction (compared to 80 percent of the cost of other 

eligible highways). 

d) The prioritization challenge is complex, and concerns how public, business and civic leaders view 

the economic stakes and social importance of completing remaining ADHS segments, often in 

competition with other statewide priorities. 

For all of these reasons, it is now important is to take a fresh look at the expected economic impacts, 

benefits and costs of completing the ADHS, and to better understand their implications. 

Research Studies on ADHS Completion Impacts. There have been two past studies of the economic 

benefits and impacts of AHDS completion (in 1998 and 2008), and a new study is currently underway. All 

of these studies involve the same basic approach: 

 Transportation network analysis is used to identify: (a) the number of cars and trucks that will 

be affected by ADHS completion, and (b) the extent to which travel characteristics (travel 

distances, speeds, congestion delays, collisions and vehicle operating expenses) will be changed 

by ADHS completion. 

 These travel characteristics are translated into changes (over time) in economic factors, such as 

commuting costs, freight delivery costs, business reliability and logistics costs, safety effects, 

labor market access, and connectivity to intermodal terminals. Costs of highway completion are 

also itemized.

 An economic model is applied to calculate how spending patterns, business productivity and 

competitiveness will be affected, and to forecast (given the economic base of the region) the 

extent to which the changes will generate future jobs, wages and business sales in the Region. A 

separate benefit-cost analysis is also conducted.

The 1998 study estimated the long-term implications of 12 ADHS corridors, representing 1,417 miles of 

highway that were already completed. It was estimated that completion of those ADHS segments had led 

to 16,270 more jobs in the Region as of 1995, which would rise to 42,190 jobs as of 2015. The study 
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 16

projected a GDP increase of $4.62 billion (in 2016 dollars) and a travel efficiency gain rising to $3.20 billion 

(in today’s dollars) by the year 2015.

25

The 2008 study estimated the long-term implications of completing the entire ADHS system, which then 

meant completing the final 453 miles of the system at a cost of $12.1 billion (2016 dollars). It was 

estimated that completion of the remainder of the system will lead to 80,491 more jobs in the region as 

of 2035. The study projected a year 2035 GDP increase of $5.69 billion (2016 dollars), and a travel 

efficiency gain rising to $5.77 billion/year (2016 dollars).26

Both of those studies also calculated a benefit/cost ratio based on updated project costs and updated 

estimates of transportation system efficiency gains. The 1998 study considered corridor benefits and 

showed a regional benefit-cost ratio (BCR) of 1.2. The 2008 study had more inclusive (network-based) 

measurements of efficiency gains and placed the BCR at 1.9 for the Region and 2.9 for the nation. The 

new 2016 study is expected to provide updated benefit and economic impact numbers based on 

completion of the 307 remaining miles of ADHS, and it will also be tailored to address broader issues of 

intermodal connectivity and export growth that have arisen in recent years. 

Issues to Consider in Assessing ADHS Completion Impacts. The challenges for completing the ADHS 

include consideration of funding allocation decisions and relative priorities for public investment in 

transportation projects. These topics can be more effectively addressed if there is better information 

available to inform decision-making, helping to answer the following questions: 

To what extent will completion of remaining ADHS segments: 

 Help those parts of Appalachia that still suffer from high poverty and high unemployment rates? 

 Help those parts of Appalachia that currently suffer from the poorest freight accessibility?

 Enhance intermodal freight movements to and from the Region (increasing competitiveness)?

 Address goals of supporting corridors that are of regional and national significance?

 Help to relieve congestion on other parts the national highway system?

 Expand access to broader job opportunities for area residents?

 Expand the region’s export base (i.e., economic activities that sell to outsiders and hence bring 

more money flowing into the Region)?

 Enable further diversification of the regional economy towards those industry sectors that are 

projected to have the greatest future growth and highest paying jobs?

 Ultimately increase jobs and household incomes for residents of affected states, and increase 

tax and fee revenues for states that need to fund the ADHS completion?

Current research can and will address these questions. 

 

25 Wilbur Smith Associates. 1998. Appalachian Development Highways Economic Impact Studies. Appalachian 

Regional Commission. All dollar values in that report were in 1995 dollars, and this text inflates them to 2016 

dollars. 

26 Cambridge Systematics, Economic Development Research Group, and HDR Decision Economics. 2008. Economic 

Impact Study of Completing the Appalachian Development Highway System. Appalachian Regional Commission. 

All dollar values in that report were in 2007 dollars, and this text inflates them to 2016 dollars. 
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 17

7. SUMMARY OF FINDINGS

This report summarizes research to date on the impact that the Appalachian Development Highway 

System (ADHS) has on economic activity and economic growth in Appalachia. There are six major 

categories of overall findings: 

1) The ADHS was designed to reduce isolation and enhance access for Appalachian communities, 

including access to jobs, business markets and more diverse economic opportunities. Most of the 

research on ADHS impacts has accordingly focused on achievement of those goals and ultimate 

economic outcomes (in terms of jobs and income growth).

2) The role of the ADHS in helping to facilitate economic development is well documented. Several 

prior studies have traced the processes whereby ADHS corridor completion to date has had a clearly 

observable effect on diversifying the economy of many parts of Appalachia, and played a pivotal role 

(along with other ARC programs) in helping to reduce poverty in the Region. However, the ADHS 

network is not complete and significant pockets of poverty still remain. 

3) There is strong evidence of a positive relationship between completion of ADHS segments and 

subsequent economic activity growth at a county level. A series of statistical studies have shown 

that these impacts are statistically significant and particularly large for economically distressed 

counties. These are statistical relationships across all Appalachian counties, which means that not 

every distressed county will automatically grow just because ADHS segments are complete. 

4) Different parts of Appalachia benefit from ADHS corridor completion in different ways. A series of 

case studies show that some areas have been able to grow tourism, others have seen industrial 

activity grow, and yet others have seen commercial activity grow. Since highways are one aspect of 

the multiple assets needed for economic development, some communities have seen large 

economic growth and others are still waiting for major economic growth to occur. The effects 

depend on the nature of the specific corridor, its population and workforce, its current economic 

profile and its location relative to surrounding business centers and markets. 

5) The importance of ADHS network connectivity is receiving increased attention as businesses move 

towards more dependence on national and global markets. Public and private organizations are 

activity working to invest in intermodal transfer facilities and global gateways within and 

surrounding the Region, and this is increasing attention to the issue of how Appalachian 

communities connect to the interstate highway network, and to intermodal rail, air and marine 

transportation facilities. Current research will more carefully examine how ADHS network 

completion addresses these needs.

6) Completion of remaining elements of the ADHS depend on complex issues, requiring more attention to 

the costs and stakes involved. Current research should help to provide more information concerning 

the economic consequences of accelerating or delaying ADHS completion.
Appalachian Development Highway System Economic Impact Study: Synthesis of Findings to Date 18

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