international conference on transport ......reliability – the variability and uncertainty...

June 13th, 2016

Eric BillPrincipal, Economic Consulting

Brian YoungProduct Manager

I NTERNATIONAL CONFERENCE ON TRANSPORT & HEALTH 2016:ECONOMIC ANALYSIS FOR MORE SUSTAINABLE AND

HEALTHY MULTIMODAL INFRASTRUCTURE

Impact Infrastructure

Overview

Infrastructure Decision Making Frameworks Cost Benefit Analysis (CBA) & Sustainable Return on Investment (SROI) Case Studies Software: Visualization and Integration into Project Assessment Discussion


Economic Analysis to Inform Decision Making

Approach to Decision Making in Transportation:

Formal Methodology: Consistent &

Replicable

Leverage Best-Practices

Multiple Considerations Data Driven Merit Based Build

Consensus


Decision Making Frameworks

• Financial Analysis• Life-Cycle Cost Analysis• Cost Effectiveness Analysis• Multicriteria Analysis• Cost-Benefit Analysis


Cost-Benefit Analysis

CBA is a tool to aid agencies in project selection and prioritization:• It considers the gains and losses to all members of the society on

whose behalf the CBA is being undertaken• CBA provides an approach for measuring and valuing some

environmental and social impacts that are not market goods• It values impacts in terms of a single, familiar measurement scale

– money• The money values used to weight the relative importance of the

different impacts• Determine whether the benefits of a proposed action justify its

costs


Cost Benefit Analysis

• Regulatory analytical requirements have been established incrementally for federal decision making

• Related Executive Orders 12291, 12498, 12866, and 13569 • Executive Order 13914 a major driver to TBL CBA: “agencies shall

prioritize actions based on a full accounting of both economic and social benefits and costs...”

• Executive Order 13914 recent additional directives for use of CBA: each agency ‘must use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible…’

• Office of Management and Budget (OMB) ensures compliance with requirements

• DOT - TIGER grant funding


Healthy, Safe, and Sustainable Transportation

Triple Bottom Line Analysis promotes decision-making armed with relevant information from a variety of perspectives:• Considers costs and benefits based on multiple criteria (trade-offs)• Involves collaborative, transparent, consensus-building process• Identifies key risks• Addresses multiple, conflicting objectives


Susta inable Return on Investment Analys is

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Sustainable Return on Investment (SROI):Triple Bottom Line Valuation Framework

o Monetary valuation of Triple Bottom Line

o Proven method in multiple contexts

o Applicable for program, project level decisions

o Accounts for risk & uncertainty

SROIAccounts for a project’s triple bottom line – its full range of economic/financial, environmental, and social impacts. Combines best-practices in CBA, financial analysis, and LCCA; augmented with advanced risk analysis.


The Triple Bottom Line Framework

9

Revenue;Operational

Savings

Capital Costs; O&M

Costs

Value of Time

Green House Gases

Accident Reduction

Water Quality

Health Benefits

Flood Risk Reduction

Non-Cash Impacts

Heat Island

Mitigation

Value of Reliability

Criteria Air Contaminants

Low Income Mobility

OtherRecreation Value

Financial Return

Sustainable Return on Investment


Transportation Costs and Benefits List - Standard

Time Savings – The amount of time saved by people using the transport system.User Costs Avoided (Vehicle Operating Costs) – the amount of

money saved by people using the transport system. CO2e Emissions – Reduced Greenhouse Gases reduces the risks of

global warming. Criteria Air Contaminants - Local air quality has strong impacts on

health outcomes of people who live and work in the area. Accident Risk – the financial, physical, and emotional damage

caused by accidents. Residual Value – The value of assets at the end of their lifecycle.


Transportation Costs and Benefits List - Extended

Reliability – The variability and uncertainty associated with peoples travel patterns. Congestion and Crowding – The impact of congestion on roads, and

crowding on transit vehicles affect peoples’ perception of travel. Value of Active Transportation – The personal and social value of

active transportation, in terms of health outcomes. Safety Benefits – People’s perception of safety when travelling.Noise Pollution – The impact transportation has on the noise levels

of surrounding communities. Low Income Mobility – Portion of total trip cost and time savings

accruing to low income users.


Transportation Costs and Benefits List: Extended

Ownership Costs of Personal Vehicles – The effect transport strategies reduce the fixed costs of vehicle ownership. Low Income Mobility – The benefit of providing low priced

alternatives to people who can’t afford other modes. Property Value Uplift – The effect transit projects have on the

character and form of neighborhoods.Oil Consumption Externality – The impact exogenous shocks to oil

markets has on economic outcomes. Shadow Wage Benefit – The poverty reduction benefits of

increased local employment opportunities.


Transportation Costs and Benefits List - Urban Amenity

Amenity Value of Trees and Vegetation Amenity Value of Street Lighting Amenity Value of Pavement Type (Brick/Cobblestone) Amenity Value of Benches Amenity Value of Pedestrianization and Shared Space Amenity Value of Transit Shelters Amenity Value of Bike Racks Recreational Value of Recreational Trails Value of Safety Improvements ADA value of step-free Access


Broader Benefits: Green Infrastructure

Flood Risk Reduction – The mitigated flood-related property damage from reduced runoff. CO2e Emissions – Sequestration/reduced production from green

infrastructure. Air Pollution - Sequestration/reduced production from green

infrastructure Property Value Enhancements – Property uplift value on market prices Heat Mortality Risk Reduction – Increased vegetation reduces urban

heat island effect Social Value of Water – Stormwater reuse reduces fresh water Recreational Value – Value of enhanced recreational amenityWater Quality – Reduced discharge/overflow events into local waters


Monetizing Economic Externalities

Market Price Method Productivity Method Hedonic Pricing

Method Travel Cost Method

Damage Cost Avoided,

Replacement Cost, and Substitute Cost

Contingent Valuation Method

Contingent Choice Method

Benefit Transfer Method

Ecosystem Valuation Techniques

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AutoCASE/SROI Sources


Probabilistic Risk-Adjusted ImpactsRisk-Adjusted vs. Deterministic Estimation Risk analysis is the systematic use of available data to determine

how often specific events may occur and what the magnitude of their consequences is. Risk Analysis can identify pitfalls as well as opportunities.


Probabilistic Analysis = More Resil ient Projects

F = f (A, B, C, D, ..)

Reduced Energy Demand(kwh/yr)

Runoff Flooding (# Events/yr)

Energy Savings($/kwh)

Property Value ($/Flood Event)

Value of Investment

($/yr)

Jointly Determined Probabilities

Risk analysis is the systematic use of available data to determine how often specific events may occur and what the magnitude of their consequences is.

Probability distributions account for uncertainty in key drivers

Monte Carlo simulation integrates uncertainties to reveal comprehensive perspective


Measures of Project Worth & Timing

Net Present Value (NPV): The net value of an investment, calculated as benefits less costs, with both expressed in present-value monetary terms

Benefit to Cost Ratio (BCR): The overall “value for money” of a project, expressed as the ratio of the benefits of a project relative to its costs, with both expressed in present-value monetary terms

Discounted Payback Period (DPP): The period of time required for the discounted return on an investment to recover the sum of the original investment


Sample Results

Risk-adjusted results Financial Impacts

Triple Bottom Line Impacts


Sample Results


Risk-adjusted outcomes

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Sustainable NPV -incorporates all costs and benefits in the model, including impacts on the local economy, society,and the environment.

Direct Financial NPV -direct costs and benefits such as capital expenditures, revenues, etc.

The difference between the curves is the (net) non-market or societal benefits (externalities) such as lower carbon emissions, less urban heat island effect and other impacts.


Identify Key Drivers and Risks

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Identify Who Benefits

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Questions?

Thomas MeninoFour-term Former Mayor of the City of Boston

“Public leaders need to understand the triple bottom line of the policy and programmatic choices before them. The ability to assign monetary values to the full costs and benefits associated with sustainable initiatives will unlock the door to additional public investment. Now, mayors can actually measure and articulate

the monetary value of green.”


Case Study

TransportationUS 50 ImprovementsLake Tahoe, Nevada


Lake Tahoe – US 50 Transportation Improvements

Convert the five-lane conventional U.S. Highway 50 (US 50) into a three-lane local street through the commercial core in the “Stateline” area of the South Shore of Lake Tahoe and a realignment creating a ‘loop road’ around the commercial core Project expected to improve traffic flows

for local residents and visitors around the Stateline area, improve water quality of Lake Tahoe, create a more pedestrian-friendly corridor, and contribute to community revitalization.


Lake Tahoe – US 50 Transportation Improvements


Project Impacts

1. Travel time savings 2. Emissions impacts3. Water quality improvements4. Reduced accidents5. Noise reduction in residential neighborhoods6. Pavement cost impacts7. Improved transit system8. Improved bicycle facilities – health, mobility, recreation benefits, cost savings9. Inventory cost savings10. Streetscape amenities


Bicycle BenefitsPopulation 1 mile

away

% Adults

NCHRP Multipliers for Existing

Recreational Users

% Bicycling Commuting

Share% Commuters

Population 1/2 mile away

Total Population ¼ mile away from

Cycling Trail

Existing Bicycle Commuters,

by Year (persons)

Output

Legend

Input

Existing Recreational Cyclists, by Year

(persons)

NCHRP Multipliers for New Users

Total New Bicycle Commuters and

Recreational Cyclists, by Year (persons)

Annual Healthcare Cost Savings from Physical Activity

($/person)

Total Health Benefit due to More Walking and Cycling Activities

($)

National Cooperative Highway Research Program (NCHRP) approach of estimating the public benefits from investing in bicycle facilities

Four categories of benefits: health improvements, mobility improvements, recreational benefits and reduced automobile costs


Safety Improvements

Total Cost of Fatality Accidents – no build

caseby Year, ($)

Total Cost of Injury Accidents – no build

caseby Year, ($)

Total Accident Cost – no build case, by Year

($)

Reduced Accident Cost due to Bypass

Construction and Road Improvements, by Year

($)

Number of Fatalities in the Project Area - no build case (fatalities)

Number of Injuries in the Project Area - no

build case (injuries)

Average Cost per Accident Injury

($)

Value of Human Life($)

Total Cost of Fatality Accidents – build case

by Year, ($)

Total Cost of Injury Accidents – build case

by Year, ($)

Total Accident Cost – build case, by Year

($)

Average Cost per Accident Injury

($)

Value of Human Life($)

Number of PDOs in the Project Area - no build

case(accidents)

Average Property Damage Cost per

Accident($)

Total Property Damage Cost – no build case

by Year, ($)

Average Property Damage Cost per

Accident($)

Total Property Damage Cost – build case

by Year, ($)

Output

Input

Legend

Number of Fatalities in the Project Area - no build case (fatalities)

Number of Injuries in the Project Area - no

build case (injuries)

Number of PDOs in the Project Area - no build

case(accidents)

Crash Modification Factors (CMFs) due to

the Improvements(unit)

Number of Fatalities in the Project Area - build

case (fatalities)

Number of Injuries in the Project Area - build

case (injuries)

Number of PDOs in the Project Area - build

case(accidents)


Streetscape Amenities

Journey ambiance improvements in the appraisal of walking facilities

Value per mile for street lighting, crowding reduction, curb level enhancements, information panels, pavement evenness, directional signage, and benches

No induced pedestrian traffic was considered

Pedestrian counts and total average daily trip length, adjusted for seasonality Output

Input

Legend

Benches

Directional SignagePavement Evenness

Information Panels

Curb Level

Reduced CrowdingStreet Lighting

Weighted Average of Pedestrian

Improvement Benefits ($/mile)

Number of Pedestrians

(#/yr)

Average Walking Distance for

Pedestrians on Street Segment(miles)

Value of Improvements to

Users($/mile)


Lake Tahoe – US 50 Transportation ImprovementsEvaluation Metrics 3%

Total Costs $63,975,640 Total Benefits $72,284,189 Net Present Value (NPV) $8,308,549 Return on Investment (ROI) 13% Benefit-Cost Ratio (BCR) 1.13

0%10%20%30%40%50%60%70%80%90%100%

-$150-$100-$50$0$50$100$150

Millions

NET PRESENT VALUE (NPV)

NET PRESENT VALUE (NPV)

Benefit #

Benefit Category 20-Yr Total 3% Discounted

1 Travel Time Savings due to Congestion Mitigation $24,031,360 2 Environmental Cost Changes due to Changes in

Vehicle Distance and Speed -$259,823

3 Water Quality Improvements through Enhanced Storm Water Treatment Facilities

$10,210,329

4 Reduced Accident Cost due to US 50 Realignment Construction and Road Improvements

$11,645,316

5 Vehicle Operating Cost Changes due to the US 50 Realignment Construction

-$15,623,694

6 Reduction in Ambient Noise Levels in Residential Neighborhoods

$101,059

7 Changes in Pavement Cost due to the Project -$199,250 8 Benefits due to Improved Transit System $486,644 9 Public Benefits due to Improved Bicycling Facilities $10,287,321

10 Residual Value - Right of Way $19,171,696 11 Inventory Cost Savings $497,655 12 Public Benefits to Pedestrians Due to Enhanced

Streetscape $11,935,577

Total $73,299,782


Case Study

Multimodal TransitProject Connect North Corridor Alternatives Analysis Austin, Texas


Austin Cap Metro – Project Connect - Alternatives Analyzed


Transit Impacts


Structure & Logic: Safety Benefits

Changes in crash costs, like other variable costs, are dependent on changes in VMT.

The changes in vehicles on the road are combined estimations on per-mile crash rates for fatal, injury, property damage only (PDO) crashes.

Crash rates and crash severity on roadways are typically higher than on bus and commuter rail systems - modal shift from auto to a “safer” mode is likely to result in overall improvements in safety.


Structure & Logic: Greenhouse Gas Emissions

Reduction in emission volumes are dependent upon the reduction in vehicle-miles resulting from diversion to transit and speed improvements.

Per-unit emission costs were applied to the emission reduction volumes due to the reduction in VMT caused by modal shifts to bus and rail.

The emission rates for autos and trucks used in this CBA were obtained from Motor Vehicle Emission Simulator (MOVES) - a tool provided by the Environmental Protection Agency (EPA).


Austin Cap Metro - Results


Simulation & Visualization for CBA

international conference on transport ......reliability – the variability and uncertainty...

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