The wider local impacts of new roads: A case study of 10 projects

This paper investigates the impacts of road investments in secondary markets, which the authors label wider local impacts. The impacts are studied using four indicators: commuting, population, new firms, and employment. We use the synthetic control method to study the counterfactual problem, namely what would have happened if a given project had not been realised. The method is used to compare municipalities that had been given a new road with municipalities that had not had a new road. The study sample consists of ten road projects that opened for traffic between 2000 and 2010 and the impacts of the projects are examined at municipal level. The results do not provide a clear answer as to whether road projects are a suitable tool for fulfilling political objectives of improving the local economy. Apart from possibly one exception, none of the projects scored positively on all indicators. We identify several examples of significant negative impacts as a result of road investments, and conclude that although the impacts have been positive in many areas, there is no evidence that road investments are generally a potent tool for achieving positive wider local impacts.