Wednesday, November 12, 2008

Appropriateness of valuing leisure travel time savings

The analysis of speed limit changes on rural freeways and divided roads included scenarios where leisure trip travel time was valued at zero, for comparison with the results where it was valued in the same way as trips in cars for other private purposes.

There is a view that on some trips, the travel time saving per trip travelled at a higher speed is so small that the benefit cannot be perceived by vehicle occupants and hence has zero value. In rural areas, trip distances are typically longer than in urban areas and travel time savings per trip are potentially substantial if travelling at a higher speed. A DOTARS analysis showed that 41 minutes per trip could be saved on a 700 km rural section of the Hume Highway if travelling at 130 km/h on the better one-third of road and 120 km/h on the remainder, compared with travelling at 110 km/h over its whole length. It is likely that vehicle occupants would perceive travel time savings of this magnitude over long rural trips and would place value on the time savings.

Another issue arising in the valuation of travel time savings on rural roads is the desirability of consistency in the valuation of leisure time in the travel time costs and in the road trauma costs. The ‘human capital’ crash cost estimates do not include any value for leisure time forgone by crash victims. For consistency reasons, it could be argued that when the human capital cost estimates are used, the leisure trip travel time savings should be valued at zero. This variation on the base scenario analyses for rural freeways and rural divided roads was presented for this reason (Table 2).

‘Willingness to pay’ valuations of road trauma

There has been considerable attention given in the USA to valuing road trauma costs as comprehensively as possible, especially including values for lost quality of life in the case of killed and incapacitated crash victims. A leading US transport safety economist, Ted Miller, has argued that comprehensive crash costs, otherwise known as ‘willingness to pay’ values, should be used in benefit-cost analysis. This is because ‘willingness to pay’ values reflect society’s consumer preferences when it comes to decisions about road safety initiatives.

Miller (1996) has also suggested that ‘it seems essential to use compatible values of life and travel time in transport investment analyses’. Since the travel time values normally used for transport decisions reflect consumer preferences, this implies that ‘willingness to pay’ values of road trauma should be used when travel time savings are valued.

Reflecting this argument, the analysis in this study includes variations on the base scenarios for rural freeways and rural divided roads in which ‘willingness to pay’ values are used (Table 2). Travel time for all purposes of trip (including leisure trips) is valued in these analyses. It is suggested that this is technically the correct combination of valuations of these two important impacts of the speed limit changes analysed in this study.

On the basis of these valuations, the optimum speed on the rural freeways is 120 km/h for cars and light commercial vehicles and 95 km/h for trucks. If these speeds were to become the speed limits for each type of vehicle, respectively, there would be a net saving of $1.36 million per annum per 100 km of rural freeway. There would be a travel time saving of 4.5 minutes per car, but an increase of 3.2 minutes per truck, and there would be an additional 0.6 fatal crashes per year per 100 km of freeway.

On rural divided roads, the optimum speed is 110 km/h for cars and light commercial vehicles and 90 km/h for trucks, if ‘willingness to pay’ valuations of road trauma are used. If the truck optimum was to become their speed limit (but no change in limit for cars), the total impact would be a saving of $864,000 per annum per 100 km of divided road. There would be no travel time saving for cars, but an increase of 6.7 minutes per truck, and there would be a reduction of 0.3 fatal crashes per year per 100 km of divided road.

If speed limits on each class of rural road (including rural undivided roads) were to be moved closer to the optimum speeds, there could be a substantial net gain in total economic costs across the road network (and perhaps even a net reduction in crash costs). This is because a large proportion of rural road travel (and an even larger proportion of rural crashes) is on undivided roads. A reduction in crash costs may result because, although speed limits for cars would increase on freeways, their limits would decrease or remain the same on other roads, and truck speed limits would decrease on all roads, especially the undivided roads with higher crash rates. However, reliable data on rural traffic levels using each of the four classes of road analysed in this study was not available to calculate the total economic impacts across the rural road network.

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