Alan J. Horowitz
Edward Beimborn
Center for Urban Transportation Studies
University of Wisconsin Milwaukee
P. O. Box 784
Milwaukee, WI 53201
December 21, 1995
Note: This paper appears in TRB record 1496
Abstract of paper
Benefit assessment is done to make decisions, and a general discussion is given of how to view benefits for that purpose. Benefit assessment practices from many agencies in the U. S. are described. Agencies are compared as to their reported benefits and
their use of benefit measures in actual practice. The political environment surrounding transit decisions were found to have a major effect upon procedures that are adopted for benefit analysis. The paper also shows how consequences of transit can be i
llustrated through the use of a benefit tree. The benefit tree allows planners to show how transit service provides an alternative means of travel, results in changes of trip making by automobile and transit, affects land-use activity and leads to direct
and indirect employment.
Approaches are described for quantifying benefits. As an example, a method is presented for calculating the enhanced consumer surplus as a broad measure of user benefits of a project alternative. Recommendations are made on how to effectively use benef
it measures for selection of project alternative within a political decision-making environment.
Recently there has been an increased interest in public transit at local units of government. Many urban areas have undergone substantial reviews of their transit services and developed ambitious plans for expanding service and for constructing new fixed
guideway facilities. This increased local interest often coincides with budget shortages at all levels of government and with increased automobile ownership and usage. Under such conditions this support for transit usually means a larger commitment of
local funds. Very often such support is manifested through a referendum or through a major grass roots effort. There is a local perception that the benefits of transit are great so great that people will accept increased local taxes to pay for them.
This has occurred in many cities, but the benefits of transit are still poorly understood.
Benefits can be viewed as those consequences that are valued by some segment of the population. Benefits exist because people believe they are important, whether or not they can be measured (or if seemingly objective measurement shows them to be nonexis
tent). Some communities place a high value on public transit even though it is difficult to find significant benefits by methods used for other means of transportation. These communities value transit highly and are collectively "willing-to-pay" a subst
antial amount of money to support transit. The level of monetary benefits of a transit system in such places must be viewed as being at least as high as the total local expenditures (user costs + subsidies) for transit, maybe substantially higher.
Benefits can be viewed in different ways, and it is essential to distinguish between approaches. Much of the debate about benefits stems from the chosen point of view. Three common viewpoints are financial, economic, or political.
A financial viewpoint includes only those benefits that can be recovered as income. Benefits are those things that contribute to the rate of return on the investment in transit. Returns (benefits of transit) should occur directly to the agency to pay t
he expense of providing service. External benefits have no value unless they can be captured by the transit agency.
The economic viewpoint of benefits is broader in that benefits can accrue to others and still be of value. This viewpoint uses a willingness-to-pay criteria for benefits; i.e., how much are users and nonusers of a system willing to pay for a service reg
ardless of its price? The difference between willingness-to-pay and price can be viewed as a benefit consumer surplus. The economic view also assumes that the benefits can be converted to monetary units. Benefits are derived from an analysis of suppl
y/demand equilibrium and from the behavior of individuals who make choices in an open market condition.
The third viewpoint of benefits is a political one. The political process in a democratic system provides a way for a community to express its opinion of what is and what isn't important. When duly elected officials make choices, ideally they are expre
ssing the collective feelings of society about the benefits of different governmental activities. The value placed on transit by voters, primarily nonusers, is an indication of the benefits beyond those accruing to users. Promotional materials from tran
sit agencies, citizen groups, and referenda advocates often include environmental improvements, access to jobs, economic development, better mobility for others, emergency transportation, and enhanced community image as reasons to support transit.
The political process involves tradeoffs and choices, and it can be a good indicator of community values. However, there are factors that may cause the political process to represent opinion poorly. Lack of open debate, unfair competition between ideas
, over-representation of special interests, or consideration of other unrelated issues (e.g., educational policy or low income housing) can inhibit the interpretation of transit decision making as a means of measuring benefits.
This paper presents a summary of a larger work (1) that provides a look at benefit issues from each of these viewpoints.
Benefit analysis is done so decisions can be made. A decision could be for a specific purpose, such as the selection of the best alternative, or for more general reasons, such as to generate support for all transit services. Understanding the nature of
transit decisions is the key to benefit measurement. Benefits can be analyzed by looking at both the product and the decision making process itself.
A list of benefits and impacts was compiled from a selection of Alternatives Analysis/Environmental Impact Statements for major transit investments. Within the AA/EIS's, the federal government requires certain impacts to be quantified; local agencies can
add other factors to this list or elaborate on required items to make their case more convincing. AA/EIS's provide evidence of which benefits are of greatest importance to each community.
Fifteen alternative analyses, environmental impact statements and economic impact assessments were reviewed. These particular cities were selected because they had had relatively recent projects and because their analyses appeared to be complete. Resul
ts from this analysis are given in Figure 1. Cited benefits are indicated, as well as whether an effort was made to quantify the benefits. A reading of the AA/EIS's reveals that communities cite a wide variety of benefits. There are considerable differ
ences between cities. None of the cities considered the option value of transit, while most considered the reduction in automobile trips, land preservation and transit operations as benefits.
Figure 1. Cited Benefits in AA/EIS's.
Visits were made to different cities around the country to gain a better understanding of transportation decision making and the role of benefits analysis. Cities were selected where expansion of the transit system has been a significant local issue and
where extensive analysis has been or is being made of the benefits of transit. Four cities were visited, each of which had undergone or is currently experiencing substantial discussion of local transit alternatives. The purpose of these visits was to ex
amine how analytical estimates of benefits were used in decision making and to identify critical factors that lead to the choice of particular courses of action. This effort also looked into the role of referenda as a way to gain a community expression o
f transit benefits, to determine whether one could estimate overall perceived benefits by looking at how much a community was willing to tax itself voluntarily to support transit.
In each community, interviews were conducted to understand better the technical and political arguments for and against the transit expansion. In-depth interviews were held with staff members of transit agencies, local government, and metropolitan plann
ing agencies, and citizens, and members of the academic community. A large number of documents were also obtained, including planning documents and promotional information that helped to understand the social, political, and philosophical history of tran
sportation decision making. There was good agreement among those interviewed about the key political issues and the areas of dispute.
In the communities we visited we found diverse opinions on the general value of transit and even more disagreement on specific projects. This disagreement is especially evident where the issue of building a rail system is a point of local controversy. I
n these places transit, in general, may have widespread support but particular parts of rail system proposals can be seriously questioned. Debates over courses of action tend to center on benefit issues. Advocates believe there are substantial benefits
of transit investment, while those people opposed doubt that such benefits exist. In most cases, these opinions existed independently of any attempts to quantify benefits. Studies that measured benefits were ignored or discredited or cited as authoritat
ive depending on one's position on the proposed project. In most places we visited benefits were a matter of belief rather than an agreed fact. Furthermore, many benefits cited were intangible and difficult or impossible to measure.
The strongest criticisms come from those who believe that rail development cannot possibly be cost effective, i.e., it cannot generate sufficient ridership and farebox revenues to justify the investment. In a role reversal, some critics are accusing pol
itical leaders of being too visionary, of not appreciating the obstacles to a successful system, and of placing too much faith in travelers' willingness to adapt to the changing transportation system. Technical analysis used to justify rail programs have
been challenged by opponents, saying that the positive results were predetermined by the chosen methods. The critics have taken a conservative position relative to the potential benefits of a rail program, suggesting that most of the benefits are small
and that overall nonquantified benefits do not exist. They say that it would be better to spend the money on bus services that can blend with the automobile-oriented life style of the community. Advocates, on the other hand, place high weight on nonquan
tified consequences and are optimistic on other effects.
In the cities visited those interviewed felt that the community supported transit principally because of the promise of congestion relief. Concerns about air pollution and energy consumption were also expressed in some locations. Supporters of transit
included downtown interests, who believed that the center of the city could not experience any future growth without an increase in transportation system capacity. Comparisons to other "world class" cities were made in a few of the cities we visited. Tr
ansit was seen as an important factor in civil pride and prestige. However, it was also mentioned in some cities that transit was supported by people who feel that they would not personally use it. In other words, their view was that people want transit
so that other people can ride it.
These reasons for transit support in some cities appear to be based on frustration with the highway system. Transit was presented as a palatable way of solving seemingly intractable problem of traffic congestion. It was mentioned in some places that th
e city once had a fine streetcar system and things were better then. Lacking tangible evidence that a rail system would actually mitigate today's traffic problems, decision makers accepted this contention as an act of faith.
In some places the issue of socioeconomic status of riders was mentioned. There was a general agreement that trains have more status than buses. They can attract a better class of rider because of the promise of personal safety, comfortable seats, smoo
ther ride, and attractive surroundings. Asked why these same attributes couldn't be given to buses, it was candidly stated by one person that a better bus environment could not be maintained, given the type of people taking the bus. A decision has appar
ently been made to create trains for affluent travelers, leaving buses as they were for poor people. Subsequent to these interviews, a lawsuit has been filed in one community concerning socioeconomic separation of train and bus riders.
Socioeconomic status is also affecting route alignments. There is a discernible tendency to locate rail lines away from richer areas and near poorer areas, somewhat undercutting the objective of increasing the proportion of affluent riders. The desire
to serve poorer areas is understandable; poorer areas already have a demonstrated need for transit. The desire to avoid rich areas is not totally explained by population density or automobile ownership considerations. Interviewees suggested that the ric
h do not envision taking transit themselves, but fear an increase in crime in their neighborhoods by "those" people who do take transit. Another impediment to providing rail transit in rich neighborhoods is a perception by some individuals that it is vis
ually unattractive and noisy.
Transit planning, especially for new rail systems, is fundamentally a political process, assisted by technical analysis. Our interviews showed that most local planners do not feel it necessary to evaluate the benefits of its rail program because they hav
e received a mandate for the program in the form of a clear political victory or successful referenda. The decision makers are all actors in the political process, and they decide which parts of the transit program receive funding.
Transit is seen by some elected officials as a means of revitalizing the community, containing sprawl, and encouraging growth in high density corridors. There exists a strong belief in the cities visited that they have a dynamic community, rapidly chang
ing in both its urban form and its demographics. The vision of rail transit development is that it can help reshape the community into a more efficient one and that it can overcome the almost complete dependence on highway transportation.
Transit relies on key elected officials for its support. If these key officials lose elections or leave office, there can be significant changes in direction. Projects are dropped or scaled back as other issues gain emphasis. The level of benefits may
remain the same, but different people pursue other political objectives.
In some cases support for transit occurs because of a compromise between highway goals, environmental interests, and other factors. Some level of transit investment is needed to gain support for overall transportation programs that include substantial i
nvestment in other modes of transportation. Furthermore, support of advocates for environmental protection is obtained by promoting transit in exchange for compromises in development policy. Transit is another issue that mixes into an overall package of
programs assembled by elected officials. When the overall picture is explained, the level of support for transit can make more sense than if transit is looked at by itself.
A number of techniques can be devised to assess benefits of transit projects in a manner consistent with the decision process. This section focusses on just two techniques: the benefit tree and enhanced consumer surplus. They do not form a complete eva
luation framework, but they indicate the needed breadth for transit decision making. Other techniques may be found in the original report for this study (1).
Despite the large amount of prior work on transit benefits, there have been few systematic efforts to deal with the interrelationships between different benefits nor have there been many attempts to provide a comprehensive picture of transit benefits. Th
is section describes a framework that was developed for understanding the interrelationships between benefits of transit service. The framework takes the form of a tree diagram.
The benefit tree provides a display of what might happen as the result a change to of transit service. These consequences may not necessarily be benefits but merely impacts resulting from the improvement of a transit system. Impacts can be significant
or insignificant depending on the chosen viewpoint, the scope of analysis, and the nature of the null alternative.
The benefit tree shows how consequences are related. The tree is divided into five branches. Vertically, the tree grows in specificity from top to bottom. Double counting occurs when benefits are included at multiple levels on the tree. Some benefits
can be quantified, others cannot. Nonetheless, the tree can provide a way to consistently compare alternative transit.
The complete benefit tree is divided into five branches:
The tree has a total of 77 consequences, and it is too big to reproduce here in its entirety.
Part of the benefit tree is shown in Figure 2. The benefit tree can be used to identify and display the potential benefits of a transit alternative. The first step is to identify those boxes on the diagram where a transit alternative will be significant
ly different from the null alternative. Only those consequences generate benefits or disbenefits. Each remaining box would then be filled with numerical or descriptive information to describe the effect.
The example shows Branch 5 of the tree, transit supply, as filled out for a rail transit alternative as compared to the null alternative, an all bus system. Plan design and travel demand analysis lead to the determination that the rail alternative requi
res 30 light rail vehicles to operate on 20 miles of track. Operations and construction require the resources shown in the tree. A fully filled out tree could illustrate all consequences and help focus decision making on key tradeoffs between alternativ
es and aid in the selection of a locally preferred alternative. This example uses the viewpoint of a local decision rather than a national decision. As such, consequences that have differential effects at the local level are included. Decisions at o
ther levels of government may use different assumptions and data.
A drawback to the benefit tree is that it is static. It is not possible to show how consequences occur over time. Should the timing of a consequence be an issue, then a suitable comment should be added to its box.
Introduction
Decision Basis for Benefit Measurement
The Benefit Tree
Measurement of Travel Related Benefits
Conclusions
ABSTRACT
INTRODUCTION
DECISION BASIS FOR BENEFIT MEASUREMENT
The Product: Cited Benefits
The Process: Local Use of Benefit Measures
Issues of Debate
Role of Political Process
A DECISION-BASED FRAMEWORK FOR BENEFIT ANALYSIS
The Benefit Tree
Use of Benefit Tree : An Example