Research 350 - NZ Transport Agency

2. APPROACHES TO ASSESSING NATIONAL ECONOMIC BENEFITS
Responses
There is little debate about the need to include environmental (and other) externalities in
SCBA, though SACTRA has been somewhat ambivalent as to whether these are included
‘above the line’ or below it. Recently released Australian Transport Council guidelines (ATC
2004) recommend inclusion of externalities, while noting the difficulty of valuing the
externalities in monetary terms. Austroads (2003a) provides unit values for environmental
externalities for use in road projects calibrated to New Zealand and Australian conditions.
The effect of including environmental impacts in SCBA can vary. In the case of a fixed trip
matrix, it is likely that project benefits will increase due to environmental benefits associated
with the improved transport conditions, albeit modest benefits commensurate with the lack
of any effect on travel behaviour. The outcome would be different where travel demand
changes as a result of a project, but is seems likely to reduce project benefits if travel
demand rises.
The inclusion of environmental externalities does not present an insurmountable issue for
SCBAs and, in principle; they should be included within such an assessment. However,
notwithstanding the Austroads work, monetary values are not available for every appraisal
context. Where this is the case, such externalities may be included ‘below the line’ as a
qualitative (dis) benefit.
Broader economic benefits
It can be claimed that SCBA does not take account of some broader economic benefits,
primarily because it is a partial equilibrium approach. This is addressed in the general sense
in the next subsection. Consideration is then given to the nature of these benefits, which
include: logistics benefits; agglomeration benefits; other positive externalities; taxation
impacts; and regional impacts.
2.5.2.1 SCBA as a partial equilibrium approach
Issues
A typical transport SCBA captures impacts from investment in transport by examining only
the effects of a proposal on transport outcomes, which are typically reduced travel time,
vehicle operating costs and accident costs. Critics of SCBA often characterise this ‘partial
equilibrium’ approach, which assumes that the broader economy is ‘fixed’ (e.g. typically
treating factors such as the prices of transport inputs as exogenous and valuing savings in
inputs at observed market prices), as thus failing to take account of all of the effects of a
proposal 6 .
Such critics argue that the development of transport infrastructure can yield more extensive,
follow-on or transmitted economic benefits throughout the economy that are not picked up in
SCBA due to its assumptions about exogeneity. These additional benefits (or ‘positive
externalities’) are argued to be above and beyond those accruing due to the passing through
of benefits such as initial travel time savings and vehicle operating cost savings to producers
and consumers. Two commonly cited positive externalities claimed to be ‘omitted’ by SCBA
6 In fact there is some blurring between the ‘partial equilibrium’ approach offered by SCBA and the
general equilibrium approach offered by economic models. This is an issue which is further explored
below.
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