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Streetfacts #3: Roads Are a Money Losing Proposition

The majority of the roads and highways built in America are simply bad investments. Continuing this pattern will only ensure that wasteful projects consume larger chunks of our federal, state, and local budgets, without addressing the real need for transportation options.

This Streetfacts chapter has a bit more math than usual, but we think we've made an entertaining and accessible profile of how government agencies routinely justify unnecessary road projects. The example we've chosen to illustrate the problem is a federally-funded "diamond-diverter" interchange in Colorado. The project as proposed may look like a pretty good deal for taxpayers at first, but after crunching the numbers, you'll see that's not the case at all.

Much of the inspiration for this piece comes from the outstanding work of Strong Towns, an organization that emphasizes obtaining a higher return on infrastructure investments. Strong Towns Executive Director Charles Marohn, Jr. has been getting his message out through what he calls curbside chats, and we'll soon be debuting a Streetfilm that features his work.

Clarence Eckerson, Jr. has been making fantastical transportation media in NYC since the late 1990s. He's never had a driver's license and never will.

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  • Diana Jones

    What's the solution to crumbling roads, then? I ask this as a person who hates cars but,,, just wondering.

  • ZA_SF

    I suspect 45 seconds of Warren Buffett's time would more than "pay" for any & all given highway expansions. The real challenge to highway expansion is the adverse impact to private property owners and public health.

  • voltairesmistress

    This piece came across as both confusing and deceptive. What facts I do know often contradicted what was being said. I don't know much, but more math, please. And take some time to really explain cost the benefit analysis of particular projects.

  • andy

    I think this video misses the mark. 45 seconds times hundreds of thousands of people is real savings and shouldn't be derided. Instead the video should focus on negative externalities of highway building to reduce the money stack on the left side: increased driving, public health, land use, community blight etc.

  • Cjax

    According to the only figures they provide, the ONLY entity who loses money on a new road project is the FHWA. Taxpayers are gaining all of the benefits leftover after taxes and/or increased benefits from government programs that get funded by the increased tax revenue.

    Some flawed logic here.

  • Grif_E

    You fix it, and you fix it without doubling the lanes, erecting sound barriers for people that bought a home next to the highway, and without creating traffic patterns that actually devalue the land around the road because nobody can easily get there because of the traffic pattern (I'm looking at you thousands upon thousands of abandoned corner gas stations and stores or their remaining empty lots).

  • HamTech87

    I'm a huge fan of Streetfilms AND Chuck Marohn, but I have to agree with the other commenters -- I couldn't follow the argument well in this video. Maybe a re-editing?

  • http://www.streetfilms.org Clarence Eckerson Jr.

    Direct linkage to some facts we drew upon:

    Strong Towns

    http://www.strongtowns.org/journal/2012/4/30/paved-with-good-intentions.html

    FHWA’s Benefit-Cost Analysis Primer

    http://www.fhwa.dot.gov/infrastructure/asstmgmt/primer05.cfm

    Tax Policy Center

    http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=205

    Superior, Colorado

    Project documents for the US 36 and McCaslin Blvd.
    Interchange

    http://superiorcolorado.gov/LinkClick.aspx?fileticket=3xOy4w8zMRw%3D&tabid=538

  • http://mattbk.com/ Matt BK

    I understand that people like videos, but is there any way you could post some text as a backup? Given a choice between a math-heavy video and math-heavy text, I would take the latter.

  • Zvi Leve

    Transportation infrastructure has very high costs but the benefits from such infrastructure are very diffuse (marginal benefits to many people over a large region) and are contingent on many factors. That is, we know the direct costs (say $100 million for a new interchange), but we are less able to identify the benefits. Perhaps we can identify the direct benefits, but it is far harder to monetize those benefits: how much would you be willing to pay to save a few seconds or to have a more 'reliable' trip? And most of the benefits are indirect anyway - economic 'activity and growth' which has been enabled by the infrastructure. But are sprawling land-uses really 'economic development'? It is true that these activities do contribute to the economy, but not nearly enough to pay for the transportation infrastructure which enabled them in the first place.

    And the even more important issue is that we cannot even afford to *maintain* the roads which we already have!

  • Jonson

    ummm, who do u think funds the FHWA?

  • Puzzled

    Wouldn't the logic used in this video have to apply to Federally-funded transit projects as well? I'm sure you'd find those to be money losers as well.

  • T.E. Shaw

    The logic here is extremely poor. By the formula you've set up, every road project must return 100x its initial investment in government revenue in order to be worthwhile. This is patently absurd. You are right to focus on the amount of value that government captures, but completely wrong to isolate the amount of value that government captures and decides to rededicate to transport spending.

    The logical flaw in that reasoning is that the revenue government captures from other investments must also be partially diverted to transport spending. So if we invest in early childhood education, for instance, and gain government funds (less spending on welfare and incarceration down the road, plus more income tax revenue from workers), then 1% of THAT gain goes to transport. This video sets up an implicit fiction whereby transport investment must share its ROU with other government programs but other government programs don't have to share their ROI with transport.

    Bottom Line: ROI here should be calculated based on additional benefit that can be captured by the government - regardless of how that additional benefit is subsequently allocated

  • Cjax

    Taxpayers do, you're correct, but we also fund the rest of the government. If government as a whole gets much more money out than it puts in, taxpayers have made a good investment.

  • Coolebra

    It is noteworthy that the 45 second savings - or whatever a highway project sponsor might claim - is the product of imperfect model
    output and of short duration, i.e., any projected travel time savings at the
    margin, if real at all, is very rapidly eroded by generated traffic and induced demand.

    I'm not at all sold on the idea that 45 seconds times hundreds of thousands of people is much more than a combination of statistical artifact and false promise.

    There is a reason why consultants hired to justify highway expansion alternatives don't use statistical significance testing: They don't want people to know that their claimed benefits at the margin can't legitimately be differentiated from no benefit at all, or even from a decline in performance, for that matter.

    Yes, there are important arguments to be made in the area of negative externalities; however, they are not part of the decision-making process and stakeholders endeavoring to highlight such concerns are, well, steam-rolled in the NEPA process. In order for such variables to receive proper consideration, there needs to be a fundamental overhaul of our approach to defining and evaluating what constitutes a feasible and prudent alternative.