- How Might Transforming Highways Impact Community Wealth?
FRB of St. Louis
Economic development in a community involves investments in growing the economy and enhancing the quality of life and prosperity of residents. Infrastructure (e.g., the system of roads) is one such investment. In particular, federal, state and local governments have devoted significant funds to establishing and maintaining the interstate highway system in communities across the U.S.
Today, the highway system can be viewed as a double-edged sword. On one hand, highways have led to economic activity that likely would not have occurred otherwise. This development has been associated, in some cities, with increased homeowner wealth from higher house values. At the same time, highways were not located at random; the interests of influential residents likely played a role―a phenomenon colloquially known as NIMBYism (“not in my backyard”). In the end, some residents were displaced―many of whom identified as Black or Latino―and elevated highways in some cities are eyesores that have divided communities.
As the highway system ages and requires a significant reinvestment, communities are taking this opportunity to reimagine what it might look like. Specifically, should sections of highway be removed or redesigned? How might this impact the wealth of residents within communities that opt to make these modifications? Changes in wealth could be from changes in home equity (the difference between the value of a home and any debt secured by it) among residents near the highway. Alternatively, changes in wealth could stem from more affordable housing being built in the highway’s former location and lower housing costs for potential homeowners and/or renters. First, some history may offer context for these questions and demonstrate the importance of racial equity when considering them.