Understanding the Impact of State of Good Repair through Economic Analysis – Mississippi Department of Transportation

Infographic of State of Good Repair in Mississippi

Objective: Determine the economic impact of preservation spending for roadways in the State of Mississippi.

Approach: A state's transportation system is vital to its economic health.  Transportation serves key industries and economic development assets in the state, provides for emergency routing, serves local commuters, and is the gateway into the state for millions of visitors each year.  Funding for transportation at the Federal and state levels has not kept up with growing demand and needs.  Under the current funding stream, it is projected that many states will fall even further behind in terms of maintenance, preservation and expansion of their roadway systems. Deteriorating pavement and bridges and increased congestion have a direct impact on transportation costs for Mississippi businesses and residents.  As transportation costs increase, the state's ability to compete in a global market decreases. Maintaining a state of good repair is critical to ensuring transportation positively impacts the economy.  As part of its 2040 Statewide Transportation Plan, MULTIPLAN, development, Mississippi Department of Transportation (MDOT) evaluated the implication of alternative spending levels for preservation and maintenance for the state-owned roadway system.  Cambridge Systematics helped to conduct the economic analysis.

To better understand the economic costs and return of the two preferred alternatives – Expected Funding and Adequate Funding- an economic analysis of the impact of changes in pavement and bridge conditions and congestion levels was conducted.  The analysis examines and is organized around two funding scenarios:

  • The economic implications of continuing with business as usual with current funding sources and levels.
  • The economic returns of increasing funding to adequately meet the minimum performance targets for the state-owned highway system.

Key findings from the economic analysis include:

  • The effects of pavement condition on vehicle operating costs[1] indicated the following:

o   For fuel consumption - surface roughness is an important factor. An increase in IRI of 63.4 in/mi will increase the fuel consumption of passenger cars by nearly 2 percent regardless of speed.  On commercial vehicles, the increase is estimated to be about 1 percent at normal travel speeds (i.e., 60 mph) and 2 percent at low travel speeds (i.e., 35 mph).

o   For repair and maintenance cost - there is no effect of roughness up to IRI of 190.2 in/mi. Beyond this range, an increase in IRI up to 253.6 in/mi will increase vehicle repair and maintenance costs by 10 percent.  Worse pavement conditions will lead to more significant increases. An increase in IRI up to 317.0 in/mi will add repair and maintenance cost up to 40 percent for passenger cars and 50 percent for heavy trucks. An increase in IRI up to 380.0 in/mi will escalate repair and maintenance cost up to 70 percent for passenger cars and 80 for heavy trucks.

o   For tire wear - an increase in IRI of 63.4 in/mi will increase the tire wear of passenger cars and commercial vehicles by 1 percent at 55 mph or higher.

  • Based on MDOT's PCR measure, 60 percent of the pavement on the state-owned system is currently in fair or better condition.  By 2040, it is projected that only 47 percent will be in fair or better condition under the current funding scenario. 
     
  • The direct impacts of only investing $371.5 million per year (in 2014 dollars) for pavement on the state-owned system under the expected funding scenario is estimated to be a $22.8 billion increase in vehicle operating, travel time delay and motor vehicle crash costs.
     
  • The direct impacts of investing $694 million per year (in 2014 dollars) on pavement for the state-owned system under the adequate funding scenario is estimated to be a $59.7 billion (in 2014 dollars) reduction in vehicle operating, travel time delay and motor vehicle crash costs.
     
  • Under the expected funding scenario, it is projected that the increase in congestion is expected to give rise to an additional 99,600 hours of delay every day.  This translates into an additional $10.1 billion in transportation costs for Mississippi residents and businesses by 2040.  If Mississippi were to invest in expanding the state-owned highway network to meet the minimum performance targets of level-of-service of C or better for rural roads and D or better for urban roads, drivers would spend an average of 200,000 fewer hours on the roadway daily than if there are no investments.  This would lead to transportation costs reduction of about $3.6 billion between 2016 and 2040. 
     
  • The expected funding scenario leads to an additional $42.7 billion in transportation costs between 2015 and 2040.  Adequate funding to meet minimum highway performance targets leads to about $62.5 billion in transportation cost savings for Mississippi businesses and residents. 

Table 1.1: Total Direct Impacts of Alternative Highway Investment Levels, 2015-2040 (billions of $ 2014)

 

Scenario

Category

Expected Funding

Adequate Funding

 Vehicle Operating Costs

$33.8

($28.9)

 Travel Time Delay Costs

$7.8

($32.9)

 Motor Vehicle Crash Costs

$1.1

($0.7)

 Total Cost 

$42.7

($62.5)

Average Annual Cost per Driver

$650

($1,200)

 
  • The estimated total impact the change in transportation costs arising from alternative investment scenarios is projected to have Mississippi's economy is significant as displayed in Table 1.2. 

Table 1.2: Total Economic Impact of Alternative Investment Levels in Mississippi's State-Owned Highways (2016-2040)

Statewide

Expected Funding

Adequate Funding

Jobs (avg annual units)

(51,800)

77,500

Income (billions of $2014)

($94.8)

$158.2

GRP (billions of $2014)

($79.7)

$123.0

 

Results:  

Our evaluation demonstrated the cost of the status quo as well as the potential return on increased investment in maintaining the roadways in a state-of-good-repair.  The results show that Mississippi drivers will pay significantly more in terms of increased travel costs under the status quo than they would under an adequate funding scenario.  In addition, the economic implications of the status quo are negative compared to a positive impact arising from providing adequate funding to maintain the system.  MDOT is using this insight to make investment decisions in an effort to mitigate the negative implications to the extent possible.  They are also using the results to inform the public and elected officials about the implication of critical funding decisions going forward.  In addition, the Mississippi Economic Council, the state's Chamber of Commerce, has embarked upon a campaign for increased transportation funding as result of these findings. 

 

[1] Chatti, K., and Zaabar, I. Estimating the Effects of Pavement Condition on Vehicle Operating Costs. NCHRP Report 720, Transportation Research Board (TRB), 2012.