Research 350 - NZ Transport Agency

ECONOMIC DEVELOPMENT BENEFITS OF TRANSPORT INVESTMENT
appears to have accrued through increased visitation to local towns from people outside the
region and increases in regional land values. Direct travel time benefits/ operating cost
benefits to regional residents appear to have been only a small component of total regional
benefits.
Another issue arises from changes in travel behaviour. For example, the opening of a new
regional road link may result in new job opportunities, perhaps out of the local region. People
who walked to work may now decide to drive. In such cases O-D data focussing on travel time
benefits may indicate an increase in travel times. Presumably the increase in travel times is
justified by the superior employment pay/conditions at more distant locations. However O-D
data will not pick up these effects. 25
A further issue is that O-D work is, by necessity, cross-sectional. Thus, results may be
complicated by migratory movements over project timeframes, including movements induced
by the transport improvement in or out of the region in question. This issue has been noted
above in considering the definition of the ‘population of standing’. While this may be
overcome by good planning and modelling work, it is necessary to consider who the ‘regional
population’ is defined to be over time, and whether (in the case of large inter-regional
population shifts) there may be changes in travel behaviour over time.
Finally, it is noted that the collection and analysis of detailed O-D data generally involves
additional costs. Analysts and policymakers will need to consider whether the advantages of
having access to such data given the above-noted situational constraints justify such
additional expenditure.
Naturally, not all regional transport projects involve such complications. In particular, SCBA
may be much more easily applied to projects in which infrastructure construction mainly
occurs within the local area and where local residents are the main beneficiaries, e.g.
upgrading of local roads used almost entirely by local residents 26 . However, such issues often
arise, at least to some extent, when ringfencing is attempted.
A further issue, connected with discussions above, is that SCBA will be unable to discern
some of the key issues of interest to policymakers when framing regional policy, e.g.
employment outcomes or changes in GRP/GSP.
These issues do not imply that SCBA should not be employed to estimate regional benefits.
As is the case on a national level, SCBA generally represents the best approach for estimating
efficient economic growth. However, they do indicate the need for caution and definitional
accuracy when estimating ‘regional’ economic benefits.
In situations where network impacts complicate the assessment of regional economic effects,
a global SCBA could be developed. This could be complemented by a more descriptive
analysis of local effects focusing on changes in income and land values, without seeking to
25 Similar issues can cause a complication for SCBA in general (and there are various technical responses
to this). However, this may be even more true at the regional level, given the major changes such
improvements can have on relatively small sub-groups.
26 The BTE also provides a useful regional case study of in its Economic Benefits of Upgrading the
Canberra-Tumut (Brindabella) Road (1997). This measured regional benefits accruing from a road wholly
within a defined regional area by assessing the proportion of generalised travel cost savings accruing to
the regional population. Allowance was also made for a (very small) induced interregional tourism benefit
as reflected by new/longer visitor stays and an estimate of the profit margin per tourist per night based
on National Accounts data.
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