Building prosperity: How infrastructure economics tracks growth and development

Infrastructure economics provides project owners, communities and policymakers with the tools and data needed to make compelling business cases for infrastructure investment. Those cases are built on job creation, workforce productivity, changes in commuting habits, rural and urban development, community well-being and other elements.  

Every federal, state and local election brings a new set of requirements and economic priorities that reshape infrastructure programs. Despite these changes, the fundamental principles of economic analysis remain constant. Economists must consistently focus on identifying and quantifying the most relevant data to accurately understand the value of a project and secure stakeholder support. These assessments also help create a compelling case for investment and ensure programs move from concept to implementation.  

By quantifying the impacts of new or upgraded programs – from transportation systems to energy grids – infrastructure economics quantifies the economic and social impacts of infrastructure projects. By analyzing costs, benefits and trade-offs, economists can help policymakers and stakeholders make data-driven decisions that maximize societal benefits.  

Moving projects forward 

In the short term, infrastructure investments can stimulate economic activity, create jobs and improve service delivery. For example, constructing a new airport or port facility can generate immediate employment opportunities and enhance trade efficiency. Over the long term, these investments contribute to ongoing economic development by fostering innovation, attracting businesses and enhancing competitiveness.  

Economic analyses play a key role in promoting funding strategies. By integrating economic insights into grant and other funding applications, organizations can highlight the broader impact of proposed infrastructure projects, which in turn improves their competitiveness for funding opportunities. In an economic analysis conducted by Virginia’s Hampton Roads Transit, for example, the agency found that an 80 percent increase in bus service hours would result in a $2.10 return for every dollar invested in improved bus service.  

A well-structured economic analysis provides quantifiable evidence as to how a project contributes to job creation, regional development and cost savings over time. Ultimately, leveraging infrastructure economics in grant applications enhances credibility, maximizes funding impact and supports effective investment decisions.  

Economics at all stages of the project life cycle  

Infrastructure economics can be deployed at every stage of a project’s life cycle, facilitating efficient planning, design, construction, operations and maintenance.  

Each project phase accentuates different priorities. For example, in the planning and environmental stage, the emphasis is on strategy development. Economic principles can guide strategic planning by identifying high-impact investments and assessing economic and environmental trade-offs. A thorough understanding of economic implications allows projects to align with community growth objectives. When the Texas Department of Transportation incorporated an economic analysis into its Lampasas Relief Route Feasibility Study, the department examined how a relief route for through traffic coupled with downtown streetscape improvements can impact employment and earnings. The study found the project would create over 200 jobs and nearly $12 million in earnings annually.   

During design, the focus of an analysis shifts to data-driven decision-making. Infrastructure economics plays a crucial role in optimizing project configurations to ensure cost efficiency and support economic development priorities. Leveraging data-driven insights helps minimize waste and enhances design effectiveness. In Boston, the Massachusetts Bay Transportation Authority (MBTA) leveraged the findings of a benefit-cost analysis that was prepared as a one-page handout about the North Station Draw One Bridge Replacement and submitted to the U.S. Department of Transportation (USDOT) as a funding application. The handout conveyed the significance of the project to decision-makers and stakeholders, and the MBTA received a $472 Mega grant award for the project from USDOT.   

In the construction stage, an analysis prioritizes quality control, risk management and cost-effective solutions. Economic principles help manage budgets, prevent cost overruns and optimize resource allocation. By applying infrastructure economics, projects can be delivered on schedule and within budget while maximizing long-term value.  

During the operations and maintenance stage, the goal of an economic analysis is asset life and performance maximization. Ongoing economic analysis ensures optimal asset performance, extends lifespan and minimizes maintenance costs, supporting long-term economic viability and efficiency.  

Comprehensive economic analysis tools for infrastructure success  

A comprehensive approach to infrastructure economics relies on various analytical techniques to assess project viability and optimize decision-making. A few approaches include: 

• Benefit-cost analysis ensures that resources are allocated efficiently by comparing a project's benefits against its costs.  
• Economic impact assessments examine how infrastructure investments influence employment, income levels and business activity.  
• Financial planning evaluates funding strategies, cost structures and revenue models while input-output modeling analyzes sectoral interactions and broader economic effects. Life-cycle cost analysis considers long-term expenses—including maintenance and operations—to enhance financial planning.  
• Market assessments determine the demand and feasibility of new infrastructure investments, and policy analysis explores the regulatory and policy implications of projects.  
• Prioritization analysis helps rank projects based on their economic and social benefits while real estate and economic development analysis assess how infrastructure influences property values and urban growth.  
• Risk assessment identifies potential financial, environmental and operational risks, ensuring that infrastructure investments are resilient and well-informed.  

Ultimately, infrastructure economics provides the analytical tools necessary to measure the efficiency, cost-effectiveness and societal benefits of infrastructure investments that allow society to function. By integrating economic principles into every stage of the project life cycle, decision-makers can ensure that infrastructure investments optimize resource utilization to promote economic growth, enhance quality of life and optimize resource utilization.  

Whether supporting short-term economic objectives or driving long-term regional development, infrastructure economics remains a cornerstone of strategic planning and viable growth.