Lec 21, Project Evaluation Part 1: Impact analysis General characteristics of benefits and costs Estimates of economic costs and benefits A framework for evaluation Social costs of transportation

Two approaches for the assessment of transportation impacts (section 6.3) What has occurred which would not have occurred if the transportation system change had not been implemented? We are interested in a with and without comparison. But this is hard to do as the book explains for transportation projects. Ex Post Assessment: Evaluate the current condition with the previous one.  Becomes a “before” and “after” comparison. With this we cannot answer the question above. A Priori Assessment: This assessment is focused directly at the with and without level of analysis.  The major problem with this is that it can estimated impacts only by using forecasted (rather than “real”) data. Good models are needed for this.

What is evaluation? Evaluation  The process of determining the desirability of different courses of action and of presenting this information to decision makers in a comprehensive and useful form. (This reflects the theme of this textbook-- presenting this information to decision makers. ) 1.Define how value is to be measured 2.Estimate the source and timing of the benefits and costs of the proposed actions 3.Comparing these benefits and costs to determine a level of effectiveness for that alternative

Questions that form the basis of evaluation

Evaluation characteristics Focus on the decisions being faced by decision makers Relate the consequences of alternatives to goals and objectives Determine how different groups are affected by transportation proposals Be sensitive to the time frame in which project impacts are likely to occur In the case of regional transportation planning, produce information on the likely impacts of alternatives at a level of aggregation that permits varying levels of assessment Analyze the implementation requirements of each alternative Assess the financial feasibility of the actions recommended in the plan Provide information to decision makers on the value of alternatives in a readily understandable form and in a timely fashion These characteristics dictate the type of info, procedure to be used, schedule to follow to make the info timely for decision makers

General characteristics of benefits and costs Real and pecuniary impacts Real = those realized by the final consumers of a project or that add to a community’s overall welfare: Pecuniary = gained at the expense of other individuals or group Direct and indirect benefits & costs Direct = Related specifically to the objectives of the investment: Indirect = by-product Tangible or intangible impacts Tangible = Can assign monetary values: Intangible = those that cannot be easily measured or associated with prices in the marketplace. Internal or external benefits & costs If benefits and costs are confined to the study area, they they are internal. Typically transportation facilities have impacts on not only to the study area but to other areas. User and nonuser benefits & costs User = benefits and costs solely attributed to the users, usually given prices: non-user = benefits and costs attributed to non- users Total and incremental costs & benefits Total = total outlay of dollars used to construct and operate an alternative: Incremental = those that represent the additional costs associated with the proposed changes to the existing system

Estimates of economic benefits and costs “…Transportation executives need to emphasize productivity and growth over the redistribution of economic activity as the principal objectives of transportation policies and investment programs.” Macroeconomic impacts Generative Reditributive Financial transfer (See Table 8.5. “Predictive” means a priori assessment: “Evaluative” means ex post assessment of the projects)

User Costs

Social costs of transportation Personal non monetary costs of using motor vehicles Explicitly priced private sector motor vehicle goods and services, net of producer surplus, taxes and fees “Bundled”private sector goods (implicitly priced) Government services charged to motor vehicle users Monetary externalities (unpriced) Nonmonetary externalities (unpriced) (See page for examples of these categories.)

Distribution impacts What are the travel activity patterns of different income and racial groups? Do low-income and minority populations shoulder a disproportionate share of the burdens of transportation facilities Do low-income and minority populations receive a proportionate share of transportation benefits Where are transportation investments being spent with respect to populations of different races and income levels

A framework for evaluation A hierarchy of benefits and costs commonly considered as part of a transportation planning process

Evaluation & impact-incidence matrix The evaluation methodology does not produce the “correct” decision, rather the approach produces a structured set of information that can be used by DMs to choose the preferred alternative.