On the Value of Minnesota's Road Network

Highway capital is a major component of public capital, both in terms of impact on productivity and magnitude of expenditures. The role of highway capital seems especially important in Minnesota, because the per capita investment in streets and highways is significantly higher than the national average. Compared to the national average, per capita spending on construction and maintenance was 58% higher in Minnesota from 1992 to 1996. This study focuses on the benefits of highway capital, especially through its effects on the productivity of Minnesota firms but also on through the benefits Minnesota consumers receive because of increased accessibility. Traditional methods of assessing the significance of investments in roads examine the costs or the use of roads, and not the benefits derived from them. Measures of costs include the size of construction and maintenance expenditure or the cost of replacing roads. Measures of use include vehicle-miles traveled or ton-miles of freight hauled. Quantifying the economic benefits derived from roads is more difficult because benefits must be inferred from macroeconomic effects or choices made by individual firms.