Road transport infrastructure can, together with other factors, influence location choices and decisions involving residential, commercial, and industrial development. The network of roads and highways provides a means for access for workers and materials as well as a way for distributing products and services. Greater access lowers the costs of transportation and therefore increases the supply of many resources, including land, labor, and materials. An investment in highway infrastructure can have a variety of land use impacts, depending upon which of the above factors have been affected and how important they are. The impact also depends on the nature of the investment. For example, the effect of building a new freeway is likely to differ from that of expanding the capacity of an existing one. The impacts of enhancements to radial and circumferential routes may also differ.

There is a sizable literature concerning the impact of road investments on land use, land values, development activity, social and community variables, and local and regional economies. The studies have been carried out in a number of different communities in the U.S. and have used a variety of research methods, from case studies to large-scale regional models. There is, however, a paucity of empirical work that attempts to isolate the impact of transportation investments in a statistically rigorous way. Much of the literature uses a case study approach that is highly descriptive and yields anecdotal information (1-5). Such studies are often inconclusive concerning the existence of linkages, and invariable so with regard to their magnitude. Other studies, while more quantitative, rely on complex models that are virtually impossible to validate (6-8).

In this study we employ econometric techniques to study land use impacts of highway capacity expansion projects in several corridors, all located in California’s four largest urban areas. Our analysis is intended to measure the effect of the expansions upon land use in the areas served by the expanded roadway, after controlling for other factors. Section 2 overviews our research approach, while section 3 describes our data set. Section 4 presents an exploratory analysis of development impacts from road capacity expansion, based on simple graphical techniques, and argues that this indicates the need for more rigorous statistical analysis. Section 5 documents the procedure for this analysis, and Section 6 discusses its results. A summary and conclusion are offered in Section 7.

Since the mid-1970s, traffic congestion on California’s urban highways has increased markedly. The roughly 3 per cent annual growth in the ratio of vehicle-miles to lane-miles that occurred during the 1960s accelerated to 4 per cent from 1974 to 1985 and 5 per cent after 1985. Moreover, there was comparatively little upgrading of existing lane-miles over this period. As traffic density increased, so did congestion. By 1988, some estimates put the economic cost of congestion to California at $16 billion in time lost and $1 billion in fuel. Despite a California Division of Highways Plan, developed in 1958, calling for 12 thousand miles of limited access roadways, by 1990 less than 6 thousand had been completed.