3.8 - Benefits of TDM programmes

Introduction

Benefits of TDM included in the economic efficiency calculation can include congestion reduction, increased access and mobility (especially for non-drivers), transport service user cost savings, increased road safety, improved environmental quality, energy savings, improved community liveability, efficient land use and national strategic benefits.

Note:  Reductions in road maintenance and construction costs and parking facility costs are cost savings not benefits in terms of the definitions used in this manual. Any additional costs to consumers are defined as disbenefits.

Benefits of mode change

Many TDM programmes can provide transport service user cost savings by improving transport options, reducing vehicle operating costs, or providing direct financial benefits. Savings can be especially large if a TDM programme allows a household to reduce the number of vehicles it owns or to defer the replacement of an older vehicle.

Some TDM measures, such as commuter financial benefits and public transport fare reductions, provide direct payments or savings to consumers.

The components of benefit of transport projects that involve mode change are:

(a) resource cost savings to people already on a mode that is improved

(b) perceived benefits to people that change modes

(c) resource cost adjustments to people that change modes for unperceived costs associated with the previous and new behaviour of these people

(d) resource cost adjustments to other transport system users and for other impacts (externalities) for unperceived costs associated with the previous and new behaviour of persons that change modes.

Transport user cost savings do not need to be assessed directly when using a consumer perceived cost approach because they are included in the perceived net benefit to people that change modes.

The benefits for a) mainly include aspects of cost, time and comfort. For projects using 'soft' measures such as education, promotion and marketing rather than change in cost, benefits for category a) are typically zero.

Benefits for b) need to be estimated from mode choice relationships. If mode change is caused by price change, benefits for b) are valued at half the unit benefits to existing users. The following perceived benefit values (applicable to both peak and off-peak) have been derived for mode change in New Zealand.

The resource cost adjustments c) represent additional resource cost savings to the people that change modes (eg resulting from replacing a private vehicle trip with a public transport, cycle or walk trip) that are not included in b).

Resource cost adjustments d) are the resource cost impacts on other transport system users or externalities. These impacts include congestion reduction and net environmental effects.

Disbenefits

Some TDM programmes may increase consumer's cost by:

• increasing fees for parking, road or vehicle use
• increasing transaction costs
• increasing travel time by introducing delays or speed reductions
• reducing comfort.

These can be perceived as disbenefits by consumers and will be taken into account in forming a view on overall benefits of mode change.

Traffic congestion reduction

The traffic congestion reduction benefit of a shift from driving to another mode of transport is the difference in congestion impacts for the two modes. As well as travel time, trip reliability is usually improved as congestion is decreased.

Reduced urban-peak vehicle travel tends to reduce traffic congestion (in this case, 'urban' includes suburbs, small towns and resort communities during tourist season). Congestion is a non-linear function, meaning that a small reduction in urban-peak traffic volume can cause a proportionally larger reduction in delay.

Traffic congestion is often defined and measured only in terms of the delays that motor vehicle traffic imposes on other motor vehicles. Traffic impacts on cyclists and pedestrians should be included where significant.

Private vehicle operating cost savings

It is normally considered that private vehicle users only perceive the fuel component of vehicle operating costs (VOC) and, therefore, a resource cost correction is required for the difference between the perceived costs and the total resource cost avoided for trips that change mode. Such a correction is about seven cents/km for New Zealand private vehicles.

If a travel behaviour change project provides sufficient information to make people aware of the difference between their perceived value of private vehicle operating cost and the resource cost, then the resource cost correction can be taken as zero.

Valuing travel time for TDM

Consumers do not always consider additional travel time as a cost. The value that people assign to travel time is highly variable, depending on factors such as comfort and enjoyment. For example, some people prefer public transport or rideshare travel as being less stressful than driving in traffic. Other people enjoy walking or cycling for recreation and exercise, and will choose these modes even if the trips take longer. In other words, consumers sometimes consider time spent travelling by alternative modes to have a lower cost per minute than driving.

Travel time savings (or increases) do not need to be assessed directly when using a consumer perceived cost approach because travel time changes and related impacts are considered to be fully included in the perceived net benefit to people that change modes. This includes effects such as differences in travel time by different modes, differences in the value of that time, other time costs such as waiting, transfers, changing etc, and trip time reliability.

If transport models are used to provide inputs for evaluation of TDM packages, it is important that they use consumer surplus analysis to measure the incremental costs and benefits of travel changes.

Trip reliability

Trip reliability of public transport using roads can be assessed using the techniques in appendix A4 of volume 1.

Time and VOC benefits to other road users

Travel time and VOC benefits to people that change travel behaviour are addressed above, there are also congestion reduction (travel time and VOC) benefits experienced by other road users as a result of the TDM programme.

Average congestion reduction benefits to other road users ($2002) are:

Reduction of congestion is likely to make private vehicle travel more appealing for other potential road users, which will partially offset the congestion benefits. This generated traffic effect should be valued as a disbenefit equivalent to 50 percent of the congestion reduction benefit.

Generated traffic

Generated traffic is the additional vehicle travel that results from increased roadway capacity. This consists of a combination of diverted vehicle trips (trips shifted in time, route and destination), and induced vehicle travel (shifts from other modes, longer trips and new vehicle trips). Over the long run, generated traffic often fills a significant portion (50-90 percent) of added urban roadway capacity.

It is important to consider generated traffic when evaluating congestion reduction strategies. Generated traffic does not eliminate the benefits of capacity expansion projects, but it can significantly change the nature of their benefits. It often means that congestion reduction benefits are smaller and shorter lived than projected, that the benefits consist of increased consumer mobility and urban fringe property values, and induced vehicle travel can exacerbate problems such as downstream congestion, road accidents, emissions, urban sprawl and overall private vehicle dependency. Evaluation that ignores the effects of generated traffic tends to overstate the true benefits of roadway capacity expansion and understate the benefits of TDM programmes.

Not all congestion reduction strategies cause induced or generated traffic. Some types of TDM programmes do not contribute to generated traffic and so tend to be particularly effective at providing long-term congestion reduction benefits. Programmes that increase the costs of driving or make alternative travel options more attractive under urban-peak conditions can change the point of congestion equilibrium. For example, congestion pricing, parking pricing, distance-based charges, HOV priority and grade separated public transport improvements can reduce overall traffic congestion. Roadway capacity expansion or flexitime (which frees up peak-period road space) is likely to generate traffic, and so will provide relatively little long-term congestion reduction, depending on circumstances.

Spill-over effects

Some TDM proposals have spillover impacts that should be considered in evaluation. For example:

• road pricing may shift vehicle travel and congestion problems to untolled roads
• traffic calming may shift traffic impacts to other roads
• parking pricing in one area may increase parking problems in nearby areas, and may shift economic activity to areas that offer free parking.

These and any other spill-over impacts should be taken into account in the evaluation of TDM projects.

Cycle operating costs

It can be assumed that people changing to cycling correctly perceive cycle costs and, therefore, the resource cost correction is zero.

Walking costs

These can be ignored because they are likely to be small and also are likely to be correctly perceived by people changing to walking.

Motor vehicle accident cost savings

TDM programmes that reduce total vehicle kilometres of travel, reduce traffic speeds, or provide an incentive for safer driving tend to be particularly effective at reducing road accidents. Programmes that reduce traffic congestion without reducing total kilometres travelled, by shifting travel times and routes, have mixed safety benefits: although accidents tend to decline, collisions that do take place tend to be more severe (and therefore have higher resource cost) because they occur at higher speeds.

Accident costs can be considered in three parts:

(a) internal costs that are borne by people in making travel choices

(b) internal costs that are borne by family and friends of the people making travel choices

(c) externality costs (not perceived) borne by others/society (hospital costs, lost productivity, etc).

People, in general, perceive only a) and b) of the accident risk or cost associated with use of private vehicles, so the resource cost correction is item c).

Resource cost corrections to be applied to motor vehicle accident costs (Ministry of Transport, Surface transport costs and charges: main report) are:

Cycle/walk accident costs

It is assumed that people that change to walking and cycling have a fairly clear perception of the associated accident risk.

If most internal costs are perceived (and included in the perceived benefit of changing travel behaviour), then the resource cost correction would be equal to the externality costs. However, it is assumed that this is offset by the fall in the average per kilometre accident cost per pedestrian or cyclist that studies show is a result of an increase in the number of pedestrians and cyclists.

The resource cost correction is therefore taken as zero.

Health (fitness) benefits

Regular physical activity is associated with an improvement in a wide range of health conditions, including heart disease, mental health and diabetes. The health benefits of walking and cycling have been researched overseas, and this research indicates significant benefits associated with these activities.

Health benefits of cycling and walking can be considered in three components in the same way as accident costs (but they are a benefit rather than a disbenefit). Total health benefits of cycling have been assessed as $0.16/km and of walking $0.40/km. It is assumed that people that change to walking or cycling do not perceive the wider savings to society (externalities) of their improved health,
eg hospital cost savings, so a resource cost correction is required at least for this.

For purposes of evaluation, it is assumed that half of the total health benefits are internal to people that use cycling and walking and are perceived. A resource cost correction is required for the other half, ie the resource cost correction is $0.08/km for cycling and $0.20/km for walking.

Note: the above values are subject to further revision as new information becomes available.

Parking user savings

The resource cost of providing parking includes the opportunity cost of using the land for parking, the capital cost of the parking facilities and the provision of security and other administration.

The Ministry of Transport Surface transport costs and charges main report found that, for CBDs in all major New Zealand urban areas, charges to car park users in commercial car parks approximate to the resource costs of the parking spaces. However, there are situations where the user pays no charge or less than the resource cost.

When making travel decisions, people are likely to only perceive the parking fee that they actually save. A resource cost correction is, therefore, required to the perceived parking savings for any difference between the parking fee and the resource cost.

Other monetised and non-monetised impacts

Other monetised and non-monetised impacts are described in sections 2 and 3 and appendix A8 of volume 1. The values and methodology in volume 1 apply equally to TDM projects.

TDM programmes that reduce total vehicle kilometres travelled, optimise vehicle speeds and reduce traffic congestion provide energy conservation and emission benefits. Programmes that encourage motorists to use more efficient, less polluting vehicles, or that reduce total vehicle ownership and trips, tend to be particularly effective at energy and emission reductions.

Community liveability

Community liveability refers to the environmental and social quality of an area as perceived by residents, employees, customers and visitors. This includes:

• accident risk
• noise
• local pollutants (eg dust)
• preservation of unique cultural and environmental resources (eg historic structures, mature trees, traditional architectural styles)
• attractiveness of streets
• opportunities for recreation and entertainment
• and the quality of social interactions, particularly among neighbours.

A liveable community directly benefits people who live in, work in or visit the neighbourhood, increases property values and business activity, and it can improve public health and safety.

The ease by which residents can travel as pedestrians or by bicycle represents a critical component of community liveability. The compactness and mixture of land uses is another important component as is proximity to busy highways or street. Some TDM programmes improve community liveability by helping to create more attractive pedestrian conditions, creating more accessible land use patterns, and reducing total vehicle traffic on local streets.

Community liveability is somewhat different from the effects covered in appendix A8 of volume 1, which are in general related to the effects of changes to the road system. Community liveability should be described and quantified as for other effects. The value of changes in community liveability can be assessed by revealed preference, eg by analysing the effect on house prices, or by stated preference methods. Care must be taken not to double count benefits under community liveability as well as under other categories.

Consumer travel options

Some TDM programmes improve transport options by improving alternative modes or providing new pricing options. This provides various types of benefits to consumers and society, including improved access and opportunity, consumer cost savings, increased equity, improved community liveability, and reductions in various external costs. Adequate transport options are a key market principle for economic efficiency and equity.

Some TDM programmes increase consumer options in ways that increase mobility. For example, car sharing makes vehicle use more affordable for lower-income drivers, and public transport improvements may increase personal travel (not every additional public transport trip represents a private vehicle trip reduced).

It is assumed that the benefit of improved consumer options are included in perceived costs.

Public transport fares

Public transport fares are perceived by users as a cost and, therefore, form part of their assessment of net benefit of changing modes. However, the fares are, in fact, a financial transfer rather than a resource cost.

A resource cost correction is required to correct for this mis-perception. The correction comprises adding back (as a benefit) the amount of the fare. The tax inclusive fare is used because this is the perceived cost.

Disbenefits during implementation/construction

Any increased travel time, increased vehicle operating costs, reduced trip reliability or increased accident cost to transport users during project implementation/construction should be specifically identified and reported as a disbenefit (negative benefit).

Land use benefits

Some TDM programmes increase land use accessibility, while others may encourage more efficient land use patterns that reduce per capita impervious surface coverage (the amount of land paved for roads, paths and parking facilities, or covered by buildings), which helps preserve greenspace and reduce stormwater management costs.

Land use benefits are, in general, captured in the monetised and non-monetised impacts described in appendix A8 of volume 1 but there may be additional benefits in particular situations.

National strategic factors

National strategic factors are defined in section 3 and appendix A9 of volume 1.

Land Transport NZ will consider categories of national strategic factors other than 'providing for security of access on busy inter-regional routes' and 'providing for investment option values' for TDM proposals where promoters can demonstrate that consumers are willing to pay for a benefit not included in current procedures.