Improvements to transportation networks, especially those in growing areas, tend to have impacts on local land
markets. In principle, an improvement to a link in the network will confer economic benefits to adjacent and nearby
properties by increasing the utility that the network provides. Traditional methods of economic analysis for
highway improvement projects have focused primarily on user benefits and sought to quantify them through the
estimation of reductions in travel delay or user cost. However, urban economic theory suggests that many of these
benefits are capitalized into local property values, yielding a localized spillover effect. Accordingly, it should be
possible to develop rough estimates of the value of the benefits from a highway project by estimating the response
of local land markets to the improvement. This report explores the nature and magnitude of benefits accruing to
nearby properties that arise from major highway construction or reconstruction projects, more precisely those that
add capacity to an existing highway. Highway projects in three Minnesota counties (Hennepin, Jackson, and
Olmsted) form the basis for our analysis.
Iacono, Michael; Levinson, David.
The Economic Impact of Upgrading Roads.
Minnesota Department of Transportation.
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