The Campaign For Better Transport

We’ve got our hands on a copy of the BCR study funded by the NZTA and others. BCRs continue to be a contentious issue for the evaluation of transportation projects.  They are intended to be a tool to help evaluate similar projects, but invariably they are used by commentators on both sides to indicate the outright justification for a project (or not, as the case may be.)

I haven’t had a chance to read through all 156 pages of the document yet (full title “The Implications of Discount Rate Reductions on Transport Investments and Sustainable Transport Futures”) but will do so when I have time.

It will be interesting to see how independent the research is, given the funders are Roading New Zealand, Downer EDI Works and the NZTA.  Have a look for yourself, here:

BCR study by NZTA

With most business opportunities, it is possible to calculate the expected monetary benefits and costs, while considering other factors such as the opportunity cost of capital and project risk.A similar approach for transport infrastructure projects is also attractive. Just work out the benefits in today’s money, divide this by the cost and – presto! – you know exactly how much the economy will benefit from for every dollar spent.

Take the proposed Waterview motorway extension, for example. Treasury and Ministry of Transport officials have worked out that for every dollar spent on the $2.8bn motorway connection between Mt Roskill and Waterview, the economy will receive $1.15 worth of benefits.

In the business case document now being considered by Cabinet, officials point out that “full tunnel” option means that the benefits are only a little in excess of their costs. Some above ground options might save up to $200m from the construction cost, but these have higher social and environmental costs, and also involve the loss of park land and a significant number of houses.

Considering the billions of dollars at stake, one would hope that the economic benefits and costs of the various options are as accurate and as realistic as possible. So are they? Well, no, actually.

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