Determining the Value of Public Transit Service
~~~~~~~~~~~~~~
Victoria Transport Policy Institute
~~~~~~~~~~~~~~~~~~~~
Updated
1 August 2008
This chapter describes methods for evaluating public transit benefits, costs and equity impacts. These include financial subsidies, improved mobility, reduced traffic congestion, road and parking facility cost savings, consumer cost savings, reduced pollution emissions, and support for land use, economic development, and equity objectives. Conventional transportation planning often overlooks some of these positive impacts and so undervalues transit. More comprehensive evaluation practices tend to justify more policies and programs that support transit. This framework can also be used to evaluate ridesharing. This chapter summarizes the more comprehensive report Evaluating Public Transit Benefits and Costs, available at www.vtpi.org/tranben.pdf.
Impacts on Existing Transit Users
Safety, Health and Security Impacts
Energy Conservation and Emission Reductions
Comparing Transit and Automobile Costs
References And Resources For More Information
Public Transit includes various services that provide mobility to the general public in shared vehicles, ranging from shuttle vans to buses and passenger rail systems. This chapter discusses how to Evaluate the value to society of a particular transit service or change in service. It describes how to create a comprehensive evaluation framework that incorporates various categories of impacts (benefits and costs), and how to quantify these impacts. It discusses how to determine whether a particular public transit program is worthwhile.
There are four general categories of transit improvements:
Since transit service and automobile travel both impose significant costs (including indirect costs such as congestion, road wear and pollution emissions), improvements and incentives that increase transit load factors and attract travelers who would otherwise drive tend to provide large benefits. Described differently, there is little benefit to society from simply operating transit vehicles (excepting Option Value); most benefits depend on how much transit is used, how well the service responds to users’ needs and preferences, the amount of automobile travel displaced, and the various savings and benefits that result (including reduced vehicle ownership and operating cost, avoided roadway and parking facility expansion, increased safety, etc.).
Economists and planners have developed computer Models and various analysis tools for evaluating the economic value of specific transport options. These were generally developed to evaluate a particular mode or objective. For example, highway investment models are designed to measure the value of road improvements, and emission reduction models are designed to prioritize emission reduction strategies. Because of their limited scope, these tools tend to be ineffective at evaluating multiple modes and planning objectives (Comprehensive Evaluation).
Conventional transport evaluation models tend to undervalue public transit because they overlook many benefits, as summarized in Table 1. To their credit, many public officials realize that transit provides more benefits than their models indicate, and so support transit more than is justified by benefit/cost analysis, but this occurs despite rather than as a result of formal economic evaluation. Decision making would improve with better evaluation Models that account for more impacts.
Table
1 Impacts Considered and
Overlooked (Comprehensive
Evaluation)
|
Usually Considered |
Often Overlooked |
|
Financial costs to governments Vehicle operating costs (fuel, tolls, tire wear) Travel time (reduced congestion) Per-mile crash risk Project construction environmental impacts |
Downstream congestion impacts Impacts on non-motorized travel Parking costs Vehicle ownership and mileage-based depreciation costs. Project construction traffic delays Generated traffic impacts Indirect environmental impacts Strategic land use impacts Transportation diversity value (e.g., mobility for non-drivers) Equity impacts Per-capita crash risk Impacts on physical activity and public health Some travelers’ preference for transit (lower travel time costs) |
Conventional transportation planning tends to focus on a limited set of impacts. Some tend to be overlooked because they are relatively difficult to quantify (equity, indirect environmental impacts, crash risk), and others are ignored simply out of tradition (parking costs, long-term vehicle costs, construction delays). These omissions tend to undervalue transit improvements.
Recent research expands the range of impacts to consider in transit evaluation (Cambridge Systematics, 1998; Cambridge Systematics, 1999; Lewis and Williams, 1999; TRB, 2000; Phillips, Karachepone and Landis, 2001; HLB, 2002; ECONorthwest and PBQD, 2002; MKI, 2003). This guide summarizes this research and describes how to apply more comprehensive evaluation in a particular situation.
Economic Evaluation (also called Appraisal or Analysis) refers to methods to determine the value of a planning option to support decision making (Litman, 2001). Economic evaluation involves quantifying and comparing the marginal (incremental) impacts (benefits and costs) of various options in a standardized format.
Economic evaluation requires an evaluation framework which specifies the basic structure of the analysis. This identifies the following (TDM Evaluation):
· Evaluation method, such as cost-effectiveness, benefit-cost,
lifecycle cost analysis, etc.
· Evaluation criteria, which are the impacts to be considered in the
analysis. Impacts can be defined in terms of objectives or their
opposite, problems (for example, congestion reduction is an objective
because congestion is considered a problem), or they can be defined in terms of
costs and benefits (for example, congestion reduction benefits
can be measured based on reduced congestion costs).
· Modeling techniques, which predict how a policy change or program will
affect travel behavior and land use patterns.
· Base Case, meaning what would happen without the policy or
program.
· Comparison units, such as net present value, benefit/cost ratio, or
cost per lane-mile, vehicle-mile, passenger-mile, incremental peak-period trip,
etc.
· Base year and discount rate, which indicates how costs are adjusted to reflect
the time value of money.
· Perspective and scope, such as the geographic range of impacts to consider.
· Dealing with uncertainty, such as use of sensitivity analysis or other
statistical tests.
· How results are presented, so that the results of different evaluations can be
compared.
It is important to carefully define the questions and options to be considered. A transit evaluation may consider whether a particular transit investment is cost effective (benefits exceed costs), which of several transit options provides the greatest net benefits, whether a transit improvement provides more value than a highway improvement, and how to optimize transit service benefits, and how the benefits and costs of a transportation option are distributed. It is generally best to evaluate several options, which may include a base case (what happens if no change is implemented), and various roadway improvements, transit improvements, and support strategies. Transit options might include small, medium and large service improvements, plus transit improvements combined with various support strategies such as ridership incentives and transit oriented development. All quantified values and calculations should be incorporated into a clearly-organized spreadsheet, which allows various options and assumptions to be tested and adjusted.
Transit system costs tend to be relatively easy to determine, since most show up in government agency budgets. The main challenge is therefore to identify all incremental benefits. Some impacts are difficult to monetized (measured in monetary units) with available analysis tools and data. Such impacts should be quantified as much as possible and described. For example, it may be impractical to place a dollar value on transit equity benefits, but it may be possible to predict the number and type of additional trips made by transportation disadvantaged people, and to discuss the implications of this additional mobility on their ability to access basic services, education and employment.
Some impacts can be considered in multiple categories, so it is important to avoid double-counting. For example, productivity gains from more accessible land use can be counted as land use benefits or economic benefits, but not both. Some impacts are economic transfers rather than net gains. It is important to identify their full effects. For example, from a local perspective, federal grants can be considered a net economic gain, since the money originates from elsewhere, but at a national level these are economic transfers, resources shifted from one area to another. Similarly, taxes and fares are economic transfers, costs to those who pay, and benefits to those who gain the revenue. Both types of impacts should be considered in economic evaluation.
Transit Level-Of-Service (LOS) refers to the convenience, comfort and security of transit travel as experienced by users (Phillips, Karachepone and Landis, 2001; Kittleson & Associates, 2003a and 2003b; Litman, 2007). Level-Of-Service (LOS) ratings, typically from A (best) to F (worst), are widely used in transport planning to evaluate problems and potential solutions. Such ratings systems can be used identify problems, establish performance standards and targets, evaluate potential solutions, compare locations, and track trends. They can also be used for travel demand modeling, to identify the types of improvements that could increase transit ridership.
Table 2 lists Level-of-Service rating factors. The Florida Department of Transportation (FDOT, 2007) developed the LOSPLAN computer program to automate these calculations.
Table
2 Level-of-Service
Rating Factors
|
Feature |
Description |
Indicators |
|
Availability |
Where and when transit service is available. |
· Annual service-kilometers per capita · Daily hours of service · Portion of destinations located within 500 meters of transit service. · Hours of service. |
|
Frequency |
Frequency of service and average wait time. |
· Trips per hour or day · Headways (time between trips) · Average waiting times. |
|
Travel Speed |
Transit travel speed. |
· Average vehicle speeds. < |