Do Rural Highways Lead to Prosperity?

An ambitious highway system through Appalachia hasn't lifted most of the region from economic distress. Have we hoped -- and invested -- too much in better roads?

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Roads are often pitched as a rural development practice: build more of them, and economic prosperity will soon follow. That idea has motivated rural highway projects over the past 50 years and continues to shape transportation policy even today, at tremendous public expense and despite a very uneven record of economic outcomes.

The Appalachian Development Highway System (ADHS), stretching from southern New York to northern Georgia and Alabama, calls into question the premise that highways lead to development. Begun in 1965 and now 85% complete, the ADHS runs through many of the poorest counties in the nation. And as mapping by the Appalachian Region Commission reveals, most of those counties that were “distressed” when the project began continue to be so today, more than 45 years later.

The ADHS is one example of countless road projects proposed since the 1950s and the Interstate craze. It has been perhaps the most high-profile road project in the Appalachian region, also one of the costliest. Cumulative obligation for the project up to FY 2011 amounts to roughly $12 billion (including state and local matches).  When completed, the total network will reach 3,090 miles. But as far-reaching as the highway system is, Appalachians  and all who are invested in rural development need to ask themselves, has it been it worth it?

The Appalachian Research Commission (ARC) is the government body that oversees the ADHS system, and it is proud of its accomplishment. According to this report, projections of new jobs from the highway project range between 80,000 and 90,000; the ARC writes that $5 to $5.7 billion of “value added” would be created if the project is finished. Another $3.2 to $3.6 billion in wages would be generated, according to the report. In addition to these forecast benefits, there may be other, less quantifiable impacts, for example, reduced travel time, smoother travels, and fewer accidents, that would add to the overall value of the roads. However, these are all projections—the highway system’s tangible benefits are harder to determine.

The ARC website is surprisingly obscure when it comes to measuring the effects of the system to date. There are plenty of reports about its potential, but the latest data that actually attempts to quantify the highways’ effects on local economies is from 1998. This report mentions some 16,270 new jobs created by the ADHS (almost 1,400 of them jobs related to the road construction itself, jobs that presumably no longer exist) by the end of 1995—30 years after the project began.
In absolute terms, the jobs provided a definite benefit. But what longer term effects has the highway system had on the Appalachian counties it passes through? Has it alleviated the region’s economic woes?

The available data does not suggest that the new highway system has brought prosperity with it.
Unemployment in Appalachia, which was at 4.0% in 1970 shortly after the ADHS began, was as high as 5.7% in 2000—a relatively prosperous year. So it appears the ADHS has not brought in enough jobs to appreciably decrease unemployment. Unemployment in Appalachia has fluctuated since the outset of the highway project but has shown no appreciable change.

Additional questions arise in comparing maps of the ARC’s designated “distressed counties” with the highway system’s route (See below).

“Distressed counties” are those where the three-year average unemployment rate, per capita market income, and poverty rate are in the lowest 10% of U.S. counties (the distressed counties constitutes a relative – not an absolute measure. These counties may have improved economically but still lag behind the nation as a whole).

Appalachian Regional Commission
“Distressed counties” in 2002 — those in the bottom 10% of all U.S. counties in terms of poverty rates, unemployment rates, and per capita income — are shown in red.

Very little shift has been seen in the pattern of distressed counties between FY 2002 (first map) and 2013 (second map), And the largest concentration of distressed counties, in eastern Kentucky, southern West Virginia, and southwest Virginia, is squarely in the midst of the largest number of ADHS projects. The counties that have shown the most progress, with a few rare exceptions, are located on the fringes of the system, or otherwise near major metropolitan areas.

Appalachian Regional Commision
ARC’s 2012 map of “Distressed counties” shows that much of the region remains in economic trouble. Notably, most of those areas where the Appalachian Highway Development System has opened remain “distressed.”

What might be happening in these distressed counties? In several cases, it appears the ADHS may have been working its magic in reverse—exporting jobs rather than bringing them in. Lee County, VA,  Pike County, KY, and Mingo County, WV are a few of the “distressed” counties traversed by the ADHS that are experiencing “persistent decline,” according to this report.

An ARC report notes the “continuing out-migration of the college and working-age population” — the very people who are needed to fill jobs that the ADHS was intended to attract are leaving. Another report says that the distressed counties have experienced “significant population losses.” In other words, conditions in counties along the ADHS system may have worsened. With newer roads, it’s become just as easy to exit as to enter, and the decline in working-age population seems to indicate that the roads are facilitating the export of people and jobs.

Appalachian Regional Commission
The 3090 network is 85% complete. Segments shown in blue were open to traffic as of September 2011.

Another force at work in many of the distressed counties is the decline of primary industry. Between 2000 and 2007, Appalachia lost 35,000 jobs in farming, forestry, and natural resources. Manufacturing was hit even harder, losing 424,000 jobs in the same span. ARC reports that these industries will lose even more jobs in the coming years.

These are the business sectors that rely heavily on the highways. While the highways have gotten better since 1960, the local industries have gotten worse. The ARC’s 2008 report forecasts thousands of potential new jobs in these declining sectors if the highway is completed. Yet the agency has pinned much of ADHS’s promise on truck-dependent industries that are shrinking.

The cost-benefit analysis of the roads is also worth considering. Older reports on the ARC site state that “every ADHS corridor that has been completed to date has created economic efficiency benefits.” But what about the costs? So far, $12,142,440,625 has been obligated to the program, with a projected $57 million more required for completion. ARC’s reports have been noticeably aggressive in their calculations of economic benefit, the 2008 report only including the optimistic projections of “medium” and “high” growth; the report did not include a “low growth” estimate of economic benefit. This third possibility is now a stark reality with the natjon’s economic downturn.

The ADHS is just one part of a larger picture of road construction in Appalachia, which includes many other local efforts to improve transportation. A joint study between the ARC and the University of Tennessee considers these other regional and local efforts and looks at the region’s transportation development as a whole. It concludes that transportation, when inadequate, is a hindrance, but improved transportation does not, in and of itself, promote development.

Location often matters; but prosperity doesn’t necessarily flow from great roads. Instead, what matters is the particular type of transportation development, and the existing economic activity in the region. When the ARC forecasts the highways’ creating new mining and manufacturing jobs (2008 report), those projections should be considered with healthy skepticism. If roads themselves don’t foster growth, and they’re being built into areas with little economic promise, it’s unlikely that much will change.

Jefferson Sinclair is an intern at the Center for Rural Strategies in Whitesburg, Kentucky, and a student at the University of North Carolina at Chapel Hill.

 

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