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N A T I O N A L C O O P E R A T I V E F R E I G H T R E S E A R C H P R O G R A M NCFRP RESEARCH REPORT 38 Subscriber Categories Economics â¢ Freight Transportation â¢ Planning and Forecasting Guide for Conducting Benefit-Cost Analyses of Multimodal, Multijurisdictional Freight Corridor Investments Sharada Vadali C. James Kruse Texas a&M TransporTaTion insTiTuTe College Station, TX Kenneth Kuhn ranD CorporaTion Santa Monica, CA Anne Goodchild universiTy of WashingTon Seattle, WA Research sponsored by the Office of the Assistant Secretary for Research and Technology 2017
NATIONAL COOPERATIVE FREIGHT RESEARCH PROGRAM Americaâs freight transportation system makes critical contributions to the nationâs economy, security, and quality of life. The freight trans- portation system in the United States is a complex, decentralized, and dynamic network of private and public entities, involving all modes of transportationâtrucking, rail, waterways, air, and pipelines. In recent years, the demand for freight transportation service has been increas- ingly fueled by growth in international trade; however, bottlenecks or congestion points in the system are exposing the inadequacies of cur- rent infrastructure and operations to meet the growing demand for freight. Strategic operational and investment decisions by government at all levels will be necessary to maintain freight system performance and will, in turn, require sound technical guidance based on research. The National Cooperative Freight Research Program (NCFRP) is a cooperative research program sponsored by the Office of the Assistant Secretary for Research and Technology under Grant No. DTOS59- 06-G-00039 and administered by the Transportation Research Board (TRB). The program was authorized in 2005 with the passage of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). On September 6, 2006, a contract to begin work was executed between the Research and Innovative Technology Administration, which is now the Office of the Assistant Secretary for Research and Technology, and the National Academies of Sciences, Engineering, and Medicine. NCFRP carries out applied research on problems facing the freight industry that are not being adequately addressed by existing research programs. Program guidance is provided by an oversight committee composed of a representative cross section of freight stakeholders appointed by the Academies. The NCFRP Oversight Committee meets annually to formulate the research program by identifying the highest priority projects and defining funding levels and expected products. Research problem statements recommending research needs for consideration by the NCFRP Oversight Committee are solicited annually but may be submitted to TRB at any time. Each selected project is assigned to a panel, appointed by TRB, which provides technical guidance and counsel throughout the life of the project. Heavy emphasis is placed on including members representing the intended users of the research products. NCFRP produces a series of research reports and other products such as guidebooks for practitioners. Primary emphasis is placed on disseminating NCFRP results to the intended users of the research: freight shippers and carriers, service providers, suppliers, and public officials. Published research reports of the NATIONAL COOPERATIVE FREIGHT RESEARCH PROGRAM are available from Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet by going to http://www.national-academies.org and then searching for TRB Printed in the United States of America NCFRP RESEARCH REPORT 38 Project NCFRP-46 ISSN 1947-5659 ISBN 978-0-309-44625-9 Library of Congress Control Number 2017934351 Â© 2017 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA, FMCSA, FRA, FTA, Office of the Assistant Secretary for Research and Technology, PHMSA, or TDC endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The research report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the National Academies of Sciences, Engineering, and Medicine. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; or the program sponsors. The Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; and the sponsors of the National Cooperative Freight Research Program do not endorse products or manufacturers. Trade or manufacturersâ names appear herein solely because they are considered essential to the object of the report.
The National Academy of Sciences was established in 1863 by an Act of Congress, signed by President Lincoln, as a private, non- governmental institution to advise the nation on issues related to science and technology. Members are elected by their peers for outstanding contributions to research. Dr. Marcia McNutt is president. The National Academy of Engineering was established in 1964 under the charter of the National Academy of Sciences to bring the practices of engineering to advising the nation. Members are elected by their peers for extraordinary contributions to engineering. Dr. C. D. Mote, Jr., is president. The National Academy of Medicine (formerly the Institute of Medicine) was established in 1970 under the charter of the National Academy of Sciences to advise the nation on medical and health issues. Members are elected by their peers for distinguished contributions to medicine and health. Dr. Victor J. Dzau is president. The three Academies work together as the National Academies of Sciences, Engineering, and Medicine to provide independent, objective analysis and advice to the nation and conduct other activities to solve complex problems and inform public policy decisions. The Academies also encourage education and research, recognize outstanding contributions to knowledge, and increase public understanding in matters of science, engineering, and medicine. Learn more about the National Academies of Sciences, Engineering, and Medicine at www.national-academies.org. The Transportation Research Board is one of seven major programs of the National Academies of Sciences, Engineering, and Medicine. The mission of the Transportation Research Board is to increase the benefits that transportation contributes to society by providing leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisciplinary, and multimodal. The Boardâs varied committees, task forces, and panels annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individuals interested in the development of transportation. Learn more about the Transportation Research Board at www.TRB.org.
C O O P E R A T I V E R E S E A R C H P R O G R A M S AUTHOR ACKNOWLEDGMENTS The research reported herein was performed under NCFRP Project 46 by the Texas A&M Transpor- tation Institute, a member of the Texas A&M University System. Thanks are extended to Saravanya Sankarakumaraswamy of the University of Washington who helped with the case study. Thanks are also extended to the late Dr. Annie Protopapas who was involved in the earlier stages of this project. The team would also like to acknowledge the contributions of Dr. Lori Tavasszy, Michael Bufalino, and Dr. Chris Guo. CRP STAFF FOR NCFRP RESEARCH REPORT 38 Christopher J. Hedges, Director, Cooperative Research Programs Lori L. Sundstrom, Deputy Director, Cooperative Research Programs William C. Rogers, Senior Program Officer Charlotte Thomas, Senior Program Assistant Eileen P. Delaney, Director of Publications Margaret B. Hagood, Editor NCFRP PROjECT 46 PANEL Freight Research Projects Elisa Arias, San Diego Association of Governments (SANDAG), San Diego, CA (Chair) Monica M. H. Blaney, Transport Canada/Transports Canada, Ottawa, ON Daniel Brod, DecisionTek, LLC, Rockville, MD Aaron Hegeman, BNSF Railway Company, Fort Worth, TX Edward R. Hutchinson, Florida DOT, Tallahassee, FL Rachel L. Knutson, Washington State Department of Revenue, Olympia, WA Anjali Mahendra, Embarq, The World Resources Institute (WRI) Center for Sustainable Transport, Morrisville, NC Kevin Neels, The Brattle Group, Washington, DC Mark Seaman, New York City Department of Transportation, New York, NY Larry A. Shughart, Jacksonville, FL David M. Luskin, FHWA Liaison Joung H. Lee, AASHTO Liaison W. Scott Brotemarkle, TRB Liaison
NCFRP Research Report 38 provides a guidebook for conducting benefit-cost analyses of proposed infrastructure investments on multimodal, multijurisdictional freight corridors for public and private decision makers and other stakeholders at local, state, regional, and national levels in order to arrive at more informed investment decisions. There are no commonly accepted methodologies or modeling tools available to quantify the benefits and costs of alternative multimodal freight projects in multijurisdictional national corridors. For example, local communities often object to the noise, air pollution, or other negative aspects of trucks and trains as they pass through their neighborhoods with little local benefit, as contrasted with the potentially large benefits on national and regional economies from improved freight flows. There is often limited understanding of such factors as (1) how to appropriately calculate net benefits in the presence of interregional transfers and how to include national and regional perspectives; (2) proper inclusion and exclusion of categories of benefits and costs; (3) how to avoid double counting of benefits and costs; (4) valuation of time, reliability, resilience, flexibility, risk, and externalities; (5) how to incorporate both public and private perspectives in the same benefit-cost analysis; and (6) how to address equity and distributional issues. These and many other factors prevent decision makers from having complete and well-informed sets of alternatives and may lead to sub-optimal planning and investment decisions. In NCFRP Project 46, Texas A&M Transportation Institute was asked to (1) identify, ana- lyze, and discuss domestic and international benefit-cost methodologies and criteria currently used by practitioners at local, state, regional, and national levels to make freight infrastructure investment decisions; (2) identify current benefit-cost best practices and their strengths and weaknesses with respect to evaluating multimodal freight corridor infrastructure investment; (3) develop a methodology for conducting benefit-cost analyses of proposed infrastructure investments on multimodal, multijurisdictional freight corridors that includes all relevant factors (e.g., taxonomy of benefits and costs, time horizon, timing of the investment, monetiza- tion of externalities, assumptions, risk analysis, perspectives, data requirements, and sources, metrics, geographic scope, boundaries, and models); and (4) demonstrate the methodol- ogy in a case study of a major multimodal freight corridor. The guidebook gives decision-makers, practitioners, and stakeholders an actionable resource and a reference for multimodal freight investment benefit-cost analysis, data sources, proce- dures and tools for projects of different geographic scales. To help practitioners get started, the guidebook is presented in a âhow toâ format relying on discrete steps that are accompanied with realistic and recent examples, a fully worked out case study, checklists of dos and donâts, and supporting worksheets. F O R E W O R D By William C. Rogers Staff Officer Transportation Research Board
1 Introduction 1 Who Benefits from this Guidebook? 1 How to Use this Guidebook 2 What Is a Multimodal BCA? What Is a Multijurisdictional BCA? 3 Guiding Principles for Multimodal, Multijurisdictional BCAs 6 Process Framework 10 Step 1 Define the Project 10 1.1 Goal 10 1.2 Tasks 13 1.3 Inputs: Recommended Tools and Data Sources 14 1.4 Best Practices and Examples 18 1.5 Common Mistakes 19 Step 2 Determine Scope of Analysis 19 2.1 Goal 19 2.2 Tasks 23 2.3 Inputs: Recommended Tools and Data Sources 24 2.4 Best Practices and Examples 24 2.5 Common Mistakes 25 Step 3 Account for Project Costs 25 3.1 Goal 25 3.2 Tasks 28 3.3 Inputs: Recommended Tools and Data Sources 29 3.4 Best Practices and Examples 29 3.5 Common Mistakes 31 Step 4 Identify Benefit Triggers and Metrics 31 4.1 Goal 31 4.2 Tasks 38 4.3 Inputs: Recommended Tools and Data Sources 38 4.4 Best Practices and Examples 39 4.5 Common Mistakes 40 Step 5 Develop Forecasts 40 5.1 Goal 40 5.2 Tasks 50 5.3 Inputs: Recommended Tools and Data Sources 51 5.4 Best Practices and Examples 55 5.5 Common Mistakes C O N T E N T S
56 Step 6 Quantify and Value Applicable First-Order Public and Private Metrics and Information Needs 56 6.1 Goal 56 6.2 Tasks 71 6.3 Models, Tools, and Methods 73 6.4 Inputs: Recommended Tools and Data Sources 74 6.5 Best Practices and Examples 75 6.6 Common Mistakes 76 Step 7 Analyze Public Externalities and Information Needs (Safety and the Environment) 76 7.1 Goal 77 7.2 Tasks 83 7.3 Inputs: Recommended Tools and Data Sources 83 7.4 Best Practices and Examples 84 7.5 Common Mistakes 85 Step 8 Analyze Higher-Order Quantifiable Metrics 85 8.1 Goal 87 8.2 Tasks 91 8.3 Double Counting with EIA and BCA 92 8.4 Inputs: Recommended Tools and Data Sources 92 8.5 Best Practices and Examples 94 8.6 Common Mistakes 95 Step 9 Conduct BCA 95 9.1 Goal 95 9.2 Tasks 101 9.3 Inputs: Recommended Tools and Data Sources 102 9.4 Best Practices and Examples 103 9.5 Common Mistakes 104 Step 10 Develop Decision Criteria and Report BCA Results 104 10.1 Goal 104 10.2 Tasks 107 10.3 Inputs: Recommended Tools and Data Sources 107 10.4 Best Practices and Examples 108 10.5 Common Mistakes 109 Step 11 Evaluate and Integrate Risk and Uncertainty 109 11.1 Goal 109 11.2 Tasks 116 11.3 Inputs: Recommended Tools and Data Sources 117 11.4 Best Practices and Examples 117 11.5 Common Mistakes 119 References 123 Acronyms and Abbreviations
125 Appendix A Rule of Half Principle, Consumer Surplus, Producer Surplus, Kaldor-Hicks Criterion, and Financial Versus Economic BCA 129 Appendix B Projects with Different Service Lives (EANB and CMPD) 131 Appendix C Residual Values 133 Appendix D Logsum Evaluation, Diversion Parameters, and Examples 140 Appendix E Benefits, Valuation Methodology, and Valuation Basis 142 Appendix F Marginal External Costs of Highway Use 144 Appendix G Shortcut for Analysis of Generated Traffic 145 Appendix H Emission Factors and Emission Costs 147 Appendix I Logistics Costs and Supply Chain Effects 150 Appendix J Multiple Accounts BCA Example 152 Appendix K Examples of Risk and Uncertainty 156 Appendix L Heartland Corridor Case Study 199 Appendix M Excel Worksheets Note: Photographs, figures, and tables in this report may have been converted from color to grayscale for printing. The electronic version of the report (posted on the web at www.trb.org) retains the color versions.