Travel Time Savings

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The perennial topic of travel time savings came up in a yesterday’s Herald Sideswipe article:

 A reader writes: “If you live in Whangaparaoa instead of, say, Takapuna, you will spend around 30 minutes extra each way in your car at rush hour. Since in each eight-hour work day most people spend at least a couple of hours doing pretty much nothing (coffee, gossip etc), commuters work an extra day a week, equal to 20 per cent of their salary in lost time/money.”

To me it sounds like the reader might work at the NZTA economics department, as what they describe is the fundamental flaw in how benefit cost ratios are calculated. Anyhow, I responded:

A commuter in Whangaparaoa might spend a lot of time commuting by car, but this isn’t “equal” to 20% of their salary. People choose to commute in their own time, not their employer’s, and the value of this time is up to the individual.

A recent NZTA survey found that 40% of people actually enjoyed their commute – and only 3% specified zero minutes as the ideal commute. Few respondents said they would use the time saved to do work or study. Common responses identified any time savings would be spent on non-work/non-study activities such as sleeping, more time getting ready for work, eating breakfast, family time, household chores and reading.

For additional benefits they could also try the 0897x bus service – tweet and text as much as you like! (phone not included).

New Motorway Lane

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Appearing in the letters section today of the NZ Herald:

In opening a fourth motorway lane between Newmarket and Greenlane, the New Zealand Transport Agency claims benefits of over a million dollars week to the Auckland economy, brought about by peak hour journey time savings of up to five minutes.

It is difficult to understand how this claimed economic benefit is calculated. No commuter using this section of motorway at peak times is likely to arrive at work any earlier or leave work any later – workers travel on their own time, not their employers. For a while they may enjoy an extra five minutes in bed or an extra bowl of cornflakes, but this is unlikely to add up to a million a week for Auckland’s economy.

Courier and freight companies that utilise this section of road more frequently at peak times may enjoy some cost savings, but these would hardly add up to $1m a week either.

The NZTA’s reasoning appears seriously flawed, which is a concern given the billions currently being allocated by central Government to motorway projects, while petrol prices soar to record levels.

On the otherhand, if NZTA want to use this type of economic evaluation, then the CBD rail tunnel must be worth tens of millions a week, since a single railway line can carry 10x more than a single motorway lane in an hour at peak. The CBD rail tunnel will also save more than 5 minutes at peak for Western Line passengers, who can also be productive on their mobile phones at the same time, checking emails and texts.

One For the BCR Boffins

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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

Waterview Motorway: Economic Nonsense

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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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