The Economic Impact of Rural Bypasses : Iowa and Minnesota Case Studies


Daniel Otto, Connie Anderson

June 1993

Report no. 1993 Bypasses

Highway bypasses around rural communities in heavily traveled transportation corridors are viewed as a highly cost effective method of improving traffic flow along non-interstate transportation routes. However the bypassing of a central business district raises concerns among merchants over possible adverse impacts to their businesses. This paper addresses the question of bypass impacts using a variety of measures. First, the effect on overall retail sales in bypassed communities will be examined by comparing to cities without bypasses for comparable periods. Next, the total sales are decomposed into categories or classes of retail sales to analyze for differential impacts from the bypass. Finally, the effects of the bypass on individual merchants will be examined by analyzing the results of a personal survey of businesses in these bypass communities to test their assessment of the bypass impacts. The sample for this evaluation of bypass impacts is drawn from 11 communities in Iowa that had bypasses opened since the late 1970's and 10 communities in Minnesota.

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