Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

- the methods applied to estimate existing and future demand: the use of single or multi-modal models,extrapolations from past trends, fares and costs for users, pricing and regulation policies, thecongestion and saturation levels of networks, expected new investments;- the competing modes and alternative routes: fares and costs for users, pricing and regulation policies,the congestion and saturation levels of networks, the expected new investments in competing nodes;- any deviation from past trends and comparison with large-scale prospects on a regional, national andEuropean level.In the presence of uncertainty about future demand trends, it may be advisable to develop two scenarios,an optimistic and a pessimistic one, and to relate the two hypotheses to GDP trends or to othermacroeconomic variables.As to the solution(s) for the project, it should first be remembered that the transport system is multimodal.The same transport demand may, at least partially, be met by various transport modes andtherefore these modes may compete for the same demand. Competition may not only occur betweenmodes but even within the same transport mode, for example between roads or between nodes, like portsor airports.The estimates of the potential demand should primarily clarify the composition of the traffic attracted bythe project in terms of:- the existing traffic,- the traffic which has been diverted from other modes,- the generated or induced traffic: the traffic that only occurs in the presence of a new infrastructure, orin the case of an increase in the capacity/speed of the existing infrastructure.Particular attention should then be paid to the sensitivity of expected traffic flows to critical variablevalues such as:- the elasticity with respect to time and costs, that is implicit in the calculation of the traffic divertedfrom other modes: travel demand characteristics, structure and elasticity are particularly important inthose projects related to charged infrastructures, since the expected volumes of traffic are determinedby the level of fares; elasticity with respect to time and costs then needs to be properly disaggregatedand compared with data provided in literature or data taken from other projects;- the levels of congestion on competing roads and the strategies in place for these modes, for example interms of fare policies. This point is particularly relevant for long term investments: in the time spanrequired to complete the intervention, the traffic that may be potentially acquired by the newinfrastructure may shift to other modes and, if so, then it may be difficult to move it back.In the first instance, induced traffic could be estimated on the basis of demand elasticity with respect togeneralised transport costs (time, tariffs, comfort). Nevertheless, since traffic is dependent upon the spatialdistribution of economic activities and households, then the recommendation for a correct estimate is toanalyse the changes in accessibility to the area induced by the project. This will normally require the use ofintegrated regional development-transport models. In the absence of these instruments, it is necessary toestimate the generated traffic with great caution and to carry out a sensitivity or risk analysis of this trafficcomponent.CHECK LIST FOR THE TRANSPORT DEMAND ANALYSISAnalysis of the demand/capacity ratio of the new infrastructure for any alternative project which may be taken into consideration. This will bebased on:- the service levels of the infrastructure in terms of a traffic/capacity relationship (traffic flows on roads, passengers on public/collectivetransport systems, etc.). It is useful to separately analyse the different traffic components both in terms of flow types (internal, exchange orcross traffic) and on the basis of their origin (traffic diverted from other transport modes and any generated traffic);- the travel times and costs for the users;- the transport performance indicators: passengers*km and vehicles*km for passengers, tons*km and vehicles*km for goods;- the traffic safety levels in the new infrastructure or in the new configuration of the existing infrastructure;- quantification of the demand not fulfilled in the presence of several alternatives and of congestion phenomena. To find out which traffic hasbeen ‘rejected’ is an important element to evaluate options;- definition of the relevant alternatives that will be evaluated from an environmental, financial and economic viewpoint..72