Published on March 4, 2014
Dr Patrick Tsai Senior Research Analyst- The University of Sydney Rail Service Analyst- Transport for NSW Presented at Informa Light Rail Future 2014 1
! Introduction ! Costs of Light Rail ! Benefits of Light Rail ! What’s Next for Cost Benefit Analysis ! Case Study ! Conclusions 2
! Light rail is usually expensive ! Low cost-recovery rate from box revenue ! Evaluation of economic benefits ! Current practice of Cost Benefits Analysis (CBA) ! Future direction of CBA ! How to get the Benefit Cost Ratio (BCR) sensible? Source: Patrick Tsai (2010) 3
! Capital cost ◦ Construction cost: $15-$120 million per km in the US ◦ Alignment- grade, elevated, or underground ◦ Project management and delivery costs ◦ Property acquisition ◦ Traffic impact and business disruption during construction ! Operating cost ◦ Operating cost per km: $9.7-$90.5 million ◦ Avg cost-recovery rate at 13.4% in the US (Higgis and Ferguson, 2012) ◦ Over-estimated demand; under-estimated cost 4
! Customer/transport benefits ◦ Travel time savings for public transport users ◦ Travel time savings for car users ◦ Usually the largest component of economic benefits ◦ Determined by value of time; vary with: ! Travel time ! Trip purpose ! Travel mode ! Socio-demographics ! etc ◦ Implication of fixed travel time budget 5
! Operating benefits ◦ Increased revenue from mode shift ◦ Reduced costs for current systems ◦ Improved operating efficiency ◦ Avoided infrastructure costs ! Environmental/social benefits ◦ Reduced emissions ◦ Reduced accident (from safety improvement) 6
! Health benefits ◦ Health benefits from active travel ◦ $1.68 per km walking and $1.12 per km cycling (Mulley et al., 2013) ! Social inclusion benefits ◦ Willingness to pay for an increased trip ◦ Mean valuation of an extra trip estimated at $19.3 ◦ Lower income people have higher value of an additional trip (Stanley et al., 2011) 7
! Wider economic benefits ◦ Agglomeration economies ! The advantages derived through the spatial concentration of economic activities ! New transport infrastructure provide better accessibility and hence improve business productivity ! Take account of 10%-21% of economic benefits for transport investment appraisals in the UK (Graham, D., 2007) ! Already included in the UK WebTAG ! Currently not in the Australian national guidelines but will be included in the guidelines 8
! Wider economic benefits ◦ Land value uplift ! New public transport infrastructure! better accessibility! higher real estate value ! Price premium ranged from insignificant to 20% ! Larger scale network connecting to business centres usually provides higher price premium ! Sydney Inner West LRT: price higher by 0.58% on average for every 100m closer to LRT stations (preliminary research finding by Tsai and Mulley, 2014) 9
Tsai and Mulley (2014) 10
! Sydney CBD and South East Light Rail ◦ 12km; 20 stations ◦ Construction to start in 2014; ◦ Expected to open in 2019-20 ◦ Total costs 1.6 billion ◦ Total benefits 4 billion ◦ BCR: 2.5 Source: CBD AND SOUTH EAST LIGHT RAIL BUSINESS CASE SUMMARY (2013) 11
Economic benefits of Sydney CSELR 0.31 billion 8% 0.22 billion 5% PT user benefits Road user benefits 0.71 billion 18% 0.33 billion 8% 0.26 billion 6% Pedestrian benefits 2.2 billion 55% Operating benefits Social benefits WEB Source: CBD AND SOUTH EAST LIGHT RAIL BUSINESS CASE SUMMARY (2013) 12
! 23km Light Rail at grade (preferred route) ! Capital cost: 2.1 billion ! Operating cost: 390 million p.a. ! Total cost at 2012 value: 1.1 billion ! Total benefits: 3.6 billion ! BCR:3.3 Source: Pre-feasibility and Rapid Economic Appraisal Report (2012) 13
Economic benefits of Sunshine Coast LRT 0.8 23% 0.05 1% 0.6 17% Transport benefits Avoided infrastructure costs 0.7 20% 1.4 39% WEB Social benefits Residual value Source: Pre-feasibility and Rapid Economic Appraisal Report (2012) 14
! Generally, economic benefits of Light Rail could outweigh the cost ! Economic benefits vary substantially with project types, locations, current transport options…etc ! Travel time savings may not be the largest component of economic benefits ! Health benefits have not yet been considered ! More guidelines are required for WEB to ensure consistency 15
Thanks for your attention Q&A Dr. Patrick Tsai firstname.lastname@example.org 16
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