This report summarizes the results of a study into the economic impacts of the transportation damage caused by the January 17, 1994 Northridge Earthquake. The Northridge Earthquake damaged four major freeways in the Los Angeles metropolitan area. Even though state and local agencies responded quickly to reroute traffic and rebuild collapsed bridges and overpasses, major interstates were closed for several weeks and, in some cases, months. This research focuses on the effects of those transportation disruptions on business activity.

The January 17, 1994 Northridge Earthquake damaged four major freeways in the Los Angeles area, creating the prospect of gridlock in the nation's prototypical automobile city. This paper examines the effect of the transportation damage on business activity. Using survey responses from 559 firms in the Los Angeles area, this paper gives information on the extent and magnitude of the business losses that can be attributed to the transportation disruptions. Despite the fact that the freeway damage was repaired exceptionally quickly, 43% of the firms that reported any earthquake losses stated that some portion of that loss was due to transportation damage. For the firms that attributed some loss to transportation damage, the average response was that 38.96% of their earthquake-related business losses were due to the disruptions in the transportation system. Comparing information on these and other survey responses yields several policy recommendations, which are summarized at the end of the paper.

We develop a traffic congestion index using data for California highways from 1976 through 1994. The technique yields a congestion measure which has several advantages. The index developed here can be applied to counties, urbanized areas, highway segments, or other portions of geographic areas or highway networks. The index allows cross-sectional and time series comparisons which have only rarely been possible. Most importantly, the congestion index developed here is based on data which are readily available. We compare our index to others based on Highway Performance Monitoring System (HPMS) data, and illustrate similarities and differences. We also discuss important issues for future research and data collection efforts which can contribute to more refined congestion measurement.