Is road investment the route to local economic growth?

10th August, 2017

Last month the Government announced a £1 billion-a-year plan to relieve congestion, including a bypass fund to take traffic around cities and towns with the worst jams. The long-term plan is to improve productivity across the country by upgrading 3,800 miles of A-roads maintained by local authorities, who expect to receive a significant amount of funding to make that happen. It also aims to improve connectivity, responding to local growth priorities, and unlocking new housing opportunities as well as economic potential.

Road schemes are broadly considered as a reliable way to take lorries out of town centres and make people’s journeys faster and easier. Unfortunateley, however, there is little robust evaluation evidence on the impact they have on local economic development. The What Works Centre for Local Economic Growth reviewed 2,300 evaluations of the local economic impact of transport projects, and found only 17 robust evaluations looking at the local economic impact of roads – and the findings on impacts are rather mixed.

On one hand, there is some evidence showing that bypasses took traffic out of the towns and city centres, with a mixed or negative effect on population depending on the nature of the project. For example, the evidence suggests that new highways can result in a population drop in city centres, but an increase in suburban areas. Congestion did not always decrease as a result of new roads, and traffic growth on new roads was sometimes higher than forecast. This is because of induced traffic on minor roads, which sometimes increased demand for newer roads.

When it comes to jobs, there is some evidence to suggest that roads can positively impact local employment, but the majority of evaluations showed either no (or mixed effects) on employment. Of the six evaluations on local employment reviewed by the What Works Centre, two find a positive impact, three find no impact and one shows mixed effects (i.e. increasing, static and decreasing total employment in the areas around highway expansion). One study shows that improved accessibility increased employment and attracted new firms in the areas, but it’s hard to tell if it was a result of firm relocation outside of congested places. To take a real world example, the introduction of a bypass around the Sussex town of Polegate means that people who would have once driven through the town now bypass it to Eastbourne for shopping trips. This may have contributed to economic decline for retailers and shop closures since the opening of the bypass. In the local economy, there is some evidence of the positive effect on wages and productivity, but the lack of quality evidence is worrying.

The local economic benefits of road infrastructure are therefore not as clear as they might seem in the Government’s announcement. As such, local government should not only focus on how to take traffic out of cities and town centres, but also on how to reduce congestion full-stop.

Improving public transport, average occupancy rate, encouraging car-pooling, walking and cycling is the best way of taking cars off the road. Good city and transport planning can improve public transport by planning the city around its network and making it as easy as possible to catch a bus or train. For major cities, the use of technology and sophisticated traffic-signal timing that varies with traffic loads and the introduction of a congestion pricing is the most effective way of reducing congestion based on evidence.

Road investments are expensive schemes and have little measurable economic benefits. If local authorities do undertake these bypass projects, they should develop adequate evaluation of the schemes.

This post originally appeared on the Centre for Cities blog

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