Measuring Aggregate Productivity Benefits from Intelligent Transportation System Applications: The California Experience

Abstract

A stated purpose of intelligent transportation system (ITS) applications has been to increase the productivity of the existing transportation system. Such productivity increases, should they occur, would be an important input into any benefit-cost analysis for the evaluation of ITS applications. The impact of different ITS applications on highway productivity in California is investigated. Using time series data for California counties, two forms of analysis are undertaken. The first examines ITS applications using a production function model, and the second uses total factor productivity (TFP) techniques to find the regional aggregate benefit of ITS strategies. The results of these two analyses are particularly interesting, in part because ITS impacts have not been evaluated in this way before. The production function model indicates that there is a slight advantage to the economy in a particular region due to ITS services. Findings also indicate that this advantage is a result of aggregate growth and not merely redistributive effects. The TFP analysis indicates that ITS applications contribute to regional economies and county product as well, though these results are only significant at the 10 percent level. Whereas the findings indicate an apparent need to include economic benefits in any study of ITS projects, further study in this area is needed to draw more concrete conclusions. In particular, the notion of synergies between multiple projects of the same type or different types is one of the next steps to be taken.