ECONOMIC DEVELOPMENT IMPACT OF AIRPORTS: A CROSS-SECTIONAL ANALYSIS OF CONSUMER SURPLUS

Attributing the entire impact of an airport's operations to economic development would be overestimating the net economic benefits of an airport. A methodology is developed for using consumer surplus as a proxy measure of the net economic development benefits from the construction of a regional airport. This methodology involves partitioning the impact of an airport into two parts: (a) the impact from the purchases of air transportation services; and (b) the consumer surplus from a decline in air transportation prices subsequent to the construction of the facility. Using a combination of input-output analysis and airport-user surveys, a cross-sectional study was conducted on two airports, one in an island economy--with few alternate means of transportation and no other airports--and the other in the Dallas-Fort Worth (DFW) area with an abundant supply of alternate airports and other modes of transportation. The transportation purchase impact was larger in the DFW area than in the island economy ($5.26 billion compared to the island's $3.73 billion--or $1,571 and $612 per capita, respectively). The size of the consumer surplus for the DFW airport was much smaller because of the proliferation of other transportation modes and competing airports ($1.3 billion). In the island economy, the consumer surplus was much larger ($11.03 billion), suggesting the importance of the availability of substitute modes and airports. The study emphasizes the importance of the industry mix, the diversity of the economy, the regional transportation infrastructure, and the full-employment status of the economy in determining the size of the impact. It also provides caveats on using stated preference methods in determining the value to the consumers of products that could be enjoyed as a free rider.

Media Info

  • Features: Figures; References;
  • Pagination: p. 82-88
  • Monograph Title: Transportation and Economic Development, 1990, proceedings of a conference, November 5-8, 1989, Williamsburg, Virginia
  • Serial:

Subject/Index Terms

Filing Info

  • Accession Number: 00603643
  • Record Type: Publication
  • ISBN: 0309050243
  • Files: TRIS, TRB
  • Created Date: Feb 28 1991 12:00AM