Improving economic evaluation of urban transport projects in Australia

Page 8

BC

BC

BC

BC

BC

BC

A

Figure 1 Estimating project benefits with fixed and variable trip matrices

300 600 700

400 800

500

A

300 600 700

A

300 630 670

A

300 630 700

A

300 660 670

A

292.5 585 682.5

B

600

B

600 400 800

B

630 400 800

B

630 400 800

B

660 400 800

B

585 390 780

C

700 800

C

700 800 500

C

670 800 500

C

700 800 500

C

670 800 500

C

682.5 780 487.5

BC

BC

BC

BC

BC

BC

A A

10 45 60

A

10 45 60

A

10 45 60

A

10 45 60

A

10.5 52.5 63

B

50

B

45 10 70

B

45 10 70

B

45 10 70

B

45 10 70

B

52.5 10.5 73.5

C

60 70

C

60 70 10

C

60 70 10

C

60 70 10

C

60 70 10

C

63 73.5 10.5

Input data Input data Input data Input data Input data

Change in perc. cost of A-B trip Change in perc. cost of A-B trip -10% Change in perc. cost of A-B trip -10% Change in perc. cost of A-B trip -10% Change in cost of travel

Resource cost (% of perc. cost) Elasticity of demand with respe

10 50 60

10 70

10

-10% 5%

133%

-0.5

Elasticity of demand with respe

-0.5 Elasticity of demand with respe

-0.5 Elasticity of demand with respe

-0.5

133%

D

Resource cost (% of perc. cost) Resource cost (% of perc. cost) 133% Resource cost (% of perc. cost) 133% Resource cost (% of perc. cost) 133%

A

re

ate outcomes

Base Case

:A

re

ate

Pro

ect Case 1a

:

re

ate

Pro

ect Case 1b

:

re

ate

Pro

ect Case 1c

:

re

ate

Pro

ect Case 1d

:

re

ate

Pro

ect Case 2

:

Number of trips 5,400 Number of trips 5,400 Number of trips 5,400 Number of trips 5,460 Number of trips 5,460 Number of trips 5,265

Total perceived cost of travel 268,000 Total perceived cost of travel 262,000 Total perceived cost of travel 261,100 Total perceived cost of travel 264,700 Total perceived cost of travel 263,800 Total perceived cost of travel 274,365

Average trip cost 49.63 Average perceived trip cost 48.52 Average perceived trip cost 48.35 Average perceived trip cost 48.48 Average perceived trip cost 48.32 Average perceived trip cost 52.11

Correct estimate of net benefits Correct estimate of net benefits Correct estimate of net benefits Correct estimate of net benefits Correct estimate of net benefits

McIntosh and Quarmby (component A) --> 6,000 6,150 6,150 6,300 -13,233

McIntosh and Quarmby (component B) -->

-6,000 -6,900 -3,300 -4,200 6,365

McIntosh and Quarmby (component C) -->

-7,975 -9,172 -4,387 -5,583 8,461

Total benefit 7,975 Total benefit 8,422 Total benefit 7,237 Total benefit 7,683 Total benefit -15,328

Derivation of perceived benefits Derivation of perceived benefits Derivation of perceived benefits Derivation of perceived benefits Derivation of perceived benefits

Total

perceiv-ed

cost

Differ-

ence from

BC

Total

perceiv-ed

cost

Differ-

ence from

BC

Total

perceiv-ed

cost

Differ-

ence from

BC

Total

perceiv-ed

cost

Differ-

ence from

BC

Total

perceiv-ed

cost

Differ-

ence from

BC

A-A 3,000 A-A 3,000 0 0 A-A 3,000 0 0 A-A 3,000 0 0 A-A 3,000 0 0 A-A 3,071 71 -148

A-B 30,000 A-B 27,000 -3,000 3,000 A-B 28,350 -1,650 3,075 A-B 28,350 -1,650 3,075 A-B 29,700 -300 3,150 A-B 30,713 713 -1,481

A-C 42,000 A-C 42,000 0 0 A-C 40,200 -1,800 0 A-C 42,000 0 0 A-C 40,200 -1,800 0 A-C 42,998 998 -2,074

B-A 30,000 B-A 27,000 -3,000 3,000 B-A 28,350 -1,650 3,075 B-A 28,350 -1,650 3,075 B-A 29,700 -300 3,150 B-A 30,713 713 -1,481

B-B 4,000 B-B 4,000 0 0 B-B 4,000 0 0 B-B 4,000 0 0 B-B 4,000 0 0 B-B 4,095 95 -198

B-C 56,000 B-C 56,000 0 0 B-C 56,000 0 0 B-C 56,000 0 0 B-C 56,000 0 0 B-C 57,330 1,330 -2,765

C-A 42,000 C-A 42,000 0 0 C-A 40,200 -1,800 0 C-A 42,000 0 0 C-A 40,200 -1,800 0 C-A 42,998 998 -2,074

C-B 56,000 C-B 56,000 0 0 C-B 56,000 0 0 C-B 56,000 0 0 C-B 56,000 0 0 C-B 57,330 1,330 -2,765

C-C 5,000 C-C 5,000 0 0 C-C 5,000 0 0 C-C 5,000 0 0 C-C 5,000 0 0 C-C 5,119 119 -247

Total

268,000

Total

262,000 -6,000 6,000

Total

261,100 -6,900 6,150

Total

264,700 -3,300 6,150

Total

263,800 -4,200 6,300

Total

274,365 6,365 -13,233

Notes: -->

Change in

con-sumer

surplus

Change in

con-sumer

surplus

Perc. travel cost Change in

con-sumer

surplus

Trips Trips (change A-B trips according to

elasticity but leave other trips

unchanged)

Trips (no change from Base Case) Trips (change number of trips

according to elasticity)

Trips (no change in total trips, but

redistribute trips to improved link)

Trips (change A-B trips according to

elasticity)

From zone

To zone

To zone

To zone

From zone

To zone

Perceived cost of travel (-10%

change in A-B trip cost)

From zone

Perceived cost of travel (-10%

change in A-B trip cost)

From zone

Perceived cost of travel

To zone

From zone

To zone

From zone

Perceived cost of travel (-10%

change in A-B trip cost)

Benefit increases compared with option 1c

because of trip diversion. But benefit is less

than for option 1b when resource cost of

generated trips is more than the perceived

cost.

An increase in travel costs results in a total

benefit that is greater than the consumer

surplus if resource costs are greter than

perceived costs.

Perceived cost of travel (-10%

change in A-B trip cost)

To zone

From zone

Perceived cost of travel (5% increase

in unit travel costs)

To zone

From zone

From zone

Meets Neuberger Method 1 conditions.

M&Q equations A and B cancel out each

other and are hence redundant, ie meets

Neuberger comment that no need to know

perceived costs in Method 1.

Benefit increases because more trips take

advantage of improved A-B link.

Benefit decreases compared with previous

case (option 1b) when resource cost is

greater than perceived cost.

Change in

con-sumer

surplus

Change in

con-sumer

surplus

Perc. travel cost Perc. travel cost Perc. travel costO-D

pair

Project Case 2 (with uniform increase in

cost of travel, eg change in fuel tax)

Enter resource/perceived

proportion, eg 125% (or use D

for default value of 133%) --->

Change in user benefits (ie

incr. in consumer surplus)

Change in perceived user costs

To zone

From zone

To zone

From zone

Project Case 1d (improve A-B route,

with additional trips on A-B from

generation and diversion)

To zone

Base Case Project Case 1a (improve A-B route, no

change in trips)

Project Case 1b (improve A-B route,

same no. of network trips but different

distribution)

Project Case 1c (improve A-B route, with

additional trips on A-B from generation)

To zone

Change in user benefits (ie

incr. in consumer surplus)

Change in user benefits (ie

incr. in consumer surplus)

From zone

Change in perceived user costs

Change in resource cost

Change in user benefits (ie

incr. in consumer surplus)

Change in perceived user costs

Change in resource cost

O-D

pair

Change in perceived user costs

Change in resource cost

Change in user benefits (ie

incr. in consumer surplus)

Change in perceived user costs

Change in resource cost Change in resource cost

Perc. travel costO-D

pair

O-D

pair

O-D

pair

O-D

pair

Total

perceiv-

ed travel

cost

Note: red cells contain variables that

can be altered