Are cba results robust experiences from the swedish transport investment plan 2010 2021
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Are CBA results robust? Experiences from the Swedish Transport Investment Plan 2010-2021. Mattias Lundberg, Maria Börjesson, Jonas Eliasson CTS March 2011. Background. Widespread scepticism: “CBA results are very sensitive to the choice of assumptions and valuations”

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Are CBA results robust? Experiences from the Swedish Transport Investment Plan 2010-2021

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Are CBA results robust?Experiences from the Swedish Transport Investment Plan 2010-2021

Mattias Lundberg, Maria Börjesson, Jonas Eliasson CTS

March 2011


Background

  • Widespread scepticism:

  • “CBA results are very sensitive to the choice of assumptions and valuations”

  • “Analysts chose assumptions in order to get wanted results”

  • “Forecast assumptions are wrong”

  • Clear signals from Swedish government on the importance of CBAs

  • Do CBAs lead to sound prioritizations?


Forecast Assumptions

(GDP, population, etc)

Forecast Model

(Sampers, Samgods or similar)

Effect Models

Valuation, discounting and

compilation

How important are assumptions and valuations?

  • Forecast Assumptions

  • Forecasted effect

  • Valuations


1. Importance of general scenario assumptions

Land use (population and employment), macro economy, vehicles, time tables, prices …


Importance of object specific assumptions

  • Land use

  • ex E4 Umeå (-0,4 or -0,2)ex Bypass Sth and Roslagspilen

  • Congestion charges

    • ex Marieholmstunneln (+0,2 or -0,5)

  • Rail timetables

    • Definition of ”with” and ”without” investment very important


2. Most important deficits of current CBA methodology (1)

  • Valuing improvements of perceived urban environment

    • Large part of benefit for bypasses and tunnels not caught – no general solution

    • Benefits underestimated

  • Forecasting effects of capacity improvementsin congested road systems

    • Shortcomings in static assignment models – solvable

    • Benefits underestimated

  • Forecasting effects of measures that reduce train delays

    • Applicable methods missing – solvable?

    • Benefits under- and overestimated


Most important deficits of current CBA methodology (2)

  • Forecasting and valuing improvements for freight transport

    • Esp. rail capacity improvements

    • Simplified cost functions, deterministic model, uncertain valuations etc – partly solvable

    • Benefit estimates uncertain

  • Wider economic benefits

    • No official method in Sweden – not solvable, but could do better

    • Benefits underestimated with approx. 10-15% – for some investments


3. Importance of valuations

Official valuations

Relative weights of benefit types

Differentiated values of time


The effect of valuations on rankings

  • The relative weight of benefit types hardly affects rankings

  • Rule of thumb: doubling the weight of a benefit type changes around a tenth of a given top ranking list

  • Differentiated VoT – even smaller changes


Conclusions

  • CBA rankings are surprisingly robust

    • Doubling the oil-price, the freight benefits or the business time valuation hardly changes the ranking

    • Rail timetables and congestion charges important

    • For the design – and NBIR in absolute terms – assumptions can be more important

    • ... Also for analyzing policy instruments

    • Largest shortfall is missing methods for forecasting effects – and valuation of urban environments

    • Increased reliability trains, reduced road congestion, capacity improvements freight railways

  • Ranking very robust wrt valuations

    • Traffic safety rather important – small share of total benefits, large for some projects

    • Differentiated VoT does not even affect balance btw road and rail

    • VoT for non-work trips more important – since more trips than work and business

  • Decision makers can trust CBAs will lead to sound prioritizations

    • The top-ranked investments are more or less the same in all sensitivity analyses

    • CBAs should not be the sole decision criteria


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