Like all things in life, when it comes to transport there are always more projects being dreamed up than there is money available. So to determine just what should be built and when there needs to be some sort of prioritisation process. On the blog we try to sit between the two different aspects that make up this prioritisation process: the technical side and the political side.
The technical prioritisation process is typically done through a ‘cost benefit analysis‘, which I’m sure anyone who has read this blog for a while will have heard mentioned on many many occasions. There are clearly two sides of any such analysis: firstly the cost, which is the ‘easy’ part of the equation: what will it cost, what negative impact might it have? The benefit side is much trickier – clearly some transport projects, policies, services or whatever generate a benefit, but how to measure that benefit, put a dollar value on it and then be certain that dollar value benefit is greater than the amount we’re spending?
At this point transport experts make a number of subjective decisions, which are often passed off as objective facts. How much value to put on a minute of saved time? How much to put on a saved life? How to even work out how much time (or lives) will be saved? Will time even be saved in the longer run?
Typically most transport projects generate the vast majority of their measured “benefits” from travel time savings – the difference in some future year between the time it would have taken everyone to travel in a hypothetical “without the project” scenario and another hypothetical “with the project” scenario. Each saved minute by every person using the route adds up to saved hours, then a value is put on each hour and a whopping big number gets generated over the many decades long measured lifespan of the project.
This process has been the stock-standard approach for many decades in New Zealand and in many countries overseas – a supposedly objective way of making transport prioritisation decisions. Yet it is becoming questioned on an increasingly frequent basis. The latest critique is by transport expert Todd Littman, whose specific critique is of something called the “Urban Mobility Report” – a report prepared by the Texas Transport Institute which attempts to quantify the cost of congestion across all different parts of America.
Todd Littman’s critique is based around the idea that current cost-benefit analyses value of time ‘lost’ to congestion (and therefore the benefit of projects that may reduce congestion) far too high:
My analysis indicates that the UMR tends to exaggerate congestion costs and roadway expansion benefits, and undervalues alternative congestion reduction strategies. It uses higher baseline travel speeds and travel time values than most experts recommend (in fact, its baseline speeds often exceed legal speed limits on the roads evaluated), ignores the increased fuel consumption, pollution emissions and crash severity caused by high traffic speeds, ignores the increased external costs of induced vehicle travel, and ignores many co-benefits provided by alternative mode improvements, pricing reforms and smart growth policies. As a result, the UMR’s congestion cost estimates should be considered upper-bound values – when using such estimates analysts should apply sensitivity analysis that also include middle and lower-bound estimates.
These might be familiar critiques for blog readers. For example, we’ve noted that the supposed time savings from the Puhoi-Warkworth road would require someone to travel in excess of the speed limit to achieve. It was only earlier this year actually that NZTA released a report which highlighted that if you measure congestion costs properly, they might actually be ‘only’ around $145 million per year for travel time delay and a further $105 million for something called “schedule delay cost” (people travelling at times other than what would be ideal for them). This compared to an estimated cost of $1.25 billion using an unrealistic comparison with ‘free flow’ traffic.
Obviously the key next question is “well so what?” As explained below, the implications of over-valuing the cost of congestion are pretty vast in terms of how it skews the way we assess and prioritise transport projects:
Why does this matter? What problems will result if urban transport planning incorporates exaggerated congestion cost values?
Comprehensive and accurate valuation of congestion costs is important because urban planning often involves trade-offs between conflicting objectives such as between traffic speed and safety, and between automobiles and other forms of access. For example, expanding urban roadways may reduce congestion but tends to create barriers to active modes (walking and cycling), and since most public transit trips involve walking links, it also reduces public transit access. Exaggerating congestion costs undervalues other impacts and modes, leading to economically excessive roadway expansion and under investment in alternatives, resulting in a transport system which is less efficient, diverse, affordable, safe, healthy and equitable than optimal…
…Exaggerating congestion costs and undervaluing other congestion reduction strategies tends to result in economically excessive roadway expansion, and under investment in alternative modes, such as grade-separated public transit, and demand management strategies, such as more efficient road and parking pricing. This mattered less during the twentieth century when VMT was growing rapidly, so there was little risk of overbuilding roadways – any excess capacity would eventually be used, it was simply a question of when. However, now that automobile travel has peaked in most developed countries, and society is increasingly concerned about the external costs of excessive automobile dependency, overbuilding has become as economically harmful as under building roadway capacity.
So if we are over-valuing congestion costs, then what are better ways of measuring the impact of transport investment and prioritising projects? Well a good place to start would be by analysing the different factors which contribute to the “cost” that transport imposes on our lives – which interestingly highlights even the upper end of congestion costs as being fairly minimal in the scheme of things:
And here’s where we get to the key point:
…a congestion reduction strategy may be worth far less overall if it increases other costs, and worth far more if it provides other benefits. For example, a roadway expansion may seem cost effective considering congestion impacts alone, but not if it induces additional vehicle travel which increases parking congestion, accidents and pollution emissions. Conversely, alternative mode improvements may not seem inefficient considering congestion reductions alone, but are cost effective overall when co-benefits (parking cost savings, traffic safety, and improved mobility for non-drivers, etc.) are also considered.
Until we fix the way we prioritise projects we’re going to keep making really stupid transport prioritisation decisions.