Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

Table 4.5 Consumer’s surplusBenefits (Millions ofPassengers trips (Millions) Unit Benefits (€)PassengersEuros)BAU Free of charge Tolled Free of charge Tolled Free of charge TolledExisting traffic 32.2 32.2 32.2 1.48 0.40 47.6 12.9Generated traffic 0.0 0.8 0.3 0.74 0.20 0.6 0.1Total 32.2 32.9 32.4 48.2 12.9FreightTons (Millions) Unit Benefits (€) Benefits (Millions of Euros)BAU Free of charge Tolled Free of charge Tolled Free of charge TolledExisting traffic 2.1 2.1 2.1 2.4 0.2 5.0 0.5Generated traffic 0.0 0.4 0.1 1.2 0.1 0.4 0.0Total 2.1 2.5 2.2 5.5 0.5Table 4.6Gross Producer’s Surplus (motorway operator) and Road User’s SurplusRevenues and costs (Millions of Euros) Benefits (Millions of Euros)BAU Free of charge Tolled Free of charge TolledPassengerMotorway operator revenues 0.0 0.0 19.6 0.0 19.6Car users unperceived operating costs -76.4 -82.0 -77.9 -5.6 -1.5Total -76.4 -82.0 -58.4 -5.6 18.1FreightMotorway operator revenues 0.0 0.0 8.9 0.0 8.9Trucks unperceived operating costs -21.3 -26.1 -24.5 -4.7 -3.2Total -21.3 -26.1 -15.6 -4.7 5.7Table 4.7 Government net revenuesTotal Revenues (Millions of Euros)Benefits (Millions of Euros)Fuel taxesBAU Free of charge Tolled Free of charge TolledPassengers 68.8 73.9 70.2 5.0 1.3Freight 23.7 29.0 24.8 5.3 1.0Tables 4.9 and 4.10 summarises the calculations of social costs and benefits of the two options. TheEconomic Net Present Values and the Rates of Return of the two options considered are:Free motorwayTolled motorwayENPV (Millions of Euros) 212.9 -41.3ERR (%) 7.8 5.0B/C Ratio 1.3 0.9The results of the analysis show that there is a substantial advantage in the performance of the indicatorsfor the free motorway option. Traffic on the motorway is much higher and as a consequence both usersand society are better off, as total time savings are higher and externalities lower than in the tolledalternative. With the introduction of a tolling system the new motorway would remain under-utilisedduring the initial years. This is due to the fact that, although there is some congestion along the existingnetwork, this is not high enough to induce a significant proportion of the demand to pay for the increasedspeed advantages allowed by the new motorway. The introduction of a pricing scheme only on some linksof the network, as in this case, shifts traffic from the priced modes or links of the network to the othernon-priced links or modes. From a welfare point of view, this could lead to a less positive effect. In orderto maximise the net benefits of the investment, the analysis shows that it might be better to postpone theintroduction of a tolling system to a second stage, (i.e., where traffic flow growth is sustained).135