Note: This is from a paper written for a Land Use Policy course while I was an undergraduate planning student at the Indiana University of Pennsylvania. 

Among the many benefits that bicycling offers, such as being a healthy and environmentally friendly mode of transportation, is the often less considered and harder to calculate economic benefit. The direct impact of bicycling is felt in the rider’s wallet, since bicycles do not require gasoline, insurance, or expensive maintenance. Other economic benefits are seen in healthcare costs savings, money spent to purchase bicycles and related products, and increased sales for local businesses. In a time where everyone is tightening their purse strings and looking for ways to save money, evaluating the cost and benefit associated with what we are spending our money on is more important than ever. The amount of funding the government provides to support bicycling is not proportional to the return that is possible by investing in bicycling. Cities have built entire bicycling networks for the same price as one mile of urban freeway (Flusche, 2012), yet we still invest less than ten percent of the Surface Transportation Program funding in bicycling and pedestrian infrastructure. Through examining the federal transportation policy, and the available data on the economic benefit of bicycling, we will see that investing in bicycling is a wise choice.

A Brief History of Transportation Policy

The first federal law to significantly change transportation policy and planning was the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA). Signed into law by George H. W. Bush, this was the first federal law in the post-Interstate Highway System era to include provisions for bicycle and pedestrian activity.  Under ISTEA, the primary source for bicycle and pedestrian programs was created, the Transportation Enhancement Program (“About Bicycle & Pedestrian Program,” 2010). Additionally, state Departments of Transportation were required by ISTEA to create a State Bicycle and Pedestrian Coordinator position (“About Bicycle & Pedestrian Program,” 2010).

ISTEA expired in 1997, and was followed by Transportation Equity Act for the 21st Century (TEA-21), which was enacted in 1998. The Transportation Enhancements (TE) program was continued under TEA-21, funded by a 10 percent set-a-side from the Surface Transportation Program funds (“TEA-21 – A Summary,” 2011). TEA-21 also created other avenues for funding bicycle and pedestrian projects, with the broadening of eligibly of National Highways System funds to include pedestrian walkways, and ensuring that bicyclists and pedestrians are considered in the planning and design phases (“TEA-21 – A Summary,” 2011). The Recreational Trails program, created under ISTEA, was authorized for $270 million dollars in funding for fiscal years 1998 through 2003 (“TEA-21 – A Summary,” 2011). Compared to the $30 million dollars per year the RTP was authorized for under ISTEA (“Intermodal Surface Transportation Efficiency Act of 1991 – Summary,” n.d.), the funding was expanded to approximately $54 million dollars per year under TEA-21, or increased by 80%. Due to the inability of Congress to come to an agreement, TEA-21 was allowed to lapse in 2003.

In 2005, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) bill was passed.  This bill was the largest surfaces transportation investment in our Nation’s history, with guaranteed funding of $244.1 billion (“A Summary of Highway Provisions in SAFETEA-LU,” 2005). A new addition in regards to bicycle and pedestrian programs was the Safe Routes to School program, which was designed to “enable and encourage primary and secondary school children to walk and bicycle to school” (“A Summary of Highway Provisions in SAFETEA-LU,” 2005). SAFETEA-LU continued funding of the Transportation Enhancements program and the Recreational Trails program, continuing the 10 percent set-aside for TE, and authorizing $370 million for Recreational Trails through 2009, or $92.5 million per year (“A Summary of Highway Provisions in SAFETEA-LU,” 2005). The bill expired in 2009, but Congress extended it ten times, until a new bill was passed.

The new bill was the Moving Ahead for Progress in the 21st Century Act (MAP-21), which is a two year bill, covering fiscal years 2013 and 2014, with a total authorization of $105 billion (“Moving Ahead for Progress in the 21st Century Act,” 2012). MAP-21 is not favored by bicycling and walking advocates, who claim it will cut funding for biking and pedestrian programs by 60-70 percent (Laing, 2012). MAP-21 restructured many of the existing transportation programs, and combined “most of the activities funded under the Transportation Enhancements, Recreational Trails, and Safe Routes to School programs under SAFETEA-LU” into a new program called Transportation Alternatives (“MAP-21 – Moving Ahead for Progress in the 21st Century,” 2012). The way monies are distributed for Transportation Alternatives is very different than it was for the programs that previously existed under SAFETEA-LU. Now, a state Department of Transportation can redirect up to 50 percent of the funding given to the state to any other highway program (“MAP-21 – Moving Ahead for Progress in the 21st Century,” 2012). Additionally, in case of emergencies, 100 percent of the Transportation Alternative Funding can be diverted to highway projects (“MAP-21 – Moving Ahead for Progress in the 21st Century,” 2012).

Data Source: USDOT - Federal Highway Administration

Figure 1: Bicycle & Pedestrian Funding: 2005 – 2014 Data Source: USDOT – Federal Highway Administration

As you can see in Figure 1, even if states do not divert any of the money they are able to, funding has already decreased for bicycle and pedestrian programs by approximately 33 percent, from $1.2 billion in fiscal year 2012 to $800 million in fiscal year 2013. If states were to divert all of the 50 percent of the funding they receive, reducing bicycle and pedestrian programming by $200 million, that would be approximately a 50 percent reduction in funding between FY 2012 and FY 2013.

Economic Benefit of Bicycling

            Bicycling benefits the economy in a number of ways. These vary from the bicycling manufacturing and sales industry to the retail gain seen by businesses near bicycling infrastructure. Bicycling also results in a number of savings, for instance cyclists often have lower travel expenses, allowing them to spend their money on other things; health insurance costs are lower for people who exercise regularly, and riding a bicycle is great exercise. Additionally, providing parking for bicycles is much cheaper and takes less space than providing parking for cars. Lastly, road construction projects which are geared towards bicycling create more jobs than those focused on cars, since bicycle infrastructure is more labor intensive than material intensive. Also, it is easier for an urban area to add capacity for bicyclists than it is to add capacity for cars. (Flusche, 2012).

On the national scale, bicycling has a large impact on the economy. The bicycling manufacturing industry is a $6 billion industry, and recreational bicyclists in the US spend $46.9 billion dollars annually on things such as meals, transportation, lodging, gifts and entertainment (Flusche, 2012). The Outdoor Industry Foundation estimates that the impact of recreational cycling may have be as high as $133 billion in 2006 (“The Active Outdoor Recreation Economy,” 2006), which is approximately 24% larger than the ‘Motor vehicles, bodies and trailers, and parts’ manufacturing sector was in 2006. When you consider the economic impact of other types of bicyclists, such as commuters, the financial gain is even greater.

A number of states have recently conducted studies on the economic impact of bicycling. In 2005, Wisconsin determined that the bicycling industry contributed $556 million to their economy, and in 2010, the state found that bicycling recreation and tourism contributes $924 million to the state’s economy, and estimated a potential benefit of $409 million from the value of reducing short car trips and increasing bicycling (Flusche, 2012). Combined, that is an approximately $1.9 billion economic impact annually for Wisconsin, however, it should be noted however, that the state has 20% of the U.S. bicycle manufacturing industry (Flusche, 2012).

Other states see a sizable impact as well. Iowa attributed over $400 million in economic activity, and $87 million in health savings to bicycling (Flusche, 2012). In 2009, Minnesota found that bicycling had an impact of $261 million, supporting in excess of 5,000 jobs and generating $35 million in taxes (Flusche, 2012). Colorado, Vermont, & Maine have all conducted similar studies, and all found a significant economic benefit attributed to bicycling (Flusche, 2012).  Many cities have also conducted economic impact studies. In North Carolina’s Outer Banks, a one-time investment of $6.7 million on bicycle infrastructure has resulted in a nine-to-one return annually (Flusche, 2012). In 2008, Portland, Oregon saw $90 million worth of bicycle-related activity (Flusche, 2012). Additionally, the bicycle industry in Boulder, Colorado reportedly earns $52 million in economic activity (Flusche, 2012).

Arguably, the impact of bicycling infrastructure on the local scale is really the most important measure to determine the financial effect. Four years after the bicycle lanes were installed on Valencia Street in San Francisco’s Mission District, nearby business owners were interviewed about how they felt these bicycle lanes affected their business. A majority of the business owners, 65 percent, felt that the bike lanes had a positive impact on their business, and only one business owner felt the bicycle lanes had a very small negative impact (Drennen, 2003). Similar results were found in Toronto, Ontario, when a survey was conducted in 2009 about the installation of bicycle lanes on Bloor Street; again, business owners felt the bicycle lanes had a positive effect on their business, and customers who biked or walked reportedly spent more money per month at local businesses in the neighborhood (Sztabinski, 2009). Another study, this time in Portland, Oregon determined again that bicyclists spend more per month at local businesses than people who drive (Badger, 2012). New York City did a study which evaluated the first protected bicycle lane in the US, which is on 8th and 9th Avenues in Manhattan, and found that there was up to a 49% increase in retail sales for locally-based businesses on 9th Ave from 23rd to 31st Streets, compared to a 3% borough-wide increase (Measuring the Street: New Metrics for 21st Century Streets, 2012). Lastly, in Memphis, TN, the installation of a ‘temporary’ bicycle lane was partially responsible for the revitalization of the Broad Avenue Arts District. After the bicycle lanes were installed, the district saw 16 new businesses and 29 property renovations (Flusche, 2012).

Bicycle lanes and other route infrastructure are not the only things which are creating a positive economic impact. Business districts which invest in bicycle parking and other bicycling friendly programming are seeing monetary benefits as well. In Portland, Oregon, they have a bike corral program, which, in essence, replaces parking spaces for vehicles with bicycle parking. Since the city has started the program, it has not been able to keep up with demand from businesses, and they had 72 requests for new bike corrals in 2011 (Flusche, 2012). Additionally, bicycle friendly business districts are being pioneered by Long Beach, California. Businesses owners are seeing the benefit of attracting cyclists, so they are investing in ways to attract them (Flusche, 2012). It is not just business in Long Beach that see this benefit either. According to the League of American Bicyclists, there are currently over 400 companies in 42 states which have made the effort to be designated Bicycle Friendly Businesses, with over 100 more which were given honorable mention. The fact that businesses are willing to make this effort shows that they feel it is worth it to improve their bottom line.

Recreational trails, bicycle tourism, and organized rides also provide a significant economic impact. Businesses along the 132 mile Great Allegheny Passage were surveyed, and they attributed 25 percent of their gross revenue to trail users (Flusche, 2012).  Similarly, 78 percent of the surveyed users of the Schuylkill River Trail made purchases averaging approximately $400 in the past year for use on the trail (Flusche, 2012).  These are just two examples of the many recreational trails which are an economic driver to the areas they pass through. Organized rides are another generator of income for many businesses in the area they occur. In 2008, the University of Northern Iowa studied the economic impact of the Registers Annual Great Bicycle Ride Across Iowa (RAGBRAI), and found that the “total direct, indirect and induced spending for RAGBRAI in 2008 is somewhere in between $24.5 and $25.7 million” (Flusche, 2012). This is the largest organized ride in the US, but it certainly isn’t the only one. Bikes Belong found that in 2008, there were more than 1,700 recreational road riding events that year, with a total revenue exceeding $240 million for the events, and another $140 million spent by riders on food, lodging, and other purchases (Flusche, 2012).

Lastly, and perhaps most surprisingly, bicycling has a large impact on home values. Arlington County, Virginia has set a goal of providing a level of bicycle facility coverage within a quarter mile of  every residence because of the large impact that bicycling has on communities (Flusche, 2012). The National Association of Realtors has also seen the benefit of being bicycle friendly, and in 2008, they revised their policy statement on transportation to “call for the consideration of all transportation types, including bicycling, in every transportation project” (Flusche, 2012). Additionally, studies have shown that homes closer to bicycle trails increase their sale values by five to ten percent over other similar homes (Flusche, 2012).

In other countries, bicycling has been embraced on a much larger scale, and the economic benefit is even more profound. According to the Traffic Department for the City of Copenhagen, the capital of Denmark, it was determined that bicycling resulted in a net profit for society of DKK 1.22 per kilometer (or $0.35 per mile), however, taking a car resulted in a net loss for society of DKK 0.69 per kilometer (or $0.19 per mile) (“Cycling and its socioeconomic benefits,” 2012). Bicycling can also be used to increase our global competitiveness, as in the US, where the car is the predominant travel mode, urban journeys cost the community one and a half times more than in Europe (UITP, 2003). Reducing this cost to our communities would make them more competitive on the global stage.

The evidence that there is significant economic benefit to supporting bicycling and making it a viable mode of transportation is plentiful. Bicycling infrastructure is less expensive to build, and creates more jobs. While expanding capacity for cars often has negative effects, and communities and local business benefit from increased levels of bicycling, we still see funding for bicycling infrastructure and programming being cut. Under MAP-21, it will be reduced anywhere between 30 to 60 percent. Even with all the economic benefits that have been previously mentioned, the mode share for bicycling in the United States is still at 1 percent. The mode share for Holland is 27%, and in Denmark it is 18%, the two highest in the world. Both those countries are working hard to increase the mode share for bicycling. The biggest difference between countries like Holland and Denmark, which are focusing on bicycling, and the United States, which continues to underfund bicycling, is a large auto-industrial. These industries have political lobbyists with far greater resources than American bicycling advocates. While things are slowly starting to change in the United States, with cities like Chicago, San Francisco, and Portland, Oregon making significant investments in bicycling infrastructure and programming, the country as a whole may never see a bicycling mode share or culture like those in Northern European counties without a systemic change in our political system, and the way it interacts with the auto-industrial complex and special interest groups. The United States has been developing an automobile dependent country for more than seventy years; and it will take time to reverse the effects of that. However, we have seen the auto industry falter in the last few years, so perhaps the giant is about to collapse, especially with the current generation rejecting cars.




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