Bringing an Economy-Wide Perspective to NextGen Benefits Analysis

This paper applies Computable General Equilibrium (CGE) modeling to describe how the broader U.S. economy, beyond the aviation industry, benefits from the Next Generation Air Transportation System (NextGen). CGE, also sometimes known as applied general equilibrium, combines supply and demand responses across aggregated industries taking into account how commodities are used as inputs to produce other commodities as well as to satisfy final demand. The specific model used is an adaptation of Monash University’s USAGE (U.S. Applied General Equilibrium) model known as USAGE-Air. NextGen costs and benefits are notionally represented in a way to facilitate a preliminary understanding of the magnitude of this economy-wide gain, though enough detail is present in the model for a greater degree of specificity. Promising initial results describe a 0.2% or $46 billion ($21 billion if discounted at a rate of 5%) increase in gross domestic product (GDP) associated with the notional air traffic modernization scenario for year 2025 measured in 2005 dollars.