Long Term Demand Forecasting for Cost Benefit Analysis

Long Term Demand Forecasting for Cost Benefit Analysis


Margot Finley, Arup, Richard Batley, Institute for Transport Studies, University of Leeds


This paper summarises research into long term demand forecasting for transport schemes for use in economic appraisal. It covers issues of uncertainty, demand capping, the profile of benefits and the validity of transport modelling methodologies.


Long term demand forecasts are often produced for proposed new infrastructure in order to estimate the economic benefits that might be realised. This paper explores the challenges associated with forecasting demand far into the future (say, 50+ years) in the context of undertaking cost benefit analysis. It considers the ‘profiling of benefits’ between the first modelled demand year and the final modelled year (say, years 0-30), and the extrapolation of benefits beyond the final modelled year (years 30-50+) including what factors drive this long term growth.

The paper explores the validity of several variants of transport demand models – including multi-modal and elasticity-based models for a number of modes – in developing long term demand forecasts, and considers the practicalities of implementing these models within projects (for example, how does one define the do-minimum many years hence?). Uncertainty is a key concept here, as is market saturation, and the fact that road and rail infrastructure has a limited capacity. The practice of ‘capping’ demand forecasts after a particular number of years is also explored. The paper reviews alternative rationales for this practice, including the aforementioned phenomena of uncertainty, saturation, and capacity.

In developing these areas of interest, the paper employs a range of techniques including review of demand theory and methods, review of previous demand modelling studies, and new empirical testing using a range of practical case studies. The paper draws on a mix of theory and practice.

This paper draws upon work undertaken by Arup and ITS Leeds for the Department for Transport in the UK.


Association for European Transport