Spatial economic dynamics in transport project appraisal

Major transport projects can alter the distribution of population and employment as households and firms respond to changes in accessibility. These land use changes can affect the distribution and scale of benefits delivered. However, models used in transport project appraisal often assume fixed land uses. A dynamic spatial model (DSM) of the economy can quantify land use changes and the level and spatial distribution of welfare impacts resulting from changed travel times. Effects of project expenditures, funding and financing are also accounted for. This paper presents a DSM featuring internal migration, commuting and trade, and an illustrative application to a hypothetical rail upgrade in South East Queensland, Australia. Internal migration proves critical to the distribution of benefits within and beyond the metropolitan region. Travel time changes are exogenous in the simulation, but linking the DSM to a conventional transport model would enable a comprehensive account of land use–transport interactions. •I develop a dynamic spatial model featuring internal migration, commuting and trade.•I model the effects of construction and operation of a transport project.•Modelled welfare benefits are widely distributed, particularly through migration.•As a dynamic model of land use, the DSM complements standard transport models.•Cost–benefit analyses of transport project could be improved by their joint use.