Using Public Transportation to Reduce the Economic, Social and Human Costs of Personal Immobility (1998) / Chapter Skim
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4. Guide for Economic Analysis of Transit Projects
4. Guide for Economic Analysis of Transit Projects
Pages 61-80
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From page 61... ...
Analyze the impacts of transit service reductions on the transportation disadvantaged. The economic costs of such reductions can be compared to cost benefits of the service cutbacks.
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From page 62... ...
1 1 _ Step 2 Step 3 SELECT ECONOMIC FEATURES, DETERMINE PROJECT PATRONAGE, UPDATE UNIT COSTS IDENTIFY MOBILITY BENEFITS Step 4 ESTIMATE EFFICIENCY BENEFITS OF PROJECT 1 .
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From page 63... ...
Equivalent uniform annual value, or simply annual value The translation of costs or benefits into a series of equal annual payments at the chosen discount rate for the project. Compound interest factors Multipliers for determining present values and equivalent annual values from annual or periodic cash flows, which can be found in any standard text for microeconomics or engineering economy, the two academic disciplines that guide this type of economic analysis.
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From page 64... ...
If so, it is usually more convenient to treat vehicle costs as annual depreciation or rental, hence part of operating costs. Are there any non-transportation costs that should be considered?
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From page 65... ...
Table 4-1 Selected Case Study Data Average One-wayAverage DependenceComparison Case StudyMilesUsersSettingPercentageAlternative PDRTA, Myrtle Beach40380/dayRural71.1%Status quo SEPTA Horsham Breeze19.3444/daySuburban63.3Status quo MDTA Metropassn.a.3,492/mo.Urbann.a.Paratransit OATS, Missouri5.925,298/yr.Ruraln.a.No OATS MTA Immediate Needs5-1113,762/mo.Urbann.a.Status quo Fremont travel trainingn. a.106/yr.Suburbann .
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From page 66... ...
then tne study year outcomes are expanded or converted to equivalent annual values -- see below -- to represent the results over the entire analysis period. The recommended discount rate is 4%, to represent the long-term average cost of capital with no allowance for inflation or risk.
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From page 67... ...
A summary of illustrative cost factors, most of them used in the case studies, is presented in Table 4-2. Table 4-2 Illustrative Unit Cost Factors Item (& Case Stuily)
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From page 68... ...
Table 4-4, in step 4, also presents several factors for estimating the value of efficiency benefits. STEP 3: DETERMINE PROJECT PATRONAGE, IDENTIFY MOBILITY BENEFITS Patronage -- the number of riders using the service day by day and month by month throughout the study period -- is usually available directly from transit agency records and on-board surveys for past projects, and from use estimates for prospective projects.
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From page 69... ...
In the other four cases -- AC Transit service reductions, PDRTA bus service to Myrtle Beach, MTA Immediate Needs program in :Los Angeles, and the Horsham Breeze -- transit passenger surveys were designed, pretested, administered, and analyzed to obtain the needed benefit information. Readers can consult those four case studies for accounts of the surveys and survey results.
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From page 70... ...
For OATS job benefits include the value of missing employment, business, and education trips. Medical benefits resulted primarily from the avoided costs of more intensive care, as by continuing to see one's own doctor, but also from being able to stay mobile and thereby care for oneself at home, from getting bused to nutrition programs, and from getting meals delivered at home.
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From page 71... ...
The $39.2 million user loss for AC Transit was the result of added travel costs, chiefly for taxis, necessitated by the transit service cuts. A sizable $4.3 million user benefit for the Immediate Needs program represents the value of transit tickets and taxi vouchers distributes} free by MTC to program participants.
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From page 72... ...
Employer benefits, from improved access to labor force Provider savings, from reduced operating costs or donated services Congestion delay reductions due to removal of transit users' autos from roads.
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From page 73... ...
This may be a tenable assumption for private sector projects where a business actually has such opportunities for reinvestment, but it is unrealistic for public sector projects where, as proposed in Step 2 of this analysis process, the preferred annual discount rate is 4%. Net annual benefits, or benefits minus costs, reveal the total excess value created by a project.
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From page 74... ...
Transit projects are often more complex to evaluate than highway projects, because they can include such a diversity of beneficiaries and the benefits in transit studies are not as predictable or easily defined as they are in the standard traffic stream of vehicles on highways. Nevertheless, when the studies are properly conducted, the relative economic merits of transit projects can validly and usefully be compared with the economic results of highway investments via benefit/cost ratios.
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From page 75... ...
Benefits (a/b) a b c c PDRTA, Myrtle Beach SEPTA Horsh~m Breeze MDTA Metropass MTA Immediate Needs OATS, Missouri Fremont travel training AC Transit service cuts $2,177 1,563 7,619 13,951 13,939 52 4,769 $79 213 1,580 6,400 6,009 27 48,100 27.4 7.3 4.8 2.6 2.3 1.9 0.1 $2,097 1,350 6,039 8,551 7,930 25 (43,341)
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From page 76... ...
Base automobile insurance and state vehicle registration fees more on Virtual miles driven. Encourage employers to give equivalent financial benefits to non-drivers when they offer free or subsidized parking to their employees.
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From page 77... ...
Typical information might include the trip purpose, fare paid, trip distance and/or travel time enroute, the days of the week such a trip is usually made, how such trips were made before this service existed (or how they would be made without it) , the time and cost that would be involved in alternative transportation, and any other financial results of having to find alternative transportation, such as loss of income (at what monthly wage level?
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From page 78... ...
(44) Litman,T., Defining and Quantifying Public Transit Benefits, Victoria Transport Policy Institute, Victoria, BC, Canada (19971.
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From page 79... ...
insurance seldom compensates the substantial time lost in settling claims and treating injuries; 4) even the reimbursed costs of motor vehicle accidents are a real added social cost that should somehow be included in comparisons of transit and automobile costs because transit travel is many times safer than automobile travel as measured by accident rates or costs per passenger mile; ant!
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From page 80... ...
(52) Additional policies to promote equity for transit are espoused by the Victoria Transport Policy Institute (Litman, op.
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