Appendix A: Worked Example - Economic appraisal of household/community program

Program details

A household/community travel behaviour change program is being considered for a suburb in a large city (> 1 million population) to encourage residents to use modes other than their private cars for some of their trips. The total population of the target suburb is 10,000 people. The objectives of the proposed initiative are to reduce pressure on road capacity and the environment by reducing car use and to encourage people to choose active travel modes such as cycling and walking for some trips, complementing other programs promoting the health benefits of increased physical activity.

Location: Large city > 1 million population

Total population of target area: 10,000

TBhC program costs:

• Year 1: Program implementation - $2.5 million
• Years 2 -10: Ongoing support - $0.2 million per annum

Example appraisal

Select diversion rate profile

	Car as driver	Car as dassenger	PT	Cycling	Walking
Standard	-3.1%	-0.5%	1.4%	0.9%	1.3%

Proportion of diverted trips in off-peak: 85%

Proportion of diverted trips to CBD: 10%

Collate trip lengths

Collate relevant trip lengths (such as default values from Table 8) and calculate weighted averages.

	Peak 15%	Off peak 85%	Weighted average (km)
Car driver	10.0	8.0	8.3
Car passener	9.0	7.5	7.7
public transport	12.0	11.0	11.2
cycle	5.0	4.5	4.6
walk	2.0	2.0	2.0

Household programs target all trips (not just trips to/from CBD)

Collate parameter unit values

Obtain unit values for unperceived costs (resource cost corrections) and externalities from Table 7 and calculate weighted averages incorporating peak/off peak and CBD/other destination.

		Peak 15%	Off peak 85%	Weighted average (cents)	Weighted average ($)
Car driver per km
VOC RCC		0	0
Net congestion ext		42.5	11.5
Accident ext		8.7	8.7
Environmental ext		6.2	6.2
Total per km		57.4	26.4	31.1	0.311
per trip
Parking RCC (trips to CBD)	10%	200	100
Parking RCC (trips other)	90%	50	25
Total per trip				37.38	0.374
Car passenger per km
VOC RCC		0	0
Net congestion ext		21.25	5.75
Accident ext		4.35	4.35
Environmental ext		3.1	3.1
Total per km		28.7	13.2	15.5	0.155
per trip
Parking RCC		0	0
Total per trip		0	0	0	0
Public transport passenger per km
Ace ident costs		0	0
Environmental costs		0	0
Total per km		0	0	0	0
per trip
Fare resource cost correction		-300	-300
Total per trip		-300	-300	-300	-3.00
Cycling per km
Ace ident costs		0	0
Health effect		-73	-73
Total per km		-73	-73	-73	~ 73
Walking per km
Ace ident costs		0	0
Health effect		-145	-145
Total per km		-145	-145	-145	-1.45

Positive values indicate an unperceived resource cost; negative values indicate an unperceived resource cost saving (benefit). Per kilometre unit values for car passenger are set at 50% of car driver values based on a proportion of trips being undertaken specifically for the passenger.

Calculate total unperceived costs and benefits for each trip type

The following table combines the steps described in Sections 5.5.2, 5.5.5 and 5.5.6 and calculates the total resource cost correction and externality benefits per day for each former and new mode.

Benefit from avoided car driver trips which change to:	Diversion rate A	Diverted trips per day B = (Ax PopxTrips)	Trip length C	per km costs D	per trip costs E	total costs ($) F = (CxD+E)	Benefits/day G = (BxF)
public transport trip	-1.21%	362	11.2	0.311	0.374	3.84	1387
cycle trip	-0.78%	233	4.6	0.311	0.374	1.79	417
walking trip	-1.12%	336	2.0	0.311	0.374	0.99	334
Sub Total	-3.10%						2139
Benefit from avoided car passenger trips which change to:	Diversion rate	Diverted trips per day	Trip length	per km costs	per trip costs	total costs ($)	Benefits/day
public transport trip	-0.19%	58	11.2	0.155	0	1.73	101
cycle trip	-0.13%	38	4.6	0.155	0	0.71	27
walking trip	-0.18%	54	2.0	0.155	0	0.31	17
Sub Total	-0.50%						144
Cost of trips undertaken on new mode of:	Diversion rate	Diverted trips per day	Trip length	per km costs	per trip costs	total costs ($)	Costs/day
public transport	1.40%	420	11.2	0.000	-3.00	-3.00	-1260
cycle	0.90%	270	4.6	-0.730	0	-3.34	-902
walk	1.30%	390	2.0	-1.450	0	-2.90	-1131
Sub Total	3.60%						-3293

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Calculate mode changer perceived net benefits

The following table shows the calculation of the mode changer perceived net benefits as described in Section 5.5.7.

Benefits to mode changers for:	Diversion rate A	Diverted trips per day B = (Ax PopxTrips)	Diversion C	Rate per 1% from Table 6 D	Benefit per person per trip E = (100xCxD)	Benefits/day F = (BxE)
car driver/passenger to public transport	1.4%	420	1.4%	$0.35	0.49	206
cardriver/passenger to cycle	0.9%	270	0.9%	$0.25	0.23	61
car driver/passenger to walk	1.3%	390	1.3%	$0.25	0.33	127
Sub Total	3.6%					393

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Calculate total benefits per day

Add:

RCC and externality costs associated with avoided car driver trips - $2,139

RCC and externality costs associated with avoided car passenger trips - $144

Subtotal - $2,283

Subtract:

RCC and externality costs associated with trips on the new modes ‑ $3,293

Subtotal (note subtracting a negative cost adds to benefits) - $5,576

Add:

Mode changer perceived net benefits - $393

Total benefit per day - $5,969

Calculate total benefits per year

Multiply the total benefits per day by an appropriate annualisation factor (Section 5.5.9).

Total benefits per year = $5,969 x 365 = $2.179 million

Calculate NPV and BCR

Discount rate -7%		Cost ($0'00)		Benefit ($'000)
Year	1		PV		PV
1	0.935	2500	2336	0	0
2	0.873	200	175	2179	1903
3	0.816	200	163	2179	1778
4	0.763	200	153	2179	1662
5	0.713	200	143	2179	1553
6	0.666	200	133	2179	1452
7	0.623	200	125	2179	1357
8	0.582	200	116	2179	1268
9	0.544	200	109	2179	1185
10	0.508	200	102	2179	1108
Total				3554	13266

Net present value = 13.266M – 3.554M = $9.71 million

Benefit/cost ratio = 13.266/3.554 = 3.7