The application of cost-benefit analysis to transport investment projects in Britain

This paper explains the need for the application of cost-benefit analysis to the evaluation of alternative projects for investment in the transport field and outlines briefly the historical development of the technique. The results of a comparative survey of a number of cost-benefit studies which have been carried out in Britain and some conclusions as to their thoroughness and comprehensiveness (or otherwise) are presented. The article concludes with a number of specific and detailed recommendations to remedy apparent methodological weaknesses. Six of these recommendations seem to merit particular attention:

1. The viewpoint of most studies should be extended so as to avoid confinement, for example, within an arbitrary local government boundary, and a wider range of “externalities” should be considered. Intangibles should be included explicitly in all such evaluation exercises.
2. The actual incidence of costs and benefits should be examined in order to indicate the directional impact of the project and its implications in terms of equity. The elimination of transfer payments and double-counting should be postponed until the latest possible stage in the evaluation.
3. Equity considerations should be investigated in any transportation plan, since most projects have considerable equity implications for particular areas or socio-economic groups.
4. Discounted cash flow techniques, which are still used only in a minority of transportation studies, should become standard practice. Most evaluations are based on a single-year rate of return, or at best on simple trend forecasting. More resources should be devoted to proper evaluation of alternative plans which give due importance to the cost and benefit streams through time.
5. Sensitivity analysis should be used in all transportation evaluations. Knowledge of the impact of different assignments, shadow prices, and discount rates are essential information for any decisionmaker.
6. Last, but not least, much greater communication should exist between analyst and decisionmaker than has existed in the past.

     

Substance precedes methodology: on cost–benefit analysis and equity

While distributive aspects have been a topic of discussion in relation to cost–benefit analysis (CBA), little systematic thought has been given in the CBA literature to the focus of such an equity analysis in evaluating transport projects. The goal of the paper is to provide an overview of the various directions an equity analysis, carried out within the context of a social cost–benefit analysis, could take. The paper starts from the widely-shared definition of distributive justice: the morally proper distribution of goods and bads over members of society. Following this definition, carrying out an equity analysis requires that decisions are made about: (1) the benefits and costs that are distributed through a transport project; (2) the members of society between whom benefits and costs are distributed; and (3) the distributive principle that determines whether a particular distribution is fair. Much of the discussions about cost–benefit analysis and equity do not address these questions in any systematic way. The paper aims to provide a framework. Three sets of benefits and costs are identified as a possible focus of an equity analysis: (1) net benefits; (2) mobility-enhancing benefits; and (3) individual benefits and costs. For each set, a discussion follows regarding the way in which members of societies could be divided into meaningful groups, as well as the possible yardstick for judging whether a certain distribution is fair. While the paper acknowledges that the choice between the three sets is ultimately a political decision, it ends with a set of arguments that suggest that the equity analysis of transport projects should focus first and foremost on the mobility-enhancing benefits generated by such projects.     

Towards a more equitable distribution of resources: Using activity-based models and subjective well-being measures in transport project evaluation

In this paper, we develop an innovative and comprehensive transport evaluation criterion to better account for equity considerations in transport project evaluation. This work explores transportation benefits from the consumer’s perspective to accessibility as a key benefit generated by any transportation project. To assess the full benefits of transportation project implementation for various consumers and calculate the improvement in accessibility, it is best to use Activity-Based Models (ABM). ABMs have two important advantages for equity analysis, which have not been utilized in the literature so far: first, ability to analyze results by various groups of the population; second, these models can utilize the Activity Based Accessibility (ABA) measure to estimate the overall benefits from transport investments and policies. The ABA measure allows one person to have different accessibilities for different choice situations, depending on his/her characteristics. We suggest including social and spatial factors in social welfare assessment by introducing the concept of accessibility gains to key social activities. Specifically, it is suggested to incorporate subjective well-being consideration into a new evaluation framework “Equity Benefit Analysis” (EBA). we use an alternative measure, “Subjective Value of Accessibility gains” (SVOA), which is based on the ABM accessibility measure as well as on Subjective Well-Being (SWB) measure, as the key benefit taken into account in the evaluation process. The SVOA is not intended to replace the current practice of analyzing equity by comparing various impacts on different groups of the population, but can aid by providing policymakers with a single measure advancing both equity and efficiency considerations and facilitating comparison among alternatives. Initial case study results indicate the SVOA can show higher benefits to policies focusing on the needs of vulnerable social groups that compared traditional measures.     

The effects of attitudes and personality traits on mode choice

We hypothesise that differences in people’s attitudes and personality traits lead them to attribute varying importance to environmental considerations, safety, comfort, convenience and flexibility. Differences in personality traits can be revealed not only in the individuals’ choice of transport, but also in other actions of their everyday lives—such as how much they recycle, whether they take precautions or avoid dangerous pursuits. Conditioning on a set of exogenous individual characteristics, we use indicators of attitudes and personality traits to form latent variables for inclusion in an, otherwise standard, discrete mode choice model. With a sample of Swedish commuters, we find that both attitudes towards flexibility and comfort, as well as being pro-environmentally inclined, influence the individual’s choice of mode. Although modal time and cost still are important, it follows that there are other ways, apart from economic incentives, to attract individuals to the, from society’s perspective, desirable public modes of transport. Our results should provide useful information to policy-makers and transportation planners developing sustainable transportation systems.     

A ‘sustainability window’ of urban form

With global environmental change and the rise of global megacities, environmental and social externalities of urban systems, and especially of urban form, become increasingly prevalent. The question of optimal urban form has been debated and investigated by different disciplines in numerous contexts, including those of transport costs, land consumption and congestion. Here we elucidate theoretically how urban form and the urban transport system systematically modifies sustainability concerns, such as greenhouse gas emissions, local air pollution and congestion. We illustrate our analytical considerations with empirical analysis. Denser urban form would almost unambiguously mitigate climate change, but it would also lead to undesired effects, such as a higher proportion of urban dwellers affected by air pollution. Our study presents a ‘sustainability window’ by highlighting trade-offs between these sustainability concerns as a function of urban form. Only a combination of transportation policies, infrastructure investments and progressive public finance enables the development of cities that perform well in several sustainability dimensions. We estimate that a residential population density between 50 and 150 persons/ha and a modal share of environmental modes above at least 50% corresponds to the sustainability window of urban form. The parameters of the sustainability window of urban form is subject to policy changes and technological progress.     

Great Britain adults’ opinions on cycling: Implications for policy

In its neglect of cycling, the transport policy history of Great Britain is typical of many car-dependent societies. Policy inertia with respect to sustainable travel may be driven by the assumptions that, firstly, most households have access to the use of a car and are keen to preserve the mobility advantages the current system offers them, and secondly that environmental and health considerations should be subjugated to economic priorities. Thus, in spite of warm words about cycling, pro-car policies tend to dominate.Set against this policy backdrop, and taking the stance that public opinion can influence policy change, this paper reports the results of two large scale surveys of opinions regarding the practice of cycling and its role within society, carried out amongst samples of adults representative of Great Britain, in 2010 and 2013. Results indicated broadly positive opinions relating to cycling as part of society, albeit with these measures dropping slightly between 2010 and 2013. Opinions of cycling were found to be significantly linked to voting intention with, broadly speaking, a gradient of decreasing positivity when moving from the political left to right. These results imply a possible link of ‘surface’ opinions of cycling being influenced by underlying ‘deep-seated’ beliefs and values. These results are discussed in terms of policy options for pro-cycling groups wishing to influence the debate. Options include decoupling cycling from underlying belief systems and presenting simply as a form of everyday transport; promoting cycling as a solution to multi-social issues across health, the environment and economic considerations such as lower congestion; the pros and cons of de-marketing car usage; and finally, changing underlying belief systems. It is concluded that pro-cycling advocates may be pleased with the broad support of cycling’s contribution to society, but they may need to seek alliances with other environmental or health groups in order to turn these good intentions into genuine policy change.     

Optimization of terminal airspace operation with environmental considerations

The rapid growth in air traffic has resulted in increased emission and noise levels in terminal areas, which brings negative environmental impact to surrounding areas. This study aims to optimize terminal area operations by taking into account environmental constraints pertaining to emission and noise. A multi-objective terminal area resource allocation problem is formulated by employing the arrival fix allocation (AFA) problem, while minimizing aircraft holding time, emission, and noise. The NSGA-II algorithm is employed to find the optimal assignment of terminal fixes with given demand input and environmental considerations, by incorporating the continuous descent approach (CDA). A case study of the Shanghai terminal area yields the following results: (1) Compared with existing arrival fix locations and the first-come-first-serve (FCFS) strategy, the AFA reduces emissions by 19.6%, and the areas impacted by noise by 16.4%. AFA and CDA combined reduce the emissions by 28% and noise by 38.1%; (2) Flight delays caused by the imbalance of demand and supply can be reduced by 72% (AFA) and 81% (AFA and CDA) respectively, compared with the FCFS strategy. The study demonstrates the feasibility of the proposed optimization framework to reduce the environmental impact in terminal areas while improving the operational efficiency, as well as its potential to underpin sustainable air traffic management.     

Development of control models for the planning of sustainable transportation systems

Planning of sustainable transportation systems requires integration of multiple systems while considering a holistic approach. A limited amount of research has been conducted that simultaneously considers all the transportation, economic activity, environmental and social effects. The proposed research envisages incorporating considerations related to sustainability and providing solutions to stakeholders in policy making. In this paper, a dynamic model for planning and development of sustainable transportation systems is presented. This is given by a system of three nonlinear differential equations representing the dynamics of the three independent states, namely, transportation, activity, and environmental systems. A policy scenario considering investment in energy efficient technologies and its effects on the states is discussed to assist making investment decisions. Optimal control techniques are used to design the controls. The results show that it is possible to formulate an optimal control to achieve the desired target. Numerical results, based on actual parameters, are presented to illustrate the long-term trends of the states. The methodology discussed in this paper will be helpful to decision makers in making optimal decisions. The contribution of this research work is the introduction of a systems and controls methodology to develop optimal policies for the design of sustainable systems.     

A multi-objective optimization model for sustainable logistics facility location

This paper offers an exploratory study of sustainable facility location. The methodology, based on the classical uncapacitated facility location problem, provides decision makers with a multi-objective optimization model to determine the trade-off among economic, service and environmental considerations. Our results indicate that it may be desirable to open more facilities than optimal from a narrow economic perspective to reduce the carbon dioxide emissions of transport and to improve service reliability.     

Determination and Applications of Environmental Costs at Different Sized Airports – Aircraft Noise and Engine Emissions

With the increasing trend of charging for externalities and the aim of encouraging the sustainable development of the air transport industry, there is a need to evaluate the social costs of these undesirable side effects, mainly aircraft noise and engine emissions, for different airports. The aircraft noise and engine emissions social costs are calculated in monetary terms for five different sized airports, ranging from hub airports to small regional airports. The number of residences within different levels of airport noise contours and the aircraft noise classifications are the main determinants for accessing aircraft noise social costs. The environmental impacts of aircraft engine emissions include both aircraft landing and take-off and 30-minute cruise. The social costs of aircraft emissions vary by engine type and aircraft category, depending on the damage caused by different engine pollutants on the human health, vegetation, materials, aquatic ecosystem and climate. The results indicate that the relationship appears to be curvilinear between environmental costs and the traffic volume of an airport. The results and methodology of environmental cost calculation could be applied to the proposed European wide harmonised noise charges as well as the social cost benefit analysis of airports.     

Costs and benefits of a bicycle helmet law for Germany

This study presents a cost–benefit analysis of a law requiring cyclists to wear a helmet when riding a bicycle in Germany. The cost benefit-analysis takes into account the benefit of increased security when cyclists wear a helmet or use a transport mode that is less risky than cycling. The analysis also considers the cost of purchasing helmets, reduced fitness when cycling is replaced by a motorized transport mode, the discomfort of wearing helmets and environmental externalities. The benefits of a helmet law are estimated at about 0.7 of the costs. A bicycle helmet law for Germany is found to be a waste of resources.     

Regulating transport’s environmental impacts in a deregulating world

In recent years, a growing awareness of the environmental impacts of transport has played a major part in the shift towards policies to manage the demand for travel. As a result, a substantial increase in the role of public transport has been identified as necessary in any strategy towards more environmentally sustainable transport patterns. At the same time there has been a quite separate process of deregulation and the withdrawal of the state from the transport market. These two trends appear to represent potentially contradictory processes. This article draws upon two major studies that explore the relationship between increasing needs for environmental regulation and the privatisation of bus and rail services. It is shown that, as currently organised in Britain, the development of bus and rail services are inadequately linked to strategic environmental policymaking and, rather than being part of the solution to transport’s environmental impacts, there is a real danger that these ‘green’ methods of transport could slide into simply being part of the problem itself. It is concluded that privatisation and deregulation does not mean the end of the need for policy mechanisms, but they do mean that policy has to be implemented in a very different way.     

Shifting towards environment-friendly modes: profiling travelers using Q-methodology

Due to a variety of reasons, the previous century is characterized by an extraordinary growth in car use that has continued into the current century. This has resulted in serious environmental repercussions. Despite technological advancements, the externalities remain an ecological threat that can not be discarded by policy makers. Therefore, it is essential that policy makers focus on reducing car use and on stimulating the shift towards more environment-friendly transport modes. In this study, Q-methodology is adopted as the technique to segment people, and to ascertain which approaches and determinants matter to medium distance travel. Segmentation is important, as policy measures will be more efficient and effective if they are fine-tuned on specific target groups. The analysis revealed that four discourses preponderate the paradigm of environmentally sustainable transport: travelers who use public transport as a dominant alternative, car-dependent travelers, travelers with a positive perception of using public transport, and travelers with a preference for car use. Concerning rational, economic motives, individuals evaluate travel time reliability as most important. To increase the reliability policy makers should consider the use of separate bus lanes and traffic light manipulation. In addition, public transport can be made even more attractive, when costs of cars are made more variable by road or congestion charging. When the s motives are discussed, the differences between the different groups of travelers were more pronounced. Next to increasing the benefits of using public transport, policy makers should also pay attention to removing psycho-social barriers.

Context-dependent influence of road attributes and pricing policies on route choice behavior of truck drivers: results of a conjoint choice experiment

In this paper, we report the results of a stated choice experiment, which was conducted to examine truck drivers?? route choice behavior. Of particular interest are the questions (i) what is the relative importance of road accessibility considerations via-a-vis traditional factors influencing route choice behavior, (ii) what are the influences of particular personal and situational variables on the evaluation of route attributes, (iii) how sensitive are truck drivers for possible pricing policies, and (iv) is there a difference in impact if environmental concerns are framed as a bonus or as a pricing instrument. The main findings indicate that road accessibility characteristics have a substantial impact on route preferences which is of the same order of magnitude as variation in travel times. This suggests that provision of adequate travel information in itself can be an effective instrument to prevent negative externalities of good transport associated with shortest routes. Furthermore, the results indicate that truck drivers/route planners when choosing a route are relatively sensitive to road pricing schemes and rather insensitive to environmental bonuses.     

Estimating potential reductions in externalities from rail-road substitution in Trans-European freight transport corridors

This paper develops a method for analysing and estimating savings in externalities that could be achieved by substituting truck with rail freight services in a given Trans-European freight transport corridor. The externalities affected include energy consumption, emissions of greenhouse gases, noise, congestion, and traffic incidents/accidents. The European Commission transport policy aims to provide an institutional framework for the medium- to long-term sustainable development of the transport sector. An important aspect of this policy is to stimulating the modal shift from truck to rail freight transport in inland Trans-European corridors.     

National policy towards cars: Singapore

Singapore has experienced rapid growth in car ownership, and private transport accounts for just under half of motorized trips in Singapore. Yet only since 1970 have determined efforts been made to curtail this increase. Simultaneously with this growth, Singapore's land‐use planners had called for the diversion of population growth into outlying residential estates while maintaining the central area's importance as an employment centre. The resulting anticipated concentration of commuter movement suggested a need for controls to restrain car ownership, reduce central‐area congestion and divert road users on to public transport. The policies followed are described. Those against ownership have included heavy road taxes and registration fees, with a system of discounts on the latter to discourage new purchasers except when replacing scrapped cars. Policies against car use include fuel taxes and the Area Licensing Scheme in the city centre, while parking space is also closely regulated. The measures adopted imply a goal of efficiency in promoting Singapore's planning objectives rather than environmental, safety or equity considerations, although the first two of these have lately received much more attention than formerly. The policies’ effect has been a temporary reversal in the growth of car ownership, but this growth has since resumed and recent further fee increases suggest a panic reaction rather than a coordinated strategy. Such coordination appears at present to be hampered by the fragmented administration of matters relating to transport. Other measures relating to car ownership and use in Singapore are also described.     

Evaluation and implications of environmental charges on commercial flights

Environmental charges are one of the economic instruments for controlling externalities. Their application to commercial flights has become a preferred method of encouraging the sustainable development of the air transport industry. Two kinds of externalities, aircraft noise and engine emissions, both generating profound impacts on human beings and on the environment, are considered here. The hedonic price method is applied to calculate the social cost of aircraft noise during the landing and take-off stages of the flight. The marginal impact of each flight with specific aircraft/engine combinations is derived for the allocation of aggregate noise social costs. In contrast, the dose - response method is applied to estimate the social cost of each engine exhaust pollutant during different flight modes. The combination of aircraft noise and engine emissions social costs is then evaluated on the basis of several environmental charge mechanism scenarios, using Amsterdam Airport Schiphol as a case study. It is shown that the current noise or engine emissions related charges at airports are lower than the actual social costs of their respective externalities. The implications of charge mechanism scenarios are subsequently discussed and evaluated in terms of their impacts on airline costs, airfares and passenger demand.     

Equity effects of congestion pricing: Quantitative methodology and a case study for Stockholm

It is widely recognised that congestion pricing could be an effective measure to solve environmental and congestion problems in urban areas—a reform that normally also would generate a net welfare surplus. Despite this the implementation of congestion pricing has been very slow. One reason for a low public and political acceptance could be that equity impacts have not been given enough concern. In studies of distributional impacts of congestion pricing it has often been claimed that the reform is regressive rather than progressive even if there are studies claiming the opposite. We develop a method for detailed, quantitative assessment of equity effects of road pricing and apply it to a real-world example, namely a proposed congestion-charging scheme for Stockholm. The method simultaneously takes into account differences in travel behaviour, in preferences (such as values of time) and in supply of travel possibilities (car ownership, public transport level-of-service etc.). We conclude that the two most important factors for the net impact of congestion pricing are the initial travel patterns and how revenues are used. Differences in these respects dwarf differences in other factors such as values of time. This is accentuated by the fact that the total collected charges are more than three times as large as the net benefits. With respect to different groups, we find that men, high-income groups and residents in the central parts of the city will be affected the most. If revenues are used for improving public transport, this will benefit women and low-income groups the most. If revenues are used for tax cuts, the net benefits will be about equal for men and women on the average, while it naturally will benefit high-income groups. Given that it is likely that the revenues will be used to some extent to improve the public transport system, we conclude that the proposed congestion-charging scheme for Stockholm is progressive rather than regressive.