11.7 - Benefits
- 11.1 - Evaluation of private sector financing and road tolling
- 11.2 - Method of evaluation
- 11.3 - Stages of analysis
- 11.4 - Do minimum
- 11.5 - Travel impacts
- 11.6 - Costs
- 11.7 - Benefits
- 11.8 - Period of analysis
- 11.9 - Financial evaluation
- 11.10 - Cost benefit evaluation
- 11.11 - Alternatives and options
- 11.12 - Sensitivity and risk analysis
- 11.13 - References
11.7 - Benefits
Introduction
Once traffic impacts have been determined, the calculation of national economic benefits follows in the normal manner but using the disaggregated willingness to pay values for travel time for benefits or disbenefits – see section 11.2.
Tolled versus un-tolled roads
When users are required to pay tolls on a route, some will choose to avoid the toll by using alternative routes if they are available. The toll charges change the benefits that would otherwise be received by road users in the following ways:
- for those motorists that continue to use the toll road, benefits are reduced by the extent of the toll charge
- the benefits to users on the toll road may be increased due to less congestion on the tolled facility
- for those that would have used the new road if it was not tolled but decide to divert to a ‘free’ road because of the toll, travel time and perhaps vehicle operating costs are likely to increase
- for those that would have continued to use alternative routes even if the new road was not tolled, benefits are likely to be reduced because of more congestion.
Environmental and community benefits may also change with a tolled road compared to leaving the road un-tolled. Possibilities include:
- overall vehicle use
- use of car pools
- level of public transport use
- options to develop public transport
- overall pollution
- degree of decentralisation
- local area traffic management
- timing of infrastructure provision.
It may not be possible to put values on all these items, but they need to be considered for a tolled facility.
Tolls
Tolls are payment by road users for the right to travel on a particular road. In economic efficiency terms the tolls can be viewed in three ways:
- If the facility is government funded, the tolls are simply a transfer payment between those motorists who pay them and the government.
- If the facility is privately financed and the concessionaire (with its toll level proposal) is selected by competitive tendering, then the toll charges also represent a true market price, ie the resource cost, for that part of the project. Any government contribution or expenditure is also part of the project cost.
- Alternatively, tolls can be related to negative benefits (disbenefits). The effect of the toll is to reduce overall public benefits. If a particular road user would achieve a benefit of say $3 by using a new toll road, but must pay a toll of $2, then the net benefit is only $1 if the tolled road is used. The loss of benefits by those who continue to use the ‘free’ route will be somewhere between zero (because there would be no benefit in using the tolled route even if there was no toll) and the cost of the toll ($2).
The present value (PV) of gross toll collections is the same, regardless of which way they are viewed. Provided that tolls are not double counted, the net present value of the project (PV of benefits minus PV of costs) is also independent of the way tolls are viewed.
Traffic congestion reduction
Some trips that would use the new route if it was ‘free’ will be deterred from its use by the charges and will continue to use the existing network. Hence the extent of congestion relief on the existing network provided by the new route is less than would be achieved if the new route were ‘free’.
Disbenefits during construction
The costs of dislocation and traffic disruption during construction should be included as negative benefits for all options. These may be different for an un-tolled road compared to a tolled road (particularly if the construction period is different).
