Strategic Issues Facing Transportation, Volume 4: Sustainability as an Organizing Principle for Transportation Agencies (2014)

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23 In 2009, the American Association of State Highway and Transportation Officials (AASHTO) allocated $7 million to conduct research on long-range strategic issues, both global and domestic, that will likely affect state DOTs. Seven research projects were initiated and addressed topics that included freight movements, sociodemographics, fuel supplies, climate change, technology adoption, system preservation, and sustainability as an organizing principle for state DOTs— all within a 30- to 50-year time frame. The projects had the following goals: • Explore the impact of major trends affecting the future of U.S. transportation priorities and needs • Provide guidance to state DOTs that will prepare them for possible futures so they can act, rather than react. This research report is generated from one of these projects. The National Cooperative Highway Research Program (NCHRP) contracted with Booz Allen Hamilton (hereafter referred to as “the research team”) to develop a framework for transportation agencies to use in identify- ing and understanding the future trends and external forces that will increasingly strain their ability to meet society’s evolving demand for transportation services and to operate on a more sustainable basis. This research was motivated by the increasing awareness that the transportation system must adapt to support a more sustainable society—specifically, transportation agencies face challenges in building consensus around balancing the short-term cost-effective delivery of transportation services and the long-term provision of the transportation needs of a sustainable society in a sustainable manner. Against this backdrop, the traditional functions of many transportation agencies are changing, and resiliency in the face of continuing and new demands by society may require agencies to fundamentally rethink the mission(s) and organizing principle(s) that drive them today. An analytical framework and supporting tools are needed to assist transportation agencies in evaluating their current and future capacity to support and contribute to a sustainable society, while delivering transportation solutions in a rapidly changing social, economic, and environmental (triple-bottom-line) context. This project helps respond to these needs. 1.1 Objective The objective of this research was to provide a framework for transportation agencies’ use in identifying and understanding the future trends and external forces that will increasingly put pressure on their ability to carry out their responsibilities to: • Meet society’s evolving demand for transportation services and • Meet society’s emerging need to operate on a more sustainable basis. C H A P T E R 1 Introduction

24 Sustainability as an Organizing Principle for Transportation Agencies The framework will also provide a means for agencies to assess their future capacity to meet society’s demands and provide or identify tools and approaches that agencies may use to assist them in making changes they deem appropriate and necessary to meet rapidly changing needs and conditions. To accomplish these objectives, the research performed the following activities: • Identified potential alternative future scenarios in which transportation agencies will be asked to achieve sustainability goals in providing for economic vitality, social well-being, and environmental integrity [the triple bottom line (TBL)] that reflect conditions 30 to 50 years in the future. • Analyzed how transportation agencies’ existing fiscal, legal, and institutional structure(s) and decisionmaking processes encourage or inhibit them from optimizing their contributions to a sustainable society. • Examined the variety of roles and the nature of their related primary activities that transportation agencies may be expected to perform in the future. • Explored linkages and expectations between transportation agencies and stakeholders and the need to form new alliances and partnerships with other transportation providers and system users. • Provided or identified tools that individual agencies can use in designing their particular approach to adapting to the challenges and opportunities of the future and in describing, in broad terms, how sustainable transportation agencies might be organized. Specifically, this project consisted of the following five phases: • Phase I. Describe future scenarios and the difficulties, challenges, and opportunities that will likely require transportation agencies to make fundamental changes in how they deliver transportation services in a manner that contributes to a more sustainable society. • Phase II. Assess the current and future ability of transportation agencies to support a sustainable society. Describe and assess the necessary evolution of linkages and relationships between transportation agencies and their partners and stakeholders. Identify barriers that may prevent transportation agencies from delivering transportation services in support of a sustainable society. Provide examples of transportation agencies that are well positioned to meet these future challenges or take advantage of future opportunities, focusing on practices or approaches that are transferrable to other agencies. • Phase III. Determine inventory benefits achieved from business models, best practices, and lessons learned from other organizations, industries, or sectors (not limited to domestic trans- portation agencies) that have successfully adapted to rapidly changing external conditions. • Phase IV. Describe plausible future roles and responsibilities of transportation agencies that deliver transportation services supporting a sustainable society. At a minimum, describe the organizational schemes, legal authorities, governance structures, and funding elements needed, as they relate to a broad vision of a transportation agency’s mission. • Phase V. Assess analytical tools and processes for agencies to use to track relevant trends and evaluate their current ability to meet future challenges or take advantage of pending opportu- nities in a manner that supports a sustainable society. Recommend tools and approaches that transportation agencies can use to implement the framework. 1.2 Scope and Limitations of the Current Research Key limitations on the scope of this research report are as follows: • This report is not intended to address the issue of sustainable transportation; it focuses on how transportation agencies can support a sustainable society.

Introduction 25 • This report is not intended to propose specific policies, programs, or guidelines that can be fol- lowed to deliver a more sustainable society or sustainable transportation; it focuses on the factors affecting the functional capabilities of transportation agencies to support a sustainable society and how those capabilities can be addressed, given plausible future scenarios. • This report provides recommended strategies and methods to help agencies anticipate evolution of a TBL sustainability policy system, and to act in the near term to prepare transportation agencies to best support a sustainable society in the future. • This report focuses primarily on state transportation agencies; however, it does address how other regional, local, and federal agencies—as well as non-government entities—may be involved in future sustainability-related policy and decisionmaking. One of the key limitations on scope referenced above is that this report is not intended to be an analysis of best policies for transportation agencies to follow to better support a sustainable society. There are a large number of potential policies that transportation agencies could undertake to increase societal sustainability. The applicability and effectiveness of these policies depend on numerous factors. Transportation agencies must select the mix of policies that best fit the chal- lenges and opportunities they face. Furthermore, even though this project is future oriented, the research team does not know whether current policies deemed unrealistic (e.g., local or state carbon taxes) will become practical or appropriate in the future. As such, this project is “policy agnostic”—it does not recommend policies or take any positions. Instead, it focuses on how transportation agencies can change their organizational structures and functions to improve development, selection, and implementation of policies that are most applicable to the conditions they face. Rather than being about what transportation agencies can do to support more sustainable transportation, this project is about what they can do to support a more sustainable society. As Figure 2 shows, this is a multifaceted problem. It includes not only the issue of how to create a more sustainable transportation system (presumably supporting a more sustainable society) but also the whole gamut of changes necessary to improve policy development, decisionmaking, and implementation. One of these challenges will be redefining some of the traditional decisionmaking roles of the stakeholders involved in long-range transportation planning in order to include representation of other agencies or social groups affected by transportation decisions. Building consensus and sharing both resources and risks among these stakeholder groups may prove to be two of the most critical aspects of moving toward a sustainable society. Figure 2. The relationship of transportation agencies and external stakeholders in support of a sustainable society. ImplementationPolicymaking TRANSPORTATION AGENCIES External Stakeholders More Sustainable Transportation Sustainable Society Societal sustainability will be improved by combining sustainable transportation initiatives with improvements in engagement and decisionmaking with all stakeholder entities – regarding plans, resources, constraints, and expectations Information Sharing Resource Sharing

26 Sustainability as an Organizing Principle for Transportation Agencies Finally, while this project primarily focuses on state transportation agencies, it also addresses the broader institutional and political environments in which they operate (e.g., the relationship between state executives, legislatures, interest groups, business interests) and other types of transportation agencies, such as regional transportation agencies, metropolitan planning orga- nizations (MPOs), localities, transit authorities, and system operators. Thus, while these findings are of greatest interest to states, they may be useful to other transportation agencies facing similar challenges and opportunities. 1.3 Defining “Sustainability” Critical to framing this research and understanding its conclusions is the concept and definition of sustainability. The Brundtland Commission, formally the World Commission on Environment and Development (WCED), supplied the classic definition of sustainability. The commission was created to address growing concern “about the accelerating deterioration of the human environment and natural resources and the consequences of that deterioration for economic and social development” (WCED, 1987). In establishing the commission, the United Nations General Assembly recognized that environmental problems were global in nature and determined that it was in the common interest of all nations to establish policies for sustainable development. The final report of the Brundtland Commission, Our Common Future, defined sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (WCED, 1987). This definition, however, has been interpreted widely. NCHRP Report 708: A Guidebook for Sustainability Performance Measurement for Transportation Agencies developed guidance for state DOTs and other transportation agencies to understand and apply concepts of sustainability and to begin to assess and measure their performance in terms of sustainability goals. NCHRP Report 708 presents the following conclusions: • There is no agreement on the terms “sustainability” and “sustainable development.” All definitions will be contested and are open to question. • Typically, sustainability is considered to be a combination of three dimensions: economic, social, and environmental (the TBL). • The issues of future needs (i.e., intergenerational equity) and governance are also relevant. • Growth in well-being, rather than pure economic growth, is desirable and is related to the concepts of a strong versus weak approach to sustainability.3 • There is a need to better understand the implications and tradeoffs if all aspects of sustainability are treated as fully tradable concerns from the economic paradigm. This project adopted the following definitions of sustainability, sustainable development, and sustainable transportation: • Sustainability—Sustainability encompasses a holistic consideration of economic, social, and environmental progress with a long-term perspective, in both a present (intragenerational) and future (intergenerational) context. The principle of equity is viewed as reinforcing each of the sustainability dimensions (Zietsman et al., 2011). • Sustainable development—Sustainable development can be viewed as a process of working toward achievement of sustainability, with a particular focus on human needs. Traditionally, it is defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (WCED, 1987). 3 TBL does not refer to what is known as “strong” sustainability, which treats the environment as fixed capital and in which tradeoff choices are made at the expense of the economy and (sometimes) social values. Strong sustainability fits within today’s policy system, wherein such tradeoffs are frequently made. Rather, TBL refers to the “weak” sustainability concept, in which all three bottom lines are traded off, balanced, and optimized.

Introduction 27 • Sustainable transportation—“A sustainable transport system [is] defined as one that (1) allows the basic access and development needs of individuals, companies, and society to be met safely and in a manner consistent with human and ecosystem health and promotes equity within and between successive generations; (2) is affordable, operates fairly and efficiently, offers a choice of transport mode, and supports a competitive economy, as well as balanced regional development; and (3) limits emissions and waste within the planet’s ability to absorb them, uses renewable resources at or below their rates of generation, and uses nonrenewable resources at or below the rates of development of renewable substitutes, while minimizing the impact on the use of land and the generation of noise” (European Union Council of Ministers for Transport and Telecommunications, 2001). A fuller expression of sustainability has emerged with the development of TBL (referred to as “people, planet, profit” or “the three pillars”; Bader, 2008). TBL is intended to capture the full range of goals that a sustainable organization should consider—specifically, economic, environmen- tal, and social goals. The concept of TBL goes back to 1994, when John Elkington argued that companies should prepare three bottom lines: (1) the traditional account of profit and loss; (2) a “people account” (i.e., a measure of an organization’s social responsibility); and (3) a “planet” account (i.e., a measure of environmental responsibility) (The Economist, 2009). In the United States, the concept of TBL has appeared at the state level as a greater commitment to developing business performance measures and tracking. For example, in 1989, the Oregon state legislature created the Oregon Progress Board (OPB) as a state agency to track quantitative indica- tors for the state of Oregon. The OPB was charged further with keeping the public up to date on the implementation of the state’s strategic plan for sustainable development. The plan had three key goals: (1) quality jobs for all Oregonians; (2) safe, caring, and engaged communities; and (3) healthy, sustainable surroundings. In 2000, an executive order from Governor John Kitzhaber established a set of sustainability-based goals: • Increase the economic viability of all Oregon communities and citizens. • Increase the efficiency with which energy, water, material resources, and land are used. • Reduce releases to air, water, and land of substances harmful to human health and the environment. • Reduce adverse impacts on natural habitats and species. In response, the OPB created a set of sustainability indicators grouped into seven principal categories: economy, education, civic engagement, social support, public safety, community development, and environment (Schlossberg and Zimmerman, 2003). Table 5 lists some of these indicators. As can be seen, efforts to track TBL performance on a macro-statewide scale can include Environment Community Economy Stream water quality Native plant species Forest land Air quality Agricultural land Marine species at risk Native fish and wildlife Carbon dioxide emissions State park acreage Municipal waste disposal Nuisance species Child abuse or neglect Teen pregnancy Homelessness Health insurance coverage Overall crime Teen alcohol abuse Juvenile arrests Commuting Vehicle miles traveled Volunteerism Drinking water Research and development Eighth-grade skill levels New companies College completion Living wage Poverty Per-capita income Economic diversi cation High school dropout rate Employment dispersion Affordable housing Timber harvest Income disparity Table 5. Illustrative sample of TBL indicators—State of Oregon.

28 Sustainability as an Organizing Principle for Transportation Agencies a large number of diverse indicators. Integrating all of these indicators and communicating a credible overall scorecard presents very complex and difficult weighting and normalization challenges. Developing criteria and reliable measures of change or quality for each indicator is an additional challenge. In the transportation community, the research indicated broad agreement for the concept of TBL. As discussed below, many state DOTs, MPOs, local governments, and other agencies involved in transportation are applying the concept of TBL to their decisionmaking and are actively developing policy, guidance, or performance-based indicators (Schiller et al., 2010). In fact, compliance with the TBL is seen generally as the principal way in which sustainability has been incorporated into the conduct of government business at the state level. Other concepts associated with sustainability, including intergenerational equity, the precautionary principle, and integrated decisionmaking, have received substantially less attention (Dembach, 2002). Internationally, several countries have progressed significantly in implementing TBL accounting and reporting. For example, Australia’s Federal Department of Family and Com- munity Services began to produce an annual TBL report as early as 2002, and the government of the state of Western Australia has developed a detailed sustainability plan with explicit TBL targets (Barrett, 2004; Government of Western Australia, 2003). Similarly, in the United Kingdom, many government agencies and semipublic organizations have developed detailed TBL scorecards and performance-tracking measures. For example, the U.K.’s National Health Service (NHS), the largest employer in Western Europe, has developed detailed TBL sustainability guidance for its operating units, including processes for conducting sustainability assessments. NHS developed TBL performance indicators and scorecards and recommended actions needed to support achiev- ing TBL goals (Lockie and Bourke, 2009). Based on the research, the following working assumptions are used to help clarify the sustain- ability concept for the purpose of this report: • TBL is fundamental to the emergence of sustainability in the public and private sectors. Pursuit of TBL has become fundamental to the concept of sustainability. Both public- and private-sector organizations have developed their sustainability programs around the concept of the TBL. • Sustainability focuses on the long term, rather than the short term. The key requirement of sustainability is to accommodate both present and future development needs. • Sustainability is an integrated rather than a stand-alone concept. Sustainability is not exclusive to any one policy area. Specifically, given the integrated nature of transportation with the rest of human activity, it is difficult to view the transportation system in isolation. Sustainable transportation requires that the team consider a broad definition of sustainability that considers how transportation affects overall social sustainability, and how other policy areas need to be coordinated to achieve sustainability. • Sustainability is multidimensional. It is not simply about “greening.” Sustainability has economic, social, and environmental dimensions—the TBL. These dimensions do not represent clearly distinct compartments; rather, they provide ways to systematically view the interlinked character of societal development as it draws on environmental, economic, and social resources and mechanisms. Development along the TBL dimensions does not take place in a governance vacuum; it presupposes institutional arrangements and reforms. 1.4 Achieving “Strong” vs. “Weak” Societal Sustainability Turner (1992) refers to two contrasting views on managing and achieving societal sustainability. Each has very distinct implications for results and for policies governing strategic planning, tradeoffs, and regulation. The two views highlight a very important contrast between many of the

Introduction 29 sustainability initiatives being pursued today versus a vision of a future TBL societal sustainability policy system. The “strong” and “weak” sustainability definitions depend fundamentally on the treatment of social, environmental, and economic stores of capital value to the public. General definitions of the three stores of capital are environmental capital is the value of the quality and health of the environment; social capital is the value of social conditions and the networks of relationships that support social needs; and economic capital is the value of economic growth to support and improve the health and welfare of a society. Presumably the total “value” of all three capital stores should be maximized for best overall societal well-being—provided the values of the three stores are maintained in an acceptable balance or proportion to each other, as determined by local, regional, and/or national public will. In “strong sustainability,” environmental capital is treated as essentially nonrenewable. It must be either maintained or improved (in some views, social capital is treated similarly). So, in the strong form of societal sustainability, economic capital is usually the primary store to be drawn from when needed to meet environmental and social goals and to keep the three aspects of sustainability in balance. In a vigorous economy, there is opportunity to both balance and improve the value of all three stores. In a sluggish or recessional economy, “strong sustainabil- ity” principles might maintain social and environmental capital but could disproportionately exacerbate economic challenges. In “weak sustainability,” all three stores of capital are considered flexible and renewable (or replaceable through, for example, alternative energy supply, better environmental remediation technology, or improved recovery of resources) to some extent to allow for practical tradeoffs to balance or improve all three capital stores. The weak sustainability principle could, of course, work best with a strong economy and without severe stress on the environment. In a very weak economy with major environmental stresses present, all three capital stores would likely decline proportionally in “value.” The research team notes that most, if not all, of the initiatives today are of practical and regu- latory necessity and are characteristic of “strong” sustainability principles. It is not intended for the research to be critical of strong sustainability—but rather to suggest that, in the future, TBL (“weak”) sustainability may be a viable generational objective with good prospects for meeting society’s needs, and for improving long-term societal conditions along all three bottom lines. 1.5 Roadmap for the Research and Report Evolution of the sustainability policy system (organizing principle) and the high-level functional framework for transportation are explained in Chapter 2. Scenario development is covered in Chapters 3 and 4. The functional challenges and gaps are addressed in Chapters 5 and 6. Chapters 7, 8, and 9 address near-term strategies, tools, and methods for consideration by transportation agencies to address gaps that can be closed or initiatives to prepare for gaps as a TBL policy system evolves. Appendix A contains a detailed description of the assumptions—or drivers—used to create each future scenario. Appendix B provides data on state, local, and federal spending and other data used to create the scenarios. Appendix C presents the energy consumption forecasts, from the U.S. Department of Energy’s National Energy Modeling System, that were used in construct- ing each scenario. Appendix D characterizes the current literature and summarizes the results of practitioner interviews. Appendix E identifies the affiliations of practitioners interviewed. Appendix F contains the TBL Maturity Assessment Tool. An acronym list is included after the Table of Contents.