Institute for Transport StudiesFACULTY OF ENVIRONMENT

Is the equity value of time really fair?

STAR Conference, Glasgow, 2014

Guoqing Zhang

GuoQing.Zhang@WSPGroup.com.cn

James Laird

J.J.Laird@its.leeds.ac.uk

Structure

• Part 1: Motivation

• Part 2: Research objectives

• Part 3:Methodology

• Part 4: Synthetic analysis

• Part 5: Scottish case studies

• Part 6: Conclusions

Motivation

• A key element of benefit from transport infrastructure improvements is travel time savings

• The value travellers attribute to travel time savings is dependent on a number of variables – but principally income and distance

• Equity values of VTTS are used in the Cost Benefit Analysis (CBA) as they are regarded as fair – preventing investment concentrating in high income areas– But equity VoT may lead to a distortion in investment

– Money might be invested in a high cost scheme when people would prefer a low cost

Research objectives

• What is the economic impact of using ‘local’ value of time savings in appraisal?

• What is the implied distributional weights from using a equity VoT?

- Are such weights appropriate?

- Do they vary by scheme?

• What are the challenges associated with using local VoT in an appraisal?

Methodology --- a two stage method

• Stage 1: Synthetic analysis

- Deriving household income

- Deriving trip length

- Deriving VTTS values per trip

- Calculating the user benefit

- Estimating distributional weights

• Stage 2: Scottish case studies

- Deriving household income

- Use demand, trip distance, journey times from Transport Scotland

- Deriving VTTS values per trip

- Calculating the user benefit

- Estimating distributional weights

Synthetic analysis

Equation used to update the VoTs into 2010 prices

VoTs for commuting purpose in 2010 price

VoTs for other non-work purpose in 2010 price

Synthetic analysis

Non-work VTTS lookup table

Synthetic analysis --- Household income fitting

• Seven areas• Distributions fitted to income data from Family Resources

Survey• E.g. Scotland

Synthetic analysis

Scenario1: Fixed trip distance of 10 miles with non-work journey purpose, and every household only produces one trip enjoying 10 minutes’ reduction (10,000 households )

Scenario 2: trip distance varying with non-work journey purpose and 10 minutes’ saving per trip for each household (10,000 households )

Case studies

Analysis of Scheme 1

Analysis of Scheme 2

Case studies

Distributional Weights for scheme1

Distributional Weights for scheme2

Conclusions

• There is a spatial bias with the equity value of time, towards urban schemes

• Distance effects are more important than income effects– User benefits of one of the case studies increased by 24%;

– User benefits of the second scheme went from negative to positive.

• Implied distributional weights of the equity value of time vary– Introduces an inconsistency

• Further research– Expansion of analysis to more trip purposes and schemes;

– Uncertainty in estimating income. Explore using GIS data (e.g. census data).

Thank you for your attention.

Any questions?