Knowledge Base - Economic Impact
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Labor and capital investment requirements change
Economic Impact Analyses of Transit Modes
Economic Impact Results Based on Regional Economy
Source of Economic Forecasting Model
Calculation of Employment Impacts
Economic Impacts of Land/Property Acquisition
Assessing Economic Impacts for Relocating Business
Retail Development and Sales Tax
Increased GSP, But Not Enhanced Local Economy
Question: Does TREDIS address induced growth impacts?
Answer: TREDIS versions 4 and greater have evolved into an equilibrium simulation model that includes wage and demographic migration responses to economic growth. TREDIS forecasts induced changes in households and population (by age cohort) as well as employment on a year-by-year basis. For example, the TREDIS induced growth impacts have been used to drive transportation and land use models used by San Francisco (ABAG and MTC) and by Chicago (CMAP). Induced growth impacts from TREDIS have also been fed back into the Ohio DOT traffic model. The induced changes are included in Population and Labor Report (Households and Demographics).
Question: How is TREDIS different from IMPLAN
Answer: TREDIS is a unique decision support analysis system for transportation planners that provides economic impact, benefit-cost, fiscal (tax) and public-private financial analysis. TREDIS incorporates a dynamic, multi-regional economic impact simulation model to estimate regional impacts on employment and income growth over time. It incorporates the full industry structure of IMPLAN - an economic input-output model that portrays industry relationships between producers, consumers, and institutions for any given region. To that, TREDIS also adds dynamic forecasting of long-term changes in the economy, general equilibrium equations representing labor force and industry cost responses, and transportation effects. So while IMPLAN can be used to estimate broader impacts of construction, business location and business expansion changes, only TREDIS can estimate impacts of transportation projects or policies that change travel times, costs, reliability, mode split or trip distribution patterns. Ultimately, TREDIS can be considered as the tool for IMPLAN users to also analyze transportation projects.
Question: What is the base input needed data to run TREDIS and where do you get it?
Answer: TREDIS is designed to recognize the unique issues faced by each step or sequence in the transportation planning process. Its input forms and output reports are tailored to meet those needs. Using the assisted mode, the system will query the user regarding the type of problem and audience, and then tailor its input needs and result outputs to match that situation.
The input requirements vary depending on the type of project or program being analyzed. In general, you need to provide three types of information: (1) the applicable mode of travel or type of facility, (2) the number of people, vehicles or trips affected, and (3) how they will be affected (which most often is a change in speed, travel time, cost, safety, capacity, reliability or access). TREDIS does not require any travel demand model to generate its inputs. However, TREDIS does give users the option to make use of a travel demand model if desired.
Question: How do you defined a "Linked Area" within the context of Market Access improvements?
Answer: The linked area is generally based on the concept that if a study area becomes better connected to a linked area with strong economic growth, it is better able to grow than if it becomes better connected to an economy that is not as economically vibrant. The linked area feature is designed so that the TREDIS model can detect when a project makes a small, isolated (and typically depressed) study area now fall within the labor (or truck delivery) market area of a larger and more diversified city or metro region – thus broadening the range of economic opportunities. For the linked area feature to make any difference in outcomes, the study area gaining benefits must be a small market with a relatively undiversified economic base, compared to a newly linked area that has greater economic diversification and growth. The study area and linked area must be separate study areas.
The linked area feature will not have a perceptible impact under other conditions, such as a project that extends the market reach of a large metro area into a more rural hinterland. In this latter case, the large area will not gain diversification by linking to satellite areas though it will gain productivity by expanding its market scale, and that will be captured by the separate market area (agglomeration) factor in TREDIS.
The productivity impacts due to gains in Market Access can also be found internally within a study region based on labor, customer, and delivery market expansions. These types of improvements result in better matching of businesses and employees, expand the options of production inputs, and improve logistics efficiencies. As such, Market Access doesn’t just involve attraction of new business to the area based on agglomeration, but also due to improved Access and Connectivity.
If there is an area outside of a user’s study region that is better connected due to a transportation investment, then this is considered to be the “Linked Area”. Otherwise, a region within a user’s study area can be selected as a “Linked Area” indicating that this region experiences Market Access improvements.
Question: What feedback responses are used in TREDIS?
Answer: TREDIS enables economic feedback relationships by reconciling labor supply and demand relationships at the scale of BLS Labor Market Areas – even if larger or smaller study area are selected for analysis. The demographic module tracks household profiles by size, type and age cohorts, to track the working age population and associated rates for unemployment and labor market participation. Industry requirements for new workers are met by a mix of existing unemployed workers and new in-migrants, depending on relative unemployment rates. Wages shift to attract in-migrants.
TREDIS provides an automated programming interface that enables integration with both external transportation network models and external land use models. This enables a feedback process whereby those models drive changes in TREDIS inputs over time, and TREDIS results can drive further changes in those economic model forecasts over time.
TREDIS employs a multi-regional economic modeling framework that incorporates change in interregional supply and demand, so that a change in one region’s economy will lead to gains or losses in other regions. The cost response factors are econometrically calibrated.
Labor and capital investment requirements change
Question: How does TREDIS handle technology change?
Answer: TREDIS enables changes in labor and capital investment requirements in a format that is tailored to transportation investment analysis. Rather than using a generic Cobb Douglas production function to shift the labor/capital mix, TREDIS provides for shifts in labor and/or capital requirements only when transportation improvements actually enable technology shifts – such as supply chain delivery integration or change in warehouse stocking requirements due to same-day, just-in-time deliveries. These technology shifts provide productivity gains that enable and attract further economic growth.
Question: How does TREDIS handle geography?
Answer: Besides responding to changes in competitive costs of doing business and cost of living, TREDIS also incorporates sensitivity to spatial scale and market access economies. These scale economies provide productivity gains that enable and attract further economic growth. There are two classes of spatial scale economies addressed by TREDIS; both are based on access impact response factors that are econometrically calibrated.
TREDIS incorporates scale economies associated with urban market size, by responding to inputs that change the effective size or effective density of labor markets and same-day delivery (buyer/supplier) markets.
TREDIS also incorporates broader market scale economies associated with expanding intermodal connectivity, by responding to inputs that change either ground access to intermodal terminals or the handling capacity and range of locations served by air, marine and rail terminals.
Economic Impact Analyses of Transit Modes
Question: How do transit modes get a “fair shake” in the economic impact analysis? … It seems like it is always geared to favor roadway widening and weighted against transit investment.
Answer: TREDIS was specifically designed as a multi-modal tool to give all modes a “fair shake.” TREDIS incorporates wider economic benefits that can include the positive effects of public transportation on the economy via changes in increases in job access and decreases in traffic congestion growth. TREDIS also incorporates wider measures of benefit cost analysis that can social and environmental benefits. TREDIS has also been used by the American Public Transportation Association (APTA) to show the job creation effects of transit investment.
Economic Impact Results Based on Regional Economy
Question: As I understand them, most economic impact models show greater economic impacts in larger and better developed regional economies. Is this true with TREDIS?
Answer: That is not true with TREDIS. The statement generally holds for economic multiplier effects of plant openings or closings. But TREDIS also responds to changes in market access and connectivity, which may be greatest in rural areas. Both Kansas DOT and the Appalachian Regional Commission were able to use TREDIS to show the benefits of improving rural access to markets and rural connectivity to intermodal facilities.
Source of Economic Forecasting Model
Question: What is the economic forecasting model behind TREDIS?
Answer: The US TREDIS model is a dynamic, multi-regional economic impact simulation model. It incorporates economic geography relationships and econometrically-derived response factors for cost and access changes, as well as labor market and income factors. The Canadian and Australian versions currently utilize state and provincial-level input-output models that have been combined with cost-response factors and baseline driver forecasts to simulate a long-range forecasting system.
Calculation of Employment Impacts
Question: How are the employment impacts calculated in a region? What database is required as input to TREDIS?
Answer: Employment impacts are calculated by the TREDIS Economic Adjustment module for several impact types (construction, operations, contingent development, and market access) . In each case, direct economic impacts are estimated by the appropriate TREDIS module in terms of net new business output (sales). In a standard** application, the Economic Adjustment Module is supplied with the CRIO-IMPLAN model that estimates secondary (indirect and induced) impacts in terms of Employment, Output, Value Added, and Wage Income. Employment is estimated based on the current use of labor in production for your study area and on an industry-by-industry basis (as derived from the IMPLAN database). For this standard option, the CRIO-IMPLAN model is embedded in the TREDIS framework with all necessary data and functionality, and no additional database is required to run TREDIS.
[**note: TREDIS may be supplied with other economic models – contact us for more information about this].
Economic Impacts of Land/Property Acquisition
Question: Does TREDIS include land/property acquisition costs in the estimation of economic impacts? If so, why?
Answer: TREDIS treats land property acquisition as a transfer that does not generate any economic impacts.
Assessing Economic Impacts for Relocating Business
Question: How does TREDIS handle economic impacts in which one area gains by attracting businesses that relocate from another area? Are those counted as economic development impacts?
Answer: TREDIS estimates business attraction through the Market Access Module which estimates how the region’s economy improves if businesses have better access to labor, customers, suppliers, and international markets. Accessibility is measured by Market Size (for example, population accessible within a 40 minute drive time), Airport Activity, and Drive times to international gateways/terminals.
The Market Access Module distinguishes three types of impacts:
1) Business Relocation. Improved market access has the effect of strengthening an economy’s competitiveness in attracting and retaining business relative to other locations. For impacts of this type, TREDIS applies a gravity model to estimate the source of this business growth, and then nets this relocation out for multi-region projects.
2) Productivity Growth. Increasing an economy’s accessibility and connectivity generates agglomeration benefits from returns to scale in production, knowledge spillovers, and better matching of suppliers and employees to businesses. This growth, which is estimated as increased output per worker (labor productivity), is not due to relocation, and therefore is treated as 100% net new to the region.
3) Increased Export Activity. Improving an economy’s access to international gateways can enable new import/export activity. The Market Access Module estimates export growth under the assumption of perfectly elastic international demand.
Retail Development and Sales Tax
Question: Is it possible for a user to provide specific inputs regarding a retail development and generate sales tax reports?
Answer: TREDIS provides an option for modeling Contingent Development, which is expected economic development that is contingent upon transportation investment. Industry impacts may be entered as sales (output) in $millions or as employment as the total number of jobs added. For Finance Module subscribers, TREDIS users can generate a Tax Impact report that shows this contingent development’s impact on Federal or State/Local government revenues, including property, income, sales, and other tax types.
Question: How does TREDIS distribute jobs via geography?
Answer: Jobs are distributed according to the location of the industry sectors in which the jobs are created. TREDIS uses US commercial and population census data for this geographical distribution. While some construction activities and business savings are outside the project region, TREDIS limits job creation forecasts to within the area designated by the user during the input to the model.
Question: When I put in time savings for personal trips, I see a benefit/cost impact as expected, but nothing appears in the economic growth impact. Aren't these two measures supposed to be consistent?
Answer: There is a reason for this difference. Having more free time has a value to people (which shows up in the B/C analysis), but it does not directly affect the flow of money in the economy. For business travel, on the other hand, savings labor time typically means saving money for the business, so that does affect money flow and thus leads to economic development (growth) impacts. TREDIS keeps this difference clean and apparent.
Question: Are TREDIS employment impacts full-time equivalents, or actual job counts?
Answer: All Employment figures shown in TREDIS are job counts (positions), including part-time slots. Note that for part-time jobs, a single individual may hold two or more jobs.
Click here for a table which may be used to convert tofull-time equivalents (FTEs) based on national averages (Source: Bureau of Economic Analysis).
Increased GSP, But Not Enhanced Local Economy
Question: How does TREDIS deal with externalities that can increase GSP, but not enhance the local economy, e.g., oil sales (a net export), health care costs from accidents, etc.?
Answer: TREDIS can be set up as a multi-regional model that accounts for both local and rest-of-state impacts. The cost inputs in TREDIS can also be used to enter additional factors affecting household or business spending patterns.
Question: Is TREDIS a static or dynamic model?
Answer: The TREDIS framework can be used with either dynamic economic models (used as is) or static economic models (in which case TREDIS supplies a means of walking I-O matrices forward over time). The default economic model in TREDIS utilizes a dynamic economic impact forecasting methodology.
Question: What kind of economic models are used in TREDIS
Answer: TREDIS normally comes delivered with a variety of built-in tools including:
- Economic impact analysis in the form of multi-regional IMPLAN trade flow model
- information on regional connectivity from Oak Ridge National Labs and GIS market data from ESRI
- freight flow data from the USDOT Freight Analysis Framework
- the LEAP model for economic development growth assessment
However, TREDIS is a modular framework that can also provided with other options including:
- the REMI economic model or localized input-output economic models
- commercial baseline forecasts from sources such as Moody’s Economy.com
- more detailed freight flow data from Global Insight’s TranSearch freight database
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