Potential gains from more efficient spending on Texas highways

Abstract

The Federal Highway Administration developed a state-level version of its Highway Economic Requirements System (HERS-ST) model to help states plan and manage their highway systems. Unlike frameworks that consider engineering sufficiency criteria only, the HERS-ST model also allows economic evaluation based on benefit-cost analysis. This study employs the model to address two questions about the level and allocation of investment spending on Texas highways: (1) Does the level of spending fall short of what is economically warranted and, if so, by how much? (2) Could a reallocation of spending between urban and rural areas, and among the highway functional classes produce substantial benefits? The results suggest that Texas is indeed under-investing in highway by a substantial amount. TxDOT expenditure on highway investments within the scope of HERS-ST averaged $2.7 billion per year during the 5 years starting FY 2000, and continuation of recent trends would bring the annual average for the 20 years starting in that year to about $3.4 billion. Relative to this 20 -year projected level of spending, our estimates from HERS-ST indicate that a near doubling would be economically warranted. The results also indicate that reallocation of investment spending, relative to the recent historical pattern, would produce substantial benefits. These gains are estimated at over $5.6 billion per year from reallocating funds from rural to urban areas, and over $1.0 billion per year from reallocating urban and rural funding among highway classes. The estimates are only broad indications, however, and numerous caveats apply.