Economic Assessment of Cycle Projects - Methodology and Cases



Economic Assessment of Cycle Projects - Methodology and Cases

Authors

E Willumsen, COWI A/S, DK; A Roehl, Municipality of Copenhagen, SE

Description

The purpose was to establish an initial methodological foundation for economic cost-benefit analyses (CBA) of cycle initiatives in the form of unit prices 2)Carry out cost-benefit analyses of two cases on the basis of these unit prices

Abstract

Introduction:
There is no established methodology for evaluating the economic costs and benefits of cycle projects in Denmark. For instance, the official manual for economic cost-benefit analyses from the Ministry of Transport does not contain recommendations with regard to cycling, and there is no official methodology and no unit prices for cost-benefit analysis of bicycle projects.
In order to evaluate cycling on equal terms with other modes of transport and improve the foundation for prioritization of resources for transportation, it is necessary to establish a methodological basis as well as unit prices for cycle transport. The City of Copenhagen asked COWI to take the first steps in this direction by carrying out a study for evaluation of cycle initiatives.
The purpose of the study was to: 1)Establish an initial methodological foundation for economic cost-benefit analyses (CBA) of cycle initiatives in the form of unit prices. 2)Carry out cost-benefit analyses of two cases (a bridge and an heavily trafficed inter-section in Copenhagen) on the basis of these unit prices.
Framework and unit values:
There are two main purposes of cycle projects: to improve the conditions for existing cyclists and to encourage more people to cycle.
The effects potentially caused by a cycle project are: time use of transportation, vehicle operating costs, accident costs, health benefits, comfort costs, recreational value, value for the urban space and potentially a branding value. Each of these elements is evaluated in the study based on a number of sources (e.g. the Oesterbro study on health) and, when possible, unit prices have been estimated.
The results show that a kilometre on cycle involves time costs, vehicle operating costs and accidents. Moreover, there is a ?cost? connected to perceived safety as the cyclist may feel unsafe when cycling. On the other hand, cycling also has health benefits, such as less illness and longer life-expectancy as well as having a marginal benefit on branding/tourism. In total, a kilometre on cycle is estimated to cost 0.60 DKK, when all estimated effects are included. This can be compared to passenger cars that have a a unit cost of 3,74 DKK per km. A key finding of the study is that health effects constitute a large positive benefit of cycling.
Case studies:
The result of the cost-benefit analysis shows that the construction of Bryggebroen was a good investment for the society from an economic point of view. The bridge has resulted in large benefits for the cyclists, primarily in the form of time savings, which are estimated to outweigh the cost of the project. The central estimate is that the bridge has yielded a good economic return with an internal rate of return at 7.7%. This does not include benefits for pedestrians.
The result of the cost-benefit analysis of the intersection shows that rebuilding the intersection in Gyldenløvesgade has been a good investment in economic terms. The rebuild has entailed large benefits for the cyclists in the form of welfare benefits from the reduction in accidents and for the society in the form of saved costs and higher tax revenue. In total the benefits of the project are estimated to more than outweigh the costs. The central estimate is that the project has yielded a large economic return with an internal rate of return at 33%.
The case studies illustrate that cycle projects can have positive economic impact on society which are fully in line with the positive economic impacts of other transport infrastructure projects. As a reference, the economic analysis of the future bridge across Fehmarnbelt between Denmark and Germany resulted in an internal rate of return at 6.8%. Likewise, the newest economic CBA of the upgrade of the railway between Copenhagen and Ringsted in Denmark estimates an internal rate of return at 5.8% for the best alternative analyzed.

Publisher

Association for European Transport