Identification of the geographical extent of an area benefiting from a transportation project: A generalized synthetic control

Abstract

In evaluating the benefits of an infrastructure project, it is essential to consider who is benefiting from the project and where benefits are located. However, there is no established way to accurately determine the latter. To fill this methodological gap, this study proposes an approach for the ex-post identification of the geographical extent of an area benefiting from a transportation project based on a generalized synthetic control method. Specifically, it allows comparing multiple treatment units with their counterfactuals in a single run—changes in land prices (actual outcome) at each treated site are compared to the counterfactual outcome, and the individual (i.e., unit-level) treatment effect on the treated site is then estimated. This approach is empirically applied to a large-scale Japanese heavy railway, the Tsukuba Express line project. Our approach enables the detection of 1) the complicated spatial shape of benefit incidence; 2) negative spillovers; and 3) the increase in options (train routes), typically not considered in a benefit evaluation system based on the hedonic approach, but which can be capitalized into land prices.