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Phil GoodwinProfessor of Transport Policy

Centre for Transport & SocietyUWE, Bristol

Transport Planning Society 26.1.2011

Getting the most out of transport investment

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What is the problem?

We know funding will be reduced

We expect it will be cut most on the ‘fringe’ areas of policy

If cuts are inevitable, what is the least damaging way they can be done?

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Eddington 2006

BCR (benefit-cost ratio) is an attempt to combine together all the economically measurable effects, such as time, health, accidents, cost... Not a perfect measure, lots of problems, but let’s just see....

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Transport Planning Society members

“TPS has conducted a membership survey with particular emphasis on the impact of the recession...(showing) ... the following top priorities:• travel behaviour change (61.2%)• road maintenance (56.5%)• walking and cycling (55%)• non-high speed rail capacity (52.6%)• Only 18% identified high speed rail as a priority,

and major trunk road schemes were even lower at 9%.  Only 10% supported grants for electric cars”. 

TPS Press Release 14.10.2010

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Recalculating Eddington’s figures

1. Not ‘average’ but ‘range’

2. Traffic growth trends not as assumed

3. A technical change in the treatment of indirect taxation

4. Eddington had lots of road schemes but few public transport and no smarter choices. Can we extend analysis to all types of transport spending?

6 of 10Cost-Benefit Analysis is not the perfect tool... but let’s

seeSuppose total benefit B produced by

expenditure on transport X is a sum of a independent expenditures, on road building, new public transport systems, smarter choices, traffic management and so on. For each, a greater benefit can be obtained by spending more money, but at a diminishing rate, as the best opportunities are carried out first, then the next best etc.

Maximise total benefit B* by making the marginal return per £ spent equal for each type of expenditure, since at any other point it will be possible to increase benefit, by swopping expenditure from one class to another.

7 of 10All classes of spending have good and bad schemes – the idea is to choose the best schemes in each class, not the ‘average’ ones. The more is spent, the less additional value....

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With caveats, information included for:

Local Safety, Smarter Choices, Cycling, Concessionary Fares, Local Bus, Local Roads, New Light Rail, HA Roads, Rail, Intelligent Speed Adaptation

(but not yet for maintenance, pedestrianisation, traffic calming except safety, optimisation of elements within policy areas, synergetic and counter-synergetic effects)

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Value for Money for Ten Policies

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ImplicationsThe most important result is the emerging proposition

that the areas of high value for money are smarter choices, cycling and pedestrian schemes, local safety schemes, some bus schemes (especially priority); much greater than traditional road capacity enlargement...(and an unresolved argument about heavy and light rail).

Traditional road building has much poorer value for money

So shift funding from worst to best. The new pattern of spending would then have: quick benefits, local focus and cheap – all plus points in current political context

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Has ‘refreshment’ solved the problems?

What is happening to traffic growth?

Value ‘for money’ – what money are we talking about?

The politics of local budgeting.

The usual suspects (value of carbon, sequence of policy assumptions, definition of the ‘do-nothing’ or ‘base’, small time savings, path-dependency of behaviour change, appraisal over terms longer than forecasts, health benefits, omission of (or confusion between) walking and cycling, mode choice assuming stable journey length distribution, non-travel alternatives, synergy, implausible claims

for economic growth......)

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Car use has levelled off and may even be falling

13 of 10Presumption that ‘economy’ = ‘fast long

distance’

LTT 12.11.2010

14 of 10Indirect TaxationA knotty problem 2003-2009, now

resolved*Suppose you build a road, and it induces more traffic, and this generates fuel tax revenue – is this a ‘benefit’ in social cost benefit terms?

*Or is it?

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That indirect tax puzzle?

LTT 24.12.2010

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The Smarter Choices Paradox

• Current allocation of funds is very small even in the champions; most funds still for traditional infrastructure, maintenance, etc. And capital spending is ‘good’ while revenue spending is ‘bad’.

• That is a danger that cuts will operate in the opposite way – small ‘discretionary’ spending may just vanish;

• But the best value for money in that context is to increase SC spending, not reduce it, to get swift cheap benefits.

• This will not be easy to understand at local level.

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Opportunities in the gloom?

‘Transport quality not quantity’ is timely

Clear away some of the inheritance of flagship projects? (But do they ever go away?)

Appetite for some cheap ways of making things better, not expensive ways of slowing down the pace at which they get worse

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What next?

From convergence to divergence in BCRs Unstable assumptions about growth and behaviour The magnetism of flagships The word ‘economy’ relaxes usual standards of

evidence

So evidence-based policy gives way to policy-based evidence?

BUT the debate is broader, better-based, and includes practical experience as well as models.