DEVELOPING LAND-USE/TRANSPORT ECONOMIC EFFICIENCY APPRAISAL

Present practice in transport appraisal generally assumes fixed land-uses and economic activities for each future year considered. So far as impacts on users are concerned, it concentrates on estimating the benefits arising from changes in the generalized cost of travel. It is then conventionally assumed that all other markets are perfect, and that any further effects outside the transport system may change the form and the distribution of benefits but do not change their magnitude. Hence the possibility that, for example, much of the benefit of an investment may be captured by property owners in the form of higher rents is implicit in the theory underlying the analysis, but is rarely made explicit in technical reports on appraisals, and still less often admitted in public discussion of transport schemes. The fact that markets are imperfect and that this may distort the assessment of benefits has been recognized for a long time, and was highlighted in particular by SACTRA in their 1999 report on Transport and the economy. However, the response to the problem has been limited to the recognition of a fairly narrow set of “wider impacts” (in UK practice and in some other countries). There is increasing criticism of the fact that benefits arising from land-use impacts appear to be ignored - if they are not excluded, they are hidden as implicit in transport benefits - and in particular of the fact that the debate about the benefits of transport investment is often couched in terms of “time savings” when there is considerable evidence that opportunities for faster travel are, in general, used to facilitate further travel rather than simply to make the same journeys more quickly. This paper reviews these issues and goes on to outline progress towards a more complete “land-use/transport economic efficiency” analysis which would address many of the criticisms of current practice. The paper is based on work recently carried out for Transport for London (TfL), but the views expressed are those of the author and not necessarily those of TfL.