Evaluating transportation improvements quantitatively : a primer

How do we evaluate the welfare gains from transportation infrastructure investment? We present a quantitative spatial framework that integrates both traffic and economic responses to infrastructure investment and derive the elasticity of aggregate welfare to improvements in the transportation network. This approach extends the traditional "social savings" method to incorporate agglomeration and dispersion externalities and endogenous traffic congestion. We calibrate the model to the US freight transport network and assess the welfare impact of upgrading segments of the US Interstate Highway System, quantifying the marginal gains from improvements in specific corridors and highlighting where the returns to investment are highest.