Least-Cost Transportation Planning
Creating An Unbiased Framework For Transport Planning
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Victoria Transport Policy Institute
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Updated
22 July 2008
This chapter describes transportation planning and investment reforms that allow demand management strategies to be implemented when they are cost effective, taking into account all benefits and costs.
Least-Cost Planning (or Integrated Planning) is an approach to resource planning that:
· Considers demand management
solutions equally with strategies to increase capacity.
· Considers all significant
impacts (costs and benefits), including non-market impacts.
· Involves the public in
developing and evaluating alternatives.
Least Cost Planning reflects best practices in transport Evaluation and Planning. Current planning practices tend to overinvest in road and parking capacity and undervalue TDM strategies (Market Principles). When all impacts are considered, TDM is often the most cost effective solution to transportation problems (Why TDM?). Least-Cost Planning first developed in the field of energy planning, when decision-makers realized that it can be cheaper to invest in conservation than to build additional electrical generation and distribution capacity. The same approach is now being applied to transportation planning.
For example, Least Cost Planning means that transit improvements, rideshare programs, or road pricing can be implemented instead of roadway capacity expansion if they improve mobility at a lower total cost, including costs to governments, businesses, consumers and the environment. If a particular demand management strategy can reduce traffic or parking demand by 10%, it is considered to be worth at least as much as a 10% increase in road or parking facility capacity, and often more when indirect impacts, such as environmental and safety impacts, are considered.
Least-cost planning involves the following steps:
1. Identify objectives (general
things that you want to achieve) and targets (specific things that you want to
achieve).
2. Identify various strategies
that can help achieve the objectives and targets. These can include both
projects that increase capacity and demand management strategies.
3. Evaluate the costs and
benefits of each strategy (including indirect impacts, if any), and rank them
according to cost-effectiveness or benefit/cost ratios.
4. Implement the most
cost-effective strategies as needed to achieve the stated targets.
5. After they are implemented,
evaluate the programs and strategies with regard to various performance
measures, to insure that they are effective.
6. Evaluate overall results
with regard to targets to determine if and when additional strategies should be
implemented.
Least Cost Planning methods can be applied to many different types of problems. For example, they can be applied to find the most cost effect way to increase safety, improve mobility options for non-drivers or reduce air pollution emissions. Many TDM strategies can help achieve a variety of planning objectives, and so tend to receive a high rating when evaluated using Least Cost principles (Win-Win Solutions).
For example, a roadway expansion project may have an annualized cost (the additional annual payment needed to pay off capital costs and any additional operating costs) of $1 million dollars and be able to accommodate 2,000 additional peak-period travelers, which works out to be $500 per additional vehicle-year, $2.00 per additional vehicle-day (assuming 250 annual work days). This is the unit benefit provided by the roadway expansion.
Transportation Demand Management can provide comparable benefits by reducing congestion or avoided roadway expansion costs. For example, if Road Pricing or Public Transit Improvements reduce peak-period traffic volumes by 2,000 vehicles, this has the same congestion reduction benefit as roadway expansion, and provides additional benefits such as reduced downstream congestion, reduced parking costs, consumer cost savings, reduced accidents, improved mobility options for non-drivers, energy conservation and emission reductions. The exact impacts vary depending on circumstances, and not all TDM strategies provide all of these benefits. For example, Road Pricing benefits depend on the type of travel responses since shifting vehicle travel from peak to off-peak times, or to less congested routes, provides only a few benefits. Reductions in total vehicle travel and shifts to alternative modes tend to provide far more benefits.
Table 1 Evaluating
Multiple Benefits
|
Planning Objective |
Road Expansion |
Congestion Pricing |
Transit Improvement |
|
Congestion reduction |
$2.00 |
$2.00 |
$2.00 |
|
Reduced downstream congestion |
|
$0.50 |
$1.00 |
|
Parking cost savings |
|
$0.00 |
$4.00 |
|
Consumer costs savings |
|
$0.00 |
$2.00 |
|
Reduced traffic
accidents |
|
$0.00 |
$1.00 |
|
Improved mobility
options |
|
$0.00 |
? |
|
Pollution reductions |
$0.10 |
$0.10 |
$0.50 |
|
Energy conservation |
$0.05 |
$0.05 |
$0.25 |
|
Smart growth land use
objectives |
|
? |
? |
|
Total Benefits |
$2.15 |
$2.65 |
$10.75 |
Roadway expansion reduces congestion and may cause small reductions in pollution emissions and energy consumption, but provides few other benefits. Congestion pricing that shifts travel to alternative times and routes may provide some additional benefits, such as reduced downstream. However, transit service improvements that attract motorists provide a wide range of benefits, including some that may be difficult to quantify, such as improved mobility for non-drivers and support for smart growth land use planning objectives.
In fact, roadway expansion tends to provide even smaller net benefits over the long term due to Induced Vehicle Travel, which reduces congestion reduction benefits and increases other problems such as downstream congestion, accidents, energy consumption and pollution emissions over the long run.
Least Cost planning recognizes that there is usually no single strategy that will address problems, and it is not always possible to predict the effectiveness of a particular management strategy or anticipate all future conditions. It allows Contingency-Based Planning, that is, planning that addresses uncertainty by deploying solutions on an as-needed basis. For example, a transportation plan may identify 5 strategies to implement immediately, another 4 to implement in two years if stated targets are not achieved, and another 3 can be implemented in the future if needed. This tends to be cost effective and flexible, because strategies are only deployed if they are needed, and additional strategies can be ready for quick deployment if unexpected changes create additional needs. This approach is ideal for medium and long-range transportation and land use planning.
Current planning and funding practices often favor capital expenditures over maintenance and Traffic Operations, and highway expenditures over transit or TDM programs (Beimborn and Puentes, 2003). Capital projects are considered prestigious and some government funds may only be used for major capital improvements. This encourages jurisdictions to expand infrastructure and implement major new projects even when they have inadequate resources to maintain and operate existing facilities, or when incremental improvements to existing facilities and demand management strategies would provide greater economic benefits. Several omissions and distortions in current transportation planning practices tend to violate least-cost planning principles (Comprehensive Transportation Planning).
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The Case For Economic Neutrality in Transport
Planning Imagine
that a teacher favored boys over girls, or tall students over short students.
This is not only unfair, it is also
inefficient, because some smart short girls may be discouraged from preparing
for higher education, leaving less qualified but taller boys to fill those
slots. As a result, the pool of physicians, lawyers and engineers would be
less than optimal. Similarly,
it is both unfair and inefficient for decision-makers to arbitrarily favor
one mode over others, for example, automobile transport over walking and
cycling or public transit, because this would favor some people (those who
drive a lot) over others (those who drive little or prefer alternative
modes), and because it can result in resources being allocated in ways that
are not optimal. Perhaps, out of their personal prejudice, local officials
are willing to devote $1,000 worth of public resources (money, municipal
employee time, or land devoted to roads and parking facilities) to
accommodate an automobile commute trip, but only $100 to accommodate commuting
other modes. The result would be a bias in the quality of services available
to non-drivers, and to the degree that travelers respond to such favoritism,
economically-excessive amounts of automobile travel, and less walking,
cycling and public transit travel than is optimal. There
are many possible causes of bias in transportation decision-making. For
example, a particular mode may receive extra support because it tends to be
used more by influential people (busy professionals, such city councilors and
agency administrators). A particular problem may receive extra attention
because it is easier to measure (traffic congestion is easier to measure than
delay to pedestrians and cyclists). A particular type of transport
improvement may be easier to finance because, through accidents of history,
it has dedicated funding unavailable to other options. For example, it may be
easier to finance road and parking facilities than sidewalk and path
improvements or mobility management programs, even if they are more cost
effective overall. Because
transport planning decisions are often mutually exclusive (road widening
improves vehicle travel but often degrades walking and cycling conditions,
and a location that optimizes automobile access is often difficult to reach
by other modes), even modest bias can have large total effects. For example,
zoning codes that mandate generous parking supply not only create more
automobile-oriented, dispersed land use development, it also tends to prevent
parking pricing (a basic rule of economics is that increased supply reduces
prices), reducing the feasibility of access by other modes. Below
are types of bias common in Conventional Transport
Planning. In practice, most of these biases tend to favor mobility over
accessibility and automobile travel over other modes.
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Least-Cost Planning implementation usually involves policy Changes by state, provincial, regional or local
governments, and changes in administrative practices within a transportation
agency. It may require legislation to reform transportation planning and
funding practices (Puentes and Prince, 2003). Some
“Fix It First” means that transportation planning and funding give top priority to maintenance, operations and incremental improvements to existing transportation facilities, and major capital projects are only implemented if there is adequate additional funds (SELC and ELI, 1999; NGA, 2004).
Least-Cost Planning provides a foundation for TDM strategies to compete equally with capacity-expansion for resources. Its travel impacts depend on how it is implemented, which TDM strategies are implemented, and how effective they are at achieving their objectives. Research by Johnston and Ceerla (1995) indicate that applying least-cost planning practices to regional highway funding would result in significant shifts from investments in roadway capacity expansion to various travel demand management programs, resulting in about a 10% reduction in regional vehicle travel. Additional funding and travel shifts could occur if least cost planning were applied to local transportation and parking planning decisions.
Table 2 Travel Impact Summary
|
Objective |
Rating |
Comments |
|
Reduces total traffic. |
2 |
Usually increases support
for TDM. |
|
Reduces peak period
traffic. |
2 |
" |
|
Shifts peak to off-peak
periods. |
2 |
" |
|
Shifts automobile travel to
alternative modes. |
2 |
" |
|
Improves access, reduces
the need for travel. |
2 |
" |
|
Increased ridesharing. |
2 |
" |
|
Increased public transit. |
2 |
" |
|
Increased cycling. |
2 |
" |
|
Increased walking. |
2 |
" |
|
Increased Telework. |
2 |
" |
|
Reduced freight traffic. |
2 |
" |
Rating from 3 (very
beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.
Benefits include more balanced and efficient transportation, more cost-effective investments, more flexible solutions, and a more diverse transportation system (Least-Cost Planning is by definition more economically efficient than planning that restricts the range of solutions that can be applied to transportation problems). A more diverse and efficient transportation system tends to increase consumer savings and choice. A less automobile-dependent transportation system tends to reduce road risk and environmental costs.
Costs include transition costs and any additional administrative activities required to incorporate more factors in transportation planning.
Table 3 Benefit Summary
|
Objective |
Rating |
Comments |
|
Congestion Reduction |
2 |
Allows the most cost
effective congestion reduction solution. |
|
Road & Parking Savings |
3 |
Allows most cost effective
solutions to road and parking problems. |
|
Consumer Savings |
2 |
Tends to improve transport
choice. |
|
Transport Choice |
2 |
Tends to increase modal
choices. |
|
Road Safety |
2 |
Tends to reduce automobile
use. |
|
Environmental Protection |
2 |
Tends to reduce automobile
use. |
|
Efficient Land Use |
2 |
Tends to encourage more
efficient land use. |
|
Community Livability |
2 |
Tends to reduce automobile
use. |
Rating from 3 (very beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.
Least-Cost Planning tends to provide equity benefits by creating more neutral public policies with respect to transportation investments. A more efficient and diverse transportation system tends to benefits lower-income and transportation disadvantaged people by improving their mobility options and increasing access for non-drivers.
Table 4 Equity Summary
|
Criteria |
Rating |
Comments |
|
Treats everybody equally. |
2 |
Allows alternative modes to
be considered and funded. |
|
Individuals bear the costs
they impose. |
3 |
Can reduce unjustified
subsidies for automobile travel. |
|
Progressive with respect to
income. |
3 |
Usually improves affordable
transport options. |
|
Benefits transportation
disadvantaged. |
3 |
Increases transport options
for non-drivers. |
|
Improves basic mobility. |
3 |
Usually improves transport
options. |
Rating from 3 (very
beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.
Least-Cost Planning can be applied by any government agency involved in transportation planning. It is particularly appropriate in urban areas with significant congestion and environmental problems.
Table 5 Application Summary
|
Geographic |
Rating |
Organization |
Rating |
|
Large urban region. |
3 |
Federal government. |
3 |
|
High-density, urban. |
3 |
State/provincial
government. |
3 |
|
Medium-density,
urban/suburban. |
3 |
Regional government. |
3 |
|
Town. |
3 |
Municipal/local government. |
3 |
|
Low-density, rural. |
2 |
Business Associations/TMA. |
2 |
|
Commercial center. |
3 |
Individual business. |
1 |
|
Residential neighborhood. |
2 |
Developer. |
1 |
|
Resort/recreation area. |
2 |
Neighborhood association. |
1 |
|
|
|
Campus. |
3 |
Ratings range from 0 (not
appropriate) to 3 (very appropriate).
Policy Reform
Least-Cost Planning and investment practices support most other TDM strategies. It is closely related to Institutional Reforms, Comprehensive Transportation Planning, Prioritizing Transportation, Traffic Operations, TDM Programs, Change Management, Contingency-Based Planning, and Comprehensive Market Reforms.
Government policies and agencies are the key stakeholders for implementing Least-Cost Planning. Transportation planners, educators and consultants may need to change their practices. The public may become more directly involved in transportation decision-making.
There are a variety of political and institutional barriers
to Least-Cost Planning. Some jurisdictions (particularly
Guides listed below describe how to implement Least-Cost Planning. The least cost planning methodology can be broken down into seven basic steps:
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How
many efficiency experts does it take to replace a light bulb? None.
Efficiency experts replace only dark bulbs. |
The
TravelSmart program in
Land
use integration: Recognizing the strong links between transportation and land use, the
city's official plan was revised to minimize the demand for car travel by
influencing growth patterns. The plan now favours a compact form of
development, situating accommodation close to employment and community
services, and increasing density of the central area.
Less
expensive road structure alternatives: To avoid expensive improvements to road networks,
the city has slowed or halted development in some areas and identified
underutilized arterial corridors for access to the downtown core. Rather than
building bypasses over the busy highway that runs through town, the city
encourages residents to use alternatives to the highway.
Improved
public transit:
A comprehensive travel plan was developed to improve the Level
of Service and provide alternatives to the single occupant vehicle. Some
improvements include increased frequency of service to outlying communities and
the use of smaller buses that feed into the main system.
Promoting
bicycle use:
The Kamloops Bicycle Plan identifies $6 million worth of additional cycle
routes and initiatives for businesses to provide "end of trip"
facilities to cyclists, such as showers and bike racks.
Promotional
programs:
Transportation alternatives, such as carpooling, biking and walking, are
promoted through workshops and seminars in workplaces; the "Safe Routes to
School" program in schools; "Go Green" billboards on commuter
streets; and door-to-door neighborhood education by city staff. The plan
recognizes the need for an ongoing awareness campaign and community involvement
to sustain TravelSmart.
Total
project planning costs $300,000, of which $245,000 was funded by the city and
$55,000 by the province. The full program is funded through city's general
revenue, development cost charges, the B.C. Transportation Financing Authority,
specific developers and BC Transit.
TravelSmart
will be updated every five years as one component of "Kamplan", the
city's growth management strategy.
After
three years of operation, the program has improved air quality and reduced
planned road expenditures by 75 per cent. Economic and environmental benefits:
· Anticipated road
expenditures were reduced from $120 million to $14 million.
· Annual energy consumption is
expected to decline from 128 to 125 gigajoules per capita.
· Carbon monoxide is expected
to decline from 116 to 111 kg/capita/year, and carbon dioxide from 7,200 to
7,000 kg/capita/year.
In one case study researchers estimated that
A
primer on preventive infrastructure maintenance provides guidelines for
applying least-cost planning to roads. It explains, “Preventive maintenance is
intended to treat small problems before they require more expensive repairs. By
slowing the rate of deterioration, treatment can effectively increase the
useful life of pavement. However, the practice of systematically identifying
payments that would benefit most from preventive maintenance, and of
implementing treatments in a timely manner, is often neglected.”
Least Cost Planning is a
process of comparing direct and indirect costs of transportation demands and
supply options to meet transportation goals and/or policies. The intent of the
process is to identify the most cost effective mix of options.
Where did Least Cost Planning come from?
Least cost planning is a
process that was developed by the electric utility industry. The utility
industry set out to develop a process designed to maximize efficiency while
lowering electrical costs to the customer. Energy-conservation programs are an
example of this. After a decade of development, least cost planning methodology
is still changing and evolving in the utility industry.
Why are we doing Least Cost Planning?
The Washington State Growth
Management Act requires each Regional Transportation Planning Organization
(RTPO) to develop a regional transportation plan based on a least cost planning
methodology that identifies the most cost-effective transportation facilities,
services and programs for their region. Regional Transportation Plans adopted
after July 1, 1995 should incrementally incorporate least-cost planning
methodologies as they are updated. All RTPs developed or updated and adopted
after July 1, 2000 must be based upon a least-cost planning methodology.
The least cost planning
process can also fulfill federal mandates for consideration of the
cost-effectiveness of alternative transportation modes and transportation
demand management alternatives as promoted by the Intermodal Surface
Transportation Efficiency Act and its’ successor, the Transportation Equity Act
for the 21st Century.
Mia Layne Birk and P. Christopher Zegras (1993), Moving Toward Integrated Transport Planning: Energy, Environment, and Mobility in Four Asian Cities, International Institute for Energy Conservation (www.iiec.org).
Marlon G. Boarnet and Andrew F. Haughwout (2000), Do Highways Matter? Evidence and Policy Implications of Highways’ Influence on Metropolitan Development, Brooking Institute (www.brookings.edu).
Edward Beimborn and Robert Puentes (2003), Highways and Transit: Leveling the Playing Field in Federal Transportation Policy, Brookings Institute (www.brookings.edu).
Patrick DeCorla-Souza, Brian Gardner, Jerry Everett & Michael Culp (1999), A Least Total Cost Approach to Compare Infrastructure Alternatives, Transportation Modeling Improvement Program, FHWA (http://tmip.fhwa.dot.gov).
ECONorthwest and PBQD (1995), Evaluation of Transportation Alternatives; Least-Cost Planning: Principles, Applications and Issues, Metropolitan Planning Tech. Rpt. #6, FHWA (www.fhwa.dot.gov/environment).
FCM
(2002), Timely
Preventive Maintenance for Municipal Roads - A Primer, National Guide to Sustainable
Municipal Infrastructure (www.infraguide.ca).
FHWA (2002), Economic Analysis Primer, Federal Highway Administration (www.fhwa.dot.gov/infrastructure/asstmgmt/primer.htm).
FHWA, National Dialogue on Transportation Operations (www.ops.fhwa.dot.gov/nat_dialogue.htm), discusses institutional changes needed to implement more efficient transportation.
Phil Goodwin (1997), Solving Congestion, Inaugural
Lecture for the Professorship of Transport Policy, University College
London (
IIEC (1996), The Integrated Transport Planning Beginner’s Handbook, International Institute for Energy Conservation (www.iiec.org).
ISF (2003), Least Cost, Greatest Impact: A Discussion Paper On The Applicability of Least Cost Planning To Transport In Australia, Institute for Sustainable Futures, University of Technology Sydney (www.isf.uts.edu.au).
Robert A. Johnston and Raju Ceerla (1995), Effects of Land Use Intensification and Auto Pricing Policies on Regional Travel, Emissions, and Fuel Use, Paper 269, University of California Transportation Center (www.uctc.net).
Todd Litman (1999), Transportation Market Distortions – A Survey, VTPI (www.vtpi.org).
Todd Litman (2001), What’s It Worth? Life Cycle and Benefit/Cost Analysis for Evaluating Economic Value, Presented at Internet Symposium on Benefit-Cost Analysis, Transportation Association of Canada (www.tac-atc.ca), available at VTPI (www.vtpi.org).
Todd Litman (2005), Win-Win Transportation Solutions: Cooperation for Economic, Social and Environmental Benefits, Victoria Transport Policy Institute (www.vtpi.org); at www.vtpi.org/winwin.pdf.
Todd Litman (2006), Win-Win Emission Reduction Strategies: Smart Transportation Strategies Can Achieve Emission Reduction Targets And Provide Other Important Economic, Social and Environmental Benefits, Victoria Transport Policy Institute (www.vtpi.org); at www.vtpi.org/wwclimate.pdf.
Ward Lyles (2005), Where Do We Go From Here? Wisconsin Transportation at the Crossroads, 1000 Friends of Wisconsin & The Land Use Institute (www.1kfriends.org/documents/1KFriendslegislat_001.pdf).
Terry Moore and Paul Throsnes (1994), The Transportation/Land Use Connection, American Planning Association, Planning Advisory Service, Report 448/449 (www.planning.org).
David Mozer (1999), Least Cost Transport Planning, IBF (www.ibike.org/lcp.htm).
NGA (2004), Fix it First: Targeting Infrastructure Investments to Improve State Economies and Invigorate Existing Communities, National Governors Association (www.nga.org).
PSRC, Least-Cost Planning Publications, Puget Sound Regional Council (www.psrc.org/publications/publist.pdf), various years.
Robert Puentes and Ryan Prince (2003), Fueling Transportation Finance: A Primer on the Gas Tax, Center on Urban and Metropolitan Policy, Brookings Institute (www.brookings.edu/es/urban).
Caroline Rodier and Robert Johnston (1997), “Incentives for Local Governments to Implement Travel Demand Management Measures,” Transportation Research A, Vol. 31, No. 4, pp. 295-308.
SELC and ELI (1999), Smart Growth in the Southeast: New Approaches to Guiding Development, Southern Environmental Law Center (SELC) and Environmental Law Institute (ELI) (www.eli.org/pdf/rrsoutheast99.pdf).
Brian Taylor (2000), “When Financing Leads Planning:
Urban Planning, Highway Planning, and Metropolitan Freeways in
TRL, Strategic Environmental Assessment Newsletter, Transportation Research Laboratory (www.trl.co.uk/env_sea_newsletter.htm) provides information on international efforts to develop more integrated transportation planning.
WSDOT (1999), What Is Least Cost Planning?, Washington State Department of Transportation (www.wsdot.wa.gov).
This
Encyclopedia is produced by the Victoria Transport Policy Institute to help
improve understanding of Transportation Demand Management. It is an ongoing
project. Please send us your comments and suggestions for improvement.
Victoria Transport Policy Institute
www.vtpi.org info@vtpi.org
Phone & Fax 250-360-1560
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