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Evaluating Transportation Improvements Quantitatively: A Primer

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Abstract

How do we evaluate the welfare gains from transportation infrastructure investment? We present a quantitative spatial framework that integrates both traffic and economic responses to infrastructure investment and derive the elasticity of aggregate welfare to improvements in the transportation network. This approach extends the traditional "social savings" method to incorporate agglomeration and dispersion externalities and endogenous traffic congestion. We calibrate the model to the US freight transport network and assess the welfare impact of upgrading segments of the US Interstate Highway System, quantifying the marginal gains from improvements in specific corridors and highlighting where the returns to investment are highest.

Suggested Citation

  • Treb Allen & Woan Foong Wong & Simon Fuchs, 2025. "Evaluating Transportation Improvements Quantitatively: A Primer," FRB Atlanta Working Paper 2025-13, Federal Reserve Bank of Atlanta.
    • Handle: RePEc:fip:fedawp:101968
    DOI: 10.29338/wp2025-13
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    References listed on IDEAS

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    1. Anthony J. Venables, 2007. "Evaluating Urban Transport Improvements: Cost-Benefit Analysis in the Presence of Agglomeration and Income Taxation," Journal of Transport Economics and Policy, University of Bath, vol. 41(2), pages 173-188, May.
    2. Graham, Daniel J., 2007. "Variable returns to agglomeration and the effect of road traffic congestion," Journal of Urban Economics, Elsevier, vol. 62(1), pages 103-120, July.
    3. Ducruet, César & Juhász, Réka & Nagy, Dávid Krisztián & Steinwender, Claudia, 2024. "All aboard: The effects of port development," Journal of International Economics, Elsevier, vol. 151(C).
    4. repec:cup:jechis:v:22:y:1962:i:02:p:163-197_06 is not listed on IDEAS
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    Cited by:

    1. Massoni, Hubert, 2026. "Climate Trade Costs: Extreme Weather, Transportation, and Supply Chains," CEPREMAP Working Papers (Docweb) 2602, CEPREMAP.

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    Keywords

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    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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