Do Highways Matter? Evidence and Policy Implications of Highways’ Influence on Metropolitan Development

Andrew F. Haughwout and
Haughwout headshot
Andrew F. Haughwout Senior Vice President and Policy Leader - Federal Reserve Bank of New York
Marlon G. Boarnet

August 1, 2000

Highways and urban growth. The two seem inextricably linked, and certainly in popular and scholarly debate
much attention is given to the way that highways shape urban development. But the link between road building and
metropolitan growth is extraordinarily complex and common assumptions on both sides of the political spectrum are often
overly simplistic. Some claim that the problems of central cities can be confidently attributed to suburban highway programs
while others deny that any such link exists. A balanced policy perspective most certainly lies in the middle. More
importantly, a balanced policy perspective requires an understanding of theory and evidence that, while often complex,
points in a consistent direction.

This paper critically reviews the evidence on how highways are linked to metropolitan development and makes policy recommendations that suggest the need to rethink the way we finance and program highways in this country.

The analysis proceeds in four steps:

First, we summarize the policy research context for this debate;

Second, we summarize recent theory and empirical evidence on how highways influence urban growth. An up-todate assessment of this question is the linchpin of any policy analysis that seeks to link federal highway programs to problems that are by-products of metropolitan growth patterns;

Third, we reformulate some of the policy questions that are popular in this area, emphasizing that questions of economic efficiency, the geography of urban development, and the institutional structure of regional transportation agencies have been overlooked too often;

Fourth, we develop policy recommendations based on our assessment of theory and evidence, and on the need to give increased attention efficiency, geography, and political institutions.

Overall, we conclude that changes in metropolitan location patterns are induced by highways, and these changes are not, on net, costless. A rational highway investment plan should account for the effects on location that highways induce. Land price, population or employment growth benefits that appear in one part of a metropolitan area may come at the expense of even larger costs elsewhere. The difficulty is that the way in which we make and finance our highway investment decisions does not induce rational consideration of all these effects. 

We recommend an increased role for representative regional decision-making bodies with both the vision and the authority to balance the competing transportation demands of various metro area constituencies. Such bodies would ideally design policy so as to maximize the regional, rather than local, advantages that transportation policies offer. Although traditionally advisory and research organizations, metropolitan planning organizations (MPOs) are well positioned to fulfill the regional role that is necessary in highway governance and finance. Yet to do that, MPOs must complete the transition, started by earlier federal legislation, from advisory bodies to full highway financing, planning, and programming authorities. To be sure, such a transition faces political obstacles, but federal policy can be used to encourage and guide this policy change.

Overall, we conclude that federal highway policy should be oriented toward more efficiently funding and managing the nation’s road infrastructure. In urban areas, that requires that the federal government, among other things, empower metropolitan authorities.