The Local Government Institute of Wisconsin has a new report out ( Filling Potholes: A New Look at Funding Local Transportation in Wisconsin ) that makes the case for funding Wisconsin Transportation. The problem is that the report they cite to highlight how much highway construction benefits the economy is from 1990. The LGI report states:
A 1990 Federal Reserve Bank of Boston study found that “states that have invested more in infrastructure tend to have greater output, more private investment, and more employment growth.”
The interstate system was completed two years after the Boston Fed made that declaration. Per-capita VMT began to drop in 2005, total VMT dropped in 2007, and in 2009 the Upjohn Institute published Understanding the Contribution of Highway Investment to National Economic Growth: Comments on Mamuneas’s Study, which in part concludes:
While there may not be a consensus in the literature on the absolute value of estimates of the rate of return to highways, and perhaps that may not be possible given the different methodologies and levels of aggregation used in the literature, it appears that there is a convergence of thought that the U.S. highway system is maturing and that the system is no longer underbuilt.
One of the interesting points made in the accompanying video is that Wisconsin ranks #5 in terms of miles of road per capita. If Wisconsin’s roads were as economically potent as proponents claim, shouldn’t we expect some aspect of Wisconsin’s economy to rank in the top 5 as well?
While we are on the subject, take a look at my blog post going into detail about the declining return on investment in highways.
