Average Benefits Per Mile Values example essay topic

Economic Impact Analysis on a High-Speed Railway System for Central Florida Economic Impact Analysis on a High-Speed Railway System for Central Florida Introduction High-speed railway (HRL) systems have been used primarily over in such countries as Japan since 1964 and France since 1984. Recently the United States has generated interest in the high-speed railway as well. The proposed system would stretch from Miami through Orlando and end in the St. Petersburg / Tampa area. With bullet trains operating at top speeds of 220 miles an hour, the express travel time from downtown Miami to Orlando would take approximately 2.5 hours. Intercity travelers (trips between metropolitan regions) along with longer-distance commuters would enjoy the benefits of a system designed to connect with existing rail, air, and highway systems.

The strategy behind the high-speed railway system would be to relieve highway congestion, air traffic congestion, and help reduce the necessity of expansion of highways and air systems (which is limited due to the inability to build new air space). Also, with this type of system (this system works on magnetic levitation), you would have a significant reduction in air pollution that would result as high-speed captures a large portion of the intercity travel market from automobiles and airlines. Context Tampa The chosen locations for the high-speed railway will be three different cities, Miami, Orlando, and Tampa / St. Petersburg area. The economic and industrial structures for Tampa has created more than 22,000 jobs May 2004, ranking the area #1 in Florida and among the best in the nation for job growth.

Job gains in the region were largely in professional and business services. Florida is creating jobs faster than any other state in the nation, adding 171,800 jobs from May 2003 to May 2004. Tampa / Hillsborough County with its dynamic and positive business climate is one of the leading business locations in the world. As the economic hub of Hillsborough County and the Tampa Bay region, Tampa enjoys ongoing and remarkable job growth, affordable business and living costs, an able and abundant workforce, excellent educational opportunities, and unmatched weather and amenities.

Service, retail, finance, insurance, and real estate sectors lead regional industry. Bioscience and other high-tech industries are expanding, thanks in part to research at university and college campuses throughout the area. Manufacturing is also experiencing increased growth as the regional economy continues to diversify. Yet costs stay low: Tampa Bay's Metropolitan Statistical Area (MSA) comprised of Hillsborough, Pinellas, Pasco and Hernando counties, ranks 3rd among all U.S. metro areas for low business costs, according to a KPMG 2004 study. Tampa / Hillsborough County's median home price increased by approximately 17 percent in 2004 yet is still around $170,000 - far below that of most MSAs. Among more than 300 U.S. urban areas, the regional cost of living remains about 6 percent lower than the average.

(Greater Tampa Chamber of Commerce, 2004) Sky Line of Tampa Bay at Night Orlando The population area of Orlando experienced a 2.62 percent growth rate from 1998 to 2003. The population estimate for 2004 was 1.84 million people and, according to the Metro Orlando Economic Development Commission, Metro Orlando is expected to rank first in the nation in terms of total employment growth and population growth through 2008. Between 2000 and 2010, population is expected to grow by 21 percent, whereas employment is expected to grow by 22.1 percent. Furthermore, Metro Orlando is projected to be among the nation's fastest-growing regions throughout this decade. The Orlando population is young, diverse and well-educated, with a median age of 35. The community's labor force exceeds 1,000,000 and boasts a 48.8% employment rate.

As of 2004, the Orlando MSA median household effective buying income was $39,285, as compared to the state average of $36,599 and the national average of $38,035. Furthermore, the median household income for the Orlando MSA in 2004 was $44,770. As of first quarter 2004, the overall cost of living index was 97.8 as compared to the U.S. average of 100, according to the American Chamber of Commerce Researchers Association. In 2003, there were 43,845 new business start-ups in the Metro Orlando MSA. In October of 2003, Orlando added 14,700 new jobs - an increase of 1.6 percent from a year earlier. In 2003, 53 percent of the region's largest employers reported increases in their employment levels compared to the previous year.

Among the top 100 companies there was a net gain of about 16,500 full- and part-time jobs, an increase of more than 5 percent from a year ago. The leading employer in Orlando is Walt Disney Co., which employs about 4 percent of all workers in Central Florida. The company employed 51,600 people in Central Florida as of September 2003, representing 15 percent of the 342,000 workers on this year's Central Florida Business Top Employers list. Despite the microscopic growth at the big theme parks, tourism employment overall has led the way in the Orlando job market's resurgence. Two emerging industries in Orlando are technology and manufacturing. Employment in the technology industry has more than doubled over the last ten years, with more than 80,000 people employed by more than 3,800 companies.

The manufacturing industry is marked by a total of over 4,000 companies, and Orlando holds an impressive ranking as one of the top 50 MSAs for manufacturing. Some of the local industry's most prestigious names include Lockheed Martin Electronics & Missiles, Siemens ICN, and Mitsubishi. (City Overviews, 2004) Miami Because of its proximity to Latin America, Miami serves as the headquarters of Latin American operations for many multinational corporations, including American Airlines, Disney, Exxon and the Port of Miami are among the nation's busiest ports of entry, especially for cargo from South America and the Caribbean. Additionally, downtown Miami has the largest concentration of international banks in the country. Miami was also the host city of the 2003 Free Trade Area of the Americas negotiations, and is one of the leading candidates to become the trading bloc's headquarters.

Tourism is also an important industry: the beaches of Greater Miami draw visitors from across the country and around the world, and the Art Deco nightclub district in South Beach (located in Miami Beach) is widely regarded as one of the best in the world. As of the census of 2000, there are 362,470 people, 134,198 households, and 83,336 families residing in the city. The population density is 3,923.5/km^2 (10,160.9/mi^2). There are 148,388 housing units at an average density of 1,606.2/km^2 (4,159.7/mi^2).

The racial makeup of the city is 66.62% White, 22.31% African American, 0.22% Native American, 0.66% Asian, 0.04% Pacific Islander, 5.42% from other races, and 4.74% from two or more races. 65.76% of the populations are Latino of any race. There are 134,198 households out of which 26.3% have children under the age of 18 living with them, 36.6% are married couples living together, 18.7% have a female head of household with no husband present, and 37.9% are non-families. 30.4% of all households are made up of individuals and 12.5% have someone living alone who is 65 years of age or older. The average household size is 2.61 and the average family size is 3.25. In the city the population is spread out with 21.7% under the age of 18, 8.8% from 18 to 24, 30.3% from 25 to 44, 22.1% from 45 to 64, and 17.0% who are 65 years of age or older.

The median age is 38 years. For every 100 females there are 98.9 males. For every 100 females age 18 and over, there are 97.3 males. The median income for a household in the city is $23,483, and the median income for a family is $27,225. Males have a median income of $24,090 versus $20,115 for females. The per capita income for the city is $15,128.28.

5% of the population and 23.5% of families are below the poverty line. Out of the total population, 38.2% of those under the age of 18 and 29.3% of those 65 and older are living below the poverty line. Below shows a graphic picture of the path in which the HSR will be laid out and which 10 top destinations cities it will include. Proposed layout of the high-speed railway alignment for Florida Picture 1: Proposed Layout of HSR alignment for Florida Business Development Externalities are in economic terms cost or benefits which are not covered by market forces. For example, if you drive your car to work, you are producing harmful emissions into the air and adding to the congestion which other people are forced to consume. Left up to a free market economy situation these costs would never be compensated for, and example of market failure.

(Keating, 2004) High-speed railway systems have been in the picture since nineteen sixty nine when the first system was introduced in Japan. When service was initiated, Japan was a much poorer country than it is today. Automobile ownership was very low; there was one automobile for each 46 persons in 1965. Commercial air service was limited, and railroads accounted for 67 percent of passenger travel, while automobiles carried only 11 percent.

HSR has the potential to contribute to a range of economic, social, environmental and political objectives, and the analysis carried out during this study has illuminated which of these high level objectives HSR could be most effective at delivering: Meeting the state's south-north; east-west transport needs effectively - HSR could be very successful both in relieving forecast crowding problems on the strategic rail network and in making a step-change in the quality of rail travel in terms of speed, reliability, accessibility and frequency; Enabling mode shift to more sustainable forms of transport - HSR can make a contribution towards mode shift to public transport, although the direct effects on the road network will not be substantial; Stimulating or supporting national economic growth - there is a clear national economic gain from HSR, as captured in the cost-benefit analyses reflecting the efficiencies to be had from the use of faster more reliable means of transport; Enabling regeneration in assisted areas - the HSR could be beneficial to the Government's urban renaissance and regional policy agendas by improving the performance of the lagging regions and conurbations, although it will not fundamentally alter the forecast geographical pattern of economic activity; Supporting effective land use - HSR is consistent with land use policies as long as it is developed along appropriate guidelines, the most important of which is to serve city centers rather than new out-of-town parkway stations; Making optimal use of resources: value for money - the economic appraisal has shown that despite the considerable capital cost of HSR, it has a positive business case and delivers better value for money than upgrading the existing rail network; Promoting safety on the transport network - HSR provides safety benefits to the transport system, by reducing the number of accidents on the highway network, although the net gain from these benefits is not large in relation to other benefits; Contributing towards environmental improvements - The USA has the highest CO 2 emission rates in the whole world. Why? The difference between the USA and Europe / Japan is perhaps the rate of car ownership is higher in the USA. People use their cars much more in the USA accounting for the extra emissions. One crucial difference is that the USA has very little by the way of railways, both high speed and local. It would seem reasonable to conclude that the more trains you have, the lower your countries CO 2 emissions.

Admittedly it's a bit simplistic but it definitely does seem to be related. (Keating, 2004) Table 1 Net Reduction in Tons of Air Quality Pollutants (Years 2010 to 2035). Secondary objectives could include enabling mode shift to public transport, supporting economic regeneration policies and promoting safer modes of travel. Cost and Benefits Benefits from implementing a version of high speed ground transportation across the most highly populated urbanized areas of Florida will, over time generate benefits that are considerably in excess of system costs. In summary, the conclusions of these studies evaluating the Tampa-Orlando-Miami urban areas find that development of a HSR system will generate: Economic Benefits: HSR project life benefits of $39.2 to $51.5 billion nominal dollars. Present Value of benefits (over varying time periods) ranges from $11.1 billion to$16.3 billion expressed in 2002 dollars.

The average PV of economic benefits created per linear mile ranged from $34.1 million to $42 million. Economic Costs: Present value of construction costs to build the HSR system range from $5.4 to $8.2 billion. Operating Costs to Operating Revenues: In each case operational revenues exceeded operational costs and deferred a varying percentage of capital costs. Job Creation: The number of permanent jobs created for Floridians varied from 5,380 to 41,267 over the life of the projects.

The average number of permanent jobs for Florida residents per corridor mile varied from 16.6 to 127. The range of benefits generated by the studies evaluating the Tampa-Orlando-Miami HSR 25 corridor in nominal terms could range from a low of $39.3 billion to a estimated high of $51.5 billion. The estimate of benefits is actually considerably higher given that the predictions on an average increase in property values of $1.1 billion (2004$) and average household income increase for those along and around the proposed route of $350 annually with continued annual increases during the project life cycle. This income reflects the new employment and increased profitability of businesses associated with the service implementation.

Given that over 1.3 million households exist in the counties between Pinellas and Orange counties, this could translate annually into over $450 million in income increasing each year for the thirty plus years of the projects existence. Together, the property value increases and income increases (and related property tax increases to local governments) suggest billions of additional dollars of benefits are not included in these benefits estimations. The ranges of the discounted present values of benefits vary from $11.1 billion to $16.3 billion over the 325- mile system. This translates into a per corridor linear mile range of PV of benefits varying from $34 million to $42 million. These differences are attributable to a wide range of differences in methodologies and benefits measured and so forth, but it is interesting to note that the average benefits per mile values that are within 2% of each other and range between $41 to $42 million with $41.5 falling as the mid-point in the range. This convergence of values provides the most likely range of reliable estimates on which to rely and extrapolate forward for the future.

While the system also provided a wide range of benefit to cost ratios, it also provided a final measure of strength that clearly exceeded system costs. Each system also reported positive operating ratios, which indicate that system revenues exceed system-operating expenditures over the life of the project. The B / C ratios range from 1.34 to 3.02 with a median value of 2.18, which suggests that using conservative estimates that on average over the life of the T-O-M (Tampa, Orlando, Miami) HSR project that system benefits will likely outweigh system costs by more than two to one. The number of permanent jobs for Floridians generated by implementing HSR in each case also ranged widely between these studies.

The average number of permanent jobs generated per corridor mile varied from implementing HSR across the 325 mile proposed system varied from 16.6 to 127, with a mid-point of 71.8 jobs per linear mile. Interestingly, as in the case of the average benefits, there is very close agreement between this mid-point estimate and the most recent FHS RA 2004 analysis, which estimates 76.5 jobs per corridor linear mile. This small 6.6% difference suggests the mid-point between these two values is the most reliable estimate for future corridor forecasts from among those evaluated. Lastly, the final number of permanent jobs created ranges from 5,380 to 41,267. (Florida Transportation Association, 2004) Operation and Implementation The operations and implementations portion of this economic impact analysis includes how the business will locate to the Miami, Orlando, and Tampa / St. Petersburg area.

Additionally, building costs, job levels, salaries. The typical cost of opening a High-Speed Railway system from Miami to Orlando to Tampa would range approximately $11.1 to $16.3 billion over the 325 mile system. Table 2 summarizes the present value of HSR Economic Impact of the Tampa, Orlando, and Miami 325 mile Corridor Total Economic Impact Summary - Present Value (Millions of Dollars) Activities Generating Economic Impacts Sales Among Florida Firms (Millions of Dollars) Earnings by Florida Workers (Millions of Dollars) DirectEconomicImpact (Millions of Dollars) PermanentJobsfor FloridaResidentsProject Implementation $5,166 $1,659 $6,826 25,973 Operation and Maintenance $1,893 $690 $2,583 4,703 Construction at Station Sites $2,441 $784 $3,225 10,591 Total $9,500 $3,133 $12,634 41,267 During the 2010-2030 analysis period, total benefits equal $1,408 million expressed in year of expenditure dollars. For the 2010-2030 analysis periods, the present value is $249 million. Travel time savings represent approximately 56 percent of the total present value benefits, and vehicle operating savings represent over 34 percent of the total present value benefits.

Nearly 15 million hours are forecast ed to be saved in 2010 by new rail travelers that divert from auto travel, with a value of $24.5 million. It is estimated that the CARS (Coast to Coast Rail System) will reduce 2010 automobile travel by 39.1 million miles, compared to the base case. Using a rate of 32.5 cents per mile (IRS standard mileage rate), this translates to a savings of $17 million in 2010. Over the 21 year time horizon (2010-2030), cost savings resulting from trip reductions are estimated to have a $582.3 million value in year of expenditure dollars and a present value of $85.8 million respectively.

It is estimated that there would be 64 injury accidents and one fatal accident avoided in 2010. This yielded a cost savings of $3.6 million. Induced trips are valued at less than $1 million for 2010, with an average trip length of 31 miles. Total Present Values of Benefits for Projected Years 2010-2030 Transportation Benefit Category Present Values of Benefits in Millions $Travel Time Savings $558 Operating Cost Savings $345 Accident Costs Avoided $81 Induced Trips $16 Total $999 Linkages The Cities of Miami, Orlando, and Tampa will assist both Florida Department of Transportation (FDOT) and Florida Overland Express (FOX) in utilizing local resources in purchasing land, construct, obtain employees, and maintain their business as needed. The cities will make the following suggestions and inform the corresponding agency of the potential business and the need to bid for the job.

Most of these businesses are members of all three cities chamber of commerce. Real Estate / Commercial Florida Executive Real Estate Balm Real Estate Lending / Banking South-Trus to Bank of American Suncoast Federal Credit Union Construction: o Electrical - Electrical Machinery Enterprises Concrete / Fabricators - Portland Cement o Commercial Construction - Horn berger Construction. Impact The impact portion of this economic impact analysis will illustrate economic impact assuming the multiplier is 2.25 and the cost (capital / operating expense) will be $200 million. Capturing the effect of initial spending in the local economy, plus the further impacts of successive rounds of re-spending of dollars from the development of a High-Speed Railway system, will be done thru the multiplier. The multiplier methodology in the following example will track the flows of spending and re-spending that take place in the local economy, resulting from the HSR expansion; until the initial dollars have completely leaked to other regions. In this case, as economic development is regionally oriented, impacts outside the region are not counted, and are referred to as leakages.

The following calculations are based on the assumption that the initial expenditure by the HSR is $200 M, with a marginal propensity to consume (MPC) of 44%. The initial infusion of spending of $200 M in Miami, Orlando, and Tampa creates a direct economic impact of $200 M to the local economy. Of the original $200 M, only $89 M is re-spent locally; the other $111 M "leaks out" of the local economy This process continues until less than a dollar remains in the local economy from the original $200 M; as illustrated in the chart below. Thru eight rounds of spending, $360 M is generated.

Spending Rounds Local Investment ($M) Leakage ($M = 44%) Initial $200 0 First $89 $89 Second $40 $40 Third $18 $18 Fourth $8 $8 Fifth $3 $3 Sixth $2 $2 Seventh $1 $1 Eighth $0 $0 Total $360 $160 Multiplier 2.25 MPC 0.4444 The multiplier was calculated using the formula m = 1/ (1-MPC), where m is the multiplier and MPC is the local spending fraction. Assessment As is evident from this economic analysis the cities of Miami, Orlando and Tampa would benefit building a High-Speed Railway System through each of their major urbanized hubs. Outlined below are some of the many highlights: High-Speed Railway System would gain growth and profitability, as demonstrated by the financial status in the industry. All three cities would have the state of the art transportation system that would bring unique, quality business to the cities. In doing so, they would diversify the employment market for local residents.

Such a project would increase the disposable income of the community through out the construction project. Although this would decrease once the construction is completed, disposable income would still be increased from previous findings due to increased employment in the community combined with attracting residents outside the cities of Miami, Orlando, and Tampa. Sophisticated business people will fit well into the target market group of the HSR and definitely will provide a welcome escape from the hustle and bustle of everyday traffic. Retention Plan The Cities of Miami, Orlando and Tampa are dedicated to economic development and strength thru recruiting partnerships with new and existing employers. There are numerous programs including training, educational and financial assistance programs to assist businesses with relocation and expansion. The State of Florida has city, county, and state programs through the Economic Development Council.

Eligibility for assistance is determined on a per case basis. Additionally, Miami, Orlando, Tampa are increasingly desirable for businesses and household alike, for the following reasons: Quality of Life Reasonable cost of living, high quality lifestyle. o Beautiful Climate (Nov-May) hot and humid during summer Quality healthcare availability o Cultural, recreational, educational diversity. Taxes are amongst the lowest in the nation. Easily accessible, affordable utility costs. Diversified, educated, and qualified workforce. Reference: 1 Keating, O. (2004).

Are High Speed Trains are the best form of transport for Consumers and Society? Retrieved April 16, 2005, from web 2 City Overviews (2004). Socio-economic overview. Retrieved on April 16, 2005, from web orlando 1. html 3. Highlights of the economic and business growth in the Tampa Bay region (2004). Retrieved on April 16, 2005, from web July 2004. pdf 4 Lynch, T (2004).

Florida High Speed Ground Transportation Economic Benefit and Cost Impact Study. Retrieved on April 16, 2005, from web Cox, W. (1997). Evaluation of the FDOT-FOX Miami, Orlando, Tampa High Speed Rail Proposal. Retrieved on April 16, 2005, from web Economic Development of Tampa Bay (2004). Retrieved on April 16, 2005, from web development. asp 7 High Speed Line Study (2004). Retrieved on April 16, 2005, from web railways / documents /page / d ft railways 032564. pdf.