ARC Study on Rockslides Underscores Economic Importance of Appalachian Highways

WASHINGTON, May 17, 2010—The two major rockslides that occurred in southwestern North Carolina and southeastern Tennessee during the fall of 2009 caused significant economic losses to the affected areas by closing segments of two Appalachian highways, according to a new Appalachian Regional Commission (ARC) study.

The first rockslide, which occurred on October 25 in Haywood County, North Carolina, resulted in the closure of a section of Interstate 40 near the Tennessee border. The second rockslide, which occurred on November 10 in Polk County, Tennessee, closed a section of U.S. Route 64.

The study, undertaken by HDR Decision Economics for ARC, assessed the loss to business in the areas directly impacted by the road closures. It also assessed the overall increase in transportation costs.

To determine the extent of business loss, HDR conducted a series of interviews with selected local businesses and development experts. The interviewees reported that business activity through April 1, 2010, in the affected areas decreased by as much as 25 to 30 percent.

Specifically:

• Revenue decreased by 50 to 80 percent for hotels, motels, and inns.
• Restaurant and retail business fell 30 to 90 percent.
• Gas stations pumped up to 25 percent less fuel.
• A local hospital lost $200,000 per month in revenue.

In addition, transportation costs for businesses increased $3,000 to $60,000 per month, generally depending upon the size of the transportation-reliant business.

By applying standard traffic-modeling equations and analysis, HDR then estimated the total increased transportation costs to the region because of the road closures, including the transportation costs to businesses, at $197 million. This number was based on an increase of 132.9 million miles of travel and 2.6 million additional hours of travel.

The study estimated that 47 percent of the economic value of these costs was borne by trucks.

The higher transportation costs were due to higher values of time for business travel plus higher per-mile costs related to fuel consumption, emissions, and pavement damage.

"The findings of this study underscore the important role Appalachian highways play in connecting regional and national markets," said ARC Federal Co-Chair Earl F. Gohl. "That is why it is so important to complete the remaining 500 miles of the Appalachian Development Highway System, a 3,090-mile network of highways connecting Appalachia to the national interstate highway system."

The closed segments of Interstate 40 and U.S Route 64 have been reopened.

Route 64 is being considered by Tennessee and North Carolina for inclusion in Corridor K of the Appalachian Development Highway System.

The study conducted by HDR Decision Economics, Economic Impact of Rockslides in Tennessee and North Carolina, is available on the ARC Web site.