ECONOMIC VALUE OF USER BENEFITS

The economic value of user impacts is defined as the dollar valuation of benefits in saving travel time, saving travel cost, and enhancing safety. These benefits reflect effects of transportation mobility performance indicators and user economic impact performance indicators. They are valued in monetary (dollar) terms to establish a uniform basis for calculating the total user benefits of projects, and to enable benefitcost comparison. That involves the application of unit values for travel time, fuel used, vehicle use and incidents (including collisions and breakdowns).

The standard practice in monetizing long-term user benefits is to identify all travelers impacted by a corridor improvement, including: (1) travelers on directly affected highways, (2) travelers using other highways in the regional network, and (3) passthrough travelers whose trips originate and terminate outside of the state. Estimated values of time and other unit costs are applied to arrive at monetized user benefits. In each case, the unit valuation may be determined on the basis of either actual costs incurred (as in the case of saving driver wages or fuel costs) or a commonly-accepted willingness-to-pay valuation (as in the case of saving personal time).

This analysis typically evaluates the values of travel time savings, fuel operating cost changes, non-fuel operating cost changes, and crashes by type (fatalities, injuries, property damage). Typically, these impacts are estimated and added to create total traveler benefit performance measures. Sometimes the value of reliability improvements (reducing the need for buffer time scheduling) and reduced non-crash incidents (such as breakdowns) may also be counted as additional forms of time savings and vehicle operating cost savings. In some cases, there may also be activity dislocation or traffic rerouting during the construction period, leading to temporary “dis-benefits” in travel times and costs.

In addition, there is growing recognition that the true “user” of freight transportation systems may include shippers, operators and consignees rather than just truck drivers. And with that has come a recognition that enhancement in Supply Chain Logistics (due to increased speed, enhanced reliability and intermodal connectivity) can also be counted as a user benefit. In some cases, enhanced access to labor markets and truck delivery markets can also lead to scale economies that are counted as broader economic benefits; these effects are addressed in the separate section on economic development impacts.

As transportation agencies increasingly consider environmental and community factors in the planning and project selection processes, all of these factors may also be valued in economic terms and included directly in a benefit-cost analysis.

Objectives and Performance Measures

Value of Traveler Time Savings

This measure most commonly represents the aggregate dollar value of long-term savings in travel time for vehicle drivers and passengers. It is usually defined as the value of time savings for people (reflecting wage rates or willingness-to-pay surveys), and is distinguished from savings in vehicle operating cost that can also occur if travel speeds change (reducing vehicle congestion delays and engine idling). In addition, improvement in reliability may also be counted as an added element of time savings (insofar as it reduces the need for travelers to leave extra “buffer time” in their travel schedules).

Data Requirements: change in Average Travel Time and affected Volume (vehicles or passengers), which together represent VHT (vehicle-hours of travel) or PHT (passenger-hours of travel), optional adjustment for change in Reliability, plus Unit Valuation factor (per vehicle-hour or passenger-hour of travel).

Relevant Analysis Scales: Project, Corridor, Regional Plan

Forecastable: Yes (using travel model or sketch planning calculations)

Case Studies:

• Kansas T-Link Highway Prioritization
• Virginia Six Year Highway Plan
• Portland Congestion Reduction Alternatives
• Appalachian Highway System Completion
• Northeast CanAm Connections
• Colorado I-70 Corridor EIS

Examples of Use:

1. Value of VHT reduction (for drivers and passengers)
2. Value of reduced peak congestion (savings in hours of queuing, or peak period VHT)

How to Use this measure:

• Long-Range Planning – Used to identify the extent of travel time benefit
• Programming – Used to identify projects or segments with the greatest travel time benefit

Value of Vehicle Cost Savings

This measure represents the aggregate dollar value of long-term vehicle operating cost savings that results from reduced travel distances and enhanced travel conditions. Such savings typically occur when construction of new routes reduce average travel distances for some trips, and hence lead to savings in fuel use and other aspects of vehicle operating cost. It is also possible, though, for vehicle operating cost savings to occur when there is improvement in road conditions (which can reduce swerving and cycles of acceleration and deceleration) or reduction in congestion bottlenecks (reducing need for engine idling in place). Changes in average speed can also increase or reduce vehicle fuel efficiency, depending on the specific speeds that are occurring.

Data Requirements: change in Average Travel Distance and affected Traffic Volume (which together represent VMT or vehicle-miles of travel), plus Unit Valuation factor (per vehicle-mile).

Relevant Analysis Scales: Project, Corridor, Regional Plan

Forecastable: Yes (using travel model or sketch planning calculations)

Case Studies:

• Kansas T-Link Highway Prioritization
• Virginia Six Year Highway Plan
• Appalachian Highway System Completion Plan
• Northeast CanAm Connections

Examples of Use: Value of reduced average VMT (annual vehicle-miles of travel) or VKT (annual vehicle-kilometres of travel)

How to Use this measure:

• Long-Range Planning – Used to identify the extent of travel time benefit
• Programming – Used to identify projects or segments with the greatest travel time benefit

Value of Safety Improvement

This represents the dollar value of long-term enhancement in road safety, as represented by a reduction in rates of collision occurrence and application of typical unit costs for collision, injury and death occurrences.

Data Requirements: change in incidence of vehicle collisions with damage only, with personal injury and with death, plus Unit Valuation factors (average cost per type of occurrence)

Relevant Analysis Scales: Project, Corridor, Regional Plan

Forecastable: Yes

Case Studies:

• Kansas DOT T-Link Highway Prioritization
• Portland Congestion Reduction Alternatives

Examples of Use: Value of reduced average collision occurrences

How to Use this measure:

• Long-Range Planning – Used to identify the extent of safety improvement
• Programming – Used to identify projects or segments with the greatest safety improvement benefit

Value of Construction Disruption

This represents the “dis-benefit” value of land takings, activity dislocations and traffic rerouting costs that may be realized by households and/or businesses as a consequence of transportation facility construction.

Data Requirements: Sum of compensated and non-compensated costs of relocating property and traveling more roundabout routes to access destinations during construction.

Relevant Analysis Scales: Project, Corridor

Forecastable: Yes

Case Studies: I-70 Mountain Corridor EIS

Examples of Use:

1. Value of local business loss (due to land takings)
2. Added travel time cost (due to rerouting traffic around construction)

How to Use this measure: Environmental Impact Assessment – Used to identify localized and temporary net income losses incurred by residents and business

Case Studies

The following case studies describe completed projects and analysis tools that illustrate the measurement of Economic Development impacts. Many of the case studies address multiple measures and factors, and some of them provide specific tools that might be helpful in calculating a measure. Within each of the measures identified above, you can also find links to the relevant case studies

FL Strategic Intermodal System Plan

Agency: Florida DOT

Location: Florida

Scale: State

Description: Florida’s Strategic Intermodal System (SIS) Plan was established in 2003 and updated in 2010 to enhance Florida’s economic competitiveness by focusing state resources on those transportation facilities that are critical to Florida’s economy and quality of life. The need for a strategic intermodal transportation system was established through the Economic Competitiveness Goal in the 2020 Florida Transportation Plan. A comprehensive set of 25 performance measures was established by the FLDOT to assist in evaluating highway capacity-adding projects eligible for SIS funding in a manner consistent with SIS goals. The performance measure evaluation is supported by the Florida Strategic Investment Tool (SIT), a methodology for determining project priorities. The SIT is driven by policies included in the Florida Transportation Plan and the Strategic Intermodal System Plan. The SIT includes five categories of prioritization criteria, each corresponding to the five SIS goals.

Link: http://www.dot.state.fl.us/planning/sis/

Kansas T-Link Highway Prioritization

Agency: Kansas DOT

Location: Kansas

Scale: State

Description: The T-LINK (Transportation-Leveraging Investments in Kansas) Task Force developed a new set of criteria that was implemented in 2010 to prioritize and select highway corridor capacity expansion projects. It was based on three core dimensions of performance indicators: (1) engineering ratings, which account for congestion (volume to capacity ratio), traffic volume flow, truck volume and accident rates, (2) local consultation ratings, which cover both local road system connectivity and social/community needs, and (3) economic impact ratings, which account for accessibility and intermodal connectivity, and their impacts on economic competitiveness, jobs and income generation.

Link: http://www.kansastlink.com/

Virginia Six-Year Highway Plan

Agency: Virginia DOT

Location: Virginia

Scale: State

Description: VTran2035 is Virginia’s Long-Range Multimodal Transportation Plan. It set forth a series of seven performance goals: (1) safety and security; (2) system maintenance and preservation; (3) mobility, connectivity and accessibility; (4) environmental stewardship; (5) economic vitality; (6) coordination of transportation and land use; and (7) program delivery. The identification of strategic corridors, key projects and policy directions was guided by those criteria. The economic development analysis was explicitly based on consideration of mobility, connectivity and accessibility impacts, and their ability to support job and income generation by enhancing productivity and competitiveness.

Link: http://www.vtrans.org/vtrans2035_final_report.asp

Appalachian Highway System Completion Plan

Agency: Appalachian Regional Commission

Location: Appalachia

Scale: 13-state region

Description: The Appalachian Development Highway System (ADHS) was authorized by Congress to “generate economic development in previously isolated areas, supplement the interstate system, connect Appalachia to the interstate system, and provide access to areas within the Region as well as to markets in the rest of the nation.” As of 2007, the system was around 85% complete but still carrying a significant cost for full completion. The Appalachian Regional Commission (ARC) initiated a process to assess the transportation and economic consequences of completing the remaining network links. The assessment process was defined to include four key performance elements: (1) travel time and cost efficiency, (2) access to labor and freight delivery markets, (3) connectivity to intermodal facilities, and (4) macro-economic impacts on suppliers, consumer spending and the economies of the 13 affected states.

Portland Congestion Reduction Study

Agency: Portland Metro

Location: Portland, OR

Scale: Regional

Description: Portland’s Metro collaborated with the Portland Business Alliance to assess the economic development consequences of alternative scenarios for multimodal (bus, light rail and highway) transportation investment in the Portland region. The assessment process included metrics reflecting change in modal investments and resulting changes in travel time and travel cost for commuters, freight deliveries, international import/export industries, local health care industries, officebased industries and retail activity. Overall economic development impacts on employment, income and business output were assessed, based on consideration of mobility, accessibility and safety changes.

Link: http://www.metro-region.org/index.cfm/go/by.web/id=16673

Northeast CanAm Connections

Agency: Maine DOT, lead for state/province consortium

Location: Northern New England and Eastern Canada

Scale: 5 Canadian provinces and 4 US states

Description: Northeast CanAm Connections was initiated as a process for eastern Canadian provinces and northern New England states to collaborate on shared needs to improve economic conditions by enabling improved cross-border and east-west connectivity. The process focused on four key elements of regional need: (1) access to jobs, (2) access to markets, (3) intermodal distribution networks, and (4) port feeder and distribution network connectivity, and their relationship to economic growth (defined in terms of jobs, population and wage levels in the region). These criteria provided a basis for identifying and assessing alternative strategic directions for transportation investment in the region.

Link: http://www.canamconnections.com/