Research 350 - NZ Transport Agency

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ECONOMIC DEVELOPMENT BENEFITS OF TRANSPORT INVESTMENT Table 2.5 New Zealand best practice approach to SCBA Inclusion of allowance for ‘Traditional <strong>Transport</strong> Land use Imperfect Environmental benefits’ based on behaviour responses in competition externalities fixed trip matrix (induced (and product market (travel time diverted) (logistical savings, vehicle demand) adaptation operating cost agglomeration), savings, accident property market, cost savings) labour market, other) Yes Yes No, apart from previously monetised values incorporated in VTTS or elsewhere (unless strong contextual evidence of material effects exists, justifying additional complexity). No (unless strong contextual evidence of material effects exists, justifying additional complexity). Yes (using previously monetised values only) If no monetised values exist, assess ‘below the line’ as qualitative indicator. The New Zealand ‘best practice’ approach therefore resembles CBA*, specified by SACTRA above, rather than their ‘fully specified’ CBA***. As indicated above, allowance for induced and diverted demand accounts for most of the flow-on benefits arising from a transport development, and, in most cases, other effects (land use, imperfect competition, environmental benefits) will make only small differences to the assessed SCBA. Further, in many cases, these effects may ‘go either way’; they do not necessarily represent ‘additional benefits’. Nonetheless, the proposed approach also suggests that, in the presence of strong contextual evidence, consideration be given to whether land use effects and imperfect competition may be issues in the assessment. Therefore, a decision rule should be developed along the lines that: • the starting point should be a default ‘no additional (dis)benefits’ position; • strong contextual evidence (including material evidence) should be provided for the existence of such additional (dis)benefits (perhaps gathered through survey work and/or industry/stakeholder consultation); • consideration be given to whether there are other, more efficient means for addressing structural issues such as imperfect competition than the transport proposal; • consideration should be given as to whether modelling the additional benefits is justified by the additional cost and complexity involved (i.e. effectively an internal costbenefit analysis); and 64
2. APPROACHES TO ASSESSING NATIONAL ECONOMIC BENEFITS • if it is considered that there is strong contextual evidence for the above effects, but the effects are too complex to model, these effects could be represented ‘below the line’ of the SCBA through qualitative analysis. The following issues should also be noted in respect of induced/diverted demand, land use factors, imperfect competition and environmental impacts in developing a ‘best practice’ SCBA: • Induced/diverted demand – This is the important issue of those discussed above, from both a technical and presentational viewpoint. While generally small, allowing for induced demand addresses many of the typical criticisms about ‘omitted benefits’ from SCBA, while also directly dealing with often-cited community concerns regarding the impacts of generated traffic. Many studies already employ measures of induced demand. However, in may cases these are based on ‘off the shelf’ elasticities or else appear as model outputs from a transport demand model, where behavioural assumptions are unknown (or questionable). Though induced demand effects may be small, there is obviously always a case for better estimation of impacts based on context specific information. Depending on the study in question (and the resources available) use of direct measures of induced demand, such as those derived from stated preference work and other survey work, should be preferred. • Logistics effects – As indicated above, unit values incorporating some of these are already in existence. An example is Austroads’ inclusion of freight travel time allowances in its value of time measures though more work needs to be done in this area and it is arguable that reliability impacts should also be included. Such unit values should be employed if available. As indicated, to the extent that there is a strong argument for additional logistical impacts arising from improved logistics, beyond those incorporated in unit values, these should be considered based on strong contextual evidence, with a default ‘no benefits’ position. • Agglomeration and other land use effects – The empirical case for inclusion of agglomeration benefits does not appear to be strong. Further, an approach which values these via divergent values of travel time savings is inconsistent with Transfund's equity based approach. Land use issues connected with the property and labour markets have been noted above. Regardless of whether a LUTI style model is ever developed in New Zealand, if additional property and labour market (dis)benefits are claimed, questions of double counting and parsimony must be carefully examined. • Imperfect competition – The effects of this within a New Zealand context may be even smaller then SACTRA’s past estimates for the UK. Allowance for imperfect competition should be considered only in specific cases where there is strong contextual evidence that such effects exist (e.g. breakdown of regional monopolies due to transport improvements). • Environmental impacts – Environmental impacts generally tend to be modest at best within the framework of SCBA. If monetised values exist these can be incorporated within the SCBA. If no monetised values exist, non-monetised values can be incorporated as ‘below the line.’ qualitative indicators. 65
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Research 350 - NZ Transport Agency

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