Induced traffic and economic appraisal

Economic appraisal of major roads in the UK is based on a set of standard procedures and conventions. A central assumption has been that the volume and pattern of traffic in any given year is independent of the quality of service offered by the network — the fixed trip matrix assumption. Failing to consider induced traffic can have serious consequences for the accuracy and robustness of the measured traffic benefits from road improvements. Assessment of the wider economic benefits of roads, which is an important political imperative for road investment, is also made more difficult. Two conclusions are reached. Variable trip matrix methods need to be introduced for the appraisal of major road schemes, and scheme appraisal needs to be complemented by a more strategic area-wide approach to evaluation. In responding to its advisory committee (SACTRA), the UK Department of Transport has accepted the first of these conclusions and is cautiously favourable to the second.     

Induced traffic: what do transportation models tell us?

Mathematical models of transportation systems have played a prominent role in transportation planning throughout the world since the 1960s. These models are hypotheses of how people use transport systems. They provide a means of extrapolating the necessarily limited empirical evidence of how road users respond to changes in the road system. However, it needs to be recognised that these extrapolations rely for their validity on the realism of the underlying theories; transportation models can only tell us about the relationships actually built into them.This paper reviews the limited number of studies undertaken mainly in the UK in which calibrated transportation models have been used in a systematic way to give some insight into the relative importance of the various components of induced traffic. These studies include analyses of the effects of road schemes using: a theoretical single link model; conventional four-stage transportation models of Cardiff and Belfast; elasticity models in Cardiff, Belfast, West London and Norwich; land-use interaction models in Leeds, Bilbao, Dortmund; and a model of land-use effects in Norwich. The results tell us two things: (a) the scale of the various elements of induced traffic, and (b) the implications for the economic benefits of road schemes.     

Decoupling of Road Freight Transport and Economic Growth Trends in the UK: An Exploratory Analysis

Abstract

Between 1997 and 2004, gross domestic product increased in real terms in the UK by one‐fifth, while the volume of road freight movement remained stable. This suggests that the long‐awaited decoupling of economic and freight transport growth has begun, possibly leading to a new era of sustainable logistics. This paper reviews previous research on the decoupling issue and recent trends in gross domestic product/freight tonne‐km elasticities in Europe and the USA. It then examines 12 possible causes of the observed decoupling in the UK using published statistics from a wide range of British and European sources. This analysis indicates that around two‐thirds of the decoupling is due to three factors whose impact can be quantified: the increased penetration of the British road haulage market by foreign operators, a decline in road transport’s share of the freight market, and real increases in road freight rates. Several other factors, most notably the relative growth of the service sector, the diminishing rate of centralization, and the off‐shoring of manufacturing, appear to be having a significant effect, though this finding cannot be measured on the basis of available statistics. The paper concludes that, while the decoupling is in the right direction from a public policy standpoint, the net environmental benefits are likely to be quite modest.     

Responses to complex pricing signals: Theory,evidence and implications for road pricing

There is a potential tension between the theoretical desirability of highly differentiated tariff structures and the ability of consumers to respond effectively to them. Evidence from studies of road pricing schemes and tolls, from other transport modes, and from other industries (notably telecommunications), is reviewed and its transferability assessed. Relevant models of human decision making (notably Prospect Theory, Risk Aversion, Ambiguity Avoidance and Bounded Rationality) are explored, and the use and efficiency of heuristics to deal with complex situations is discussed.It is concluded that people have a strong preference for simple tariffs but that they are able to respond to quite complex tariffs provided that they have a clear and logical structure. However, people’s difficulties in estimating distance will severely limit the accuracy of their estimates of distance-based charges and their response to complex pricing signals will be influenced by their attitude to the fairness of the charge. These conclusions are summarised in a general model of response to complex prices.The paper, which reports and extends a study conducted for the UK Department for Transport, concludes by considering the implications for the design and performance of road pricing schemes (an inherent problem being that the theoretically optimum, first-best, pricing structure might be so complicated and dynamically variable that it would be unreasonable to expect road users to predict, let alone respond to, the prices on any given road at any given time – a simpler pricing structure might therefore yield a better overall result).     

Rebound effects in UK road freight transport

This paper analyses aggregate time-series data to estimate the direct rebound effect in UK road freight over the period 1970–2014. We investigate 25 different model specifications, conduct a comprehensive set of diagnostic tests to evaluate the robustness of these specifications and estimate the rebound effect using three different elasticities. Using the mean of the statistically significant estimates from these specifications, we estimate a direct rebound effect of 61% - which is larger than previous estimates in the literature and almost twice as large as the consensus estimate of direct rebound effects in road passenger transport. Using the mean of the estimates from our most robust models, we estimate a slightly lower direct rebound effect of 49%. Our estimates are fairly consistent between different model specifications and different metrics, although individual estimates range from 21% to 137%. We also find that an increasing proportion of UK road freight is being undertaken by foreign registered vehicles, and that increases in the vehicle weight limits have encouraged more freight activity. We highlight the significant limitations imposed by the use of aggregate time series data and recommend that further studies in this area employ data from vehicle use surveys.     

The acceptability of road pricing in Vienna: the preference patterns of car drivers

The acceptability of road pricing has attracted considerable attention among researchers over the last decade, as is evident in the amount of literature about transport and environmental economics. The general conclusion from these studies has been that there is low acceptability for road pricing among car users. In this paper, we add more knowledge to the existing literature by conducting an acceptability study of road pricing in Vienna, where such a study has never been conducted before. We used a replication study approach where a previous approach used in the EU research project AFFORD (acceptability of fiscal and financial measures and organisational requirements for demand management) was replicated for Vienna and further supplemented with a conjoint analysis. In order to examining whether the Vienna study confirms previous findings. We investigated the acceptability of two concrete policy packages factors influencing this acceptability, and preference patterns that can be used in designing a road pricing policy for Vienna. The survey reveals a higher acceptability if road pricing schemes lead to perceived personal benefits. According to the multivariate analyses, the “personal outcome expectations”, “social norm” and “perceived effectiveness” variables account for more than 50 % of the criterion variance and therefore these are the most influential factors. Road pricing schemes can be an effective transport management instrument for a city particularly if they are associated with direct investment in public transport and public infrastructure. Thus, personal benefits can be perceived more easily and direct effects can be expected.     

Social welfare analysis of investment public–private partnership approaches for transportation projects

This paper has two objectives: (i) to introduce a new approach in order to gain widespread support for road pricing; and (ii) to develop a detailed social welfare analysis for road pricing schemes. We first describe our novel approach that stimulates public support for road pricing, which we refer to as an investment public–private partnership, or IP3. This approach returns a significant portion of the economic value created by road pricing back to the citizens who own the newly priced facility. We then present a social welfare framework that estimates the benefits and costs of using the IP3 approach on an urban transportation network. A P3 project’s impact on overall social welfare provides a more comprehensive evaluation criterion than the often-used Value for Money (VfM) analysis. Apart from several theoretical studies, a detailed social welfare analysis that includes all major P3 project stakeholders is absent from the literature. We use Fresno, California as our case study in order to conduct a welfare analysis on IP3s. Our results show that system-optimal tolling favors average users, but that government—and consequently taxpayers—should pay for costly tolling systems (negative profits). In contrast, unlimited profit-maximizing tolls raise substantial profits for government, for the infrastructure’s citizen-owners, and for the private sector, but the average user is worse off. From a social-welfare perspective, one should search for a Pareto improvement under which all major stakeholders are better off. Our estimates indicate that a mixed public and private tolling scheme offers such an improvement.     

How much do people value the environment?

The selection and evaluation of road schemes through the Leitch framework is based on a combination of cost-benefit analysis and environmental impact assessment. Both techniques involve the definition and valuation of a number of costs and benefits. These costs and benefits are defined and valued in isolation to each other so that we know virtually nothing about the relative valuation that people assign to different types of costs and benefits which might affect them directly or indirectly. This paper outlines the development of a method which allows people to conceptualise the costs and benefits of a road scheme in their own terms and then to rank schemes in relation to those costs and benefits. This method is based upon an interview process involving the use of repertory grid technique. The information from the repertory grid technique is used as a sound basis for determining trade-offs between attributes and for attempting to obtain monetary valuations of different project attributes. A number of exploratory interviews are reported which outline some of the difficulties with a number of the survey features including the choice of case-study, interviewer and information biases and sample and non-response biases. Various ways of dealing with these difficulties are discussed.     

Introducing Willingness‐to‐pay for Noise Changes into Transport Appraisal: An Application of Benefit Transfer

Abstract

Numerous research studies have elicited willingness‐to‐pay values for transport‐related noise. However, in many industrialized countries including the UK, noise costs and benefits are still not incorporated into appraisals for most transport projects and policy changes. This paper describes the actions recently taken in the UK to address this issue, comprising: primary research based on the city of Birmingham; an international review of willingness‐to‐pay evidence; the development of values using benefit transfers over time and locations; and integration with appraisal methods. Amongst the main findings are: that the willingness‐to‐pay estimates derived for the UK are broadly comparable with those used in appraisal elsewhere in Europe; that there is a case for a lower threshold at 45 dB(A)Leq,18h rather than the more conventional 55 dB(A); and that values per dB(A) increase with the noise level above this threshold. There are significant issues over the valuation of rail versus road noise, the neglect of non‐residential noise and the valuation of high noise levels in different countries. Conclusions are drawn regarding the feasibility of noise valuation based on benefit transfers in the UK and elsewhere, and future research needs in this field are discussed.     

Welfare evaluation with a road capacity constraint

Severe traffic congestion in and around many cities across the world has resulted in programmes of extensive road building and other capacity increasing projects. But traffic congestion has often not fallen in the long run and neither has journey speed increased. Demand for peak period road travel, particularly by car, has grown so strongly that increases in road capacity have been quickly matched by increased road use. This paper develops a model of a road network characterised by insatiable road passenger (car and bus) demand. The model parameters are calibrated on a typical urban road network, and a number of simulations conducted to determine social welfare after the introduction of a road capacity constraint into the optimisation process. The empirical results have an important policy implication for the evaluation of projects that increase road capacity, namely that standard methods of cost-benefit analysis may tend to overestimate the net benefits of such projects by a significant amount. Although the model is developed in the context of roads and road traffic congestion, it could also be applied to air travel.     

Designing pay-per-mile auto insurance regulatory incentives

By converting fixed insurance costs to per-mile charges, pay-as-you-drive-and-you-save (PAYDAYS) insurance would encourage voluntary reductions in driving with concomitant decreases in congestion, air pollution, greenhouse gas emissions, crashes, and insurance claims. Public policies have at time been deployed to require or reward environmental performance in the sale of transportation-related products in the marketplace. For example, the US National Highway Traffic Safety Administration has issued both proposed and final fuel economy rules intended to maximize net benefits through the use of marginal cost-benefit analysis. This paper explores how an analogous benefit-maximizing rule could be structured to encourage adoption of PAYDAYS insurance. The key to designing such a benefit-maximizing rule is to: estimate the net benefits of every mile not driven; estimate the reduction in mileage that would result from PAYDAYS insurance; and, apply these estimates to the calculation of net benefits of every PAYDAYS-insured mile. A mechanism by which the industry itself funds the incentive payments is described, as are alternatives.     

The authors in this issue

Cambridge is a small free standing city in the UK with a population of 105 000. In recent years it has endured a worsening congestion problem essentially as a result of employment growth within the city and the narrow street layout. This is not a unique problem but one which is particularly acute in historic cities. In 1990, Congestion Metering was advanced, in addition to a number of other measures, as a means of managing traffic demand within the city. It has generated a great deal of interest internationally, particularly the field trial which took place in October 1993. This was the first time that any form of road pricing had been demonstrated practically in the UK. The aim of this article is to provide a review, establishing why the idea of Congestion Metering was originally considered and why, at least in the short to medium term, it is unlikely to be implemented in a Cambridge context. The process by which, if adopted, it is envisaged that Congestion Metering would be introduced is outlined, and the relative merits and potential weaknesses of such a demand management measure. Finally, the author considers the real problem of ‘public scepticism’ which needs to be addressed if Congestion Metering is to avoid the pitfalls which have bedevilled other road pricing schemes world‐wide.     

Role of transport in rural development in Africa

Rural Africa is starved of transport services. The transport routes run towards the export enclaves and the coast.

The political, social and developmental rural transport benefits are discussed. Rural transport will help (i) integrate the country and ease its governance; (ii) widen markets; (iii) induce increased agricultural output, through new technologies, reduced transport costs, etc. The transport cost savings should be passed on to rural firms and producers. The paper warns against their accruing only to middlemen — agricultural parastatals inclusive, thereby stifling the benefits to production. This could happen under some forms of pan‐territorial pricing. Negative aspects of road development, e.g. the substitution of local goods by imports, increased migration and noise, are noted.

The place and role of project appraisal in rural road planning is acknowledged. The broad‐based development packages approach associated with Integrated Rural Development Projects has, despite its attractions, some pitfalls. It favours well established villages and ignores distribution benefits within villages.

Project appraisal can be used to justify socially uneconomic transport developments. However, rural road investment projects with immediate negative returns are unlikely to be funded. Given clear priorities, short of elaborate cost/benefit analysis, obvious road investments choices can be made by the local community. Greater public accountability of transport planners and peoples’ participation in determining rural transport needs and priorities is emphasized. Increased rural road maintenance especially through self‐help schemes and increased use of traditional modes of transport, e.g. walking, animal and water transport, is recommended.     

Help or hindrance? The travel,energy and carbon impacts of highly automated vehicles

Experts predict that new automobiles will be capable of driving themselves under limited conditions within 5–10 years, and under most conditions within 10–20 years. Automation may affect road vehicle energy consumption and greenhouse gas (GHG) emissions in a host of ways, positive and negative, by causing changes in travel demand, vehicle design, vehicle operating profiles, and choices of fuels. In this paper, we identify specific mechanisms through which automation may affect travel and energy demand and resulting GHG emissions and bring them together using a coherent energy decomposition framework. We review the literature for estimates of the energy impacts of each mechanism and, where the literature is lacking, develop our own estimates using engineering and economic analysis. We consider how widely applicable each mechanism is, and quantify the potential impact of each mechanism on a common basis: the percentage change it is expected to cause in total GHG emissions from light-duty or heavy-duty vehicles in the U.S. Our primary focus is travel related energy consumption and emissions, since potential lifecycle impacts are generally smaller in magnitude. We explore the net effects of automation on emissions through several illustrative scenarios, finding that automation might plausibly reduce road transport GHG emissions and energy use by nearly half – or nearly double them – depending on which effects come to dominate. We also find that many potential energy-reduction benefits may be realized through partial automation, while the major energy/emission downside risks appear more likely at full automation. We close by presenting some implications for policymakers and identifying priority areas for further research.     

An evaluation of national road user charging in England

This paper explores the effects of road user charging throughout England. It develops a model to test charging scenarios including revenue raising and revenue neutral charging options, and economically efficient pricing. For each scenario we estimate effects on traffic volumes, user charges and fares, subsidies, environmental costs, benefits to consumers, government revenue, and overall net benefits. We show that appropriate charging structures coupled with compensating reductions in existing motoring taxes can make a real difference to traffic growth, congestion and environmental damage, and can relieve pressure to build new roads.     

Exploring low carbon transition pathways for the UK road transport sector

This paper uses an analytical framework of multi-level and multi-phase perspectives to explore low carbon transition pathways for the UK road transport system. The work draws on the impact made by the national (UK) and regional (EU) low carbon policy instruments on the UK road sector. The results show that the transformation pathway, which is at the take-off phase on a large scale, is the only fully active pathway. The transformation is mainly characterized by the adoption of biofuel blends and hybrid electric vehicles, as well as niche technologies. For the emergence of an ideal low carbon road system in the UK, it is shown that the transformation pathway is insufficient and the likely pathway sequence to full decarbonization will be transformation-substitution-de-alignment/re-alignment. However, the dynamics that can favour a smooth process of this sequence will demand a range of active niche technologies and strong government intervention.     

Capturing value of reliability through road pricing in congested traffic under uncertainty

Empirical studies showed that travel time reliability, usually measured by travel time variance, is strongly correlated with travel time itself. Travel time is highly volatile when the demand approaches or exceeds the capacity. Travel time variability is associated with the level of congestion, and could represent additional costs for travelers who prefer punctual arrivals. Although many studies propose to use road pricing as a tool to capture the value of travel time (VOT) savings and to induce better road usage patterns, the role of the value of reliability (VOR) in designing road pricing schemes has rarely been studied. By using road pricing as a tool to spread out the peak demand, traffic management agencies could improve the utility of travelers who prefer punctual arrivals under traffic congestion and stochastic network conditions. Therefore, we could capture the value of travel time reliability using road pricing, which is rarely discussed in the literature. To quantify the value of travel time reliability (or reliability improvement), we need to integrate trip scheduling, endogenous traffic congestion, travel time uncertainty, and pricing strategies in one modeling framework. This paper developed such a model to capture the impact of pricing on various costs components that affect travel choices, and the role of travel time reliability in shaping departure patterns, queuing process, and the choice of optimal pricing. The model also shows the benefits of improving travel time reliability in various ways. Findings from this paper could help to expand the scope of road pricing, and to develop more comprehensive travel demand management schemes.     

A new approach to evaluating on-road public transport priority projects: balancing the demand for limited road-space

Despite widespread growth in on-road public transport priority schemes, road management authorities have few tools to evaluate the impacts of these schemes on all road users. This paper describes a methodology developed in Melbourne, Australia to assist the road management authority, VicRoads, evaluate trade-offs in the use of its limited road-space for new bus and tram priority projects. The approach employs traffic micro-simulation modelling to assess road-space re-allocation impacts, travel behaviour modelling to assess changes in travel patterns and a social cost benefit framework to evaluate impacts. The evaluation considers a comprehensive range of impacts including the environmental benefits of improved public transport services. Impacts on public transport reliability improvements are also considered. Although improved bus and tram reliability is a major rationale for traffic priority its use in previous evaluations is rare. The paper critiques previous approaches, describes the proposed method and explores some of the results found in its application. A major finding is that despite a more comprehensive approach to measuring the benefits of bus and tram priority, road-space reallocation is difficult to economically justify in road networks where public transport usage is low and car usage high. Strategies involving the balanced deployment of bus and tram priority measures where the allocation of time and space to PT minimises negative traffic impacts is shown to improve the overall management of road-space. A discussion of the approach is also provided including suggestions for further methodology development.

Empirical evidence on induced traffic

Disparate evidence indicates that the provision of extra road capacity results in a greater volume of traffic. The amount of extra traffic must be heavily dependent on the context, size and location of road schemes, but an appropriate average value is given by an elasticity of traffic volume with respect to travel time of about –0.5 in the short term, and up to –1.0 in the long term. As a result, an average road improvement has induced an additional 10% of base traffic in the short term and 20% in the long term: individual schemes with induced traffic at double this level may not be very unusual, especially for peak periods. Induced traffic is particularly seen on the alternative routes that road improvements are intended to relieve.     

Highway and transportation planning in England

This article presents an overview of highway and transportation planning in England. It covers the division of responsibilities between central and local government; the organisation of the Department of Transport; the planning, financing and implementation of road schemes, both local and national. A very brief review of transport legislation is included.NOTE: This paper was printed before the UK General Election of May 1979. The Department of Transport is now responsible to the Minister of Transport. The Minister has similar responsibilities to those previously exercised by the Secretary of State for Transport as referred to in this paper. The views expressed in this paper are those of the writer and are not necessarily those of the Department of Transport.