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 |