International comparisons of transport appraisal practice.
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Transcript of International comparisons of transport appraisal practice.
Institute for Transport StudiesFACULTY OF ENVIRONMENT
International comparisons of transport
appraisal practice
Transport Economists’ Group
28th May 2014
Tom Worsley Visiting Fellow
Outline
2 Studies – DfT and EU
Context of the studies
Findings from the DfT study
Additional information from the EU Sintropher
Conclusions
The DfT report
International Comparisons of Transport Appraisal Practice –
July 2013
www.gov.uk/government/publications/international-comparisons-of-
transport-appraisal-practice
• Overview Report – Peter Mackie and Tom Worsley
• Annex 1: England – Guehnemann A, Kelly C, Mackie P, Worsley T
• Annex 2: Germany- Guehnemann A
• Annex 3: Netherlands – de Jong G
• Annex 4: Sweden – Eliasson J
• Annex 5: USA – Weisbrod G
• Annex 6: NSW Australia – Douglas NJ and Brooker T
• Annex 7: New Zealand – Douglas NJ, Wallis I, Lawrence A, Wignall D
The Sintropher Report
Developments in the Appraisal of Transport Infrastructure
Investments in the UK and other European Countries and in
its Influence on Decisions. T Worsley
Not yet published
http://www.sintropher.eu/about/partners/university-college-
london
Project focuses on tramways/light rail links between main line
stations and peripheral regions of NW Europe
Sustainable Integrated Tram-Based Transport Options for
Peripheral European Regions
Context for the DfT report
DfT faced challenges on appraisal methods
How does the UK Department for Transport compare with
other countries-
• In the methods, framework and values?
• In the use made of CBA in the decision making process?
Method for the study-
• Selected 6 countries identified as leaders in CBA and with contacts
• Took EU HEATCO (2006) as the base and review changes since 2006
• Sought guidance/information on use of appraisal in decisions
• 7 weeks for draft report:10 for final
Context for the Sintropher
Report
UCL lead partner – Sir Peter Hall team leader
Land use planning focus – The Bartlett School of Planning,
with French, Flemish, Dutch and German partners
Demonstration projects: Blackpool, Valenciennes, Nijmegen-
Kleve(NL), Nord Hessen, West Flanders
Sintropher objective; Supporting Growth through Regional
Connectivity’ – how can better transport links promote
economic development at the regional level?
Report on economic appraisal methods and decision making
Interaction between economist and planners
Transport Cost Benefit
Analysis in the UK
Strong tradition over some 50 years
External challenge from ACTRA/SACTRA/Eddington
Occasional internal reviews – NATA (1998), NATA refresh (2008),
transport business case (2010), Understanding and Valuing the Impacts
of Transport Investment (2014)
Published detailed guidance – WebTAG
Evidence based values: increasing use of money values to replace
quantified or qualitative scores
Updated and extended eg wider benefits, reliability
Originally for highways and local transport capital schemes
Extended to national rail, walking, cycling, current expenditure
Published information about role of CBA in the decision-making process
Why does CBA remain in
favour in England?
The English policy framework supports the use of CBA-
• The parliamentary process – protecting the public interest
• The dominant role of HM Treasury – Green Book, value for money
• Accounting officer responsibilities – the role of the Permanent Secretary
• The absence of local taxation and funding – a national perspective
• The public inquiry process
• A British preference for evidence based decisions over political ones to
demonstrate ‘fairness’
BUT
• Desire to demonstrate ‘real economy’ impact
• Scepticism about time savings as a proxy for longer term effects
• Localism and devolution set different objectives
Key findings – Appraisal
Framework
Discount rate – Europe uses lower rates (2.5% – 4%) and longer periods
US or Australasia (7%-8%). Period – asset specific, or varies from 30 to
60+ years
Shadow prices – only Sweden uses 1.3 for public spending
Appraisal metrics – varies, several reported for some countries – BCR,
NPV, IRR, FYRR, with denominator either national costs or costs to
government or capital costs (Sweden)
Non-monetised impacts – varies, eg -presented as additional information in
standard reporting format ; provides ‘red flag’; translated into broad
monetised score to provide additional BCR
Risk and uncertainty – varies, QRA and/or OB used by some, risk premium
on discount rate (NL), sensitivity analysis (Germany)
Role of Finance Ministry in setting appraisal standards varies: delegated
powers in some countries for local schemes
Key Findings – Unit Values
User Benefits
Values of Time – Broadly comparable: England – EB high relative to
NWTTS (now x4) compared with other countries (x3) but WebTAG
NWTTS lower than NL and Sweden for commuting. Germany weights
savings <5mins by 0.7, Sweden by journey distance. NL uses SP
values in place of cost saving for freight. Factor on walk/wait applied in
England and outside EU
Reliability – either reliability ratio or IVT based value of lateness (typically
around 3). No value reported for Germany
Comfort/crowding – Sweden and NZ increases VoT for car congestion,
most use public transport crowding penalty, some depending on
crowding level
Safety – comparable except US has VoSL 3x the English value and
Sweden values serious casualty higher
Key Findings – Environmental
Impacts
Monetisation now widespread: much progress since HEATCO
• Noise – wtp approach in Europe, mitigation costs elsewhere. Methods
not easily comparable – eg in volume/value relationship, and area type.
• Local pollution – broadly similar approach for all, based on impact
pathway, damage to health and wtp based change in state of health,
with some differences in pollutants measured
• Climate change – other than Australia, all use money values, based on
EUETS or a shadow price of carbon. US and NZ low, Sweden high
• Environmental capital – qualitative assessment to inform MCA. NL
considering monetisation.
• Other impacts – Germany mark up for induced traffic (no VDM); NZ
disruption related strategic factors; social and distributional impacts only
in WebTAG
Key Findings – Wider
Economic Impacts
Range of methods – often ‘additional’ to BCR
Much progress since HEATCO
• Agglomeration benefits – relationship between generalised costs,
employment density and productivity – England, S, NZ, NSW (Australia)
and some NL - larger schemes only
• Regional spatial economic models – NL(large schemes –RAEM,REMI)
and some US states (REMI, TREDIS)
• Uplift for cross border and port connections – Germany
• Regeneration (regional/local distributional effects) – only in England,
Germany (direct employment effects), US and some NSW (A), generally
not monetised
• Labour supply and M2MPJs based output change – England only.
Applying the Guidance –
Capital & Current Projects
Roads – mandatory for all capital projects requiring central govt funding:
varies for state or locally funded schemes in US and NZ.
Rail passenger – as for roads, often with some supplementary guidance
Rail freight – mostly commercial, with mode shift appraisal in England.
Bus/tram – as for roads: not always in Sweden or for smaller German
schemes.
Air – varies. NL, England use appraisal for strategic decisions, regulation
and planning applications. Some appraisal use in US and NSW (A)
Sea/Water – mandatory in Germany, NL, US (central funding), and some
NSW (A)
Cycle/walk – mandatory in England, varies for others
Current spending –only a few examples provided: rail franchising and bus
subsidy in England
Appraisal and its influence on decisions –
qualitative and quantitative impacts
Increased use on monetised values since HEATCO – so role
of unquantifiables diminished.
• England uses initial BCR to categorise projects into v high, high,
medium and low value for money ( >4, 4-2, 2-1.5, 1.5-1); ministers
advised on whether non-monetised impacts would change category/rank
and make their judgement (only projects >2 approved)
• Less evidence from other countries – BCR >1 is a hurdle for most - NL,
Sweden, Germany.
• Germany and US rely more than others on BCR for ranking national
schemes because environmental appraisal sets mitigation measures.
Appraisal and its influence on decisions in
England – strategic factors - England
England uses Treasury business model – economic, strategic,
management, commercial and financial cases.
• Economic case is CBA/welfare – strategic is policy objectives – jobs,
GVA, carbon – some overlap with economic case
• Transfer of responsibility for local infrastructure investment to local
authorities – more weight on local strategic case, less on (national) CBA
• Guidance and evidence for strategic objectives much less prescriptive
than WebTAG (and only 8 pages) - estimates of jobs/GVA have usually
based on either LUTI plus economic inputs, or models of agglomeration
and employment densities, the UDM (SDG), or surveys to inform
changes in costs and trade flows. No English regional spatial economic
model.
Appraisal and its influence on decision-
making – strategic factors - other countries
US, Sweden and New Zealand identify various strategic factors for some
schemes
NL has used spatial regional economic models to identify GVA and jobs
impacts by region for some major schemes, but RAEM no longer
maintained
US TIGER programme – federal funding priority for projects which improve
economic efficiency and productivity and reduce the cost of exporting
US states use a variety on models of the local economy and some
prioritise on that basis
Countries with a federal structure often have two sets of guidance
In Sweden and NL (and others?), largest schemes are less likely to be
ranked on BCRs alone
Some Conclusions from
ICTAP
The principles of economic appraisal are widely accepted: however, they
face challenge (at least in England) from time savings sceptics, urban
land use planners and the real economy lobby
Extension of monetisation and of impacts included since HEATCO in all
countries reviewed – convergence of methods and values
While several countries estimate some ‘real economy’ impacts, there is no
consensus on how to do this
The structure of government (federal/central) affects the use of appraisal
and its influence on decisions.
Some of the values used in WebTAG need updating – some other
countries make use of more recent research findings
Did we meet the client’s requirements?
Further conclusions
The investigation showed that;
• England remains among the leaders in the use of CBA, all of whom face
similar challenges
• WebTAG provides a model of appraisal and modelling documentation,
often benchmarked by others
• No country explains how the CBA metric influences the decision making
process – the DfT provides more information than others
The authors proposed an international forum and information
exchange for officials and academics
Sintropher – additional
findings
Study covered schemes in Germany, Netherlands, Flanders,
England and France
Focused on local schemes, funded in Germany by the
allocation of central funds to the Länder and in France in
part by Versement Transport.
A BCR>1 was a requirement for schemes in Flanders and
Netherlands, where BCRs have some influence on
priorities, and in most cases for the German Länder
France: Vivre la différence!
Appraisal of local schemes in
France
France has high quality appraisal guidance – Boiteaux, Quinet
Law requiring the use of this guidance for all schemes
For major local schemes the CBA is largely ignored, but Préfet can always
veto scheme
The mayor ;
• Acts as the champion for the proposal
• Outlines a vision – transport, land use, public realm, regeneration
• Lobbies the communes, land owners, developers, businesses and
residents to get support and to cooperate on move from vision to
scheme design
• Lobbies national politicians for the state contribution
• Delivers the project
Pros and Cons of the French
Approach
Pros
Local buy-in – “l’excellence ferroviaire de Valenciennes”
Integration of land use and transport change – a package, not a transport
scheme
High quality public realm
Cons
No evidence that the chosen option was better than others
No concept of value for money
‘Unfair’ – might the mayor of Dunkirque had a better scheme?
Lack of transparency in decision making process
Questions?