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Transport Planning Society 26.1.2011
Getting the most out of
transport investment
Phil Goodwin
Professor of Transport Policy
Centre for Transport & Society
UWE, Bristol
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What is the problem?
 We know funding will be reduced
 We expect it will be cut most on the ‘fringe’ areas of policy
 If cuts are inevitable, what is the least damaging way they
can be done?
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Eddington 2006
BCR (benefit-cost ratio) is an attempt to combine together all the
economically measurable effects, such as time, health, accidents,
cost... Not a perfect measure, lots of problems, but let’s just see....
Transport Planning Society
members
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“TPS has conducted a membership survey with particular
emphasis on the impact of the recession...(showing) ...
the following top priorities:
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travel behaviour change (61.2%)
road maintenance (56.5%)
walking and cycling (55%)
non-high speed rail capacity (52.6%)
Only 18% identified high speed rail as a priority, and
major trunk road schemes were even lower at
9%. Only 10% supported grants for electric cars”.
TPS Press Release 14.10.2010
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Recalculating Eddington’s figures
1. Not ‘average’ but ‘range’
2. Traffic growth trends not as assumed
3. A technical change in the treatment of indirect taxation
4. Eddington had lots of road schemes but few public
transport and no smarter choices. Can we extend
analysis to all types of transport spending?
Cost-Benefit Analysis is not the
perfect tool... but let’s see
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Suppose total benefit B produced by
expenditure on transport X is a sum of a
independent expenditures, on road
building, new public transport systems,
smarter choices, traffic management and
so on. For each, a greater benefit can be
obtained by spending more money, but
at a diminishing rate, as the best
opportunities are carried out first, then
the next best etc.
Maximise total benefit B* by making the
marginal return per £ spent equal for
each type of expenditure, since at any
other point it will be possible to increase
benefit, by swopping expenditure from
one class to another.
All classes of spending have good and bad schemes –
the idea is to choose the best schemes in each class,
not the ‘average’ ones.
The more is spent, the less additional value....
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With caveats, information
included for:
Local Safety, Smarter Choices, Cycling,
Concessionary Fares, Local Bus, Local
Roads, New Light Rail, HA Roads, Rail,
Intelligent Speed Adaptation
 (but not yet for maintenance, pedestrianisation, traffic
calming except safety, optimisation of elements within
policy areas, synergetic and counter-synergetic effects)
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Value for Money for Ten Policies
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Implications
The most important result is the emerging proposition that
the areas of high value for money are smarter choices,
cycling and pedestrian schemes, local safety schemes,
some bus schemes (especially priority); much greater
than traditional road capacity enlargement...(and an
unresolved argument about heavy and light rail).
Traditional road building has much poorer value for money
So shift funding from worst to best. The new pattern of
spending would then have: quick benefits, local focus
and cheap – all plus points in current political context
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Has ‘refreshment’ solved the problems?
What is happening to traffic growth?
Value ‘for money’ – what money are we talking about?
The politics of local budgeting.
The usual suspects (value of carbon, sequence of policy assumptions,
definition of the ‘do-nothing’ or ‘base’, small time savings, path-dependency of
behaviour change, appraisal over terms longer than forecasts, health benefits,
omission of (or confusion between) walking and cycling, mode choice assuming
stable journey length distribution, non-travel alternatives, synergy, implausible
claims for economic growth......)
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Car use has levelled off and may
even be falling
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Presumption that
‘economy’ = ‘fast long distance’
LTT
12.11.2010
Indirect Taxation
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A knotty problem 2003-2009, now resolved*
Suppose you build a road, and it induces more traffic, and this generates
fuel tax revenue – is this a ‘benefit’ in social cost benefit terms?
*Or is it?
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That indirect tax puzzle?
LTT
24.12.2010
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The Smarter Choices Paradox
• Current allocation of funds is very small even in the
champions; most funds still for traditional infrastructure,
maintenance, etc. And capital spending is ‘good’ while
revenue spending is ‘bad’.
• That is a danger that cuts will operate in the opposite way
– small ‘discretionary’ spending may just vanish;
• But the best value for money in that context is to
increase SC spending, not reduce it, to get swift cheap
benefits.
• This will not be easy to understand at local level.
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Opportunities in the gloom?
 ‘Transport quality not quantity’ is timely
 Clear away some of the inheritance of flagship projects?
(But do they ever go away?)
 Appetite for some cheap ways of making things better,
not expensive ways of slowing down the pace at which
they get worse
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What next?
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From convergence to divergence in BCRs
Unstable assumptions about growth and behaviour
The magnetism of flagships
The word ‘economy’ relaxes usual standards of evidence
 So evidence-based policy gives way to policy-based
evidence?
 BUT the debate is broader, better-based, and includes
practical experience as well as models.