Dr Patrick Tsai
Senior Research Analyst- The University of Sydney
Rail Service Analyst- Transport for NSW
Presented at Informa Light Rail Future 2014
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! Introduction ! Costs of Light Rail ! Benefits of Light Rail ! What’s Next for Cost Benefit Analysis ! Case Study ! Conclusions
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! 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?
3 Source: Patrick Tsai (2010)
! 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
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! 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
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! 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)
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! 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)
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! 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
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! 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)
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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
2.2 billion 55%
0.26 billion 6%
0.33 billion
8%
0.71 billion 18%
0.31 billion 8%
0.22 billion 5%
Economic benefits of Sydney CSELR
PT user benefits
Road user benefits
Pedestrian benefits
Operating benefits
Social benefits
WEB
Source: CBD AND SOUTH EAST LIGHT RAIL BUSINESS CASE SUMMARY (2013)
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! 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
Source: Pre-feasibility and Rapid Economic Appraisal Report (2012)
0.6 17%
0.7 20%
1.4 39%
0.05 1%
0.8 23%
Economic benefits of Sunshine Coast LRT
Transport benefits
Avoided infrastructure costs
WEB
Social benefits
Residual value
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! 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
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