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Briefing on a Cost-Benefit Analysis Framework for Transit Investments in the Washington Region

National Capital Region Transportation Planning Board - Technical Committee. Briefing on a Cost-Benefit Analysis Framework for Transit Investments in the Washington Region. David Lewis Ph.D. Chief Economist. May 2, 2008. HDR|Decision Economics. 2. Comprehensive Value Assessment. Mobility

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Briefing on a Cost-Benefit Analysis Framework for Transit Investments in the Washington Region

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  1. National Capital Region Transportation Planning Board - Technical Committee Briefing on a Cost-Benefit Analysis Framework for Transit Investments in the Washington Region David Lewis Ph.D. Chief Economist May 2, 2008 HDR|Decision Economics

  2. 2 Comprehensive Value Assessment • Mobility • Congestion Management • Community Economic Development The economic benefits of transit:

  3. 3 Comprehensive Value Assessment • Time savings to transit users • Cash savings to low income households for reallocation to housing, nutrition, child care … • Cross-sector benefits: reduced financial burden on social services Mobility:

  4. 4 Comprehensive Value Assessment • Reduced delay • Improved reliability, predictability and productivity • Reduced environmental emissions • Lower vehicle operating costs • Safety (lives, injuries, property) Congestion Management:

  5. 5 Community Economic Development Location Efficiency Measurement Double Counting? • High density economic activity (retail, commercial …) • Agglomeration economies • Less demand for motorized trips • Reduced auto-ownership requirements, dependence • Higher density life-style • Development benefits manifest and measured as increased economic land value • Capitalization of time savings? Only partially

  6. 6 Emerging Evidence From Comprehensive Value Assessment (Cost-Benefit Analysis) • Projects can generate value in all three categories of transit value creation • Projects can be economically worthwhile (generate greater economic benefits than the life-cycle costs of construction, operations, maintenance and opportunity cost of capital) • Not all transit investments will generate more benefits than costs • Bus investments can outperform rail alternatives in terms of rate of return, but rail investment can generate greater absolute levels of economic benefit and net benefit • Transit investment can outperform highway alternatives in terms of economic return • Focusing on ridership-related benefits alone can lead to the mistaken conclusion that a project is not economically worthwhile

  7. 7 Comparing Alternative Alignments

  8. 8 Comparing Alternative Modes

  9. 9 A Streetcar Example

  10. 10 Risks With Partial Value Project Evaluation • Can understate prospective community value of transit projects • Design risk • Can overlook good transit projects • Inability to compare economic rate of return on alternative uses of funds • Can fail to identify all financing options

  11. 11 Potential Applications of Cost-Benefit Analysis in The Region • Corridor Cities Transitway, Phases I and II • Purple Line • Potomac Yards Metro Station • Columbia Pike Streetcar • New York Avenue Station • Anacostia Area Streetcar

  12. 12 Conclusions • Feasible in the case of transit projects • Can reveal economic value not otherwise apparent • Can reveal financing options not otherwise apparent • Can provide a basis for more widespread community support • Would be counter-productive as an added federal requirement Comprehensive Value Assessment:

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