Post on 02-Jan-2016
Transportation leadership you can trust.
presented to
Canada/U.S. Transportation Border Working Group
presented by
Stephen Fitzroy, Economic Development Research Group
Andreas Aeppli, Cambridge Systematics, Inc.
April 13, 2010
Economic Impacts of the Border on Transportation
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Presentation Overview
Project Summary
Case studies
Application of model on a real situation
Some thoughts for further action
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Economic Impacts on Transportation of the United States/Canada Border
Main objective was to determine the economic consequences of delay at the US/Canada border, including:
• impacts at specific border facilities or regions
• macroeconomic effects for entire border
• impacts of policy alternatives
Some key questions:
• What are the impacts of freight versus passenger delay?
• What commodities/industries are affected most?
• How does the transport sector respond?
• What role does reliability play?
Study ElementsOverview of Transborder Trade Data
• Collect data and identify trends
Literature Review• Summarize relevant work
• Identify advantages and limitations of applied methodologies
Develop Analytic Methodology• Logical approach
• Compare to methods from literature review
• Data requirements
• Define three sample scenarios that reflect range of potential model application
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Literature ReviewMost relevant studies:• HDR|HLB (2006) – San Diego/Baja Border
• Taylor et al. (2003) – US/Canada Border
• DAMF (2005) – US/Canada Border (impacts to trucking firms)
Two broad approaches:• macroeconomic – measure supply and demand elasticities of response to time
delay
• microeconomic – measure costs at vehicle-level, determine how costs “flow” through economy
Room for improvement:• “delay” is not the only cost of crossing border
• address travel time variability
• add commodity dimension
• recognize multiple freight carrier types
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Key Considerations for Methodology
Many types of costs
• travel time and variability
• operating costs (fuel, capital, maintenance, labor, etc.)
• administrative costs
Costs affect many economic players
• passenger (commute, leisure, on-the-clock)
• freight carriers (own-account, for-hire, common carriers)
• freight shippers (bulk, mixed freight, small package, JIT firms)
Many possible responses to costs
• Vehicle: mode/ route/ time-of-day
• Firm: inventory management/ production technology/ site location
• Household: tourism, employment, residential location
Data
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Overview of analytic approachScenarios:• Changes in fees or charges• Change in processing time• Change in inspection policy• Change in hrs of operation• Change in security procedures
Facility Capacity Response:• Change in processing time• Change in idle time• Change in reliability• Change in tolls
Demand Response:• Change in crossing demandby trip purpose• Change in vehicle/freight mix• Change in crossing location• Change in crossing time of day
Change in user costs by vehicle
Analyzing Border Delays
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Methodology blends micro- and macro- approaches
Veh. Costs:• Trucks• Cars Vehicle Users:
• Households• Industry (pass.)• Freight shippers• Freight carriers Users’ Responses:
• Travel demand• Traveler spending• Carrier response• Shipper response Regional Impacts:
• Employment• Output• Value Added• Wages
microeconomic elements
macroeconomic elements
Overview of Methodology
Flow of Model Interactions
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Figure 1. Overview of Model for Estimating Delay Impacts at U.S./Canada Border Crossings
Time Cost Factors Passenger Time Crew Time Freight Time Buffer Time
Vehicle Cost Factors VOC/mi-Congested VOC/mi-Free Flow VOC/hr-Idle
Travel Demand Factors Vehicle-Trips VMT (VKT) VHT Congestion Level Buffer Time Average Crew per Vehicle Average Pass per Vehicle Average Freight per Vehicle Freight Commodity Mix Average Toll/Fare per Trip Average Passenger Spending Local Portion of Trip Ends
Input Variables
1 – Travel Savingsby Cost Type
Passenger Time Cost Crew Time Cost Freight Time Cost Reliability Time Cost Toll/Fare Cost Vehicle Operations Cost
2 – Travel Savingsby “User” Type
Households-Time Households-Out-of-Pocket Vehicle Operator (carrier) Industry-Freight (shipper) Industry-Nonfreight
3 – Travel Savingsby NAICS Industry
4 – Direct Industry Impacts (output)
Transportation Sectors (481-485) Other Industry Sectors
Expanded Industry Production Changes in Final Demand
5 – Total Industry Impacts
All Industry Sectors Direct + Indirect + Induced Employment Output Value Added Wage Income
Industry Factors Modal Utilization Production Elasticities Output Multipliers Passenger Spending Patterns
Detailed Border Crossing Methodology (BCM)
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Implications
Addresses limitations of surveyed approaches
• Vehicle based
• Incorporates industry and macroeconomic responses
• Includes travel time variability
• Recognizes different truck carrier types
• Impacts revealed at industry level
Additional features
• Benefit/Cost analysis
Challenges
• Appropriate data
• Demand responses to cost changes
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Three Sample Scenarios to Test BCM
Niagara Falls Peace Bridge improvements: • Analyze options for operational improvements to more
efficiently handle traffic
Detroit – Windsor tunnel: • Assess the impact of the Western Hemisphere Travel
Initiative (WHTI) on cross-border travel
Pacific Highway border crossing:• Examine the impact on travel times from expanded FAST
implementation
Niagara Falls Peace Bridge Improvements
Problem: Assess proposed post-9/11 physical and operational improvements to approaches and processing plazas
Criteria/Needs to be addressed:
• Inspection/Security
• Safety
• Structural Improvements/Renovations
• Capacity/Reliability (during and after structural improvements)
• Environmental/Externality Issues
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Modeled Economy-Freight Relationship
Economic Change
Freight Flows
• Taxes, Fees
• Regulations• Facilities Investment
• Services Affected Speed, CostProductivityMarket Access
• Industry Output• Profit • Value Added• Jobs & Wages
Freight-Focused Project or Policy
• Commodity Value• Import/Export• Tonnage• Containers/
Vehicles
ConnectivityThroughput
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Niagara Falls Peace Bridge Solutions
Multi-criteria investment evaluation
• More than one “solution” must be implemented and tested in combination with others
• Extended construction and interaction effects must be addressed
• Costs and responses vary over time and differentially affect user segments and markets served
• Timing, regional scale and industry impacts vary by policy/investment configurations and duration of activity
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Detroit – Windsor Tunnel
Problem: Assess impact of WHTI on cross-border travel and the corresponding impacts on business sales, employment, tax revenue, wages, and output.
Criteria/Needs to be addressed:
• Effect of current border crossing policies and restrictions on economy of Detroit and Windsor− Local spending (especially tourism)
• Effects of labor markets and market access− Labor productivity impacts
• Impacts on both US and Canadian economies
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Modeled Economy - Passenger Relationship
Economic Impacts
Travel Decisions
• Regulations• Facilities Investment
• Security ProceduresSpeed, CostProductivityMarket Access
• Industry Output• Profit • Value Added• Jobs & Wages
Alternative Border Policies
• Value of Time• VHT/VMT Savings• Household
Spending
ConnectivityThroughput
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Modeled Passenger-Economy Relationship
Key issues to be addressed:
• Benefits and costs of tunnel approach improvements
• Procedural innovations to respond to alternative security levels
• Robustness of procedures to respond to security alerts *and costs associated with implementing these procedures
• Overall economic impacts of Detroit/Windsor region
• Key employment and retail sectors believed to be affected
• Effects of tunnel connectivity (and options – both capital and operational)
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Detroit-Windsor Tunnel Solutions
Assessment must address:
• Full range of regional economic impact measures− Ability to assess local, metro (two cities) and regional scales
• Assessment of benefits and costs for multiple scenarios
• Scenarios that include both policy and capital investment solutions− Include parking and traffic management at bridge approaches
• Assess differential impacts by trip purpose
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Pacific Highway Border Crossing
Problem: Assess proposed post-9/11 physical and operational improvements to approaches and processing plazas and evaluate effects of options to take advantage of current FAST “excess” capacity
Policy responses to be addressed:• Increase FAST enrollment• Mutual recognition of FAST enrolments for empty vehicles
(73% of southbound moves are empty)• Use of pricing to allow non-FAST users to “purchase”
unused FAST lane capacity when GP lane is congested• Convert FAST lane to: a) Priced lane; or b) GP lane• Retain FAST lane and convert one of two GP lanes to priced
lane
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Modeled Economy-Freight Relationship
Economic Change
Freight Flows
• Taxes, Fees• Regulations• Facilities Investment• Services Offered
Speed, CostProductivityMarket Access
• Industry Output• Profit • Value Added• Jobs & Wages
Freight-Focused Project or Policy
• Commodity Value• Import/Export• Tonnage• Containers/
Vehicles
ConnectivityThroughput
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Pacific Highway Border Crossing Solutions
Assess differential effects of user segments:• Relationships between delay reduction on commercial and
passenger crossings
Evaluation of industry-specific market effects • Does commercial traffic increase, and if so, for which
industry groups/commodity shippers
How do benefits move through economy:• How are operator cost savings passed through to shippers• How do shipper savings affect operations and markets
served• What are the effects of non-commercial relay reductions on
household expenditures
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Application of BCM in Actual Situation
Analysis of fiber optic network installation at Vermont’s Derby Line/Highgate Springs Border Crossing
Problem: Assess impacts of pre-processing fully-laden trucks to reduce queuing times for all border traffic.
Criteria/Needs to be assessed:
• Introduction of ITS to speed pre-approval and processing of laden trucks
• Affect of delay and reliability at crossing and on I-89 and I-91
• Impacts on passenger cars, buses and empty trucks
Derby Line/Highgate Springs Border Crossing
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Canadian Customs
Canadian Queue
US-Canadian Border
US Queue
US Customs
Derby Line/Highgate Springs Profile
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I-91/ Derby
I-89/ Highgate Totals
Total Exports $0.50 $2.86 $3.36Exports Originating in Vermont $0.04 $0.67 $0.72% Originating in Vermont 8.80% 23.50% 21.30%Total Imports $2.12 $4.53 $6.66Source: WiserTrade, 2009; (in $ billion)
Derby Line/Highgate Springs Border Crossing
Data Available:
• Available vehicle entry data (USDOT, Customs and Border Protection, OMR database, December 2008)
• DHS Survey of vehicle border crossing times (2008)
Analysis Approach:
• Synthesize queuing distributions using current data
• Estimate new queuing distribution(s) assuming: − 5-minute reduction in laden-vehicle median crossing time− average queue mix of passenger cars, laden trucks, empty
trucks, and passenger buses− Minimum, average and standard deviation of processing time
for each vehicle type
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Modeled Economy-Freight Relationship
Economic Change
Freight Flows
• Taxes, Fees• Regulations• Facilities Investment• Services Offered
Speed, CostProductivityMarket Access
• Industry Output• Profit • Value Added• Jobs & Wages
Freight Project or Policy
• Commodity Value• Import/Export• Tonnage• Containers/
Vehicles
ConnectivityThroughput
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Derby Line/Highgate Springs Queuing
Average delays of 15 minutes propagate through peak queues and result in more than 5% of trucks experiencing 30-minute delays
Reductions of 5 minutes in median crossing produces 3-minute reduction in minimum times; reduction in standard deviation of 4 minutes; and results in less that 5% of trucks experiencing 20-minute delays
Inputs to model developed using queuing simulations of the build and no-build scenarios and comparing the differences
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Derby Line/Highgate Springs Economic Impacts
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Economic Development Benefit DirectIndirect & Induced Total
Jobs 2,700 2,400 5,100 Output ($ Millions) 276$ 229$ 505$ Value Added ($ Millions) 138$ 125$ 263$ Wages ($ Millions) 97$ 85$ 182$
Sources: Calculated by EDR Group from EDR-LEAP and IMPLAN modeling packages. Indirect and induced benefits are Vermont-wide; (in $ million)
Derby Line/Highgate Springs BCA
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FactorsPresent Value
Border Queuing 265.0$ Safety 0.3$ Congestion Reduction 1.5$ Fuel and Emissions Reduction 0.1$ Benefits 267.0$ Costs 77.5$ NPV 189.4$
BCR 3.44Source: EDRG, 2009; (in $ million)
Derby Line/Highgate Springs Benefits
Border Queuing
• Time savings for all vehicles (commercial and passenger) attributable to queue reduction at border
Safety
• Crash reduction - injuries, property damage
Congestion Reduction
• Value of congestion reduction on I-89 and I-91 throughout Vermont
Fuel Used and Emissions Reduction
• Savings in fuel costs and reduced emissions costs
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Border Crossing Model Advances and Limitations
Sensitivity of BCM to Transportation Factors Affecting Cross Border Trade
Spatial Coverage/Geographic Range of Impacts
System Output and Results
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Sensitivity of BCM to Transportation Factors Affecting Cross Border Trade
Advantages and Modeling Innovations
• Network operations (delay/Reliability)
• Pricing and cost pass-through structures
• Vehicle/load characteristics
Limitations
• Differing detail on commodity flow information (O/D and routings) on US versus Canadian networks
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BCM Spatial Coverage/Geographic Range of Impacts
Advantages and Model Innovations
• Details on sub-state and sub-provincial economic data
Limitations
• Interactive effects of macro-economic shifts/responses must be exogenously or iteratively addressed
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BCM System Output and Results
Advantages and Model Innovations
• Flexible reporting structure and consistent outputs
• Addresses concerns of US DOT on methods and practices
Limitations
• Sensitivity analysis (risk and uncertainty) associated with inputs and responses
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Some Further Thoughts
Develop Comparable Cross-Border Economic Interaction Models
Integrate Cross-Border Commodity and Freight Routing Algorithms
Develop Financial Modeling and Accounting for Revenue and Innovative Financing Evaluation
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Development of Provincial & Sub-Provincial I/O
Enhanced Social Accounting Structure
• Stats Canada I/O
• IMPLAN− Commodity flows and wage
structure
Industry and commodity interactions for detailed industry impacts
• Industry spending on labor and materials
Wage payments to employees for induced economic impacts
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User Responses
Provincial Impacts
Statistics Canada
I/O Multipliers
IMPLANCommodity
& Wage Structure
Tax Impact Analysis
Tax impacts for federal and state/local govt.
Contribution from households & businesses
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TAX IMPACT REPORT ($mil)
Tax/FeeCollector
Tax/Fee DescriptionTaxes/Fees Paid by:
TotalsHouseholds Businesses
Service Operator Tolls & Fees 97.09 446.49 543.59
Federal Government
Motor Fuel Tax 0.45 9.49 9.94
Income/Profits 526.97 494.33 1,021.31
Social Insurance Tax (FICA) 420.76 398.62 819.38
Miscellaneous Fees & Taxes - 139.88 139.88
Total Federal Government 948.18 1,023.34 1,971.52
State and Local Government
Motor Fuel Tax 0.33 12.66 12.99
Motor Vehicle License Fees 8.36 6.77 15.12
Income/Profits 155.30 106.57 261.87
Sales tax not available not available 370.67
Property Tax 3.34 294.09 297.43
Social Insurance Tax 1.29 5.15 6.43
Miscellaneous Fees & Taxes 60.30 70.26 130.56
Total State & Local Government 228.92 470.18 1,069.76
Grand Total 1,177.09 1,493.52 3,041.28
Revenue & Cost Sharing Analysis
Input public & private sector responsibilities for construction, operation, maintenance, revenue collection
Internal rate of return (ROI), payback period, revenue/cost ratio
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REVENUE & COST SHARING REPORT
Cost or Revenue Description Government Private Totals
Project Costs ($m)
Capital Costs 1,450.00 250.00 1,700.00
Operations - 55.30 55.30
Maintenance - 75.20 75.20
Lease/Contract Costs - 750.00 750.00
Project Cost Totals 1,450.00 1,130.50 2,580.50
Project Revenues ($m)
Tolls 918.25 1,836.50 2,754.75
Lease/Contract Revenues 750.00 - 750.00
Project Revenue Totals 1,668.25 1,836.50 3,504.75
Revenue to Cost Metrics
Payback Period 12 years 7 years 7 years
Internal Rate of Return 11.5% 26.3% 19.9%
Revenue/Cost Ratio 1.15 1.62 1.36
Questions?