Thursday, 12 June 2014

If sustainable transport initiatives deliver such impressive return on investment – why don’t we put more money into it?

Colin Black - Temple Associate

It is interesting to note just how many official reports by the Department of Transport, peer-reviewed academic papers, and evaluation studies of initiatives there are. They all point to the substantial benefits of investment in sustainable transport projects, particularly those that seek to manage demand – known inter-changeably as TDM (transport demand management), Mobility Management and Smarter Choices.
In 2011, a House of Lords Select Committee reviewed the evidence and concluded that large-scale campaigns are effective in changing behaviour. They recommended that TDM was combined with fiscal interventions and infrastructure improvements. They also said that more use of regulatory and fiscal interventions should be made to support policies to reduce car use and that we should continue investment in sustainable transport infrastructure.
Also in 2011, the UK Treasury published guidance to encourage use of TDM to improve the asset life and value of infrastructure. Its guidance emphasised that all infrastructure benefits can be enhanced by TDM in terms of “improved asset utilisation”. It recommended that TDM must be applied from the outset and should include measures to influence behaviour. The treasury emphasised the key role of TDM to improve performance of both existing and future networks.
So why does investment in sustainable transport remain so low? How come the preference (in terms of Lion’s share of budget allocated) tends to be to build our way out of traffic congestion? Unprecedented amounts of cash are currently being pumped into transport infrastructure schemes on the basis that they deliver impressive economic returns on investment, that they are “good for the economy”.
Well this is partially because scheme promoters intentionally use the following formula to secure approval and funding: underestimate costs + overestimate benefits = funding! The Highways Agency recently commissioned evaluation of its recent major infrastructure projects and found very little evidence that the out-turn benefits were comparable to those projected when determining viability for funding. The standard economic appraisal system is flawed and favours bigger infrastructure projects. Large infrastructure schemes are therefore commonly presented as more attractive than many small, tried and tested sustainable transport initiatives.
This year David Metz from UCL published his book “Peak Car”. He argues that if you’re going to use economic analysis to inform investment decisions for any kind of intervention the economic analysis must reflect the real behavioural response to the intervention. He emphasised that the analysis of time savings does not – it is a notional response. For new infrastructure you have to apply a monetised value according to the formula used to calculate the values of time – such as labour market values, stated /revealed preference surveys, etc. All values of time are tenuous - you can’t observe or isolate the specific financial benefits after the event.
The current approach to scheme appraisal has recently been used to justify a plethora of incremental improvements to the highway network on the basis of a few minutes time savings here, multiply it by a lot of vehicles, and voila: there is your economic justification for another road scheme to help improve national economic performance.  
On the flip-side, despite compelling evidence of the proven economic benefits of sustainable transport, there remains little pressure to act on it as the majority of policy makers, practitioners, and general public still adhere to the ‘predict and provide’ mindset. Not enough people yet understand the role and proven benefits of sustainable transport. This is why still relatively little money is channelled towards sustainable transport.
Recently an internationally-significant strategic project was commissioned to address this important issue, working with the industry-leading universities specialising in transport and economic appraisal. It addresses the need to communicate the proof that sustainable transport works - by bringing together the compelling international evidence, validating it, making it available and then making sure that the right people in the right places are aware of it.
Transport professionals commonly refer to the compelling ‘cost-benefit’ case for measures variously termed as ‘sustainable transport’, ‘mobility management’, ‘smarter choices’ or ‘transport demand management’ measures. Impressive returns on investment in these types of measure are frequently emphasised by those facilitating the development of Sustainable Urban Mobility Plans, especially when compared to more traditional infrastructure investment in highways or rail-based systems.
However, the lack of access to evidence to substantiate such claims is a fundamental obstacle to developing support for the “sustainable” element of local transport plans. Critics continue to suggest that claims regarding return on investment are myths and not supported by credible evidence. Others assume the law of rationality prevails, and that if there really was a compelling case for investing more heavily in sustainable transport measures then this would have already become reality, supported by appropriate laws, policies, and funding allocation.  
There remains uncertainty about whether sustainable transport really delivers. A cynicism seems to prevail about whether so-called benefits are simply hyped up by increasingly well organised environmental campaigners. The fact is that many plans are dressed up as “sustainable plans” but, in reality, continue to operate much as they did previously with the emphasis continuing on major schemes. Even in leading city case studies the total ‘demand management’ investment in the “sustainable transport” plan can be as low as 0.05% of total transport expenditure, which remains dominated by supply-side expansion.
One way to facilitate greater buy-in to sustainable transport initiatives and measures is to demonstrate the benefits and return on investment. After all, when major schemes are put forward the over-riding emphasis for doing it is because of the economic benefits. Over the last decade many sustainable project evaluation reports, research studies, and demonstrations have reported impressive results. The difficulty is bringing these together and sifting out those that are credible from those that are more selective in how the results are reported, perhaps with commercial marketing or local politics in mind.
The EVIDENCE Project, funded by the European Commission, seeks to collate the best evidence from around the world on the effects of Sustainable Urban Mobility/Travel Demand Management initiatives and measures.  The first stage of the three-year project, which began on 1 April 2014, is to compile an extensive list of literature items which will then be reviewed for their relevance, the significance of the evidence presented, and the quality of the methods used to establish it. Although the remit is broad in terms of type of urban transport measure and whether the evidence relates to a specific measure or initiative or a package, evidence will be particularly welcome on the local economic benefits that arise from investing in Sustainable Urban Mobility.
The project consortium will be undertaking a number of structured literature reviews, but is also appealing for references or electronic publications to be submitted via the project website:
Contributions in any language are welcome, as soon as possible and by October 2014.
The EVIDENCE project starts the quest to find the credible evidence that can be used to substantiate the benefits of greater investment in sustainable transport. At this stage in the project we are gathering published evidence from around the world. This database of information will then be reviewed by an independent team of academics specialising in sustainable transport to determine the strength and depth of the evidence base.
The results will be published on-line and translated into 22 languages.
Dr Colin Black is director responsible for the EVIDENCE project. He has over 20 years experience on sustainable transport research and practical implementation.

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