sintropher plus towards a new appraisal approach: transport investment in regeneration areas...

SINTROPHER PLUS

Towards a New Appraisal Approach: Transport Investment in Regeneration Areas

EMERGING THINKING

Dr Chia-Lin Chen & Dr Robin Hickman

Bartlett School of Planning, UCL

[email protected]

[email protected]

mailto:[email protected]

mailto:[email protected]

Key Issues and Questions

• Infrastructure projects – how might we assess impacts?• Quantification – moving back from over-quantification to a planning decision?• CBA – rational decision-making?• Problems with the current CBA approach – including (particularly) for regeneration areas• Quantifying the unquantifiable?• An alternative: MCA, with locally weighted criteria?• Current national approaches (UK, Germany, France, Belgium, Denmark ..)

A potential modified appraisal approach?

1. Quantifying the regeneration potential – ‘impact’of investment or ‘potential’ development?

2. CBA incorporating an additional ‘regeneration’ impact?

3. MCA, with locally weighted criteria, supported by a less important CBA?

Assessing Impacts of Infrastructure Projects: Multiple Dimensions of Sustainability?

Impacts across the three pillars of sustainable development?(Plus contextual dimensions)

• The are multiple likely impacts – but many are indirect

• Cause and effect are uncertain• What happens if progress against

competing objectives works in different directions?

• Do certain objectives become more important than others?

• Is there an implicit weighting?• Can we actually measure likely

impacts robustly?

Evidence to Inform the Debate? Or, Nonsense on Stilts?

Many of the judgements relative to the appraisal (and calculation of the likely impacts) of a transport infrastructure project can only be reasonably expressed and argued in fairly broad terms.

“They belong to the arena of public debate – and not to a world of endlessly hypothecated and quantified sums.” (Self, 1970, p.255)

“Ultimately, they can only be taken through a series of policy judgements, which should be as open and explicit as possible, and supported by relevant information which by itself can never be conclusive. Greater rationality in the final decision is not helped, but hindered, by the use of notional monetary figures which either conceal relevant policy judgements or involve unrealistic and artificial degrees of precision. Those who suppose otherwise are heading for a peculiarly dreary version of 1984.” (Self, 1970, p.260)

Self, P. 1970. Nonsense on stilts: cost benefit analysis and the Roskill Commission. The Political Quarterly, 41, 249-260.

CBA: The Epitome of Rational Decision-Making?Infrastructure planning involves making choices between different projects and budget allocations – deciding what project, and of what form, might be the best spend of funds.

Cost benefit analysis (CBA) is the conventional approach to deciding priorities – costs and benefits are quantified and expressed in monetary terms. Costs and benefits that occur in different years are discounted and presented in net present values.

Final results are often presented as a ratio – the cost benefit ratio – or as the return on investment.

The attraction is in the common monetary standard applied – to all issues.

CBA has its basis in Utilitarianism: “It is the greatest happiness of the greatest number that is the measure of right and wrong.”Jeremy Bentham (1776). A Fragment on Government. Preface (2nd para).

Van Wee, B. 2012. How suitable is CBA for the ex-ante evaluation of transport projects and policies? A discussion from the perspective of ethics. Transport Policy, 19, 1-7.

Quantifying the Unquantifiable?

The benefits of CBA• CBA offers to make difficult decisions easy. • It is a method of project appraisal – consisting of measuring the costs and benefits of proceeding with a project, and adding them up to see which is greater.• Advocates of CBA claim that it is clear – indeed if all the costs and benefits of a project can be measured in the same monetised manner, it is a matter of simple arithmetic to decide whether the benefits exceed the costs, and by how much.• It is offered as a way of making decisions that is objective, systematic, fair, transparent and democratic.• On first encounter, it is difficult to understand how an apparently simple and straightforward method of analysis could provoke such strong debate.

Adams, J. 1994. The role of cost-benefit analysis in environmental debates. London: UCL [http://john-adams.co.uk/wp-content/uploads/2006/Theroleofcost-benefitanalysisinenvironmentaldebates.pdf ] [accessed February 2014].

Quantifying the Unquantifiable?

BUT, CBA fails an elementary political test – it fails to convince .. It is proffered by economists to politicians and government officials as a method for making decisions about controversial issues. But, far from resolving controversy, CBA has itself become a focus of conflict.

There are major problems with CBA:• It attempts the impossible – everything cannot be monetised, many issues remain

unquantifiable and add little or no weight to the decision.• The CBA is only a calculation of partial costs v. partial benefits (but this is little understood) ..• The indicator(s) to be ‘maximised’ can often be disputed – and there is often more than one

objective – working in different directions• Some issues are uncertain, e.g. Regeneration – hence are ignored (the focus is on ‘likely

impacts’ – rather than policy objectives we might like to achieve through transport investment

• Distribution effects are ignored (gentrification is seen as ‘positive’ development)• Poor people count less than rich people in most of the calculations• Not only humans matter – the environment or other animals should have value• Choices of people are not always based on reason and rational choice – there are habits,

norms and cultural values• Absolute levels of welfare are important – but ignored• The process can be important as well as the outcome


Multi-criteria analysis (MCA): allows impacts that cannot be expressed in a monetary scale or be easily quantified into the decision-making process, i.e. environmental, distributional (social) issues and progress against wider societal goals (such as regeneration – which is an important policy goal in some areas).

The wider dimensions of sustainability can therefore be explored.

Different MCA techniques vary in how initial performance results against policy objectives are processed, but often qualitative descriptions are transformed into scores using a valuation scale.

Weights can be applied to the impact scores in order to aggregate them into a single overall value – in UK transport planning practice this is not done and is left to the decision-maker.

Guhnemann, A., Laird, J. and Pearman, A. (2012) Combining cost benefit and MCA to prioritise a national infrastructure programme, Transport Policy 23, 15-24.

An Alternative: MCA?

An Alternative: MCA?

Multi-criteria analysis can be:• Useful in comparing options against multiple criteria and generating an aggregate answer.• Help to evaluate issues that can’t be quantified – and even a mix of quantitative and

qualitative analysis.

Though MCA is also criticised as well:• Weighting is sometimes required for criteria – but the application can be biased and not

transparent• There is much scope for manipulation• There is still difficulty in comparing quantitative and qualitative impacts• The decision still often remains cloudy/untransparent – as a ‘black box’ technical or

political decision • There is no ‘forward look’ – or attempt to measure progress against societal goals


National Differences Among Partners

Government Level

England Germany NL France Belgium

National Web-based Transport Analysis Guidance (WebTAG)

Bundesverkehrswegeplan (BVWP)

OEI-guideline (OEEI)

(CBA+MCA) -

Regional / state

- Empfehlungen für Wirtschaftlichkeitsuntersuchungen an Straßen (EWS)


- -

Local Web-based Transport Analysis Guidance (WebTAG)

Standardisierte Bewertung


- -

TO COMPLETE

The Project Cycle (UK): WebTAG

Stage 1Option Development

Identifying need for intervention and develop options against local

objectives (incl. BCR)

Development of Evidence for

Business Case Decision-Making

Process

Implementation

Ex-

An

te (

Be

fore

In

vest

me

nt)

Ex-

po

st (

Aft

er

Inve

stm

en

t)

Stage 2Further Appraisal

Better performing options – estimate likely impacts (Incl. BCR)

Stage 3Implementation,

Monitoring and EvaluationEvaluation of intervention impacts –

extent of achieving objectives

Str

ateg

ic C

ase

Eco

nom

ic C

ase

Fin

anci

al C

ase

Del

iver

y C

ase

Com

mer

cial

Cas

e

Economic Appraisal Results (Example from Blackpool)

Tram Extension to

Blackpool North

St Anne’s – no Heavy

Rail

St Anne’s and Heavy

Rail

Lytham Preston Tram-Train

PVB (Present Value Benefit)

41.9 31.7 36.8 44.8 74.3

PVC (Present Value Cost)

12.5 21.9 34.8 55.3 166.5

NPV (Net Present Value)

29.4 9.8 2.1 -10.5 -92.2

BCR (Benefit Cost Ratio)

3.3:1 1.4:1 1.1:1 0.8:1 0.4:1

Monetary values in £m, 2002 prices and values• The BCR drives the decision –

despite carrying out a strategic option case (which is qualitative and descriptive)

• Tram-train provides most benefits, but is very expensive – hence BCR is very low at 0.4:1

• Scheme costs: capital costs (construction) and operating costs (employment of drivers, energy costs)

• User benefits: monetised valuation of time savings aggregated across all public transport users over 60 years

• User benefits are narrowly defined – time savings are disputed as an approach, plus no ‘wider benefits’, such as regeneration, are captured.

SDG Fylde Coast Transport Study, Scheme Option Outline Business Case, 2012

The Appraisal Summary Table (AST) is MCA-based – but is dominated by CBA – and regeneration/environmental issues are largely ignored. A high CBA ratio is required at 2:1 – so schemes are favoured if they have high ‘user benefits’, i.e. time savings. This favours road building and public transport schemes in busy urban areas?

TAG Unit 2.7.2

Business Case: Appraisal Summary Table

Method (WebTAG Unit A2.2, Regeneration)• How will accessibility and travel conditions be affected via a change in journey times, costs or

reliability for business trips and commuting trips?• How can the proposed scheme be expected to change accessibility and transport conditions

such that employment will be affected?

The assessment of regeneration impacts should be built up from an assessment of the economy in the area – individual economic sectors such as manufacturing, commerce, retailing, tourism, public sector etc.

The assumption is that changes in accessiblity will affect the economy – and this is estimated as a direct relationship between transport investment and ‘likely’ impact.

Method (WebTAG Unit A2.3, Dependent Development)• Determine the quantity of new housing that is regarded as dependent on the transport scheme,

i.e. is the network at capacity without the new development and new transport intervention.

For areas such as Blackpool, the ‘likely impact’ of transport investment is zero or near to zero? There is very little consideration of housing and other community facilities? The calculation should not be focused on ‘likely’ impact, but instead the ‘potential’ impact – what

can be done for regeneration in the area?

Business Case: Estimating Regeneration ‘Impacts’

1. Develop a corridor Masterplan for the preferred transport scheme

2. Quantify the ‘regeneration impact’ (employment, housing, social and community facilities, etc.)

3. Debate: does this estimation go into the Economic Case (BCR) or is it handled through an MCA? (or combined?)

What Do We Propose for Blackpool (and Wider Regeneration Areas)?

NATIONAL SCHEMESNational Rail, Strategic Highways(20% Funding?)

What Do We Propose for Blackpool (and Wider Regeneration Areas)?

REGIONAL SCHEMESRegional Rail? (50% Funding?)

LOCAL SCHEMESUrban Public Transport, Walking, Cycling(30% Funding?)

Strategic Planning MCALocally derived policy objectives and weighting

Policy Objective Quantitative and Qualitative Commentary

Locally Derived Weighting

CRITERIA SCORE

WEIGHTED SCORE

Environment• Noise• Local air quality• CO2 emissions• Landscape • Townscape

2%4%6%2%8%

Safety• x 6%

Economy• GDP• Employment• y

15%10%10%

Social• Accessibility• Severance• REGENERATION

10%2%15%

100%

+Economic Case (1:1)

(Lower BCRs considered if policy priorities deem this necessary, such as regeneration)

e.g. Jubilee Line was 0.95:1 BCR before ‘wider’ regeneration impacts considered

Option Development

Further Appraisal• Strategic Case• Economic Case• X• Y• Z

Dominated by Economic Case and BCR

This Strategic Planning MCA assists the policy judgement – appraisal becomes planning-led rather than economics

Conclusions and Next Steps?

Critique of the current appraisal system• The current appraisal system do not help justify public transport investment in regeneration areas in

the UK – it favours other modes and other areas.• There is much controversy over the current appraisal system – a centralised system (DfT) and one

largely based on time savings (which are no longer an important basis for investment).• Regeneration and ‘dependent’ development impacts are poorly quantified – the methods need to

improve – or we will continue to discriminate against certain modes and areas.

The Way Forward?• We suggest a modified approach that helps bring planning and regeneration objectives to the fore –

the prioritisation of investment becomes a planning judgement rather than a misguided calculation.• Regeneration impacts are quantified in a corridor Masterplan.• A strategic planning appraisal prioritises between schemes at the regional and local level.• Significant funding is devolved to the local level.• The BCR is an ‘administrative’ hurdle – with a very low hurdle.

UCL Next Steps• Further reading of national approaches, including academic literature (Steen Leleur, etc.).• Student exercise: Masterplanning and quantification of impacts.• Testing with various interested groups: TfGM, Lancashire County Council, Blackpool Borough

Council, DfT, academics.• A revised proposed method (for further comment – by the end of 2014).• An appraisal tool is developed (web-based, Flash software – useable in a workshop setting)• Test the method in Blackpool – and justify some investment ..

sintropher plus towards a new appraisal approach: transport investment in regeneration areas...

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