Cost-Benefit Analysis of RetBus
A new Bus Rapid Transit system in Barcelona
Master thesis: Final report 14 June 2011
Author:
Bernat Goñi Ros (1560255)
MSc Transport, Infrastructure and Logistics
Delft University of Technology
Thesis committee members:
Prof. dr. ir. Bart van Arem (TU Delft, CEG)
Dr. ir. Rob van Nes (TU Delft, CEG)
Dr. Hans van Ham (TU Delft, TPM)
Dr. ir. Miquel Estrada (UPC Barcelona TECH, CENIT) Cost-Benefit Analysis of RetBus
Acknowledgements
This thesis is the result of my research on the RetBus project in the past nine months. The thesis would not have been possible without the guidance of the members of my thesis committee, who closely monitored my research progress, addressed my multiple questions and continuously challenged me to do things better than I thought I could do. For that reason, I would like to sincerely thank Bart van Arem, Rob van Nes, Hans van Ham and Miquel Estrada.
Also, I would like to thank Mireia Roca-Riu and Mateu Turro (Center for Transport Innovation, Barcelona TECH), for providing me with the input data that I needed for my research and for their comments on how to improve the research methodology and analyze the results.
In addition, I would like to thank OmniTRANS, especially Peter Kant, for assisting me in building the transport model and analyzing the results and for his willingness to help me in all circumstances.
I would like to thank Claire Minett (Department of Transport and Planning, TU Delft) for her valuable remarks on English grammar and writing style.
Furthermore, I would like to thank all the other master students who worked on their graduation projects in the same office room of the Department of Transport & Planning as me during the last months. Their contributions to my research and their daily support were really helpful.
This thesis is also the culmination of my master studies at Delft University of Technology, which I started in February 2009 with the intention of acquiring the knowledge and skills necessary to work in the field of transport planning. Looking back, I can see that my decision to enroll in the master program Transport, Infrastructure and Logistics was a good decision. However, I do not forget that I could not have finished my studies without the support of many people.
First, I would like to thank the TIL community (professors, lecturers and classmates) for helping me to progress with my studies and giving me support during the last two years.
I would also like to thank Fundación Caja Madrid for giving me a scholarship and for extending it when I needed it. I could not have finished my master and my thesis without that scholarship and I feel an immense gratitude for the opportunity I was given.
I would like to thank my friends in Delft for all their help and the good times we had during the last two years.
Finally, I would like to express my most sincere gratitude to my family and friends in Barcelona, who believed in me, supported my decision to come to the Netherlands and gave me strength to carry on with my studies.
I dedicate this thesis to my parents, who always devoted a lot of time and energy to my education and wellbeing.
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Summary
A. Background and motivation
A1. What is the RetBus project? The RetBus project is a plan of the City Council of Barcelona (Spain) and the transit operator Transports Metropolitans de Barcelona (TMB) which aims to improve the public transport service in the city. The project involves building a new Bus Rapid Transit (BRT) system called RetBus and eliminating or modifying some existing bus lines. The main design objective of the RetBus project is to provide a higher quality bus service to transit users at a lower cost for the operator (TMB). The BRT network has a hybrid grid-radial structure and comprises 11 BRT lines, some of which are composed of two different sub-lines overlapping in the central segment (see Figure 0-1). On average, stop spacing is 650 m (433 in the city centre), service frequency is 20 services per hour (10 in peripheral line segments) and operational speed is 15 km/h. The new BRT system has been designed to provide a service of intermediate quality between metro and bus; therefore it is expected to attract current users of both systems. In addition, the RetBus system is expected to improve the competitiveness of the public transport network as a whole, thus attracting current private vehicle users.
Figure 0-1: Map of the RetBus network.
A2. Purpose of the study This report presents the results of a cost-benefit analysis (CBA) of the RetBus project. TMB and the City Council of Barcelona need to make a decision on whether or not to proceed with that project; therefore, it is necessary to make a complete assessment of its most relevant effects.
ii Cost-Benefit Analysis of RetBus
TMB and the City Council would like to know not only whether or not the implementation of the RetBus project will result in adequate returns to justify the investment costs, but also the extent to which socio-economic welfare will increase in the region of Barcelona as a result of the realization of that project, thus considering the net benefit to society as a whole. Based on the results of that evaluation, the report also presents some recommendations on what type of changes could be made to the project in order to make it more socially beneficial and/or financially profitable.
The main research questions this thesis aims to answer are: 1) To what extent will the implementation of the RetBus project be socially and financially beneficial?; and 2) What modifications could be made in the RetBus project so as to improve its social and/or financial value?
B. Methodology
B1. What is cost-benefit analysis? Cost-benefit analysis (CBA) is an economic evaluation method which is frequently used in the public sector to evaluate the desirability of transport projects. Essentially, CBA identifies all the relevant effects of a given project in a systematic way and indicates the extent to which the benefits generated by the project will exceed the costs of its implementation. Both costs and benefits are valuated in monetary units, preferably on the basis of market prices.
Two types of CBA have been carried out in this study: financial cost-benefit analysis (FCBA) and social cost-benefit analysis (SCBA). FCBA looks only at the financial-economic effects of a given project, i.e. investment costs, operating costs and revenues. Therefore, it evaluates the project from the viewpoint of the investors and operators. In contrast, SCBA evaluates all relevant effects of the project from the perspective of society as a whole. SCBA includes the effects analyzed in FCBA plus additional items which have a socio-economic value, such as environment, mobility and safety.
B2. Appraisal period and project variants The time horizon of the evaluation is ten years (2012-2021). The base case has been defined as a scenario in which the RetBus project is not realized. Two project alternatives have been analyzed: Alternative 1 (TMB plan) and Alternative 2 (Cost-reduction plan). Alternative 1 (TMB plan) corresponds to the RetBus project as it would be implemented according to the plans of TMB: the BRT system is implemented and some changes are made in the bus network in terms of routes and service frequencies (7 bus lines are eliminated, 7 lines are shortened, the frequency of 22 lines is reduced and the frequency of one line is increased). Alternative 2 (Cost- reduction plan) contains all the elements of Alternative 1 plus additional changes to the bus network (namely, 21 extra bus lines are eliminated).
B3. Identification of project effects Table 0-1 identifies and defines the most relevant effects of the RetBus project. It also identifies the most relevant social-economic parties affected by the implementation of the project.
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Table 0-1: Inventory of project effects and affected parties
Project effect Definition Affected parties
BRT investment Initial investments in the BRT infrastructure and the TMB / Government costs vehicles needed to operate the BRT system Change in fleet Change in the costs of renewing the vehicle fleet of the TMB / Government replacement costs bus and BRT systems Change in Change in the costs of operating the bus and BRT TMB / Government operating costs systems (fuel and personnel costs) Change in Variation in the total amount paid in fares by all transit TMB / Government operating revenues users Transit user Variation in the total consumer surplus of transit users Transit users benefits
Safety effects Variation in external accident costs Society
Environmental Change in external environmental costs (i.e. noise, air Society effects pollution and climate change costs)
B4. Travel demand forecasts Travel demand forecasts are necessary to estimate some effects of the RetBus project. In this thesis, forecasts have been produced by means of a model based on the traditional four-stage model. First, a growth factor model has been used to forecast future total trip demand by updating an observed base year matrix. Trip growth rates have been assumed to be equal to predicted rates of population growth. Second, a multinomial logit mode choice model has been used to perform modal split. That model has been calibrated based on observed data. Finally, two different models have been used to assign transit and private vehicle travelers to the transit and roadway networks. The assignment of transit trips is based on a multinomial logit model, while private vehicle trips have been assigned by means of a deterministic user equilibrium (DUE) model. The two assignment models have been validated based on theoretical assumptions.
B5. Estimation and valuation of project effects Project effects are the differences in the cost and benefit estimates between the base case and the project alternatives. In this study, project effects have been valuated in monetary terms, by using market prices whenever possible and shadow prices when market prices were not available. Table 0-2 provides a description of the measures used in this research to estimate/valuate the most relevant effects of the RetBus project.
The implementation period is 2012-2015 (four years). Project effects have been estimated and valuated for years 2016 and 2021 only; the annual costs and benefits in the remaining years of the appraisal period have been obtained by linear interpolation. The first five years of the appraisal period have been assumed to be a linear ramp-up period. A discount rate of 5% has been applied to discount the future. Two measures of social/financial value have been used to evaluate the RetBus project: a) net present value (NPV); and b) benefit/cost ratio (BCR). These two measures are complementary: the NPV indicates the total net benefit of the project, while the BCR indicates how much net benefit would be obtained in return for each unit of investment cost. These indicators have been calculated twice in order to evaluate the project from the socio-economic (SCBA) and financial-economic (FCBA) points of view.
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Finally, several sensitivity tests have been carried out in order to explore possible ways to improve the social and/or financial value of the RetBus project and to evaluate the robustness of the CBA results. The following changes have been investigated: a) increase of the average BRT operational speed; b) earlier completion of the project; c) metro lines L9-L10 not completed within the appraisal period; d) rise of the annual fare increase rate; e) use of a lower value of travel time; and f) increase of the discount rate to include a risk-premium.
Table 0-2: Indicators used to estimate and valuate project effects
Market prices Indicators used?
Infrastructure costs: BRT network length (km) multiplied by a BRT investment unit infrastructure cost (euro/km). Yes costs Vehicle costs: number of vehicles required to operate the BRT system multiplied by unit vehicle costs (euro/veh). Number of vehicles of the BRT and bus systems that need to Fleet replacement Yes be replaced every year multiplied by unit vehicle costs costs (euro/veh).
Total annual mileage of the bus and BRT systems (veh-km) Operating costs Yes multiplied by unit operating costs per transit sub-mode (in euro/veh-km).
Operating revenues Yes Number of transit trips multiplied by average transit fares.
Consumer surplus Area below the demand curve and above the generalized No of transit users travel cost line.
Total annual mileage of private car users, the bus system and External accident No the BRT system (veh-km) multiplied by unit external accident costs costs per transport mode (euro/veh-km).
Total annual mileage of private car users, the bus system and External No the BRT system (veh-km) multiplied by unit environmental environmental costs costs per transport mode (euro/veh-km).
C. Evaluation of the RetBus project
C1. Effects on transport The RetBus project (both alternatives) will cause a modal shift towards public transport in the Metropolitan Region of Barcelona (RMB), i.e. it will generate a net increase of transit trips and a net decrease of private vehicle trips. However, the influence of the project on modal split at the regional level will be small in both project alternatives. For instance, if Alternative 1 is implemented, around 18.400 additional travelers/workday will use transit instead of private vehicle (in 2016), which will cause an increase of +0,89% in total transit trip demand in the RMB compared to the base case. If Alternative 2 is implemented, total transit trip demand will increase by +0,75% (around 15.600 additional public transport users per workday).
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D8
D9
D7
D10 D5 D6
D2 D4 D1
D3
Figure 0-2: Districts that produce more than Figure 0-3: Zones that produce more than +1,50% transit trips in Alternative 1 (TMB +1,50% transit trips in Alternative 1 (TMB plan) compared with the base case in 2016 plan) compared with the base case in 2016
(in orange). (in orange).
Figure 0-4: Districts that produce more than Figure 0-5: Zones that produce more than +1,50% transit trips in Alternative 2 (Cost- +1,50% transit trips in Alternative 2 (Cost- reduction plan) compared with the base case reduction plan) compared with the base case in 2016 (in orange). in 2016 (in orange).
Within the municipality of Barcelona, the RetBus project (both project alternatives) provides transit routes with lower travel costs than the existing ones (and therefore causes a shift in modal split) mostly for OD pairs with origins and destinations located in peripheral districts1 rather than the city centre (see figures 0-2, 0-3, 0-4 and 0-5). The main reason is that the city centre is rather well connected to the rest of the city via a radial metro network (with similar
1 Particularly districts 3 (Sants-Montjuic), 4 (Les Corts), 7 (Horta-Guinardo) and 10 (Sant Marti).
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frequency but higher operational speed than the BRT system). In conclusion, the new BRT system does not improve the competitiveness of public transport for all OD pairs within the municipality of Barcelona. Rather, it reduces the travel costs of transit trips between certain OD pairs (around 30%) that are not directly connected via metro and/or are only connected by regular bus lines.
Number of passengers/workday (2016)
-1.000.000 -500.000 0 500.000 1.000.000 1.500.000 2.000.000 2.500.000 3.000.000 3.500.000 4.000.000
Base case (BC)
Alternative 1 (A1)
Variation A1 - BC
Alternative 2 (A2)
Variation A2 - BC
Bus FGC (Light Rail) Metro RENFE (Heavy Rail) Retbus (BRT) Tram
Figure 0-6: Ridership of each transit sub-mode in the base case and Alternative 1 in 2016 (BRT boarding and transfer penalties between those of metro and bus)
The RetBus project (both alternatives) will have an impact on transit route choice: some passengers will decide to take routes that (partially or totally) make use of the RetBus system instead of the other transit sub-modes, which are expected to lose ridership. As shown in Figure 0-6, around 500.000 passengers per workday will use the BRT system in 2016. There are no big differences between the two project alternatives (495.000 passengers per workday in Alternative 1, and 510.000 passengers per workday in Alternative 2).
In both project alternatives, most of the RetBus passengers would use the bus and metro systems if the BRT system was not in place (base case). More specifically, in Alternative 1 (TMB plan), 45% of the BRT passengers would use bus and 52% would use metro if the BRT was not operational (in 2016); in Alternative 2 (Cost-reduction plan), those percentages are 51% and 47%, respectively (see Figure 0-6).
The implementation of the RetBus project will cause bus ridership to decrease by -42% in 2016 if Alternative 1 is implemented (-49% in Alternative 2), while metro ridership will decrease to a considerably lower extent (-13% in Alternative 1, -12% in Alternative 2) (see Figure 0-6). The differences between alternatives result mostly from the fact that a higher number of bus lines are eliminated in Alternative 2 (Cost-reduction plan).
A sensitivity analysis has been carried out in order to investigate the impact on transit ridership of setting the preference of transit users to travel by RetBus equal to that of metro (by changing the BRT boarding and transfer penalties). The results indicate that the RetBus system could achieve a higher level of ridership if transit users showed a similar preference to travel by BRT to that of traveling by metro (i.e. if perceived BRT boarding and transfer penalties were similar
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to those of metro). Another relevant finding is that, in general, metro and RetBus are mutually exclusive transit sub-modes in terms of route choice, i.e. travelers choose to travel either by metro or by RetBus. In contrast, the RetBus and bus systems are mutually exclusive for certain routes, but complementary for some other routes. In the latter case, the bus network functions partially as a feeder to the RetBus network, i.e. travelers choose to make multimodal transit trips making use of both the bus and the BRT networks.
C2. Monetary evaluation Table 0-3 shows the results of the cost-benefit analysis of the two project alternatives as well as the results of the sensitivity tests.
Table 0-3: Results of the cost-benefit analysis: social and financial NPV and BCR for 2011 (numbers indicate the difference compared with the base case)
SCBA FCBA
Project alternative NPV NPV SCBA BCR FCBA BCR (million euro) SCBA (million euro) FCBA
Alternative 1 (TMB plan) 629,0 18,87 -108,4 -2,08
Alt. 1 / BRT speed 20 km/h 1.424,9 64,05 114,0 6,04
Alt. 1 / completion in 2013 712,0 20,78 -124,7 -2,46
Alt. 1 / Lines L9-L10 not operational 875,1 25,86 -95,7 -1,72
Alt.1 / fare increase 5% 538,1 16,29 191,1 6,43
Alt.1 / lower VOT 456,1 13,96 -118,9 -2,38
Alt.1 / discount rate 7% 558,9 17,63 -98,6 -1,93
Alternative 2 (Cost-reduction plan) 817,4 24,22 115,9 4,29
Alt. 2 / BRT speed 20 km/h 1.616,3 72,52 338,7 15,99
Alt. 2 / completion in 2013 893,7 25,83 133,4 4,71
Alt. 2 / Lines L9-L10 not operational 1.043,8 30,65 126,8 4,60
Alt. 2 / fare increase 5% 724,3 21,58 414,9 12,79
Alt. 2 / lower VOT 662,5 19,82 106,9 4,04
Alt. 2 / discount rate 7% 726,6 22,63 101,1 4,01
The social net present value (NPVSCBA) of Alternative 1 (TMB plan) is positive (629,0 million euro). Consequently, the project is expected to generate a net increase in social welfare. The main reason is that the project will bring substantial benefits to transit users. However, the financial net present value (NPVFCBA) of Alternative 1 is negative (-108,4 million euro), the main reason being a large increase in total operating costs in comparison with the base case. Therefore, Alternative 1 is not profitable from a financial perspective.
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The social net present value (NPVSCBA) of Alternative 2 (817,4 million euro) is considerably higher than that of Alternative 1; therefore, it can be concluded that Alternative 2 (Cost- reduction plan) produces a higher increase in social welfare. Moreover, the financial net present value (NPVFCBA) of Alternative 2 is positive (115,9 million euro), which indicates that the financial benefits generated by the project will be higher than its costs. Note that this is a very different result than the one obtained in the analysis of Alternative 1 (TMB plan), which is not financially profitable. The most important reason why Alternative 2 is more beneficial than Alternative 1 from both the social and financial viewpoints is that the additional changes to the bus network generate considerable savings in operating costs, but they have a smaller impact on transit user benefits and operating revenues.
Several sensitivity tests have been carried out to evaluate the robustness of the CBA results to changes in model parameters and the environment of the project. The results indicate that if a lower VOT (75% of the value of working time) or a higher level of risk aversion (discount rate 7%) are assumed, the social value of the project decreases, but the main conclusions of the cost-benefit analysis still hold: a) both project alternatives are socially beneficial, although Alternative 2 contributes to social welfare to a greater extent than Alternative 1; and b) Alternative 1 is not profitable from a financial perspective, while Alternative 2 is profitable. In addition, the sensitivity analysis shows that if metro lines L9/L10 were finally completed later than planned (which is likely to happen, due to the current economic crisis), both RetBus project alternatives would become more socially and financially beneficial.
The results of the CBA demonstrate that the RetBus project could become more socially beneficial and at the same time become financially profitable if additional changes to the bus network were made (in order to reduce the operating costs of the bus system) along with the implementation of the BRT system. Other ways to make the project (both alternatives) more socially beneficial could be: a) increasing the operational speed of the RetBus system (e.g. through infrastructural and traffic management measures); and b) speeding up the project implementation. To improve the financial performance of the project (both alternatives), the following measures could be considered: a) increasing the operational speed of the RetBus system; and b) increasing transit fares (e.g. by increasing the annual fare increase rate or by other means). In both of these ways, Alternative 1 could potentially become financially profitable.
D. Conclusions The main conclusions with regard to the two primary research questions are the following:
Both alternatives are socially beneficial, although Alternative 2 (Cost-reduction plan) contributes to social welfare to a greater extent than Alternative 1 (TMB plan). Alternative 2 is profitable from a financial perspective, while Alternative 1 is not.
Both RetBus project alternatives are socially beneficial, i.e. they contribute to social welfare. The chief reason is that they bring substantial benefits to transit users. It is important to remark that Alternative 2 is more beneficial than Alternative 1 from a social viewpoint. This results from the fact that operating costs are considerably lower in Alternative 2 (because the mileage of the bus system is lower), while transit user benefits and additional operating revenues are not that different in both alternatives (because the BRT system provides new transit routes that are competitive with the ones provided by the extra bus lines eliminated in Alternative 2).
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There is a fundamental difference between the two project alternatives in terms of financial performance: Alternative 1 (TMB plan) is not financially profitable, while Alternative 2 (Cost- reduction plan) is profitable. This difference is of particular interest to the project investors (TMB and the Government). The main reason is that operating costs are considerably lower in Alternative 2 (because the mileage of the bus system is lower), while levels of transit ridership and operating revenues are similar in both alternatives.
The social value of both project alternatives could be improved by increasing the operational speed of the BRT system and/or by speeding up the implementation of the project.
If the average BRT operational speed could be increased to 20 km/h (e.g. by means of traffic management and infrastructural measures), both project alternatives would produce a larger increase in social welfare (although Alternative 2 would continue to be more beneficial than Alternative 1). The main reason is that transit travel costs decrease further; as a result, both alternatives produce considerably higher transit user benefits.
If the project was implemented in less than four years, both project alternatives would become more beneficial from the social perspective (although Alternative 2 would continue to be more beneficial than Alternative 1). The chief reason is that the project would yield higher net benefits in the earlier years of the appraisal period. However, the option of completing the project earlier must be studied carefully if TMB and the Government intend to implement Alternative 1 (TMB plan). On the one hand, speeding up the completion of Alternative 1 makes the project contribute more to social welfare, but on the other hand, the project would generate somewhat higher financial losses, which means that the project would become more unprofitable to TMB and the Government. This is not an issue if Alternative 2 (Cost-reduction plan) is implemented, since completing the project earlier makes Alternative 2 more beneficial from both the social and the financial viewpoints.
The financial profitability of both project alternatives could be improved by increasing the operational speed of the RetBus system and/or by raising transit fares.
Increasing the average BRT operational speed (e.g. through traffic management and infrastructural measures) could make both project alternatives considerably more profitable from a financial viewpoint. In fact, Alternative 1 produces net financial losses if the operational speed is 15 km/h but it could become financially profitable if the BRT operational speed was higher (although Alternative 2 would continue to be more profitable than Alternative 1). The main reasons why increasing the BRT operational speed makes the two project alternatives more financially profitable are the following. First, as a result of the increase in operational speed, the BRT operating costs decrease considerably. Second, transit travel costs decrease further. This has an impact on mode choice: both alternatives produce a higher modal shift from private vehicle to transit at the regional level. As a result, a higher amount of additional operating revenues is generated.
By increasing transit fares, both alternatives could become significantly more profitable. In particular, Alternative 1 could generate net financial benefits (although Alternative 2 would continue to be more profitable than Alternative 1). The main reason is that a higher amount of additional operating revenues would be generated, even though the project would not cause transit ridership to increase as much as if transit fares were not changed. However, the option of
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raising fares must be studied carefully. On the one hand, raising transit fares would improve the project‟s financial performance. But on the other hand, the RetBus project would become less socially beneficial, although if fares were not increased too much it would continue to produce an increase in social welfare. More specifically, increasing transit fares would make transit users receive considerably lower benefits and society get smaller or negative benefits in terms of safety and environmental effects.
E. Recommendations The conclusions of the evaluation of the RetBus project lead to the following recommendations to TMB and the City Council of Barcelona:
Redesign the bus network in conjunction with the implementation of the BRT system.
Compared with Alternative 1 (TMB plan), Alternative 2 (Cost-reduction plan) is more socially beneficial and is financially profitable. These finding suggests that the RetBus project could generate a greater increase in social welfare and simultaneously bring net financial benefits to the investors/operators if the bus network was appropriately redesigned along with the implementation of the BRT system. Therefore, this thesis recommends to implement the BRT system and modify the bus network as suggested in Alternative 2 (Cost-reduction plan), instead of implementing Alternative 1 (TMB plan). However, it should be noted that Alternative 2 is a conceptual design rather than a formal proposal to eliminate specific bus lines. A more thorough analysis should be carried out before coming up with a formal proposal to redesign the bus network that would reduce the total mileage of the bus system and make it fit better to the public transport network of Barcelona. The new design should take into account the role of the bus network as feeder to the RetBus network.
Implement measures to increase the operational speed of the BRT system.
The results of the cost-benefit analysis indicate that a higher average operational speed of the BRT system makes both project alternatives considerably more beneficial from the social and financial points of view. Therefore, based on the findings of this thesis, it is recommended to implement infrastructure measures (e.g. intermittent bus lanes), traffic management measures (e.g. traffic light prioritization) or other types of measures aimed at increasing the operational speed of the BRT system.
Consider the possibility of speeding up the completion of the RetBus project, but study carefully its implications for all parties involved.
If TMB and the Government decided to implement Alternative 2 (Cost-reduction plan), it would be highly recommendable to speed up the realization of the project, since that would make the RetBus project more beneficial from both the social and the financial viewpoints. However, if they decided to implement Alternative 1 (TMB plan) the question of whether to complete the project earlier would pose a dilemma between the socio-economic and financial objectives of the RetBus project. The reason is that completing the project earlier would make Alternative 1 more socially beneficial but also more financially unprofitable. Therefore, speeding up the implementation of Alternative 1 would only be advisable if the resulting benefits to transit users and society were considered to be more important than the resulting financial losses.
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Consider the possibility of increasing transit fares along with the implementation of the RetBus project, but study carefully its implications for all parties involved.
Increasing transit fares makes both project alternatives considerably less socially beneficial but more financially profitable. This thesis recommends studying the possibility of increasing transit fares as a means to enhance the financial performance of the RetBus project, particularly if the chosen project configuration is Alternative 1 (TMB plan), which is financially unprofitable. However, it is important to remark that raising fares would reduce the social value of the project, as well as its transit user benefits, safety effects and environmental effects. If it was decided to increase transit fares, it is recommended that the new fare scheme be designed after a thorough analysis of its impact on transit ridership, so as to not reduce the social value of the project too much. In particular, if fares were too high, the RetBus project could end up producing negative safety and environmental effects.
Carry out further research to make a more comprehensive evaluation of the effects of the RetBus project and determine the most suitable strategies to improve its social and financial value.
This research performed a preliminary evaluation of the most relevant effects of the RetBus project in order to determine whether it is recommendable to proceed with the project from an economic perspective. However, this thesis has not analyzed the political implications of its implementation. Further research is required in that area. In particular, it would be useful to carry out a multi-criteria analysis (MCA) to complement the CBA. Broadening the scope of the SCBA is also recommended; in particular, it is considered necessary to investigate how the RetBus project will affect private vehicle users. The study also explored what changes in the configuration of the project could make it more socially beneficial and/or financially profitable. More specifically, this thesis has analyzed the potential benefits associated with redesigning the regular bus network, increasing the operational speed of the BRT system, completing the project earlier and raising transit fares. However, those changes have been only analyzed at a conceptual level. Further research is needed to determine how those measures should be implemented in order to get optimal results.
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Table of contents
Acknowledgements ...... i
Summary ...... ii
Table of contents ...... xiii
List of tables...... xv
List of figures ...... xvii
1. Introduction ...... 1
1.1. Background ...... 1
1.2. Problem definition and research objectives ...... 1
1.3. Research approach ...... 2
1.4. Report contents ...... 3
2. Background ...... 4
2.1. Mobility patterns in Barcelona ...... 4
2.2. The Urban Mobility Plan 2006-2012 ...... 9
2.3. The RetBus project ...... 10
2.4. Conclusions ...... 13
3. Purpose of the study ...... 15
3.1. The need for an evaluation of the RetBus project ...... 15
3.2. Research questions ...... 16
3.3. Research approach ...... 18
3.4. Conclusions ...... 20
4. Evaluation methodology ...... 21
4.1. Methodological approach: CBA vs. MCA ...... 21
4.2. What is cost-benefit analysis? ...... 22
4.3. Methodological steps ...... 24
4.4. Conclusions ...... 46
5. Travel demand forecasts ...... 48
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5.1. Travel demand forecasting methodology ...... 48
5.2. Travel demand forecasts...... 61
5.3. Notes on forecast reliability ...... 76
5.4. Conclusions ...... 79
6. Monetary evaluation ...... 82
6.1. The social and financial value of the RetBus project ...... 82
6.2. Sensitivity analysis ...... 90
6.3. Conclusions ...... 96
7. Conclusions ...... 98
7.1. Research objectives and methodological approach ...... 98
7.2. Main research findings ...... 100
7.3. Conclusions ...... 109
7.4. Recommendations ...... 112
7.5. Reflection ...... 115
References ...... 117
Annex A: Socioeconomic data at district level ...... 121
Annex B: Description of the RetBus project ...... 122
Annex C: General criticisms of CBA ...... 124
Annex D: Comparison between CBA and MCA ...... 126
Annex E: Changes in bus line frequencies (Alt. 1) ...... 128
Annex F: Valuation of costs and benefits ...... 129
Annex G: Inputs to the travel demand forecasting model ...... 132
Annex H: Calibration of the modal split model...... 139
Annex I: Validation of the transit assignment model ...... 141
Annex J: Cost-benefit tables resulting from the sensitivity tests...... 143
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List of tables
Table 2-1: Total population, area and population density of the municipality of Barcelona, the AMB and the RMB………………………………………………………………………………….…. 5
Table 2-2: Design characteristics of the RetBus system and the existing bus and metro systems in Barcelona…………………………………………………………………………………....…….... 11
Table 3-1: Secondary research questions………………………………………………………….. 17
Table 4-1: Inventory of relevant project effects and affected parties…………………….……… 28
Table 4-2: Indicators used to estimate and valuate project effects……………………….……… 32
Table 4-3: Vehicle unit costs per vehicle type, including taxes (base 2011)……………………. 33
Table 4-4: Environmental unit costs (euro/vehicle-km) of private vehicle and RetBus/bus trips in 2016 and 2021…………………………………………………………………………………...... 38
Table 4-5: Changes made in the BRT network in order to analyze the impact of an increase in the average BRT operational speed on the CBA results……………………………………...…. 43
Table 4-6: Changes made in the distribution of BRT investment costs and the procedure to interpolate annual costs and benefits in order to analyze the impact of the project completion period on the CBA results…………………………………………………………………..……..…. 43
Table 4-7: Changes made in the metro network in order to analyze the impact of the development of lines L9-L10 on the CBA results………………………………………….…..….. 44
Table 4-8: Changes made in the fare system in order to analyze the impact of an increase in the annual fare increase rates on the CBA results……………………………………………….….... 45
Table 4-9: Changes made in the VOT in order to analyze the impact of assuming a lower value of time on the CBA results………………………………………………………………………....…. 46
Table 4-10: Changes made in the discount rate in order to analyze the impact of assuming a higher level of risk aversion on the CBA results…………………………………………………… 46
Table 5-1: OD matrices used to calibrate and run the demand forecasting model…………….. 50
Table 5-2: Speeds by car and walking (per road type and class)………………………………... 52
Table 5-3: Operator, average frequency and average operational speed of each transit sub- network……….…………………………………………………………………………………………. 53
Table 5-4: STI transit fares in 2011…………………………………………………………….……. 53
Table 5-5: Expected changes in the public transport network (2012-2021)…………………..… 54
Table 5-6: Total population in Barcelona and the RMB in 2007, 2011, 2016 and 2021………. 55
Table 5-7: Growth factors periods 2007-2016 and 2007-2021 (Barcelona and RMB)………… 55
xv Cost-Benefit Analysis of RetBus
Table 5-8: Modal split model parameters…………………………………………………..……..… 57
Table 5-9: Groups of OD pairs (modal split model)………………………………………….…….. 58
Table 5-10: Transit assignment model parameters……………………………………………...... 60
Table 5-11: BPR function parameters per road type……………………………………...……..… 61
Table 5-12: Total number of trips/workday in years 2007, 2016 and 2021………………...... 62
Table 5-13: Relative variation in the total number of trips/workday in periods 2007-2016 and 2007-2021………………………………………………………………………………………..…….. 62
Table 5-14: Impact of the RetBus project (alternatives 1 and 2) on modal split in the RMB (2016)…………………………………………………………………………………………..……….. 63
Table 5-15: Difference in generated transit trips/workday (Alternative 1 - base case) per district in 2016……………………………………………………………………………………………..…… 65
Table 5-16: Difference in generated transit trips/workday (Alternative 2 - base case) per district in 2016……………………………………………………………………………………………...... 65
Table 5-17: Ridership of each transit sub-mode in the base case and Alternative 1 (TMB plan) in 2016 (reference transit assignment model)…………………………………………………..…….. 71
Table 5-18: Ridership of each transit sub-mode in the base case and Alternative 2 (Cost- reduction plan) in 2016 (reference transit assignment model)……………………..……………. 72
Table 5-19: Ridership of each transit sub-mode in the base case and Alternative 1 in 2016 (BRT boarding and transfer penalties equal to those of bus)………………………………..…...... 74
Table 5-20: Ridership of each transit sub-mode in the base case and Alternative 1 in 2016 (BRT boarding and transfer penalties equal to those of rail)………………………………….………… 75
Table 5-21: Number of car trips and vehicle-km per workday and average car trip distance in the base case and Alternative 1 (TMB plan) in 2016……………………………………………...... 76
Table 5-22: Number of car trips and vehicle-km per workday and average car trip distance in the base case and Alternative 2 (Cost-reduction plan) in 2016…………………………….………… 76
Table 6-1: Cost-benefit analysis of Alternative 1: overview of costs and benefits, NPV and BCR for 2011………………………………………………………………………………………..………... 84
Table 6-2: Cost-benefit analysis of Alternative 2: overview of costs and benefits, NPV and BCR for 2011…………………………………………………………………………………………...…….. 87
Table 6-3: Results of the CBA: social and financial NPV and BCR for 2011…………………. 96
xvi Cost-Benefit Analysis of RetBus
List of figures
Figure 2-1: Map of the RMB, the AMB and the municipality of Barcelona……………………… 4
Figure 2-2: Population density in 2008 (per district)………………………………………………. 5
Figure 2-3: Number of jobs in 2004 (per district)………………………………………………...... 5
Figure 2-4: Number of trips/workday generated in the AMB (in millions)…………….…………. 6
Figure 2-5: Modal split of trips in Barcelona, AMB and RMB……………………………..………. 7
Figure 2-6: Average income per inhabitant in 2008 (per district)………………………………… 8
Figure 2-7: Private vehicle ownership in 2008 (per district)…………………………………...... 8
Figure 2-8: Percentage of transit trips over total trips made by mechanical modes in 2007 (per district)…………………………………….…………………………………………………………….. 9
Figure 2-9: Map of the RetBus network……………………………………..……………………… 12
Figure 2-10: Line spacing and stop spacing in the centre and periphery of the BRT grid……. 12
Figure 4-1: Diagram of CBA methodological steps………………………………………………… 25
Figure 4-2: Shortened bus lines: original routes (Alternative 1)………………………………….. 27
Figure 4-3: Shortened bus lines: final routes (Alternative 1)……………………………………… 27
Figure 4-4: Bus lines with reduced service frequency (Alternative 1)………………….……...... 27
Figure 4-5: Bus line with increased service frequency (Alternative 1)……………….……..…… 27
Figure 4-6: Eliminated bus lines (Alternative 1)………………………………………….……..….. 28
Figure 4-7: Additional bus lines eliminated in Alternative 2………………………….……….….. 28
Figure 4-8: Change in consumer surplus between the base case and an alternative……..…. 30
Figure 4-9: Percentage of achievement of the project costs and benefits per year (ramp-up period)……………………………………………………………………………………………..……. 39
Figure 4-10: Metro lines L9 and L10……………………………………………………………..….. 44
Figure 5-1: Travel demand forecasting model…………………………………………….………... 49
Figure 5-2: Variation in the total number of trips/workday in period 2007-2021……………….. 62
Figure 5-3: Districts that produce more than +1,50% transit trips in Alternative 1 (TMB plan) compared with the base case in 2016……………………………………………………………..... 66
Figure 5-4: Districts that attract more than +1,50% transit trips in Alternative 1 (TMB plan) compared with the base case in 2016…………………………….……………………………….... 66
xvii Cost-Benefit Analysis of RetBus
Figure 5-5: Districts that produce more than +1,50% transit trips in Alternative 2 (Cost-reduction plan) compared with the base case in 2016………………………………………..………………. 66
Figure 5-6: Districts that attract more than +1,50% transit trips in Alternative 2 (Cost-reduction plan) compared with the base case in 2016………………………………………..………………. 66
Figure 5-7: Zones that produce more than +1,50% additional transit trips in Alternative 1 (TMB plan) compared with the base case in 2016…………………………………………..……………. 68
Figure 5-8: Zones that attract more than +1,50% additional transit trips in Alternative 1 (TMB plan) compared with the base case in 2016………………………………………………………… 68
Figure 5-9: Zones that produce more than +1,50% additional transit trips in Alternative 2 (Cost- reduction plan) compared with the base case in 2016…………………….…………………….... 69
Figure 5-10: Zones that attract more than +1,50% additional transit trips in Alternative 2 (Cost- reduction plan) compared with the base case in 2016…………………….………………………. 69
Figure 5-11: Ridership of each transit sub-mode in the base case and Alternative 1 in 2016 (reference transit assignment model)……………………………………………………………….. 72
Figure 5-12: Comparison of bus ridership in Alternative 1 and the base case (2016)…………. 73
Figure 5-13: Comparison of metro ridership in Alternative 1 and the base case (2016)………. 73
Figure 6-1: Cost-benefit analysis of alternatives 1 and 2: overview of costs and benefits, and NPV for 2011……………………….…………………………….……………………………………. 89
Figure 7-1: Cost-benefit analysis of alternatives 1 and 2: overview of costs and benefits, and NPV for 2011…………………………………………………………………………………………...103
Figure 7-2: CBA of Alternative 1 (TMB plan) and sensitivity analysis: overview of costs and benefits for each relevant social-economic party, and NPV for 2011…………………………....107
Figure 7-3: CBA of Alternative 2 (Cost-reduction plan) and sensitivity analysis: overview of costs and benefits for each relevant social-economic party, and NPV for 2011……….……….….….108
xviii Cost-Benefit Analysis of RetBus
1. Introduction
This chapter discusses the purpose and content of this report. Section 1.1 introduces the concept of Bus Rapid Transit (BRT) and describes the characteristics and objectives of the RetBus project, which involves building a new BRT system in Barcelona. Section 1.2 explains the reasons why it is necessary to perform an evaluation of the RetBus project and defines the research objectives. Section 1.3 describes the evaluation methodology used in this thesis. Finally, Section 1.4 summarizes the content of each chapter of the report.
1.1. Background Public transport investment is usually mentioned as a key to spatial accessibility and sustainable development, particularly in large metropolitan regions. The underlying principle is that improved public transport service theoretically leads to higher transit ridership and a decrease in automobility, which in turn causes a decrease in congestion and air pollution. Public transport service can be improved by means of different technological alternatives. Rail systems are usually dominant options in discussions about transport planning; however, nowadays there is a growing interest in ways of making better use of bus systems as primary means of public transport. The main reason for this interest is that bus systems are more flexible and generally have lower investment and operation costs than rail systems. In this context, the concept of Bus Rapid Transit (BRT) has gained a lot of attention. Bus Rapid Transit may be defined as “a high- quality bus based transit system that delivers fast, comfortable and cost-effective urban mobility through the provision of segregated right-of-way infrastructure, rapid and frequent operations and excellence in marketing and customer service” (Wright and Hook, 2007).
In the near future, a BRT system will probably be realized in Barcelona (Spain). In 2008, the City Council of Barcelona approved the Urban Mobility Plan 2006-2012. One of the core objectives of that plan is to reduce automobility by improving the service quality offered by the public transport network. In order to improve the transit service in Barcelona the City Council is planning to implement several projects. One of them is the RetBus project, which involves building a BRT system (called RetBus) and eliminating/changing some existing bus lines that overlap with the new BRT lines. The main objective of the RetBus project is to provide a higher quality bus service to transit users at a lower cost for the operator. The BRT network has been designed based on the guidelines of Daganzo (2010); it is formed by 11 BRT lines and it has a hybrid grid-radial structure. The RetBus system has been designed to provide a service of intermediate quality between metro and bus; therefore it is expected to attract current users of both systems. In addition, the RetBus system is expected to improve the competitiveness of the public transport network as a whole, thus attracting current private vehicle users.
1.2. Problem definition and research objectives The transit operator Transports Metropolitans de Barcelona (TMB)2 and the City Council of Barcelona need to make a decision on whether or not to implement the RetBus project. They would like to make that decision based on an assessment of the most relevant effects of the project. In this respect, they would like to know not only whether or not the implementation of the RetBus project will result in adequate returns to justify the investment costs, but also the
2 TMB is a public company that operates the bus and metro systems of Barcelona.
1 Cost-Benefit Analysis of RetBus
extent to which socio-economic welfare will increase in the region of Barcelona as a result of the realization of this project, thus considering the net benefit to society as a whole.
This report presents the results of a preliminary evaluation of the RetBus project which aims to assist TMB and the City Council in the process of decision-making. By evaluation, this research understands the process of assessing, in a structured way, the case for proceeding with the project or not. The evaluation focuses on both financial-economic and socio-economic aspects of the project, but does not analyze the technological requirements and the political implications of its implementation. Based on the results of the evaluation, the report also presents some recommendations on what type of changes could be made to the project in order to make it more socially beneficial and/or financially profitable.
1.3. Research approach Based on the results of a literature review, cost-benefit analysis (CBA) has been selected as the most suitable methodology with which to evaluate the RetBus project. CBA indicates the extent to which the benefits generated by a specific project will exceed its costs, all benefits and costs being expressed in monetary terms (Pearce and Nash, 1981). Both a financial cost-benefit analysis (FCBA) and a social cost-benefit analysis (SCBA) have been carried out, since they provide complementary information to evaluate the project. The project effects included in the FCBA are: BRT investment costs (infrastructure and vehicle costs); change in fleet replacement costs; change in operating costs; and change in operating revenues. The SCBA focuses mainly on direct project effects; a comprehensive analysis including all indirect effects and distributional effects of the project is beyond the scope of this research. The SCBA includes transit user benefits, safety effects and environmental effects as well as all the effects included in the FCBA.
A methodology based on the CBA step-by-step plans proposed by Eijgenraam et al (2000) and UNECE (2003) has been used to perform the cost-benefit analysis. The time horizon of the evaluation is ten years (2012-2021). The base case is defined as a scenario in which the RetBus project is not implemented. Two project alternatives have been analyzed: a) Alternative 1 (TMB plan), which defines the RetBus project as it would be implemented according to the plans of TMB; and b) Alternative 2 (Cost-reduction plan), which contains all the elements of Alternative 1 plus additional changes to the bus network. Including Alternative 2 (Cost-reduction plan) in the analysis is an attempt to determine whether making further adjustments to the bus network could potentially make the RetBus project more socially beneficial and/or financially profitable. Alternative 2 should be regarded as a conceptual design rather than a formal design proposal.
Travel demand forecasts are necessary to estimate some effects of the RetBus project. The travel demand forecasting model that has been used in this research is based on the traditional four-stage model (Ortuzar & Willumsen, 2001). First, a growth factor model has been used to forecast the future total trip demand by updating an observed base year matrix from 2007. That OD matrix includes trips by private vehicle and public transport made during an average workday for all trip purposes. Trip growth rates have been assumed to be equal to predicted rates of population growth. Second, a multinomial logit mode choice model has been used to perform modal split. That model has been calibrated based on observed data. Finally, two different models have been used to assign transit and private vehicle travelers to the transit and roadway networks. The assignment of transit trips is based on a multinomial logit model, while private vehicle trips have been assigned by means of a deterministic user equilibrium (DUE)
2 Cost-Benefit Analysis of RetBus
model. The two assignment models have been validated based on theoretical assumptions. The main inputs to the travel demand forecasting model are: a) OD travel demand (obtained from TMB, 2007); zoning system (TMB, 2007); and characteristics of the roadway and transit networks (Ajuntament de Barcelona, 2008; and other sources).
BRT investment costs have been calculated based on unit costs (euro/km and euro/vehicle). The change in fleet replacement costs and the change in operating costs have been estimated based on unit costs (euro/vehicle and euro/vehicle-km, respectively). The change in operating revenues has been estimated on the basis of average transit fares. Transit user benefits (i.e. change in total consumer surplus) have been calculated by applying the rule of half based on generalized travel costs. Finally, safety effects and environmental effects have been estimated based on unit external costs per transport mode (euro/vehicle-km). The project effects have been estimated and valuated only for years 2016 and 2021; the annual costs and benefits in the remaining years of the appraisal period have been obtained by linear interpolation. The first five years of the appraisal period have been assumed to be a linear ramp-up period. A discount rate of 5% has been applied to discount the future. Two measures of social/financial value have been used to evaluate the project: a) net present value (NPV); and b) benefit/cost ratio (BCR).
Several sensitivity tests have been carried out in order to explore possible ways to improve the social and/or financial value of the RetBus project and to evaluate the robustness of the CBA results. The following changes have been investigated: a) increase of the average BRT operational speed; b) earlier completion of the project; c) extension of metro lines L9-L10 not operational within the appraisal period; d) rise of the annual fare increase rate; e) use of a lower value of travel time; and f) increase of the discount rate to include a risk-premium.
1.4. Report contents The structure of this report is as follows. Chapter 2 describes the mobility patterns in Barcelona and introduces the transport planning context of the RetBus project. It also discusses the main characteristics of the RetBus project as well as the objectives of its implementation. Chapter 3 explains the reasons why it is necessary to evaluate the RetBus project and defines the research questions. In addition, it describes the research approach and defines the research boundaries. Chapter 4 describes in detail the methodology used to evaluate the RetBus project. It explains why cost-benefit analysis (CBA) is considered to be a more suitable approach for evaluating the project than multi-criteria analysis (MCA). It discusses the theoretical foundations of cost-benefit analysis as well as its limitations. Finally, it describes the step-by-step plan that has been used to perform the CBA of the RetBus project. Chapter 5 describes the methodology used to predict future travel demand and presents the resulting forecasts. The reliability of the forecasting methodology is also examined. Chapter 6 presents the results of the cost-benefit analysis of the two project alternatives under study. It also analyzes the sensitivity of the CBA results to changes in critical model parameters, the project characteristics and the environment of the project. Chapter 7 contains the conclusions of the thesis. It summarizes the problem studied and discusses the main research findings and conclusions. Some recommendations with regard to the project configuration as well as suggestions for further research are also given. Finally, that chapter presents a personal reflection on the research process and the final results.
3 Cost-Benefit Analysis of RetBus
2. Background
This chapter introduces the transport planning context of the RetBus project and describes its main characteristics as well as the objectives of its implementation. Section 2.1 defines four spatial scales that are relevant to study the mobility patterns in Barcelona (RMB, AMB, municipality of Barcelona and districts) and analyzes the major mobility flows at the AMB and municipal levels, particularly with regard to modal split. Section 2.2 describes the main principles and objectives of the Barcelona Urban Mobility Plan 2006-2012. Section 2.3 discusses the concept of Bus Rapid Transit and explains the main design characteristics of the RetBus system. Finally, Section 2.4 presents the conclusions of this chapter.
2.1. Mobility patterns in Barcelona This section briefly introduces the mobility patterns within the Barcelona Metropolitan Region. Four spatial levels are defined: Barcelona Metropolitan Region (RMB), Barcelona Metropolitan Area (AMB), municipality of Barcelona, and districts. Section 2.1.1 examines the spatial distribution of population and jobs at those four levels. Section 2.1.2 describes the major mobility flows at the AMB level, and Section 2.1.3 describes their distribution by trip purpose. Finally, Section 2.1.4 analyzes modal split at the four spatial levels previously defined.
2.1.1. Spatial distribution of population and jobs To study the mobility patterns in Barcelona, four spatial scales are relevant: a) Barcelona Metropolitan Region (RMB); b) Barcelona Metropolitan Area (AMB); c) municipality of Barcelona; and d) districts of Barcelona (see Figure 2-1).
Figure 2-1: Map of the RMB (left), the AMB (centre) and the municipality of Barcelona (right).
The Barcelona Metropolitan Region (RMB) has approximately 5 million inhabitants and it is one of the ten largest metropolitan regions in the European Union (ESPON, 2007). More than 2,0 million people work in the RMB (Table 2-1).
The core of the RMB is the Barcelona Metropolitan Area (AMB), which comprises eleven municipalities (Barcelona, Badalona, Santa Coloma, Sant Adria, Montcada i Reixac, L‟Hospitalet, Cornella, El Prat, Esplugues, Sant Joan Despi i Sant Just Desvern). The AMB contains half the population of the RMB (2,5 million inhabitants) and has a much higher population density (11.000 inhabitans/km2) than that of the region as a whole (1.500 inhabitants/km2). About 1,2 million people work in the AMB, therefore the AMB contains 60% of the jobs of the RMB (Table 2-1).
4 Cost-Benefit Analysis of RetBus
The municipality of Barcelona is the main city in the RMB. It has around 1,6 million inhabitants, i.e. 32% of the total population of the RMB, and 0,9 million jobs, i.e. 41% of the total number of jobs in the RMB (Table 2-1).
Table 2-1: Total population, area and population density of the municipality of Barcelona, the AMB and the RMB (INE, 2010; Ajuntament de Barcelona, 2008).
Population 2010 Area Pop. density Jobs 2001 2 2 (inhabitants) (km ) (inhabitants/km ) (millions) Barcelona 1.619.337 102,3 15.829,3 0,9 AMB 2.530.269 227,1 11.143,6 1,2 RMB 5.012.961 3236,0 1.549,1 2,0
Barcelona is divided in ten administrative districts. Data on population, jobs and other socioeconomic variables per district is provided in figures 2-2, 2-3, 2-6 and 2-7 (see also Table A-1 in Annex A). District 2 (Eixample) is the most populated district and also the one containing the greatest number of jobs.
Figure 2-2: Population density in 2008 (per Figure 2-3: Number of jobs in 2004 (per district). district).
2.1.2. Major mobility flows in the Barcelona Metropolitan Area (AMB) According to TMB (2007), 7,35 million trips are generated in the AMB on an average workday3. About 6,03 million of those trips (82%) are AMB internal trips (i.e. trips made within the AMB), while the rest (18%) are AMB external trips (i.e. trips connecting the AMB to external areas).
3 Tourists and visitors from outside the RMB are not included in the survey. Therefore, trip generation estimates by TMB (2007) probably underestimate the real number of trips/workday generated in the AMB.
5 Cost-Benefit Analysis of RetBus
Number of trips generated in the AMB on an average workday (in millions)
3,82 0,85 1,36 0,90 0,42
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Barcelona - Barcelona Barcelona - Rest AMB Rest AMB - Rest AMB Barcelona - Areas outside AMB Rest AMB - Areas outside AMB
Figure 2-4: Number of trips/workday generated in the AMB (in millions) (TMB, 2007).
As observed in Figure 2-4, the municipality of Barcelona generates the majority of trips within the AMB: around 77% of the AMB internal trips are produced or attracted by the municipality of Barcelona (4,67 million), of which 3,82 million trips are made within Barcelona itself and 0,85 million are trips connecting Barcelona to other municipalities of the AMB (particularly L‟Hospitalet, Badalona, Santa Coloma and Cornella). The remaining 23% of AMB internal trips have their origins and destinations in other municipalities of the AMB (1,36 million).
The municipality of Barcelona also generates the majority of trips connecting the AMB to external areas, although its dominance is lower than in AMB internal trips. Around 68% of the AMB external trips are produced or attracted by the municipality of Barcelona (0,90 million). The remaining 32% of AMB external trips have their origins or destinations in other municipalities of the AMB (0,42 million) (see Figure 2-4).
2.1.3. Distribution by trip purpose The 7,35 million trips produced in the AMB on an average workday are distributed among trip purposes4 as follows:
Work/study: 1,88 million trips (25%)
Shopping and other activities: 2,17 million (30%)
Come back home (from any origin): 3,30 million trips (45%)
Note that the number of work/study trips (which generally show stable patterns over time in terms of mode and route choice) is lower than the number of trips made for other purposes (which generally show less stable patterns).
4 Trip purpose is defined here based on trip destination.
6 Cost-Benefit Analysis of RetBus
2.1.4. Distribution by transport mode The 7,35 million trips produced in the AMB on an average workday are made by means of the following transport modes5:
Walking/bicycle: 2,81 million trips (38,2%)
Private vehicle: 2,03 million trips (27,6%)
Public transport: 2,52 million trips (34,2%)
Therefore, travelers tend to use public transport a little more than private transport to make trips within the AMB: 55,4% of all trips generated in the AMB and made by mechanical modes6 are transit trips, while the remaining 44,6% are private vehicle trips (Figure 2-5). This high demand for public transport is probably due to the good quality of the transit service in the AMB (pull factor) combined with high levels of car traffic congestion (push factor). Metro and bus are the most widely used transit modes in the AMB: about 75% of the transit trips produced in the AMB (1,88 million), use the metro or bus networks in at least one stage of the trip7 (TMB, 2007).
Modal split: Barcelona, 2007 Modal split: AMB, 2007 Modal split: RMB, 2007
37,2% 39,2% 44,6%
55,4% 60,8% 62,8%
Public transport Private vehicle Public transport Private vehicle Public transport Private vehicle
Figure 2-5: Modal split of trips in Barcelona (left), AMB (centre) and RMB (right) (TMB, 2007).
Modal split in the entire RMB shows a different pattern: only 37,2% of all trips produced in the RMB and made by mechanical modes are transit trips; the remaining 62,8% are private vehicle trips (Figure 2-5). Thus, in the RMB private transport plays a bigger role than in the AMB and Barcelona. In fact, on an average weekday, about 90% of all transit trips made in the RMB have their origin or destination within the AMB. Mobility by private vehicle has a more dominant role in the RMB because the accessibility by transit at the regional level is lower.
Trips that have their origin and/or destination within the municipality of Barcelona show a modal split more favorable to public transport: 60,8% of all trips generated in the municipality of Barcelona and made by mechanical modes are transit trips, while the remaining 39,2% are trips made by private vehicle (Figure 2-5). The share of transit trips is slightly higher for Barcelona internal trips: 62,3% of Barcelona internal trips made by mechanical modes are transit trips.
5 Multimodal trips are assigned to the transport mode used in the longest trip leg.
6 Mechanical modes are private vehicle (car, motorcycle, etc.) and public transport (train, metro, bus, etc.).
7 Intermodality, i.e. sequential use of different transit modes to make a particular trip, is a common phenomenon in the AMB (TMB, 2007).
7 Cost-Benefit Analysis of RetBus
Public transport has a more dominant role in the municipality of Barcelona because the accessibility by transit at the local level is higher than at the regional level.
There are differences in modal split between districts of Barcelona (Figure 2-8). Districts 1 (Ciutat Vella) and 2 (Eixample) show the highest percentages of transit trips produced. This is possibly due to the high transit accessibility of these two districts (which are the most central districts in Barcelona) as well as higher car parking costs in comparison to other areas. In addition, District 1 shows very low values for average income per inhabitant (Figure 2-6) and number of cars per 1000 inhabitants (Figure 2-7), both key variables influencing mode choice, which indicates that there may be a higher percentage of transit captives living in District 1 than in other areas. Instead, Districts 4 (Les Corts) and 5 (Sarria – Sant Gervasi) show the lowest percentages of transit trips produced (and therefore the highest percentages of private vehicle trips produced). The main reason is that people living in those two districts have a stronger preference for choosing their private vehicle as transport mode, since they have a higher average income (Figure 2-6) and a higher ratio of private vehicles per inhabitant (Figure 2-7) than the other districts of Barcelona. Those geographical differences in terms of modal choice behavior have been incorporated into the modal split model used in this research to forecast travel demand (see Section 5.1.4).
Figure 2-6: Average income per inhabitant in Figure 2-7: Private vehicle ownership in 2008 2008 (per district). (per district).
8 Cost-Benefit Analysis of RetBus
Figure 2-8: Percentage of transit trips over total trips made by mechanical modes in 2007 (per district).
2.2. The Urban Mobility Plan 2006-2012 In 2008, the City Council of Barcelona approved the Urban Mobility Plan (PMU) 2006-2012. That plan aimed at: a) coordinating all local policies that affect urban mobility in Barcelona; b) defining an urban mobility model for Barcelona; and c) designing a policy strategy aimed at improving mobility in Barcelona in accordance to that model (Ajuntament de Barcelona, 2008). The Urban Mobility Plan was designed after a process of consultation with experts and representatives of several political parties and NGOs. The official time horizon of the plan was 2012, although its vision encompasses a longer period (until 2018).
The Plan defines a mobility model and strategy for Barcelona based on the following basic principles (Ajuntament de Barcelona, 2008):
a) Equity: guaranteeing the right to mobility to all citizens (including those who do not own a private vehicle and those who are disabled).
b) Safety: decreasing the number of accidents and their severity (with regard to all transport modes).
c) Sustainability: reducing the environmental costs caused by the transport system (which are related to air pollution, noise, loss of nature and biodiversity, and climate change).
d) Efficiency: optimizing the net benefits of the transport system taking into account not only operating and maintenance costs but also social and environmental costs.
On the basis of those principles, the Urban Mobility Plan 2006-2012 defines as one of its main objectives to increase the modal share of public transport and non-mechanical modes (walking, bicycle, etc) and reduce the modal share of private vehicles. In that way, the plan aims to
9 Cost-Benefit Analysis of RetBus
reduce: a) the energy consumption per inhabitant due to mobility; b) the total emissions of air pollutants and greenhouse gases; and c) the number of fatalities due to traffic accidents (Ajuntament de Barcelona, 2008).
2.3. The RetBus project Public transport investment is usually mentioned as a key to spatial accessibility and sustainable development, particularly in large metropolitan regions. The underlying rationale is that improved public transport service should lead to higher transit patronage and therefore to a decrease in automobility. Such modal shift theoretically causes a decrease of congestion and environmental costs8. As explained in Section 2.2, one of the main objectives of the Barcelona Urban Mobility Plan 2006-2012 is to increase the modal share of public transport.
Improving public transport service can be done through different technological options. Variations in rail systems (ranging from heavy rail to metro and light rail) are usually dominant options in discussions about transport planning, but there is currently a growing interest worldwide in ways of making better use of bus systems as primary means of public transport instead of limiting their role to a service that feeds the rail network (Hensher and Golob, 2008). This growing interest in bus transport is due to the flexibility of bus systems and their lower investment and operation costs in comparison to rail systems. There are many ways in which bus transport can be developed as part of an integrated network-based transit system; the most famous examples are the Bus Rapid Transit (BRT) systems of Curitiba (Brazil) and Bogota (Colombia), but similar systems have also been implemented in cities like Nagoya (Japan), Sydney (Australia) and Boston (USA) (Hensher and Golob, 2008).
Bus Rapid Transit may be defined as: “a high-quality bus based transit system that delivers fast, comfortable and cost-effective urban mobility through the provision of segregated right-of-way infrastructure, rapid and frequent operations and excellence in marketing and customer service” (Wright and Hook, 2007). BRT essentially emulates the performance and characteristics of a modern rail-based transit system but at a fraction of the cost, since a BRT system typically costs four to twenty times less than a Light Rail Transit (LRT) system and ten to one hundred times less than a metro system (Wright and Hook, 2007).
The urban transit network of Barcelona is currently being redefined. In the next years, a new Bus Rapid Transit (BRT) system called RetBus will probably be built (the deployment phases are shown in Figure B-1, Annex B). This system would be operated by the same public agency that operates the existing metro and bus systems in Barcelona (TMB). In parallel to the implementation of the BRT system, some existing bus lines that overlap with the new BRT lines would be eliminated or shortened or their frequency will be reduced9, in order to avoid bus route overlaps and free the vehicles needed to operate the RetBus system.
In line with the objectives of the Barcelona Urban Mobility Plan 2006-2012 (see Section 2.2), the main objective of the new BRT system is to provide a higher quality bus service to transit users
8 However, a decrease in congestion due to a modal shift from private vehicle to public transport often causes a reverse modal shift from transit to private vehicle. Because of that effect, improving transit service does not necessarily lead to a significant decrease in congestion and environmental costs.
9 The changes in the bus network are described in Section 4.3.1.
10 Cost-Benefit Analysis of RetBus
at a lower cost for the operator. The RetBus network has been designed based on the guidelines developed by Daganzo (2010) for the design of competitive transit networks combining both grid and radial structures (hybrid structure). However, it is important to note that proposals to optimize the bus network of Barcelona by means of a grid network structure have already been made by many transport planners since the 1970s (for example, Morales and Thorson, 1981). According to Daganzo (2010), the main design objective of the RetBus network is to simultaneously minimize investment costs, operating costs and user generalized travel costs10, while providing sufficient capacity as to meet passenger demand. The costs to be minimized are assumed to be related to the following metrics:
Investment costs: network length and vehicle fleet size required for operation.
Operating costs: total distance traveled per vehicle per hour of operation.
User costs: average durations of the various components of a typical transit trip (access time, waiting time, in-vehicle time and egress time), and expected number of transfers.
The RetBus system has the design characteristics shown in Table 2-2.
Table 2-2: Design characteristics of the RetBus system and the existing bus and metro systems in Barcelona (TMB, 2010a; TMB, 2010b; CENIT & COEFUT, 2009).
Existing bus Existing metro Design characteristics RetBus system system11 system Total network length (km) 217 920 100 Number of lines 11 108 6 Number of stops 522 2.545 130 Average stop spacing (m) 433 - 650 300 650 Commercial speed (km/h) 15 11,5 27,5 Average headway in peak hour (min) 3 - 6 13 3 Number of vehicles required 265 890 130 Number of passenger-km supplied (millions) 1.646,3 3.520,7 14.390,3 Number of vehicle-km supplied (millions) 16,0 34,8 79,0
The RetBus network has a hybrid grid-radial structure consisting of 11 lines: 6 vertical lines plus 5 horizontal lines (see Figure 2-9). Some of these lines (e.g. H4 and V2) have two different origin and/or destination terminal stops, so they actually consist of two sub-lines (e.g. H4A, H4B, V2A, V2B) overlapping in the central segment. The total network length is 217 km. In the central grid, line spacing is 1,3 km for vertical lines and 0,65 km for horizontal lines. In general, stop spacing is 650 m, although it is reduced to 433 m in the city centre in order to account for the high demand for short trips in that area (see Figure 2-10). As a result, the BRT system has a
10 The main dilemma of public transport network design is the balance between opposing objectives, particularly those of travelers and those of builders/operators. Travelers are interested in short travel times and hence prefer fully connected networks, while builders/operators are interested in low investment/operating costs and thus prefer a minimum spanning tree network. Generally, the objective of public authorities is to minimize total costs (i.e. the sum of investment costs, operating costs and user generalized travel costs) or maximizing social welfare; therefore, they are interested in balancing the objectives of both the builders/operators and the travelers (Hansen et al, 2008).
11 The existing bus system operates either on mixed-traffic lanes or on bus lanes which are not physically separated from general-use lanes.
11 Cost-Benefit Analysis of RetBus
lower stop density than the existing bus network, therefore average access and egress costs for users are higher as well.
Figure 2-9: Map of the RetBus network.
Figure 2-10: Line spacing and stop spacing in the centre and periphery of the BRT grid.
Lower spatial accessibility is compensated by higher time accessibility (CENIT, 2010). Indeed, in comparison to the existing bus network, the RetBus system has higher service frequencies (average headway of 3 min in the grid area of the BRT network, 6 min in the peripheral BRT line segments), lower need for transfers (within the grid area of the BRT network, every point should be reachable by making maximum one transfer) and higher average operational speeds (up to 15-20 km/h). This increase in operational speed is a direct consequence of the increased stop spacing as well as the implementation of infrastructural measures (permanent or intermittent bus lanes, right-turn ban, etc.) and traffic management measures (double bus stops, traffic light synchronization, etc) (CENIT, 2010).
In many large cities, the public transport network consists of different levels. Each network level is useful for trips of a certain length and at the same time acts as feeder to the next higher level (Van Nes, 2002). In Barcelona, the lower-level network mainly consists of a bus system and the higher level network consists of a metro system. A third level consisting of a rail system (RENFE
12 Cost-Benefit Analysis of RetBus
and FGC) provides access to the surrounding municipalities. The main differences between hierarchical network levels are stop spacing and operational speed, which are higher for higher- level networks (bus Access and egress time: Bus < Retbus < Metro In-vehicle travel time: Metro < Retbus < Bus For that reason, the new BRT system is expected to be suitable for average trip distances between those typical of regular bus (2,8 km) and metro (3,8 km)12. Therefore, the RetBus system should attract current users of both the existing bus and metro systems13. In addition, the BRT system is expected to improve the competitiveness of the transit network of Barcelona as a whole, thus attracting current private vehicle users (CENIT, 2010). The fleet required to operate the whole RetBus system will consist of 265 vehicles, of which 146 will be articulated buses (120 passengers capacity) and 119 will be standard buses (80 passengers capacity) (see Table B-1 in Annex B). Of these 265 vehicles, 23 will be acquired in the market, while the rest will be reallocated from the existing bus system (see Table F-2 in Annex F). 2.4. Conclusions This chapter has explained the mobility and policy context of the RetBus project as well as its main characteristics and the objectives of its implementation. Four relevant spatial scales have been defined: a) RMB; b) AMB; c) municipality of Barcelona; and d) districts of Barcelona. The AMB comprises eleven municipalities (including Barcelona) and is the core of the region. It contains half the population (2,5 million inhabitants) and 60% of the jobs of the RMB (1,2 million jobs). The mobility patterns have been analyzed particularly at the level of the AMB and the municipality of Barcelona, since the coverage area of the RetBus system correspond to those levels. About 7,35 million trips are produced in the AMB on an average workday, of which 82% have their origin and destination within the AMB. The municipality of Barcelona plays a central role in the mobility flows of the AMB: 75% of the trips generated by the AMB are actually generated by the municipality of Barcelona. The 7,35 million trips produced in the AMB on an average workday are distributed amongst transport modes as follows: 38% walking/bicycle, 28% private vehicle, and 34% public transport. Metro and bus are the most widely used transit sub-modes in the AMB. Trips that have their origin and/or destination within the municipality of Barcelona show a modal split even more favorable to public transport. However, there are differences in modal split between 12 The average distance of bus trips is 2,8 km, the 25%-quartile is 1,8 km and the 75%-quartile is 4,6 km. The average distance of metro trips is 3,8 km, the 25%-quartile is 2,2 km and the 75%-quartile is 5,5 km. In both cases, the trip distances per mode are defined as the distance between the two origin and destination centroids, averaging the Euclidean distance and the distance moving only on the horizontal and vertical axis (CENIT, 2010). 13 The impact of the BRT system on bus and metro ridership is discussed in Section 5.2.3.1. 13 Cost-Benefit Analysis of RetBus districts of Barcelona. Those geographical differences in terms of modal choice behavior are of crucial importance to model modal split in Barcelona. In 2008, the City Council of Barcelona approved the Urban Mobility Plan 2006-2012, which defines as one of its main objectives to increase the modal share of public transport and non- mechanical modes (walking, bicycle, etc) and reduce the modal share of private vehicles. One of the measures that the City Council has designed in order to improve the public transport service in Barcelona is the implementation of a new Bus Rapid Transit (BRT) system called RetBus. In line with the Urban Mobility Plan, the main objective of the RetBus project is to provide a higher quality bus service to transit users at a lower cost for the operator (TMB). In parallel to the implementation of the BRT system, some existing bus lines that overlap with the new BRT lines will be eliminated or modified in order to avoid bus route overlaps and free the vehicles needed to operate the RetBus system. The BRT network has a hybrid grid-radial structure (11 lines). In essence, the designed BRT network provides lower spatial accessibility than the existing bus network, but that is compensated by higher time accessibility. If the new BRT system is implemented, it is expected to provide a service quality between that of regular bus and metro. Therefore, the RetBus system is expected to attract current users of both the existing bus and metro systems, besides current private vehicle users. The next chapter (Chapter 3) discusses the reasons why it is necessary to perform a preliminary evaluation of the RetBus project. Next, it defines the main questions that this research study aims to answer. Finally, it briefly describes the methodological approach that has been used to answer the research question and defines the research boundaries. 14 Cost-Benefit Analysis of RetBus 3. Purpose of the study Chapter 3 describes the problem that this research endeavors to solve. The reasons why it is necessary to perform a preliminary evaluation of the RetBus project are discussed in Section 3.1. Section 3.2 defines the main questions that this research aims to answer as well as a set of secondary questions that should help to structure the research process. Section 3.3 briefly describes the methodological approach used to answer the research question and defines the research boundaries. Finally, Section 3.4 presents the conclusions of this chapter. 3.1. The need for an evaluation of the RetBus project The transit operator TMB and the local government of Barcelona need to make a decision on whether or not to carry out the RetBus project. They would like to make that decision based on both the project„s social value and financial profitability. This research aims to perform a preliminary evaluation of all the relevant effects that would be caused by the implementation of the project in order to assist TMB and the local government in the process of decision-making. The most relevant impacts of the RetBus project are: investment costs; changes in fleet replacement costs, operating costs and operating revenues; transit user benefits; safety effects; and environmental effects. It is particularly complex to estimate the change in operating revenues, the transit user benefits, the safety effects and the environmental effects caused by the RetBus project, since those effects strongly depend on the impact of the new BRT system on travel costs and modal split, which are not easy to forecast accurately. Assessment of investment costs and changes in operating costs depend on supply-related characteristics of the RetBus system so they can be estimated in a simpler manner. The RetBus network has been designed based on guidelines developed by Daganzo (2010). However, it should be noted that Daganzo (2010) only deals with design of unimodal transit networks. He compares the theoretical performance of hybrid BRT and light rail/metro networks and concludes that a BRT system would be more cost-effective than a metro (or light rail) system in a city with the characteristics of Barcelona14, but he does not take into account that highly developed metro and bus networks already exist in Barcelona. As mentioned in Section 2.3, the bus and metro systems can be regarded as different hierarchical network levels which offer a different service quality and are suitable for trips of different length. However, it is not clear how the RetBus system will fit in the existing structure of the transit network. TMB states that the RetBus network has been designed to be complementary to the existing metro network (Lopez, 2009). However, both networks have similar values for some design parameters (for example, stop spacing and service frequency), although operational speed is clearly lower in the case of BRT. In addition, many RetBus lines overlap with existing metro lines, especially in the central part of the BRT grid, with less overlap occurring in the peripheral parts of the grid. Finally, both systems cover a similar area (corresponding to the area within the municipal boundaries of Barcelona). A very relevant question then arises regarding whether or not the new BRT network and the existing metro network will offer a similar service quality. If that were so, both systems would be suitable for the same trip types; therefore, as they cover the same area and many of their lines overlap, they would compete for passenger demand. As 14 City characteristics with regard to city size and public transport demand. 15 Cost-Benefit Analysis of RetBus a result, the RetBus system would produce an increase in operating costs but would probably have a minor impact on modal split. Those are key elements influencing the social value and financial profitability of the project. Instead, if the BRT and metro networks offered a different level of service quality, they could be considered complementary systems in a multimodal transport network. As a result, the implementation of the RetBus project would probably improve the attractiveness of transit routes in comparison to private vehicle routes, thus generating a greater modal shift to public transport. Another important issue is the complementarity between the RetBus network and the existing bus network. The line spacing and stop spacing of the bus network are lower than those of the RetBus network; therefore, the space accessibility of the latter is lower. However, the average frequency and operational speed are much higher in the case of BRT, which means that the time accessibility is also higher. Also, many RetBus lines partially overlap with existing bus lines and both networks cover a similar area. Again the question arises of whether the BRT network and the bus network would provide a similar level of service quality. If that were so, they would compete for passenger demand. In that case, it might be advisable to remove some RetBus or bus lines in order to save operating costs. Alternatively, if the two networks provided different levels of service quality, they could be considered complementary systems in a multimodal transport network. As a result, the RetBus project would most likely generate a modal shift to public transport, which would positively influence the social value and financial profitability of the project. This research aims to perform a preliminary evaluation of the most relevant effects of the RetBus project in order to determine whether it is recommended to proceed with the project from the socio-economic and financial points of view. Based on the results of that evaluation, the study aims to make recommendations on what changes could be made to the project in order to make it more socially beneficial and/or financially profitable. 3.2. Research questions This section presents the main research questions addressed in this study (Section 3.2.1). Those questions indicate what knowledge this study endeavors to make available to the reader. Furthermore, a group of secondary research questions is also presented (Section 3.2.2). Those questions have been defined in order to structure the research process: the answers to the secondary questions should help answering the primary research questions. 3.2.1. Primary research questions This study aims to answer the following two primary research questions: PQ1: To what extent will the implementation of the RetBus project be socially and financially beneficial? PQ2: What modifications could be made in the RetBus project so as to improve its social and/or financial value? 16 Cost-Benefit Analysis of RetBus This study presents the results of a preliminary evaluation of all relevant socio-economic costs and benefits15 caused by the implementation of the RetBus project in the Metropolitan Region of Barcelona (RMB). The objective of the analysis is not only to answer the question of whether the implementation of the RetBus will result in sufficient returns to justify the investment costs and additional operating costs, but also to determine the degree to which socio-economic welfare will increase in the region of Barcelona as a result of the realization of this project. Based on the results of the evaluation, the study also aims to analyze what kind of changes could be made to the project in order to improve its performance. 3.2.2. Secondary research questions Table 3-1: Secondary research questions. Cluster 1: SQ1: What are the main characteristics of the RetBus project? What are the main Definition objectives of the implementation of the RetBus project in Barcelona? SQ2: What project appraisal methodologies are available and what type of information do they provide? What is the most adequate methodology to evaluate the RetBus project? SQ3: What is the most relevant time horizon to evaluate the RetBus project? Within that Cluster 2: time horizon, what changes are planned to be made in the transport network of the RMB Methodology along with the implementation of the BRT system? What changes would most likely be made in the transport network of the RMB if the RetBus project was not implemented? SQ4: What will be the most relevant positive and negative effects of the RetBus project? Is it possible to assign an objective value in terms of market prices to the effects of the project? If that is not possible, what methods could be used to objectively express these effects in monetary terms? SQ5: What factors have a critical influence on the social and financial value of the RetBus system? How can the uncertainty in the development of those factors be incorporated in the evaluation? SQ6: How will the RetBus network fit in the existing transit networks? What will be the total passenger demand of the RetBus once fully operational? Which transport modes would the RetBus passengers most likely use if the BRT system was not operational? Cluster 3: Results SQ7: What is the social and financial value of each effect of the RetBus project? Which parties will be affected by each of those effects? What is the total social and financial value of the RetBus project? What changes could be made in the project in order to improve its social value and/or financial profitability? 15 The socio-economic costs and benefits included in the evaluation are specified in Chapter 4. 17 Cost-Benefit Analysis of RetBus A set of secondary research questions has been defined to help structure the research process. The idea is that the answers to these questions should lead to an answer to the primary ones. The secondary questions have been grouped in three clusters based on whether they relate to: 1) the definition of the RetBus project; 2) the methodology that will be used to evaluate the project; 3) the results of the evaluation (see Table 3-1). 3.3. Research approach Based on the results of a literature review, cost-benefit analysis (CBA) has been selected as the most suitable methodology with which to evaluate the RetBus project. CBA indicates the extent to which the benefits generated by a specific project will exceed its costs, all benefits and costs being expressed in monetary terms (Pearce and Nash, 1981). Multi-criteria analysis (MCA), an alternative evaluation approach, has been discarded because of its subjective nature and the fact that it does not indicate whether a project is attractive per se. Both a financial cost-benefit analysis (FCBA) and a social cost-benefit analysis (SCBA) have been carried out, since they provide complementary information to evaluate the project. On the one hand, FCBA answers the question of whether the project will result in adequate financial returns to justify the costs incurred by the investor/operator; therefore, it includes only financial- economic project effects. On the other hand, social cost-benefit analysis (SCBA) answers the question of whether the project will generate an increase in social welfare in the Barcelona Metropolitan Region (RMB). In this study, the SCBA focuses mainly on direct project effects (partial SCBA). A comprehensive analysis including all indirect effects and distributional effects of the project is beyond the scope of this research. The project impacts included in the FCBA are: BRT investment costs; change in fleet replacement costs; change in operating costs; and change in operating revenues. The SCBA includes all the effects mentioned above plus transit user benefits, safety effects and environmental effects. Indirect effects on car users are not taken into account because some model inputs (e.g. OD data and roadway network characteristics) do not have an adequate level of detail so as to make a sound estimation of congestion effects; furthermore, the RetBus project is expected to have a small impact on car traffic congestion at the macro level. A methodology based on the CBA step-by-step plans proposed by Eijgenraam et al (2000) and UNECE (2003) has been used to perform the cost-benefit analysis. The time horizon of the CBA has been set to ten years (2012-2021), which is deemed an adequate economic life span for the RetBus system and a sound forecasting period. The base case is defined as a scenario in which the RetBus project is not implemented. Two project alternatives are defined: a) Alternative 1 (TMB plan), which defines the RetBus project as it is going to be implemented according to the plans of TMB; and b) Alternative 2 (Cost-reduction plan), which contains all the elements of Alternative 1 plus additional changes in the bus network (21 extra bus lines are eliminated). Including Alternative 2 in the analysis is essentially an attempt to determine whether making further adjustments to the bus network could turn the RetBus project into more beneficial than the project as defined in the TMB plan. The underlying rationale is that, by eliminating bus lines that are expected to considerably lose patronage after the implementation of the RetBus project, it may be possible to reduce the total operating costs of the bus system without losing too many transit users. This view implicitly assumes that the BRT system would 18 Cost-Benefit Analysis of RetBus compete more strongly for demand with the bus system than with the metro system16. However, Alternative 2 (Cost-reduction plan) should be regarded as a conceptual design rather than a formal design proposal. Travel demand forecasts (particularly future OD demand, traveler flows and travel costs per mode) are necessary to estimate many effects of the RetBus project. A travel demand forecasting model based on the traditional four-stage model (Ortuzar and Willumsen, 2001) has been used in this research. First, a growth factor model has been used to forecast the future demand of total trips per OD pair based on an observed base year matrix. That OD matrix includes trips by mechanical modes (i.e. private vehicle and public transport) made during an average workday for all trip purposes. Trip growth rates have been assumed to be equal to predicted rates of population growth. Second, a modal split model has been used to disaggregate total trip OD matrices in transit trip OD matrices and private vehicle OD matrices. The modeling approach used is multinomial logit (MNL). Finally, two different models have been used to assign transit trips and private vehicle trips to the transit and roadway networks, respectively. The assignment of transit trips is based on a multinomial logit (MNL) model, while private vehicle trips have been assigned by applying a deterministic user equilibrium (DUE) procedure. The main inputs to the travel demand forecasting model are: a) OD travel demand (obtained from TMB, 2007); zoning system (TMB, 2007); and characteristics of the roadway and transit networks (Ajuntament de Barcelona, 2008; and other sources). The reliability of the travel demand forecasting model is limited because of inaccuracies of the input data and the model‟s predictive validity, but it is deemed sufficient for the purpose of this research. In order to simplify matters, the project effects have been estimated and valuated only for years 2016 and 2021; then the annual costs and benefits associated to the remaining years of the appraisal period have been obtained by linear interpolation. For interpolation, the first five years of the appraisal period have been assumed to be a ramp-up period. A linear ramp-up path is considered reasonable since the project is going to be implemented in phases of similar magnitude and RetBus ridership is expected to grow at a constant rate over time. A discount rate of 5% has been applied to discount the future. Such a discount rate is considered adequate for the evaluation of risk-free investments and is frequently applied in the appraisal of transport projects in Western Europe. Two measures of social/financial value have been used in this research to evaluate the RetBus project: a) net present value; and b) benefit/cost ratio. These two measures are complementary: the NPV indicates the total net benefit of the project, while the BCR indicates how much net benefit would be obtained in return for each unit of investment cost. These indicators have been calculated twice to perform two different types of analysis: SCBA and FCBA. Finally, a range of sensitivity tests have been carried out in order to explore possible ways to improve the social and/or financial value of the RetBus project and to evaluate the robustness of the CBA results. The following changes have been investigated: a) increase of the average BRT operational speed; b) earlier completion of the project; c) extension of metro lines L9-L10 not operational within the appraisal period; d) rise of the annual fare increase rate; e) use of a lower value of travel time; and f) increase of the discount rate to include a risk-premium. 16 The findings of this thesis indicate that the implementation of the RetBus project would cause bus ridership to decrease by a greater percentage than metro ridership (see Section 5.2.3.1). 19 Cost-Benefit Analysis of RetBus 3.4. Conclusions This chapter has defined the problem that this research deals with. In brief, TMB and the local government of Barcelona need to make a decision on whether to implement the RetBus project, and they would like to make that decision based on the project‟s social value and financial profitability. This research aims to perform a preliminary evaluation of the most relevant effects of the RetBus project in order to assist TMB and the local government in the process of decision-making. Based on the results of that evaluation, the study aims also to make recommendations on what changes could be made to the project in order to make it more beneficial. Furthermore, this chapter has defined the main research questions addressed in this study: To what extent will the implementation of the RetBus project be socially and financially beneficial? What modifications could be made in the RetBus project so as to improve its social and/or financial value? Additionally, a set of secondary research questions have been defined. Those secondary questions have been used to structure the research process. Finally, the methodological approach used to answer the research questions has been presented, and the research boundaries have been defined. The evaluation methodology is based on a cost-benefit analysis approach. An adapted version of the traditional four-stage model has been used to produce the travel demand forecasts that are necessary to estimate many of the effects of the RetBus project. Next chapter (Chapter 4) describes more in detail the methodology used to evaluate the RetBus project. First, it compares the advantages and disadvantages of using CBA and MCA methods and explains why CBA is a more suitable approach with which to evaluate the RetBus project. Then, it explains the theoretical foundations of cost-benefit analysis and examines its limitations. Finally, the step-by-step plan that has been used to perform the cost-benefit analysis of the RetBus project is thoroughly described. 20 Cost-Benefit Analysis of RetBus 4. Evaluation methodology Chapter 4 describes in detail the methodology used to evaluate the RetBus project. The selected methodological approach is cost-benefit analysis (CBA). Section 4.1 compares the advantages and disadvantages of using CBA and MCA methods and argues why CBA is the most suitable approach with which to evaluate the RetBus project. Section 4.2 explains the theoretical foundations and rationale of cost-benefit analysis. Additionally, it explains what information is provided by CBA and what its limitations are. Also, different types of CBA are discussed. Section 4.3 describes the step-by-step plan that has been used to perform the cost- benefit analysis of the RetBus project. The methodology consists of the following steps: a) project definitions; b) identification of project effects, c) estimation and valuation of project effects; d) production of a cost-benefit report; and e) sensitivity analysis. Finally, Section 4.4 presents the conclusions of this chapter. 4.1. Methodological approach: CBA vs. MCA The methodological approach that has been used to evaluate the RetBus project is cost-benefit analysis (CBA). Essentially, CBA indicates the extent to which the benefits generated by a specific project will exceed the costs of its implementation; both costs and benefits are valuated in monetary units, preferably on the basis of market prices (Beuthe, 2002). CBA has been selected as evaluation approach because of the following reasons: a) it is a well- known method, firmly based on economic science and frequently used in practice; b) it yields clear policy conclusions, which are related to the social and financial value of the project under study; c) it provides an assessment of a broad range of project effects and their impact on different stakeholders; d) it valuates the project effects in an objective way (based on the preferences of individuals as expressed in the market system, if possible); and e) it can incorporate into the evaluation uncertainties related to the project. However, it should be noted that CBA has some important limitations. The most important shortcomings are: a) CBA may be incomplete in terms of project effects included in the evaluation, since it is difficult to valuate some effects in monetary terms (e.g. external effects); and b) CBA does not connect well to the process of decision-making, as it does not analyze distributional effects adequately (Turro, 2001; Saitua, 2007). Multi-criteria analysis (MCA) is an alternative approach that does not have those limitations. MCA does not necessarily rely on welfare economics concepts such as willingness-to-pay and consumer surplus. Instead, MCA establishes preferences between a number of projects or alternatives in terms of specific criteria. These criteria represent an operationalization of the objectives and sub-objectives of the stakeholders participating in the decision-making process (De Brucker & Verbeke, 2007). Each project impact is evaluated separately, by using the most appropriate techniques for each of them, and keeping their own units of measurement. Then, the data on individual criteria are aggregated (e.g. by means of weights) to provide indicators of the overall performance of project alternatives (Musso et al, 2007; DCLG, 2009). However, MCA has not been used in this research because of the following reasons. First, MCA methods rely on the judgment of the analysts about the contribution of each project alternative to each performance criterion; this involves a certain degree of subjectivity, which opens the evaluation results to ambiguity. Second, MCA can only rank projects and it does not indicate 21 Cost-Benefit Analysis of RetBus whether or not a specific project is attractive per se. The latter makes this evaluation approach not suitable to answer the first primary research question of this study (see Section 3.2.1). In conclusion, CBA is considered the most suitable approach with which to evaluate the RetBus project. Although CBA has the above mentioned limitations, they do not disqualify the use of CBA in this study. In fact, this research aims to provide a preliminary assessment of the most relevant impacts of the project; therefore, it is not necessary to take all project effects into account. Furthermore, this study aims to analyze the performance of the RetBus project from an objective viewpoint, so no explicit analysis of distributional issues is required. However, a simple analysis of distributional effects can be done by disaggregating the benefits and costs of a project for different groups in the presentation of the CBA results. Annex C provides an extended discussion of the limitations of cost-benefit analysis as project evaluation approach. Annex D contains a more complete comparison of the advantages and disadvantages of using CBA and MCA methods. 4.2. What is cost-benefit analysis? Cost-benefit analysis (CBA) is an economic evaluation method commonly used in the public sector to evaluate the desirability of a given intervention (project, program, policy, etc.) and widely used in the appraisal of transport projects. The theoretical framework of CBA is grounded in microeconomics and welfare theory. Essentially, cost-benefit analysis evaluates the extent to which the benefits generated by a specific intervention will exceed the costs of its realization17. Two types of CBA need to be distinguished: a) financial cost-benefit analysis (FCBA); and b) social cost-benefit analysis (SCBA). FCBA answers the question of whether the project, taking its entire life span into consideration, will result in adequate financial returns to justify the costs incurred by the investor/operator (Eijgenraam et al, 2000). In contrast, social cost-benefit analysis (SCBA) answers the question of whether an intervention will contribute to social welfare. The main criterion to determine whether an intervention generates an increase in social welfare is the Hicks-Kaldor criterion, which assumes that a particular intervention results in a potential Pareto improvement if those who are better off after the intervention can potentially compensate those who are worse off and still benefit from the project implementation18 (Eijgenraam et al, 2000). SCBA identifies all relevant positive and negative effects of a given intervention from the viewpoint of society as a whole. Financial-economic effects (investment costs, operating costs and revenues) are included in the analysis; in this respect, FCBA forms part of the SCBA. However, SCBA includes additional items which have a socio-economic value, such as environment, mobility and safety. Therefore, SCBA is a combination of utility maximization for producers and consumers alike, in contrast with FCBA, which looks only at the interests of producers (Pearce and Nash, 1981). 17 In this respect, the budget of a project can be interpreted as a measure of the utility of forgone consumption, i.e. the utility of spending funds on other projects (Beuthe, 2002). 18 The Hicks-Kaldor criterion is an efficiency criterion which does not explicitly consider equity issues. 22 Cost-Benefit Analysis of RetBus CBA valuates all project effects in monetary terms, preferably using market prices (Beuthe, 2002). To valuate some of the non financial-economic effects included in SCBA in case of market failure or non-existing markets, other relevant markets are used or surrogate markets 19 are created (Saitua, 2007). Valuations of effects are generally based on: a) the willingness-to- pay of the potential gainers for the benefits they will receive as a result of the intervention; and b) the willingness-to-accept of potential losers to accept compensation for the losses they incur (DCLG, 2009). Both in FCBA and SCBA, annual cost and benefit streams expressed in monetary terms (related to each project effect) are suitably discounted over time, and aggregated over the whole appraisal period. The results of the analysis are presented using one or more measures of financial/social value, such as net present value (NPV), benefit/cost ratio (BCR) and/or internal rate of return (IRR)20 (Eijgenraam et al, 2000). Generally, CBA recommends carrying out only those interventions yielding a positive net present value. In FCBA, a NPV>0 means that a particular project will be financially profitable. In SCBA, a NPV>0 means that the project will contribute to social welfare (Beuthe, 2002). Once a group of beneficial interventions has been identified, CBA also allows for a comparison between them in terms of net benefit, which can be useful for project prioritization and selection. It should be noted that the NPV of public investment projects as given by SCBA has important differences compared with the NPV of private investment projects as given by FCBA. More specifically, in SCBA: a) the additional wealth created by the project does not entirely take the form of monetary transfers accruing to specific stakeholders; b) the dividends are not evenly distributed amongst multiple stakeholders; c) interpersonal utility comparisons are made, according to the principle that winners should win more than what losers lose, although effective compensation of the losers does usually not take place (at least fully) (De Brucker and Verbeke, 2007). Eijgenraam et al (2000) and the Dutch Ministry of Finance (1998) identify two types of social cost-benefit analysis to be used in transport projects: a) partial (or quick-scan) SCBA; b) comprehensive SCBA. Essentially, these two types of SCBA differ on the categories of project effects that are included in the evaluation. Eijgenraam et al (2000) state that partial SCBA is limited to the direct effects of the project, while comprehensive SCBA includes both direct and indirect effects on other economic sectors. The Dutch Ministry of Finance (1998), however, states that the difference between partial and comprehensive CBA is the number (one or more) of aspects (environment, safety, costs, etc.) which is included in the analysis. Generally, in a decision-making process, two stages can be distinguished: analysis stage and decision stage. In the analysis stage, the analyst typically intends to make an objective valuation of the most relevant effects of a range of project alternatives. The main purpose is to ascertain whether or not each of those project alternatives will be beneficial in general terms. This calls for the use of a partial SCBA approach. In contrast, in the decision stage, the analyst intends to thoroughly evaluate a limited number of project alternatives which are beneficial 19 This is of particular importance for the transport sector, in which subsidies and taxes distort tariffs and operating costs, and externalities are of high importance (Turro, 2001). 20 IRR is a measure mostly used in financial cost-benefit analysis. 23 Cost-Benefit Analysis of RetBus according to the partial SCBA. Therefore, in this stage decision-makers are more interested in a comprehensive SCBA including indirect and distributional effects (Eijgenraam et al, 2000). This study evaluates the RetBus project from both a financial perspective and a social perspective. A FCBA and a partial SCBA have been performed. The reason why a partial instead of a comprehensive SCBA has been carried out is that the research objective is to make a preliminary evaluation of the most relevant effects of the RetBus project, so the higher level of detail provided by a comprehensive SCBA is not necessary. 4.3. Methodological steps In this research, a methodology based on the step-by-step plans proposed by Eijgenraam et al (2000) and UNECE (2003) has been used to perform the cost-benefit analysis of the RetBus project. The methodology consists of the following steps (see also the diagram in Figure 4-1): a) Project definitions (Section 4.3.1): Several project elements are defined, including the project variants (base case and two project alternatives), and the appraisal period (2012- 2021). b) Identification of project effects (Section 4.3.2): An inventory of the most relevant impacts which will be caused by the implementation of the project is carried out. The project impacts included in the FCBA are: BRT investment costs; change in fleet replacement costs; change in operating costs; and change in operating revenues. The SCBA includes all the effects mentioned above plus transit user benefits, safety effects and environmental effects. The main social-economic parties affected by the benefits and disbenefits of the project are also identified. They are: TMB, local government, transit users and society as a whole. c) Estimation and valuation of project effects (Section 4.3.3): The negative and positive effects caused by the project (which have been previously identified) are estimated and expressed in monetary values. BRT investment costs are calculated based on unit costs (euro/km and euro/vehicle). The change in fleet replacement costs and the change in operating costs are estimated based on unit costs (euro/vehicle and euro/vehicle-km, respectively). The change in operating revenues is estimated on the basis of average transit fares. Transit user benefits are calculated by applying the rule of half based on generalized travel costs. Finally, safety effects and environmental effects are estimated based on unit external costs per transport mode (euro/vehicle-km). Travel demand forecasts and the characteristics of the RetBus and bus systems (e.g. network length, total annual mileage and fleet size) are necessary to estimate many effects of the RetBus project. d) Production of a cost-benefit report (Section 4.3.4): Costs and benefits estimated for the selected forecast years are interpolated to all years included in the appraisal period, taking also into account an initial ramp-up period. Then, annual cost and benefit streams are discounted over time by means of a discount rate in order to account for time preference. Discounted cost and benefit streams are aggregated. The results are presented in a CBA table and synthesized by using two measures of social/financial value: net present value (NPV) and benefit/cost ratio (BCR). Finally, the relationship between discounted benefits and costs and the stakeholders who obtain/bear them is presented in an incidence table. e) Sensitivity analysis (Section 4.3.5): The analysis is repeated after changing some model parameters and project definitions in order to evaluate the robustness of the CBA results to 24 Cost-Benefit Analysis of RetBus the uncertainty about critical parameters (e.g. the value of time or the discount rate) and about changes in the project and its environment which may have a critical impact on transit supply and/or demand (e.g. average operational speed of the new BRT system). Appraisal period Base case and (2012-2021) project alternatives Transit and private vehicle OD demand, Transit system traveler flows and travel costs characteristics FCBA Change in BRT investment Unit infrastructure Fare system operating revenues costs and vehicle costs SCBA Change in fleet Transit user Unit vehicle costs benefits replacement costs Unit external Change in operating Unit operating Safety effects accident costs costs costs Unit external Estimation/valuation Environmental effects environmental costs of project effects Ramp-up period Costs and benefits streams Parameters Base year (2011) DISCOUNTING Discount rate (5%) Discounted cost and benefit streams AGGREGATION AND PRESENTATION OF RESULTS CBA table, NPV, BCR, incidence table Figure 4-1: Diagram of CBA methodological steps. 4.3.1. Project definitions 4.3.1.1. Appraisal period The time horizon to evaluate the RetBus system is ten years. It is assumed that the implementation of the project and related investments will begin in 2012; the appraisal period finishes ten years later (in 2021). In this study, ten years is considered an adequate economic life span for the RetBus system and a sound period for future projections. 4.3.1.2. Project variants This study evaluates the net benefit of two project alternatives compared with a base case. 25 Cost-Benefit Analysis of RetBus 4.3.1.2.1. Base case In the base case, it is assumed that: a) The RetBus system is not implemented. b) No changes are made on the bus network in terms of routes and service frequencies compared with the current situation. However, the base case includes investments in the vehicles used to operate the bus system so as to keep renewing the fleet completely every five years. 4.3.1.2.2. Alternative 1: TMB plan Alternative 1 defines the RetBus project as it would be implemented according to the plans of TMB. In Alternative 1, it is assumed that: a) The RetBus system is implemented. b) Some changes are made in the existing bus network in terms of routes and service frequencies in order to free the vehicles needed to operate the RetBus system. These changes are the following: Removing bus lines 15, 16, 17, 56, 58, 71 and 74, which are largely overlapping with new RetBus lines (Figure 4-6). Shortening bus lines 9, 14, 33, 39, 43, 44 and 45, which are partially overlapping with new RetBus lines (figures 4-2 and 4-3). Decreasing the frequency of lines 6, 10, 14, 20, 22, 30, 32, 34, 36, 40, 41, 44, 47, 50, 54, 55, 59, 64, 66, 72, 75 and 92, for which RetBus lines offer faster alternative routes (Figure 4-4 and Table E-1 in Annex E). Increasing the frequency of line 9 (Figure 4-5 and Table E-1 in Annex E). 4.3.1.2.3. Alternative 2: Cost-reduction plan Alternative 2 contains all the elements of Alternative 1 (TMB plan), but it includes some additional changes in the bus network. These supplementary changes imply the elimination of 21 bus lines (Figure 4-7), namely lines 6, 9, 10, 13, 14, 20, 26, 30, 35, 40, 45, 47, 51, 54, 68, 70, 72, 75, 91, 185 and 19221. All these lines are expected to lose patronage to a significant extent after the RetBus system will be implemented22. Including Alternative 2 in the analysis is essentially an attempt to determine whether making further adjustments in the bus network (along with the implementation of the RetBus system) could make the RetBus project more socially and financially beneficial than the project as defined in Alternative 1 (TMB plan). The underlying rationale is that it may be possible to reduce the total operational costs of the bus system without losing too many transit users, thus 21 Many of the additional lines eliminated in Alternative 2 are lines whose route is shortened or whose frequency is reduced in Alternative 1 in comparison to the bus network defined in the base case. 22 According to the forecasts carried out in this study (see Chapter 5), each of those 21 lines will lose patronage and be used by less than 5.000 passengers/workday after the implementation of the project as defined in Alternative 1. 26 Cost-Benefit Analysis of RetBus increasing the net benefit of the project. This view implicitly assumes that given its service quality, the RetBus system would compete more strongly for demand with the bus system than with the metro system (see Section 5.2.3.1). However, Alternative 2 should be regarded as a conceptual design rather than a formal proposal to remove the previously mentioned bus lines. If the idea of diminishing the size and/or level of service offered by the bus network was adopted, a more thorough analysis would be required to determine what changes should be actually done in the bus network. Figure 4-2: Shortened bus lines: original Figure 4-3: Shortened bus lines: final routes routes (Alternative 1). (Alternative 1). Figure 4-4: Bus lines with reduced service Figure 4-5: Bus line with increased service frequency (Alternative 1). frequency (Alternative 1). 27 Cost-Benefit Analysis of RetBus Figure 4-6: Eliminated bus lines (Alternative Figure 4-7: Additional bus lines eliminated in 1). Alternative 2. 4.3.2. Identification of project effects Project effects can be defined as the “differences between the development with and the development without the implementation of the project” (Eijgenraam et al, 2000). Therefore, in this study, the project effects are the differences between the development in the base case and the development in the two project alternatives. Table 4-1: Inventory of relevant project effects and affected parties. Direct or indirect Project effect Definition Affected parties effects? Initial investments in the BRT BRT investment infrastructure and the vehicles needed Direct TMB / Government costs to run the BRT system Change in the costs of renewing the Change in fleet vehicle fleet of the bus and BRT Direct TMB / Government replacement costs systems Change in the costs of operating the Change in bus and BRT systems (fuel and Direct TMB / Government operating costs personnel costs) Change in Variation in the total amount paid in Direct TMB / Government operating revenues fares by all transit users Transit user Variation in the consumer surplus of Direct Transit users benefits transit users Safety effects Variation in external accident costs Direct / indirect Society Change in external environmental Environmental costs (i.e. noise, air pollution and Direct / indirect Society effects climate change costs) 28 Cost-Benefit Analysis of RetBus This study assumes that the most relevant impacts caused by the implementation of the RetBus project will be: a) BRT investment costs; b) change in fleet replacement costs; c) change in operating costs; d) change in operating revenues; e) transit user benefits; f) safety effects; and g) environmental effects. Table 4-1 contains the definitions of those project effects and indicates whether they arise directly from the project (direct effects) or they are derived from direct effects (indirect effects). It also identifies the most relevant social-economic parties affected by the implementation of the project. This research does not take into account indirect effects on car users. Changes in the consumer surplus of car users have not been included in the social cost-benefit analysis because some model inputs (e.g. road network and OD data) do not have an adequate level of detail so as to make a sound estimation of congestion effects. Furthermore, the RetBus project is expected to have a small impact on modal split, therefore its impact on congestion at the macro level is expected to be low. 4.3.2.1. BRT investment costs The implementation of the BRT system will require initial investments in infrastructure and vehicles: Infrastructure costs include: urban renovation works; modifications of road lane directions; changes in traffic light management; and building BRT stops (wherever necessary). Vehicle costs include: the acquisition of new vehicles; the refurbishment and adaptation of vehicles reallocated from the existing bus system; and the installation of safety systems and electric engines in the vehicles that will be used to run the RetBus system. 4.3.2.2. Change in fleet replacement costs Annual investments will be required to renew the vehicle fleet used to operate the RetBus system as well as the fleet used to operate the conventional bus system. This study assumes that the vehicle fleets of both the RetBus and the bus systems are completely renewed every five years23, which means that it is necessary to purchase a number of vehicles equal to 20% of the fleet every year. The RetBus fleet replacement costs will be higher in the project alternatives than in the base case, since the base case assumes that the BRT system is not implemented (therefore replacement costs are equal to zero). It is expected that the bus fleet replacement costs will be lower in the project alternatives than in the base case, since the fleet size required to operate the bus system is lower in the alternatives. 4.3.2.3. Change in operating costs Operating the RetBus and regular bus systems has specific annual costs, which are associated mainly to fuel costs and drivers‟ salaries. Therefore, total operating costs depend on the total mileage (vehicle-km/year) and the average operational speed, which determine fuel consumption and the number of vehicles (and drivers) required to operate both systems. 23 TMB would like to keep the current average vehicle age (five years). 29 Cost-Benefit Analysis of RetBus The RetBus operating costs are higher in the project alternatives than in the base case, since the base case assumes that the BRT system is not implemented (therefore operating costs are equal to zero). The operating costs of the bus system are expected to be lower in the project alternatives than in the base case, since the total mileage of the bus system is lower in the alternatives. 4.3.2.4. Change in operating revenues The annual operating revenues are defined as the sum of the fares paid by all transit users in Barcelona during one year. This study considers that a variation in revenues as a result of the implementation of the RetBus project will only take place if the total number of transit users changes, since the fare systems of all transit sub-systems are integrated (Integrated Fare System)24. Therefore, this study is not concerned about the revenues generated solely by the RetBus system, but about those produced by the transit network as a whole. The implementation of the new BRT system should provide a faster connection by public transport between certain zones of the city; therefore, it will most likely alter modal split and cause an increase in the total number of travelers who decide to use transit instead of private vehicle as transport mode. Since the fares remain equal in the base case and the project alternatives, the implementation of the RetBus project is expected to produce an increase in operating revenues. 4.3.2.5. Transit user benefits The transit user benefits of the RetBus project are defined as the change in consumer surplus25 of transit users as a result of a change in supply conditions between the base case and the project alternatives. Figure 4-8: Change in consumer surplus between the base case (0) and a project alternative (1) (UNECE, 2003). It is expected that the new BRT system will reduce the generalized travel cost between certain zones of the city, which would cause an increase of transit users (Figure 4-8). This combination 24 Transit users pay only once even if they make multimodal trips, instead of paying a separate fare for each transit sub- system they use to make a particular trip, e.g. metro, bus, etc. (see Section 5.1.2.3). 25 Consumer surplus is defined as the excess of consumers‟ willingness-to-pay over the prevailing generalized travel costs (UNECE, 2003). 30 Cost-Benefit Analysis of RetBus of lower travel costs and higher number of transit users would produce an increase in consumer surplus equal to the shaded area in Figure 4-8. Therefore, the project is expected to generate positive benefits for transit users. 4.3.2.6. Safety effects Safety effects are defined as the change in external accident costs caused by the implementation of the project. External accident costs are the social costs of traffic accidents that are not covered by risk-oriented insurance premiums, including some medical costs, administrative costs and production losses, as well as the pain, grief and suffering caused by accidents (expressed in monetary terms) (UNECE, 2003; CE Delft, 2008). These costs are not borne only by the transport users, but by society as a whole. In this study, external accident costs are estimated on the basis of unit costs per vehicle-km which are dependent on the transport mode. Accident costs per vehicle-km per traveler are lower for transit modes than for private modes (CE Delft, 2008) (see Section 4.3.3.6). As previously mentioned, it is expected that the implementation of the RetBus project will cause a shift of modal split from private vehicle to public transport. Therefore, the RetBus project is expected to reduce the total external accident costs, i.e. it should bring positive safety effects. 4.3.2.7. Environmental effects Environmental effects are defined as the change in external environmental costs caused by the implementation of the project. Three types of external environmental costs are included in this study: a) noise costs; b) air pollution costs; and c) climate change costs. These costs are not borne only by the transport users, but by society as a whole. Noise costs are caused by sounds produced by vehicles, and they comprise annoyance and health costs. Noise costs are dependent on the time of the day, being higher at night (CE Delft, 2008). Air pollution costs are caused by the emission of air pollutants (particulate matter, NOx, SO2, VOC, etc.) and consist mainly of health costs, even though other less relevant costs have also been identified (material damages, crop losses, ecosystem damages, etc.) (CE Delft, 2008). Climate change costs are caused by the emission of greenhouse gases (CO2, CH4, etc.). They include human health costs as well as costs related to sea level rise, water supply impacts, damage to ecosystems, and extreme weather events (CE Delft, 2008). External environmental costs are estimated on the basis of unit costs per vehicle-km which are dependent on the transport mode (as well as the type of engine). Generally, external environmental costs per vehicle-km per traveler are lower for transit than for private modes CE Delft, 2008) (see Section 4.3.3.7). Since the RetBus project is expected to cause a shift of modal split towards public transport, it should also produce a decrease of the total external environmental costs, thus bringing positive environmental effects. 4.3.2.8. Social-economic parties affected by the project The main social-economic parties who will be affected by the benefits and disbenefits of the RetBus project are: 31 Cost-Benefit Analysis of RetBus TMB (transit operator) and the Government: they will bear the BRT investment costs and will be affected by the changes in fleet replacement costs, operating costs, and operating revenues26. Transit users: they will benefit from the change in consumer surplus. Society as a whole: it will benefit from the safety and environmental effects. 4.3.3. Estimation and valuation of project effects This section describes the measures used to estimate and valuate each of the project effects identified in Section 4.3.2. All project effects have been estimated and valuated in monetary terms, by using market prices whenever possible and shadow prices when market prices were not available. A brief description of the estimation/valuation methods used in this research is provided in Table 4-2. As previously mentioned, project effects are the differences in the cost and benefit estimates between the base case and the project alternatives. Table 4-2: Indicators used to estimate and valuate project effects. Market prices Indicators used? Infrastructure costs: BRT network length (km) multiplied by a BRT investment unit infrastructure cost (euro/km). Yes costs Vehicle costs: number of vehicles required to operate the BRT system multiplied by unit vehicle costs (euro/veh). Number of vehicles of the BRT and bus systems that need to Fleet replacement Yes be replaced every year multiplied by unit vehicle costs costs (euro/veh). Total annual mileage of the bus and BRT systems (veh-km) Operating costs Yes multiplied by unit operating costs per transit sub-mode (in euro/veh-km). Operating revenues Yes Number of transit trips multiplied by average transit fares. Consumer surplus Area below the demand curve and above the generalized No of transit users travel cost line. Total annual mileage of private car users, the bus system and External accident No the BRT system (veh-km) multiplied by unit external accident costs costs per transport mode (euro/veh-km). Total annual mileage of private car users, the bus system and External No the BRT system (veh-km) multiplied by unit environmental environmental costs costs per transport mode (euro/veh-km). 26 TMB is a public company partially funded by the local and regional governments. Therefore, the investment costs, fleet maintenance costs and operating costs are borne by both TMB and the Government. Also, TMB is not the only transit operator in Barcelona. Total revenues from transit operation are distributed amongst all operators. Therefore, TMB will not fully benefit from the additional operating revenues. 32 Cost-Benefit Analysis of RetBus 4.3.3.1. BRT investment costs The BRT investment costs include two types of costs: a) infrastructure costs; and b) vehicle costs. Both types of investment costs have been estimated on the basis of unit costs (in euro/km and euro/vehicle, respectively) which have been increased every year by applying an average annual inflation rate of 2,5%. Total infrastructure and vehicle costs have been evenly distributed over an investment period of four years (2012-2015). 4.3.3.1.1. Infrastructure costs To estimate infrastructure costs, this study assumes a unit cost of 42,67 € per meter of BRT line (base 2011) (CENIT, 2010). The total infrastructure costs of the BRT network have been estimated by multiplying this unit cost by the total network length (216,7 km). The resulting total infrastructure costs are 9,2 million euro (base 2011) in both project alternatives (see Table F-1 in Annex F). 4.3.3.1.2. Vehicle costs Vehicle costs have been estimated on the basis of unit costs per vehicle. These unit costs depend on: a) the type of vehicle, i.e. standard bus (capacity of 80 passengers) or articulated bus (120 passengers); and b) whether a vehicle is purchased in the market (new vehicle) or reallocated from the existing bus system. Table 4-3 shows the unit costs of each vehicle type. It is important to note two things: first, special safety systems (lights, cameras, etc) need to be installed in both standard and articulated vehicles; second, standard buses need to be hybridized, i.e. they need to be installed an electric engine, so that they can use either gasoil or electric power as energy source (TMB decided not to use hybrid articulated buses). Table 4-3: Vehicle unit costs per vehicle type, including taxes (base 2011) (CENIT, 2010). Unit costs (base 2011) Articulated bus Standard bus Market price 430.700 € 295.000 € Safety systems 10.856 € 10.856 € New vehicle Hybridization 0 € 129.800 € Total 441.556 € 435.656 € Renovation 11.800 € 8.850 € Reallocated Safety systems 10.856 € 10.856 € vehicle Hybridization 0 € 129.800 € Total 22.656 € 149.506 € The total vehicle costs of the BRT system have been estimated by multiplying the unit costs by the number of vehicles of each type that are required to run the RetBus system. The resulting total vehicle costs are 28,1 million euro (base 2011) in both project alternatives (see Table F-2 in Annex F). 33 Cost-Benefit Analysis of RetBus 4.3.3.2. Change in fleet replacement costs This study assumes that every year it is necessary to purchase a number of new vehicles equal to 20% of all articulated vehicles and 20% of all standard vehicles that are used to operate the RetBus and the bus systems. The total annual fleet replacement costs of both the RetBus and bus systems have been calculated by multiplying the number of vehicles that need to be purchased by a unit cost per vehicle: CCC0,2 NcNcNcNc (Eq. 4-1) m m,,,,,, BRT m bus art BRT art st BRT st art bus art st bus st Where: Cm are the total annual fleet replacement costs of the RetBus and bus systems (euro/yr); Cm,BRT and Cm,bus are the annual fleet replacement costs of the RetBus system and the bus system, respectively (euro/yr);; Nart,BRT and Nart,bus are the number of articulated vehicles required to operate the RetBus system and the bus system, respectively; Nst,BRT and Nst,bus are the number of standard vehicles needed to operate the RetBus system and the bus system, respectively; cart and cst are the unit costs of acquiring and adapting a new articulated vehicle and a new standard vehicle, respectively. Fleet replacement costs have been estimated on the basis of the same unit costs per vehicle used to estimate vehicle investment costs: 441.556 euro per new articulated vehicle (base 2011) and 435.656 euro per new standard vehicle (base 2011) (see Table 4-3). These unit costs have been increased every year by applying an average annual inflation rate of 2,5%. The change in fleet replacement costs is calculated as follows: ' CCCm m m (Eq. 4-2) Where: Cm is the change in total annual fleet replacement costs (euro/yr); Cm and C’m are the total annual fleet replacement costs in the base case and in the project alternative under study, respectively (euro/yr). The total annual fleet replacement costs of the BRT and bus systems in the base case and the two alternatives are presented in Table F-3 (Annex F). The change in fleet replacement costs has been estimated to be +2,2 million euro/yr (base 2011) in Alternative 1 and -2,6 million euro/yr (base 2011) in Alternative 2 (see Table F-4 in Annex F). 4.3.3.3. Change in operating costs The total annual operating costs of the RetBus and bus systems have been estimated by multiplying the total system mileage (vehicle-km/yr) by a unit operating cost per vehicle-km: Cop C op,,,, BRT C op bus M BRT c op BRT M bus c op bus (Eq. 4-3) Where: Cop is the total annual operating costs of the RetBus and the bus systems (euro/yr); Cop,BRT and Cop,bus are the annual operating costs of the RetBus system and the bus system, respectively (euro/yr); MBRT and Mbus are the total mileage of the RetBus system and the bus system, respectively (veh-km/yr); cop,BRT and cop,bus are the unit operating cost of the RetBus system and the bus system, respectively (euro/veh-km). This study has assumed that unit operating costs are 5,22 euro/vehicle-km for the bus system and 4,01 euro/vehicle-km for the RetBus system (base 2009). The unit costs are different for the 34 Cost-Benefit Analysis of RetBus two systems because they depend on the average operational speed27. They have been increased every year by applying an average annual inflation rate of 2,5%. The total mileage of the RetBus and bus systems has been calculated by applying the following formula: M Ll f A (Eq. 4-4) l Where: M is the total system mileage (veh-km/yr); l is a particular line; L is the line length (km); f is the line frequency (veh/h); and A is the number of operation hours in one year (which has been assumed to be 4.200 h/yr 28 for both the RetBus and the bus systems). The change in total operating costs is calculated as follows: ' CCCop op op (Eq. 4-5) Where: Cop is the change in total operating costs (euro/yr); Cop and C’op are the total operating costs in the base case and in the project alternatives, respectively (euro/yr). The total operating costs of the BRT and bus systems in the base case and the two alternatives are presented in Table F-5 (Annex F). The change in operating costs has been estimated to be +14,6 million euro/yr (base 2009) in Alternative 1 and -11,1 million euro/yr (base 2009) in Alternative 2 (Table F-6 in Annex F). 4.3.3.4. Change in operating revenues Total operating revenues have been estimated by applying the following formula: (Eq. 4-6) RTFij, PT ij ij Where: R is the total annual operating revenues (euro/yr); i is a particular origin zone; j is a particular destination zone; Tij,PT is the total number of transit trips per year between zones i and j (trips/yr); and Fij is the fare that transit users must pay to travel from zone i to zone j (euro/multimodal trip). The total number of transit trips per OD pair (Tij,PT) is an output of the modal split model (see 29 Section 5.2.2). This study has assumed that average transit fares (Fij) are : 0,82 euro/trip (base 2011) if travelers stay within the same fare zone (zone 1 or 2) and 1,64 euro/trip (base 2011) if 27 The average unit operating cost per veh-h has been assumed to be 60,22 euro/veh-h (base 2009) (CENIT, 2010). This includes both fuel costs and the drivers‟ salaries. The unit operating costs per veh-km have been obtained by dividing the unit costs per veh-h by the average operational speed (11,5 km/h for the bus system and 15,0 km/h for the RetBus system). 28 The RetBus and bus system have been assumed to operate 300 days per year and 14 hours per day (CENIT, 2010). 29 It is important to note that the use of public transport in Barcelona is publicly subsidized, so the fares paid by transit users do not fully cover the operational costs of the transit system. 35 Cost-Benefit Analysis of RetBus they move from zone 1 to 2, or from zone 2 to 1 (see Section 5.1.2.3). Those fares have been increased every year by 4%, which is the average annual increase rate normally applied in Barcelona. The change in operating revenues is the difference between the total revenues in the project alternatives and the base case: RRR ' (Eq. 4-7) Where: R is the change in total annual revenues (euro/yr); R and R’ are the total annual revenues in the base case and the project alternatives, respectively (euro/yr). The change in operating revenues in 2016 has been estimated to be +6,6 million euro/yr in Alternative 1 and +5,7 million euro/yr in Alternative 2 (undiscounted). 4.3.3.5. Transit user benefits Transit user benefits have been estimated by applying the valuation method known as “rule of half” (Pearce and Nash, 1981; Eijgenraam et al, 2000; UNECE, 2003). According to that rule, the change in consumer surplus caused by a modification of the transport network can be estimated by applying the following formula, which aggregates the benefits for users traveling between all OD pairs: 1 CS T T'' c c (Eq. 4-8) ij,,,, PT ij PT ij PT ij PT 2 ij Where: CS is the change in consumer surplus (euro/yr); i is a particular origin zone; j is a particular destination zone; Tij,PT and T’ij,PT are the total number of transit trips per year between zones i and j in the base case and the project alternatives, respectively (trips/yr); cij,PT and c’ij,PT are the generalized cost of traveling by public transport from zone i to zone j in the base case and the alternatives, respectively (euro/trip). The total number of transit trips per OD pair (Tij,PT) is an output of the modal split model (see Section 5.2.2). The generalized travel cost of transit trips is defined as: (Eq. 4-9) cij,PT 2,0ta 2,5tw tv BPm VOT TPm VOT 2,0 te VOT Fij n n1 Where: VOT is the value of time (euro/min); n is the transit line used in each leg of a particular transit trip; ta is the access time to the first stop or transfer stops (on foot) (min); tw is the waiting time at the transit stop (which is assumed to be half the time headway) (min); tv is the in-vehicle time (min); BPm is a boarding penalty, the value of which varies for different transit sub-modes (min); TPm is a transfer penalty, the value of which varies for different transit sub-modes (min); te is the egress time (on foot) (min); Fij is the average transit fare (euro); and the weights for access/egress time (2,0), waiting time (2,5) and in-vehicle time (1,0) are those recommended by Wardman (2004). It should be noted that although generalized travel costs and user benefits are both expressed in monetary terms, they do not imply full money transfers, since transit users only pay the fare. However, transit users give a specific economic value to the various travel time components; therefore, user benefits represent a change in consumer surplus in terms of utility, not money. 36 Cost-Benefit Analysis of RetBus The transit user benefits in 2016 have been estimated to be +116,7 million euro/yr in Alternative 1 and +109,8 million euro/yr in Alternative 2 (undiscounted). 4.3.3.6. Safety effects External accident costs have been calculated by applying the following formula: ECa c a,, car M car c a b M bus M BRT (Eq. 4-10) Where: ECa are the total annual external accident costs of private vehicle, RetBus and bus traffic (euro/yr);; ca,car and ca,bus are the unit accident costs of car trips and bus/RetBus trips, respectively (euro/veh-km); Mcar, MBRT and Mbus are the total annual mileage of private vehicle users, the RetBus system and the bus system, respectively (veh-km/yr). The unit accident costs have been assumed to be: 0,0524 euro/vehicle-km (base 2000) for car trips30 and 0,1335 euro/vehicle-km (base 2000) for bus and RetBus trips. Those unit costs have been reported by UNITE (2002) and their use for transport project evaluation studies is recommended by CE Delft (2008). They are specific for Spain and traffic on urban roads. The unit accident costs have been increased every year by applying an average annual inflation rate of 2,5%. It should be noted that because of a higher capacity of passengers per vehicle, the unit accident costs per vehicle-km per traveler are lower for bus and RetBus trips than for car trips. The total mileage of private vehicle users (Mcar) is an output of the car assignment model (see Section 5.2.3.2). The total mileage of the RetBus and bus systems (MBRT and Mbus) are presented in Table F-5 (Annex F). Safety effects (i.e. change in external accident costs) have been estimated by applying the following formula: ' ECa EC a EC a (Eq. 4-11) Where: ECa is the change in total annual external accident costs of private vehicle, bus and RetBus traffic (euro/yr); ECa and EC’a are the total annual external accident costs in the base case and in the project alternatives, respectively (euro/yr). Safety effects in 2016 have been estimated to be +3,1 million euro/yr in Alternative 1 and +3,7 million euro/yr in Alternative 2 (undiscounted). 30 For simplicity reasons, this study has assumed that: 1) all trips by private vehicle are made by car (none is made by other vehicles, e.g. motorcycles); and 2) every car traveler uses his own vehicle (so there is one passenger per car). The first assumption may lead to an underestimation of external accident costs of private vehicles, since according to UNITE (2002) the unit accident costs of motorcycle trips per veh-km (on urban roads in Spain) are seven times higher than the unit costs of car trips. The second assumption may lead to an overestimation of external accident costs of private vehicles, since the average occupancy of private vehicles is probably higher than one passenger per vehicle, which would mean that the total mileage of private vehicle users is overestimated. 37 Cost-Benefit Analysis of RetBus 4.3.3.7. Environmental effects External environmental costs have been calculated by using the following formula: ECcce n,,,,,, car ap car cMcc cc car car n bus ap bus c cc bus MM bus BRT (Eq. 4-12) Where: ECe are the total annual environmental costs of private vehicle, RetBus and bus traffic (euro/yr); Mcar, MBRT, and Mbus are the total annual mileage of private vehicle users, the RetBus system and the bus system (veh-km/yr); cn,car, cap,car and ccc,car are the unit noise, air pollution and climate change costs of car trips (euro/veh-km), respectively; and cn,bus, cap,bus and ccc,bus are the unit noise, air pollution and climate change costs of bus and RetBus trips (euro/veh-km), respectively. Table 4-4: Environmental unit costs (euro/vehicle-km) of private vehicle and RetBus/bus trips in 2016 and 2021. 2016 2021 Private RetBus and Private RetBus and vehicle trips bus trips vehicle trips bus trips Noise unit costs 0,0100 0,0500 0,0100 0,0500 (euro/vehicle-km, base 2000) Air pollution unit costs 0,0128 0,0380 0,0060 0,0380 (euro/vehicle-km, base 2000) Climate change unit costs 0,0053 0,0160 0,0052 0,0160 (euro/vehicle-km, base 2010) The unit environmental costs31 used in this study are shown in Table 4-4. These unit costs are reported in CE Delft (2008) for urban roads. Air pollution and climate change unit costs of private vehicle trips are assumed to decrease over time even though the percentage of diesel cars (which have higher emission rates per km than petrol cars) is expected to rise; the main reason is the introduction of more efficient engines emitting a lower amount of toxic gases, particulate matter and greenhouse gases per km32. Noise unit costs are an average of unit costs during day and night. All unit environmental costs have been increased every year by applying an average annual inflation rate of 2,5%. It should be noted that because of a higher capacity of passengers per vehicle, the unit environmental costs per vehicle-km per traveler are lower for bus and RetBus trips than for car trips. 31 As previously mentioned, for simplicity reasons this study has assumed that: 1) all trips by private vehicle are made by car (none is made by other vehicles, e.g. motorcycles); and 2) every car traveler uses his own vehicle (so there is one passenger per car). Both assumptions may lead to an overestimation of external environmental costs of private vehicle trips, since: a) the unit environmental costs of motorcycle trips per veh-km are probably lower than the unit costs of car trips (because they have less powerful engines); b) the average occupancy of private vehicles is probably higher than one passenger per vehicle, which would mean that the total mileage of private vehicle users is overestimated. 32 The technical characteristics of the average private vehicle in 2016 and 2021 have been adapted from projections by Ajuntament de Barcelona (2008). The average private vehicle in 2016 is assumed to be a car with a EURO4-class engine of 1,7 liters. In 2021, the average private vehicle is assumed to be a car with a EURO5-class engine of 1,7 liters. In 2016, 35% of cars are assumed to run on petrol and 65% on diesel, while in 2021 those percentages are assumed to be 25% and 75%, respectively. 38 Cost-Benefit Analysis of RetBus The total mileage of private vehicle users (Mcar) is an output of the car assignment model (see Section 5.2.3.2). The total mileage of the RetBus and bus systems (MBRT and Mbus) are presented in Table F-5 (Annex F). Environmental effects (i.e. change in external environmental costs) have been estimated by applying the following formula: ' ECe EC e EC e (Eq. 4-13) Where: ECe is the change in external environmental costs of private vehicle, bus and RetBus traffic (euro/yr); ECe and EC’e are the total external environmental costs (euro/yr) in the base case and the project alternatives, respectively. Environmental effects in 2016 have been estimated to be +1,3 million euro/yr in Alternative 1 and +1,8 million euro/yr in Alternative 2 (undiscounted). 4.3.4. Production of a cost-benefit report 4.3.4.1. Interpolation of costs and benefits The total BRT investment costs have been evenly distributed over the four initial years of the appraisal period (2012-2015). The other project effects have been estimated only for years 2016 and 2021, and then the streams of annual costs and benefits for the whole appraisal period have been obtained by linear interpolation. For interpolation, projects effects have been assumed to be zero in 2011, so the first five years of the appraisal period have been assumed to be a ramp-up period (Figure 4-9). For example, if the undiscounted value of the environmental effects caused by Alternative 1 is X in 2016 and Y in 2021, then that value has been assumed to be: 1/5·X in 2012, 2/5·X in 2013, 3/5·X in 2014, 4/5·X in 2015, X in 2016, X+1/5·(Y-X) in 2017, X+2/5·(Y-X) in 2018, X+3/5·(Y-X) in 2019, X+4/5·(Y-X) in 2020, and Y in 2021. 100% % of predicted costs benefitscosts and predicted of % 0% year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Figure 4-9: Percentage of achievement of project costs and benefits per year (ramp-up period). 39 Cost-Benefit Analysis of RetBus The concept of ramp-up period (UNECE, 2003) has been applied so as to take into account that: a) the RetBus system and the changes in the existing bus network will not be implemented all at once but in phases (see Figure B-1 in Annex B); and b) design levels of RetBus ridership and changes in modal split will not be achieved immediately after the new system will become operational but only after some time, since travelers need to get to know the system before starting to fully use it. A linear ramp-up path is considered reasonable since the project is going to be implemented in phases of similar magnitude and RetBus ridership is expected to grow at a constant rate over time. The output from interpolation is a set of undiscounted annual cost and benefit streams (related to all project effects) at base year prices. By convention, cost increases and benefit reductions between the base case and the alternative cases are expressed in negative values, while cost reductions and benefit increases are expressed in positive values. 4.3.4.2. Discounting Cost and benefit streams at base year prices need to be discounted and expressed in present values in order to take into account the time preference of individuals. Time preference means that individuals prefer present consumption to future consumption and future costs to present costs (i.e. they discount the future). Therefore, each unit of benefit or cost cannot be treated as being of equal value regardless of when it occurs: it needs to be discounted in the future (Pearce and Nash, 1981). In order to obtain discounted streams of benefits and costs, every item in the undiscounted streams of benefits and costs has been multiplied by a discount factor equal to 1/(1+r)t, where r is the discount rate and t is the year number from 0 (2011, the base year) to 10 (2021). An appropriate value for the discount rate is in theory equal to the return that would be obtained from an alternative use of resources (Eijgenraam et al, 2000). In this study, a discount rate of 5% has been applied. Such a discount rate is considered sufficient for the evaluation of risk-free investments and it is commonly applied in the appraisal of urban transport projects in Western Europe (UNECE, 2003). 4.3.4.3. Measures of social and financial value Two measures of social/financial value are used in this research to evaluate the RetBus project: a) net present value; and b) benefit/cost ratio. These two measures are complementary: the NPV indicates the total net benefit of the project, while the BCR indicates how much net benefit would be obtained in return for each unit of investment cost, which is of crucial importance in case of budget constraints. These measures are applied twice to perform two different types of analysis: a) social cost- benefit analysis (SCBA); and b) financial cost-benefit analysis (FCBA). As explained in Section 4.2, the difference between these two types of CBA lies in the project effects included in the analysis. SCBA aims to determine to what extent a particular project contributes to an increase of social welfare, therefore it includes all socio-economic benefits and costs. FCBA is meant to provide an indication of the financial value of the project to the investor/operator; hence it includes only financial-economic benefits and costs. 40 Cost-Benefit Analysis of RetBus 4.3.4.3.1. Net present value (NPV) The discounted socio-economic benefits and cost streams are aggregated by summing them across all years of the appraisal period, thus obtaining the present value of the benefits (PV(B)) and the present value of the costs (PV(C)) produced by the project. The net present value (NPV) is the difference between both and can be calculated by applying the following formula (UNECE, 2003): t10 BC tt (Eq. 4-14) NPV PV()() B PV C t t0 1 r Where: NPV is the net present value (euro); PV(B) and PV(C) are the present values of the total benefits and costs generated by the project, respectively (euro); t is the year number from 0 (2011) to 10 (2021); Bt is the sum of all undiscounted benefits of the project (i.e. positive project effects) in year t (euro); Ct is the sum of all undiscounted costs of the project (i.e. negative project effects) in year t (euro); and r is the discount rate. Projects with a higher NPV yield higher total net benefits than projects with lower NPV, and therefore the former are generally preferred to the latter (in the absence of budget constraints). As a rule, projects with NPV lower than zero should be rejected (Pearce and Nash, 1981), since they do not meet the Hicks-Kaldor criterion (see Section 4.2). 4.3.4.3.2. Benefit/cost ratio (BCR) In practice the budget for transport projects is rarely unlimited: there are constraints on money capital. In such cases, it is imperative to analyze how much net benefit would be generated by a particular project in return for each unit of investment cost. The benefit/cost ratio (BCR) is an indicator that attempts to summarize the overall value for money of a project (Pearce and Nash, 1981). The BCR is given by the ratio of the discounted sum of all future costs and benefits except investment costs to the discounted sum of investment costs (UNECE, 2003; Verhaeghe, 2007): t10 BCKt() t t t t0 1 r BCR (Eq. 4-15) t10 Kt t t0 1 r Where: BCR is the benefit/cost ratio; t is the year number from 0 (2011) to 10 (2021); Bt is the sum of all undiscounted benefits of the project (i.e. positive project effects) in year t (euro); Ct is the sum of all undiscounted costs of the project (i.e. negative project effects) in year t (euro); Kt are the project investment costs in year t (euro); and r is the discount rate. Projects with a higher benefit/cost ratio generate a greater net benefit per unit of investment cost than projects with lower BCR. Hence, in case of budget constraints the former are generally preferred to the latter. If an agency has a fixed investment budget to work with, selecting the most profitable projects implies ranking those projects in order of desirability (i.e. value for money) and work down the list until the budget is finished (Pearce and Nash, 1981). In principle, projects with a negative BCR should not be considered for implementation, since they do not deliver a positive benefit in return for the money invested. 41 Cost-Benefit Analysis of RetBus 4.3.4.3.3. Measures of social value From a social viewpoint, SCBA recommends: a) rejecting projects with NPVSCBA<0 and BCRSCBA<1; and b) considering the implementation of projects with NPVSCBA>0 and BCRSCBA>1 (Pearce and Nash, 2001; Eijgenraam et al, 2000; UNECE, 2003; Mishan and Quah, 2007). From a list of projects, those showing the highest positive NPVSCBA will cause the highest increase in social welfare. The projects with the highest BCRSCBA are expected to deliver the best social value for money. 4.3.4.3.3. Measures of financial value Financial cost-benefit analysis (FCBA) states that a particular project is only financially attractive to private investors if it has a NPVFCBA>0 and a BCRFCBA>1 (Eijgenraam et al, 2000; Verhaeghe, 2007). However, it should be noted that many transit projects are carried out even though they have a negative NPVFCBA and a BCRFCBA lower than one. The main reason is that public transport is considered a merit good, i.e. a commodity which an individual or society should have on the basis of some concept of need, rather than ability and willingness to pay (Mishan and Quah, 2007). Therefore investment and operating costs are generally not fully paid by the operator but they are publicly subsidized. Nevertheless, analyzing the private value of project is still necessary to study its feasibility and to compare its performance to that of other projects (ranking). 4.3.4.4. Incidence table The relationship between discounted benefits/costs and the social-economic parties who obtain/bear them are presented in an incidence table. The main objective is to gain a better understanding of the distribution of the benefits and disbenefits caused by the project amongst the main affected parties. Examining the distributional effects of the RetBus project, even if it is done in a simple way, is important because those effects may generate political opposition, hence influencing the feasibility of the project. However, this thesis does not attempt to make a thorough analysis of distributional effects. 4.3.5. Sensitivity analysis The estimation and valuation of project effects is often fraught with uncertainty, since they depend on future developments and their estimation and valuation is based on models with limited predictive capability. Several tests have been carried out to evaluate the sensitivity of the CBA results to changes in critical model parameters, the project characteristics and the environment of the project. The objective is to analyze the robustness of the CBA results and also to explore possible ways to improve the social and/or financial value of the RetBus project. The impact of the following changes on the CBA results has been investigated: a) increase of the average BRT operational speed (from 15 to 20 km/h); b) completion of the project in two years (2012-2013) instead of four (2012-2015); c) assuming that the extension of metro lines L9-L10 will not start operations within the appraisal period (before 2021); d) rise of the annual fare increase rate (from 4 to 5%); e) use of a lower value of time (75% instead of 100% of the value of working time); and f) increase of the discount rate from 5 to 7% to include a risk- premium. 42 Cost-Benefit Analysis of RetBus 4.3.5.1. Average BRT operational speed The RetBus system has been designed to run at an average operational speed of 15 km/h. However, TMB is studying the possibility of implementing several infrastructure measures (e.g. intermittent bus lanes) and traffic management measures (e.g. traffic light prioritization) which may help the BRT system to achieve higher operational speeds (up to 20 km/h). Therefore, examining the impact of an increase of the BRT operational speed on the SCBA results is very relevant. The changes that have been made in the BRT network in order to perform this sensitivity test are shown in Table 4-5. Table 4-5: Changes made in the BRT network in order to analyze the impact of an increase in the average BRT operational speed on the CBA results. Average BRT operational speed (km/h) Base case Alternative 1 Alternative 2 Reference scenario - 15,0 15,0 Scenario with increased - 20,0 20,0 BRT operational speed 4.3.5.2. Project completion date TMB intends to complete the implementation of the new BRT system in four years (2012-2015). This study assumes that the RetBus system will be fully operational in 2015 and will reach its full demand in 2016, one year after the project completion. However, TMB may consider the option of speeding up the deployment process if that meant a significant increase in the social or financial value of the project. Therefore, it is important to analyze the impact of shortening the project implementation period on the CBA results. In this sensitivity test, 2013 is set as hypothetical completion year and the RetBus system is assumed to reach its full demand in 2014. In order to perform this test, some changes have been made in the distribution of BRT investment costs and the procedure to interpolate the other costs and benefits (see Table 4-6). Table 4-6: Changes made in the distribution of BRT investment costs and the procedure to interpolate annual costs and benefits in order to analyze the impact of the project completion period on the CBA results. BRT investment costs Other project effects (Alternatives 1 and 2) (Alternatives 1 and 2) Even distribution over years Interpolation: 2011-2016 (ramp-up) Reference scenario 2012-2015 and 2016-2021 Scenario with earlier Even distribution over years Interpolation: 2011-2014 (ramp-up) completion 2012-2013 and 2014-2021 43 Cost-Benefit Analysis of RetBus 4.3.5.3. Development of metro lines L9-L10 Metro lines L9 and L10 are currently operational only from Sagrera to Can Zam and Gorg (Figure 4-10). The remaining part of those lines (from Sagrera to Zona Franca and Barcelona Airport) is still under construction and is expected to be operational by 2014-2015. This research assumes that metro lines L9/L10 will be complete and operational in 2015 and will reach their full demand in 2016. However, it is currently doubtful whether or not the opening date will be delayed as a result of the economic crisis in Spain. The extension of lines L9-L10 is expected to improve to a significant extent the connection by public transport between several zones within Barcelona as well as between the city and some adjacent municipalities. Moreover, those metro lines are overlapping with RetBus line H5. Therefore, it is important to analyze the impact of delaying the opening of the extended metro lines on the CBA results. This research considers a scenario in which the segment of lines L9-L10 between Sagrera and Zona Franca/Barcelona Airport would not be operational before 2021. The changes made in the metro network in order to perform this sensitivity test are shown in Table 4-7. Figure 4-10: Metro lines L9 and L10 (in blue, currently operational; in orange, opening planned in 2014-2015; highlighted in dark grey, Municipality of Barcelona). Table 4-7: Changes made in the metro network in order to analyze the impact of the development of lines L9-L10 on the CBA results. Lines L9-L10 fully operational between Sagrera and Zona Franca/Airport? Base case Alternative 1 Alternative 2 2011 2016 2021 2011 2016 2021 2011 2016 2021 Reference scenario No Yes Yes No Yes Yes No Yes Yes Scenario with No No No No No No No No No opening date delay 44 Cost-Benefit Analysis of RetBus 4.3.5.4. Annual fare increase rate In the last years, the transit fares in Barcelona (Integrated Fare System, STI33) were increased by 4% each year. This study has assumed that the same annual rates will be applied during the whole appraisal period (2012-2021). However, since the RetBus project is expected to increase the service quality provided by the public transport network of Barcelona, one may argue that STI transit fares could be raised more than 4% per year (e.g. 5%) so that the investor/operator (TMB and the Government) could recover a part of its investment by obtaining a fraction of the additional value generated by the project. Consequently, examining the impact of an increase of the annual fare increase rate on the CBA results becomes very relevant. The changes made in the annual rates in order to perform this sensitivity test are shown in Table 4-8. Table 4-8: Changes made in the fare system in order to analyze the impact of an increase in the annual fare increase rates on the CBA results. Annual STI fare increase rate (%) Base case Alternative 1 Alternative 2 Reference scenario 4,0 4,0 4,0 Scenario with higher fare 4,0 5,0 5,0 increase rates 4.3.5.5. Value of time In this research, the value of travel time (VOT) has been assumed to be equal to the value of working time defined as the average gross wage (Gutierrez-Domenech, 2008). The VOT has been used as model input to produce transport forecasts as well as to valuate transit user benefits arising from the RetBus project. However, not all trips produced in Barcelona in one day are actually made for work purposes; indeed, many of them are made for non-work purposes, notably leisure and education. The value of non-working time is usually lower than the value of working time. For example, UNECE (2003) suggests that the value of non-working time is generally around 30% of the value of working time. Therefore, one could argue that a lower VOT (between 30% and 100% of the value of working time) would yield more realistic estimates of transport forecasts and transit user benefits. Since transit user benefits are expected to form a very large proportion of the total benefits of the RetBus project, it makes sense to carry out a sensitivity test in order to analyze the impact of using a lower VOT on the CBA results. The changes made in the annual rates in order to perform this sensitivity test are shown in Table 4-9. 33 The characteristics of the Integrated Fare System (STI) are described in Section 5.1.2.3. 45 Cost-Benefit Analysis of RetBus Table 4-9: Changes made in the VOT in order to analyze the impact of assuming a lower value of time on the CBA results. Value of time (VOT) Base case Alternative 1 Alternative 2 100% of the value of 100% of the value of 100% of the value of Reference scenario working time working time working time 75% of the value of 75% of the value of 75% of the value of Scenario with lower VOT working time working time working time 4.3.5.6. Discount rate In this study, a discount rate of 5% has been used to discount future costs and benefits. Such a rate is considered sufficient for the evaluation of risk-free investments and it is frequently applied in the appraisal of urban transport projects. However, the costs and benefits of the RetBus project depend on future developments, which may not occur exactly as predicted. For that reason, the social value of the RetBus project has been assessed on the basis of a higher level of risk aversion. In order to do that, a risk premium has been added to the discount rate (increasing it from 5 to 7%) so as to reduce the weight of future benefits and costs in the calculation of the NPV and the BCR (see Table 4-10). Table 4-10: Changes made in the discount rate in order to analyze the impact of assuming a higher level of risk aversion on the CBA results. Discount rate (%) Alternative 1 Alternative 2 Reference scenario 5,0 5,0 Scenario with higher discount rate 7,0 7,0 4.4. Conclusions This chapter has described the methodology used to evaluate the RetBus project. The selected approach is cost-benefit analysis (CBA). Essentially, CBA indicates the extent to which the benefits generated by a specific project will exceed the costs of its implementation, both costs and benefits being expressed in monetary units on the basis of market prices (wherever possible). Different types of CBA have been discussed. First, two types of CBA have been distinguished: a) financial cost-benefit analysis (FCBA); and b) social cost-benefit analysis (SCBA). FCBA includes only financial-economic project effects, while SCBA examines all relevant effects from the viewpoint of society as a whole, including financial-economic effects but also additional items which have a socio-economic value. Second, two types of SCBA have been identified: a) partial (or quick-scan) SCBA; and b) comprehensive SCBA. Partial SCBA includes only direct effects, while comprehensive SCBA looks also at indirect and distributional effects. In this study it has been decided to evaluate the RetBus project from both a financial and social perspectives (a FCBA and a partial SCBA have been performed). 46 Cost-Benefit Analysis of RetBus Next, the chapter has described the steps of the methodology used to perform the cost-benefit analysis of the RetBus project: a) Project definitions: Several project elements have been defined, including the appraisal period and the project variants (base case and project alternatives). The appraisal period is 2012-2021. The base case is defined as a scenario in which the RetBus project is not implemented. Two project alternatives are defined: Alternative 1 (the RetBus project as it is going to be implemented according to the plans of TMB) and Alternative 2 (which contains all the elements of Alternative 1 plus additional changes in the bus network). b) Identification of project effects: The most relevant impacts of the project have been identified and described, including: BRT investment costs; change in fleet replacement costs; change in operating costs; change in operating revenues; transit user benefits; safety effects; and environmental effects. The main parties being affected by the benefits and disbenefits of the project have also been identified. f) Estimation and valuation of project effects: The methods used to estimate and valuate the project effects previously identified have been described. BRT investment costs have been calculated based on unit costs (euro/km and euro/vehicle). The change in fleet replacement costs and the change in operating costs have been estimated based on unit costs (euro/vehicle and euro/vehicle-km, respectively). The change in operating revenues has been estimated on the basis of transit fares. Transit user benefits have been calculated by applying the rule of half. Finally, safety effects and environmental effects have been estimated based on unit costs per transport mode (euro/vehicle-km). It should be noted that travel demand forecasts and the characteristics of the RetBus and bus systems (e.g. network length, total annual mileage and fleet size) are necessary to estimate many effects of the RetBus project. c) Production of a cost-benefit report: The procedure used to interpolate costs and benefits to all years included in the appraisal period has been described. This procedure includes a ramp-up period (2011-2016). In addition, the method used to discount annual cost and benefit streams (by means of a 5% discount rate) has also been explained. Next, the measures of social/financial value used to present the CBA results (net present value and benefit/cost ratio) have been described. d) Sensitivity analysis: A range of tests have been designed to evaluate the sensitivity of the CBA results to the uncertainty about critical parameters and changes in the project and its environment. The objective is to analyze the robustness of the CBA results as well as to explore possible ways to improve the social/financial value of the RetBus project. As already mentioned, transport forecasts (particularly OD demand, traveler flows and travel costs per mode) are crucial inputs to estimate the impacts of the RetBus project. For that reason, before presenting and discussing the results of the cost-benefit analysis (Chapter 6), the next chapter (Chapter 5) describes the model used to predict future travel demand and presents the resulting forecasts. The outputs of the forecasting model must be interpreted with care, since their reliability is dependent on the accuracy of input data and the model‟s predictive validity, which are both limited. 47 Cost-Benefit Analysis of RetBus 5. Travel demand forecasts This chapter describes the methodology used to predict future travel demand and discusses the forecasts produced by means of that methodology. Those forecasts (particularly OD demand, traveler flows and travel costs per mode) are critical inputs to the estimation of some impacts of the RetBus project (change in operating revenues, transit user benefits, safety effects and environmental effects). Section 5.1 describes the forecasting methodology, which is based on the traditional four-stage model. Section 5.2 presents and analyzes the travel demand forecasts. Section 5.3 discusses the reliability of the forecasts, which is limited by the accuracy of the input data and the predictive validity of the model. Finally, Section 5.4 presents the conclusions of this chapter. 5.1. Travel demand forecasting methodology Generally, methods used to predict future travel demand are procedures based on logic and knowledge about transport networks and traveler behavior. These methods assume that travelers choose the trip alternative that provides them the highest net utility and fits in their time and money budget constraints (principle of subjective utility maximization) (Bovy, Bliemer and Van Nes, 2006). Many methods to predict future travel demand are available. In this research, an adapted version of the traditional four-stage model has been applied. This model is the most widely used in practice because of its simplicity and solid traveler behavior foundations (Ortuzar and Willumsen, 2001; Vuchic, 2005). Section 5.1.1 gives a general overview of the methodology used in this study to predict future travel demand. Section 5.1.2 describes the data that has been used as input to the travel demand forecasting model. Section 5.1.3 elaborates further on the model used to produce total trip OD matrices. Section 5.1.4 describes the model used to perform modal split. Finally, Section 5.1.5 presents the models used to assign travelers to the transit and roadway networks. 5.1.1. Methodology overview The traditional four-stage model generally consists of four sequential steps which estimate: first, the number of trips generated in each zone (trip generation); second, the distribution of all trips generated in each origin sub-area amongst all destination sub-areas (trip distribution); third, the transport mode used to perform each trip (mode choice); and finally, the routes followed to make each trip (assignment) (Ortuzar and Willumsen, 2001). In this study, the specifications of the four-stage model have been adapted to fit the research objectives and the input data available. The model used to predict future travel demand per mode is graphically presented in Figure 5-1 and described below. a) Production of total trip OD matrices: A growth factor model has been used to forecast the future demand of total trips34 per OD pair. Growth rates have been applied to an observed base year matrix (2007) in order to obtain total trip OD matrices for the target future years (2016 and 2021). The trip growth rates have been assumed to be equal to predicted rates of population growth. For each year, the same total trip OD matrices apply to the base case and the two 34 Total trips include only trips made by mechanical modes, i.e. public transport and private vehicle. Trips on foot, by bicycle or other modes are not included. 48 Cost-Benefit Analysis of RetBus alternative project variants. Predicted total trip OD matrices are essential inputs to the modal split model. b) Modal split: A modal split model has been used to disaggregate the total trip OD matrix of each target future year in two separate matrices for each project variant: a) transit trip OD matrix; and b) private vehicle OD matrix. The modeling approach used is multinomial logit (MNL), which assumes that the proportion of trips between a given OD pair made by a given transport mode is related to the absolute difference between the trip utilities provided by each mode. Utility has been defined based on generalized travel cost, which depends on the characteristics of the transport network (for private vehicle trips, route length and speed; for transit trips, route length, stop location, operational speed, service frequency, fares and number of transfers required). Note that the transit network is different in each project variant (base case, Alternative 1 and Alternative 2), therefore OD demand per mode is also different in each variant. Predicted transit trip OD matrices are necessary inputs to both the transit assignment model and the estimation of some effects of the RetBus project (see Section 4.3.3). Predicted private vehicle trip OD matrices are needed as inputs to the car assignment model. Estimation of future OD trip demand, traveler flows and travel costs per mode Total trip OD Production of total Total trip OD matrix (2007) trip OD matrices matrix (year t) Modal split model (MNL) Growth factor model Modal split Transit network Project variants Roadway network characteristics (year t) characteristics (year t) Private vehicle Transit assignment Transit trip OD Private vehicle trip assignment model model (MNL) matrix (year t) OD matrix (year t) (DUE) Private vehicle Transit assignment assignment Transit flows and travel Private vehicle flows and costs (year t) travel costs (year t) Estimation/valuation of project effects (CBA) Figure 5-1: Travel demand forecasting model. c) Assignment: Two different models have been used to assign transit trips and private vehicle trips to the transit and roadway networks, respectively. On the one hand, the assignment of transit trips is based on a multinomial logit (MNL) model. This model assumes that the proportion of transit travelers between a given OD pair who take a particular route depends on the difference between the generalized travel costs of that route and the travel costs of all the 49 Cost-Benefit Analysis of RetBus other transit routes available (which depend on the characteristics of the transit network, different for each project variant). On the other hand, private vehicle trips have been assigned by applying a deterministic user equilibrium (DUE) procedure, which assumes that travelers choose routes based on travel costs, by taking into account the characteristics of the network as well as possible delays caused by traffic congestion. Equilibrium is reached when the travel costs of all the used routes between a given origin and destination are equal. The outputs of the transit and private vehicle assignment models are: a) traveler flows on each road link and each transit line/link; and b) generalized travel costs between each OD pair per transport mode. These outputs are necessary to estimate some of the effects of the RetBus project (see Section 4.3.3). The software package OmniTRANS has been used to run the travel demand model, since this program includes a broad range of functions related to the traditional four-stage model and it is also the package that transport planning students learn to use at Delft University of Technology. 5.1.2. Input to the travel demand forecasting model The travel demand forecasting model needs the following inputs: a) OD travel demand; b) zoning system; and c) characteristics of the roadway and public transport networks. Each of those inputs is described in detail in the remaining of this section. 5.1.2.1. Origin-Destination travel demand The five OD matrices that have been used to calibrate and run the travel demand forecasting model are listed in Table 5-1. Table 5-1: OD matrices used to calibrate/validate and run the travel demand forecasting model. OD matrices Function Trips/workday made by private vehicle by residents of the RMB older Calibration of the modal split than 15 years (in 2007) model Trips/workday using the metro or bus systems made by residents of Calibration of the modal split the RMB older than 15 years (in 2007) model Trips/workday using the bus system made by residents of the RMB Validation of the transit older than 15 years (in 2007) assignment model Trips/workday using the metro system made by residents of the RMB Validation of the transit older than 15 years (in 2007) assignment model Production of future total trip Total trips/workday using a private vehicle, the bus or the metro OD matrices / Calibration of systems made by residents of the RMB older than 15 years (in 2007) the modal split model These OD matrices have been derived from OD data based on a survey financed by TMB (2007). The universe under study is all the population older than 15 years living in the Barcelona Metropolitan Region. The sample consists of 40.122 interviewees. The survey is based on a zoning system containing 130 zones which correspond to local administrative units: 68 internal zones (located within the municipality of Barcelona) and 62 external zones (located in other municipalities). 50 Cost-Benefit Analysis of RetBus It is important to remark that TMB (2007) OD matrices contain the number of trips produced during a whole workday; therefore, they generally include trips from an origin (home) to a destination as well as the trips back to the initial origin (home). As a result, the OD matrices are nearly symmetrical, i.e. the number of trips produced and the number of trips attracted by each zone are similar. It should also be noted that TMB (2007) OD matrices include all trip purposes. Those OD matrices do not include trips made by tourists or visitors from outside the RMB. 5.1.2.2. Zones and centroids In this study, zones have been divided in two classes: internal (i.e. located within the municipality of Barcelona) and external (i.e. located in a municipality other than Barcelona). The internal zones correspond to the 68 internal zones defined in TMB (2007), but the external zones correspond to groups of external zones defined in TMB (2007) (see Section 5.1.2.1). Every zone has been assigned one centroid, i.e. a central point which is assumed to attract all trips to that particular zone and to produce all trips from that particular zone. Maps of the internal and external zones and their centroids can be found in Figure G-1 and Figure G-2 (Annex G), respectively. Table G-1 (Annex G) contains a list with zone/centroid numbers and their associated zone names. The centroids of internal zones (zones 1-68) have been automatically located in the gravitational centre of each zone; however, for some internal zones (namely zones 24, 26, 29, 34 and 51, which contain large natural areas), the centroid has been relocated to a non-central position closer to the most densely populated areas. Internal centroids are connected to the road network of Barcelona (which is connected to the transit network) through connectors of infinite pedestrian and private vehicle capacities. External zones 69-78 correspond to the ten municipalities that form part of the AMB besides Barcelona (see Section 2.1.1). The zone boundaries have not been drawn. Centroids have been located approximately in the gravitational centre of each municipality, but this has been done in a manual way. External zones 79-82 correspond to groups of municipalities that are located in the south-west (79), north-east (80), north-west (81) and north (82) of the RMB but are not part of the AMB. Those centroids have been located in a position with short and direct connection to both the road and the transit network. The centroids of all external zones have been connected to the road network via connectors of infinite pedestrian and private vehicle capacities. 5.1.2.3. Characteristics of the transport networks There are three networks that are important inputs to the travel demand forecasting model: a) roadway network; b) pedestrian network; and c) public transport network. The characteristics of those transport networks are described below. 5.1.2.3.1. Road and pedestrian transport network Travel costs of private vehicle trips and the access/egress legs of transit trips have been derived from the roadway network characteristics (length and average travel speed). The roadway network has been defined based on road types and classes. Seven road types have been specified on the basis of maximum speed and number of lanes: a) 3-lane highway; b) 2- lane highway; c) avenue; d) 3-lane urban road; e) 2-lane urban road; f) 1-lane urban road; and g) local street. Each of these road types belongs to a road class. The four road network hierarchy levels specified in the Urban Mobility Plan (Ajuntament de Barcelona, 2008) have 51 Cost-Benefit Analysis of RetBus been adapted to the following four road classes: 1) ring roads and main access roads, 2) basic road network; 3) secondary road network; and 4) local road network. It has been assumed that all four road classes can be used by private vehicles and buses, but pedestrians can only use road classes 2, 3 and 4 (since road class 1 corresponds to highways). Table 5-2 specifies for each road type and class: a) maximum speed by car; b) average travel speeds by car, which include the delay caused by traffic congestion and stops at intersections (Ajuntament de Barcelona, 2008); and c) average speeds on foot. Travel speeds by bus are specified in Section 5.1.2.3.2. A map of the road network specified per road class is shown in Figure G-3 (Annex G). Table 5-2: Speeds by car and walking (per road type and class). Maximum speed Average speed Average speed Road type Road class by car (km/h) by car (km/h) walking (km/h) 3-lane highway Ring roads / main 120,0 55,0 - 2-lane highway access roads 120,0 Basic road Avenue 80,0 30,0 5,0 network 3-lane urban road Secondary road 50,0 15,0 5,0 2-lane urban road network 50,0 1-lane urban road Local road 50,0 10,0 5,0 Local street network 30,0 In the next 10 years, there are no major changes planned in the road network of Barcelona. Some local changes and maintenance works will surely be made, but the basic structure of the road network is not expected to change significantly. To simplify matters, this research has not taken into account that some new bus lanes need to be built in order to operate the BRT system35, which will reduce the capacity of some specific links of the roadway network. 5.1.2.3.1. Public transport network Travel costs of transit trips have been derived from the public transport network characteristics (length, operational speed, frequency, transfer points and fares). Currently, the public transport network of Barcelona consists of five sub-networks: a) metro; b) tram; c) RENFE (regional train); d) bus; and e) FGC (light rail). Maps of these sub-networks are shown in Figure G-4 and Figure G-5 (Annex G). In the future, a sixth sub-network will be built (RetBus). All transit lines of the six sub-networks have been included in the transit network modeled in OmniTRANS. Bus and RetBus lines run over road links; therefore they are directly connected to the pedestrian network. Rail lines use special links which are connected to the road/pedestrian network through walking links at stops. All the stops of each transit line have been included in the transit network (with a location accuracy of ±100m). Transfers between transit lines are possible at stops (if transit lines have a stop in the same location) or between stops via the pedestrian network. Table 5-3 contains the average service frequency and average commercial speed of each transit sub-network. However, these are average values for each sub-network. Specific values for the frequencies and operational speeds of each line have been incorporated to the 35 The BRT system would use bus lanes that already exist (and are used by the regular bus system) as well as new ones. 52 Cost-Benefit Analysis of RetBus transport network modeled in OmniTRANS when such information was available. A complete list of frequencies and operational speeds per transit line can be found in Table G-2 (Annex G). Table 5-3: Operator, average frequency and average operational speed of each transit sub- network. Average frequency Average operational Transit sub-network Operator (services/h) speed (km/h) Metro TMB 20,0 27,5 Tram TRAM 4,7 21,0 RENFE RENFE 2,1 43,0 Bus TMB 4,6 11,5 FGC FGC 10,0 29,5 RetBus TMB 10,0 - 20,0 15,0 The fare systems of all the transit sub-networks specified above are integrated. This means that users pay only once even if they make multimodal transit trips, instead of paying a separate fare for each transit sub-system they use to make a particular trip. For instance, a person may take the regional train (RENFE) to travel from an external municipality to the city centre of Barcelona and then take first the metro and then the bus to reach his/her destination within the city, paying only one ticket (as long as a certain time limit is not exceeded). The Integrated Fare System (STI) divides the transit network in 6 radial zones (see Figure G-6 in Annex G).The Barcelona Metropolitan Area (AMB) lies within the most central STI zone (Zone 1). External zones which do not form part of the AMB have been assumed to be in Zone 2. User fares depend on the number of zones that travelers cross to make their trips. There are many types of tickets available to users (single trip, 10 trips, 50 trips in 30 days, etc.). Table 5-4 shows the transit fares per multimodal trip, as well as the time during which the traveler can use the same ticket once validated (if travelers buy 10-trip tickets, which is one of the most widely used types of ticket). Table 5-4: STI transit fares in 2011. Number of zones crossed 1 2 3 4 5 6 Price of a 10-trip ticket 8,25 16,40 22,35 28,70 33,00 35,10 Transit fare per trip 0,82 1,64 2,24 2,87 3,30 3,51 Ticket time 1h 15‟ 1h 30‟ 1h 45‟ 2h 00‟ 2h 15‟ 2h 30‟ This research assumes that the only changes that will be made in the public transport network between 2012 and 2021 are the ones described in Table 5-5. The basic structure of the Integrated Fare System (STI) is not expected to change during the period 2012-2021 (except for a fare increase every year). 53 Cost-Benefit Analysis of RetBus Table 5-5: Expected changes in the public transport network (2012-2021). Sub-network Changes Year RetBus Deployment of the new RetBus system 2012-2015 Elimination, shortening and/or reduction of the frequency of Bus 2012-2015 some regular bus lines Metro Completion of metro lines L9/L10 Finished in 2015 Tram None - RENFE None - FGC None - 5.1.3. Production of total trip OD matrices A growth factor model has been applied to produce future total trip OD matrices. The OD matrices for the target future years (2016 and 2021) have been generated by updating a base year matrix (which contains data from 2007) by means of growth factors and a balancing procedure. The main reasons to use a growth factor model instead of alternative approaches (e.g. regression models for trip generation, gravity models for trip distribution) are the relative simplicity and low data requirements of growth factor models. The level of detail provided by growth factor models is deemed sufficient for the purpose of this research. Trip growth rates have been assumed to be equal to predicted rates of population growth. The underlying rationale is that growth in total travel demand by mechanical modes will be of the same magnitude as total population growth. This is not an unrealistic assumption, since research indicates that, in the RMB, the average trip generation rate (around 3 trips per workday per person, including all transport modes) and the distribution of trips amongst modes have remained rather stable over the last ten years (EMEF, 2010). The same growth factors have been used to update both production and attraction trip ends. The reason is the following. The base year OD matrix contains data on number of trips over a whole workday; as a result, it is almost symmetrical in terms of the total number of trips produced and attracted per zone, since, over a day, people generally make trips from home to destination and back home. For that reason, this study has assumed that productions and attractions per zone will grow at the same rate during the next ten years. The model assumes that geographical patterns of OD demand within the municipality of Barcelona will stay stable during the whole appraisal period (2012-2021); this is considered a realistic assumption because ten years is not a very long period and no major changes in the population and job location patterns in Barcelona are expected to occur during that period. However, different growth factors have been used to update the trip ends of internal and external zones. The reason is that the municipality of Barcelona and the rest of the RMB are expected to grow in population at very different rates during the next years. According to population projections by IDESCAT (2010), Barcelona will not grow as much as the RMB as a whole; in fact, the population of Barcelona is expected to be lower in 2021 than it was in 2007. 54 Cost-Benefit Analysis of RetBus Table 5-6 contains the total number of inhabitants living in Barcelona and the entire RMB in 2007, 2011, 2016 and 2021. Table 5-7 presents the relative population growth in periods 2007- 2011, 2007-2016 and 2007-2021, and the corresponding total trip growth factors in the same periods. These growth factors have been used to update the production and attraction trip ends of the base year matrix. For example, the number of total trips/workday produced by a given origin in 2016 has been estimated as follows: the number of total trips/workday produced by that same zone in 2007 has been multiplied by a growth factor equal to 1,0004 (assuming the origin is located within the municipality of Barcelona). Once all production and attraction trip ends have been updated, a Furness-balancing procedure has been applied to revise the whole OD matrix. This procedure balances the content of each matrix cell until the production and attraction trip ends match (or are close enough to) the predicted ones (Ortuzar & Willumsen, 2001). Table 5-6: Total population in Barcelona and the RMB in 2007, 2011, 2016 and 202136. Population (inhabitants) Year Barcelona RMB 2007 1.595.110 4.856.579 2011 1.601.888 4.983.189 2016 1.595.749 5.120.128 2021 1.589.493 5.228.836 Table 5-7: Trip growth factors of periods 2007-2016 and 2007-2021 (Barcelona and RMB). Population variation (%) Total trip growth factors Period Barcelona RMB Barcelona RMB 2007-2011 +0,42 +2,61 1,0042 1,0261 2007-2016 +0,04 +5,43 1,0004 1,0543 2007-2021 -0,35 +7,67 0,9965 1,0767 5.1.4. Modal split Modal split typically distributes trips between public transport and private vehicle, although it sometimes encompasses more modes than those basic two. In this research, a multinomial binary logit model has been applied to predict mode choice. This approach has been chosen because it generally offers a sounder theoretical foundation to predict travelers‟ modal choices than other approaches, such as trip-end or trip-interchange models (Vuchic, 2005). MNL modal split models assume that the proportion of trips made by a given transport mode is related to the difference between the utilities provided by each available mode. Utility functions can include several explanatory variables as well as mode-specific constants accounting for factors that cannot be observed (Ortuzar and Willumsen, 2001). 36 Population in 2007 has been obtained from census data (IDESCAT, 2010), while the source of future population estimates (2011, 2016 and 2021) is a projection (moderate growth scenario) made by IDESCAT (2010). 55 Cost-Benefit Analysis of RetBus In this research, the only transport modes included in the modal split model are public transport and private vehicle. For simplicity reasons, all private vehicle trips have been assumed to be made by car, i.e. not by motorcycle, etc. Walking has not been included in the model as a separate transport mode, since the implementation of the new BRT system is not expected to change accessibility on foot. However, walking has been taken into account as access and egress mode for multimodal transit trips. Bicycle trips have not been taken into account because in Barcelona the share of cycling in modal split is very small. Trip modal sequences have been simplified. Public transport trips have been modeled as multimodal transit chains with walking37 as access and egress mode (private vehicle is not included as access/egress mode); and private vehicle trips have been modeled as unimodal trips. Therefore, trips have been assumed to have the following modal sequences: Transit trips: Origin – Walking – PT (– PT)n-1 – Walking – Destination Private vehicle trips: Origin – Private vehicle – Destination Modal split has been performed by applying the following formulae: e VPT(,) i j 1 TTTPT(,)(,)(,) i j total i j total i j (Eq. 5-1) e VVVVPT(,)(,)(,)(,) i j e car i j1 e () PT i j car i j TTTcar(,)(,)(,) i j total i j PT i j (Eq. 5-2) Where: i is a particular origin zone; j is a particular destination zone; Ttotal(i,j) is the total number of trips/workday made by mechanical modes between zones i and j; TPT(i,j) is the number of transit trips/workday between zones i and j; Tcar(i,j) is the -1 number of private vehicle trips/workday between zones i and j; is the dispersion factor (euro ); VPT(i,j) is the utility of transit trips between zones i and j (euro); and Vcar(i,j) is the utility of private vehicle trips between zones i and j (euro). The definition of the utility functions is based on the concept of generalized travel cost: Vcar a z b z t v VOT (Eq. 5-3) (Eq. 5-4) VPT cz 2,2ta 1,5tw 1,0tv VOT n 1TP 2,2te VOT F n Where: az is a mode-specific constant (euro); bz and cz are the sensitivities to travel cost for private vehicle and public transport trips, respectively; VOT is the value of time (euro/min); n is the transit line used in each leg of a particular transit trip; ta is the access time to the first stop or transfer stops (on foot) (min); tw is the waiting time at the transit stop (which is assumed to be half the time headway) (min); tv is the in-vehicle time (min); TP is a transfer penalty equal to 5 min (no matter the transit sub-modes involved); te is the egress time (on foot) (min); F is the average transit fare (euro); and the weights for access/egress time, waiting time and in-vehicle time have been assumed to be 2,2, 1,5 and 1,0 . The following remarks about equations 5-3 and 5-4 need to me made: For each OD pair, the generalized travel costs of transit trips (including tv, n, ta, tw, te and F) and car trips have been computed by using a shortest path algorithm (in OmniTRANS). Car travel times (tv) have been calculated based on observed average travel speeds per road classes (see Table 5-2). 37 An average walking speed equal to 5,0 km/h has been assumed. 56 Cost-Benefit Analysis of RetBus For each OD pair, only the route with the lowest cost for each mode (transit and private vehicle) has been taken into account to estimate utilities and perform modal split. The definition of car trip utility in the modal split model includes a mode-specific constant (az), which accounts for unobserved attributes of generalized travel cost, e.g. car parking costs. Furthermore, the model assumes that the sensitivity to travel cost is different for private vehicle and public transport trips. Travel cost sensitivity is generally lower for transit trips than for private vehicle trips because a higher percentage of public transport users tend to be mode- captives, i.e. they have no other option but using public transport, in comparison to travelers who use private vehicles, who can generally choose between private transport and public transport. The modal split model takes into account geographic differences in mode choice behavior (see Section 2.1.4) by setting different values for the mode-specific constant and travel cost sensitivities for different groups of OD pairs (see tables 5-8 and 5-9): The fact that trips from/to districts 1 and 2 (Group 1) have a lower preference for car as transport mode (as a consequence of higher parking costs in the city centre) is taken into account by specifying a higher mode-specific constant, which increases the disutility of car trips. The fact that trips from/to District 5 (Group 2) have a higher preference for car as transport mode (as a result of being the district with the highest average income and the greatest number of cars/inhabitant in Barcelona) is taken into account by specifying a lower mode-specific constant (which decreases the disutility of car trips compared to transit trips). The fact that the utility of trips from/to District 5 (Group 2) is less influenced by travel cost (as a result of being the district with the highest average income) is taken into account by setting lower car and transit travel cost sensitivities (which makes the disutility increase with travel costs at a lower rate than for OD pair groups 1 and 3). Travel cost sensitivities are equal for groups 1 and 3 because the remaining districts (all but District 5) and the external zones are assumed to not be too different in terms of average income and car ownership. Table 5-8: Modal split model parameters. a a a 1 2 3 b b b c c c (euro-1) (euro) (euro) (euro) 1 2 3 1 2 3 1,00 1,38 0,00 0,75 0,48 0,24 0,48 0,19 0,09 0,19 The modal split model parameters az, bz and cz have been calibrated by using: a) observed transit and private vehicle OD matrices from year 2007 (TMB, 2007); and b) travel cost matrices derived from the transport network characteristics in 2007 (see Annex H). The average error per observation is 27,4%, therefore the modal split model is considered considerably accurate. This is of critical importance, since the impact of the RetBus project on mode choice has a strong influence on its social value and financial profitability (see Section 4.3.3). 57 Cost-Benefit Analysis of RetBus Table 5-9: Groups of OD pairs (modal split model). External D1 D2 D3 D4 D5 D6 D7 D8 D9 D10 zones D1 Ciutat Vella D2 Eixample D3 Sants - Montjuic D4 Les Corts D5 Sarria - St Gervasi D6 Gracia D7 Horta - Guinardo D8 Nou Barris D9 Sant Andreu D10 Sant Marti External zones Group 1 (z=1) Group 2 (z=2) Group 3 (z=3) 5.1.5. Assignment There are normally several alternative paths that a single trip-maker can take to travel from a particular origin to a destination. The objective of the traffic assignment step is to allocate all trips to specific routes, thus deriving traffic volume forecasts for each section of the transport network (Vuchic, 2005). Assignment models assume that travelers are rational, that is to say, they select the route which offers them the highest utility, as perceived and anticipated by them (Ortuzar and Willumsen, 2001). Generally, the assignment of private vehicle trips and public transport trips is done separately, since the networks of both modes have very different characteristics38 (Bovy, Bliemer and Van Nes, 2006). In this research, two different models have been used to assign transit trips and private vehicle trips to the transit and roadway networks, respectively. Those two models are presented below. 5.1.5.1. Transit assignment A multinomial logit (MNL) model has been used to assign passengers to public transport routes. For each OD pair, the model allocates the total number of transit trips to different transit routes based on the differences between the trip utilities of all available routes. Disutility has been defined in terms of generalized travel cost. Transit trips have been modeled as multimodal transit chains with walking as access and egress mode. Modal split has been performed by applying the following formula: 38 Some of the transit network characteristics that make transit assignment different from private vehicle assignment are the following (Ortuzar and Willumsen, 2001; Desaulniers and Hickman, 2007): a) links are sections of bus/rail services running between stops/stations, instead of road sections between intersections; b) some transit sections use road links (e.g. bus running on streets), while some other sections use dedicated infrastructure (e.g. rail); c) in transit route choice modeling, what is modeled is the movement of passengers, not vehicles (cars), so the transit network needs to incorporate specific walking links for access, transfer and egress; d) link capacity is generally related to the passenger capacity of vehicles and the service frequency, as opposed to road capacity, which depends on vehicle flow (in practice, the interaction between traffic volume and level of service in transit links is generally of less importance than in road traffic); and e) the monetary cost of a transit trip is not directly dependent on travel distance (as in private vehicle assignment), but on the fare structure, thus generally on origin and destination location and selected route. 58 Cost-Benefit Analysis of RetBus e VPT1( i , j ) TTPT1( i , j ) PT ( i , j ) (Eq. 5-5) ()e VPTx(,) i j x Where: i is a particular origin zone; j is a particular destination zone; TPT(i,j) is the total number of transit trips/workday between zones i and j; TPT1(i,j) is the number of transit trips/workday between zones i and j which use route 1; TPTx(i,j) is the number of transit trips/workday between zones i and j which use a specific route x; is the dispersion factor (euro-1); VPT1(i,j) is the utility of transit trips that use route 1 to travel between zones i and j (euro); and VPTx(i,j) is the utility of transit trips that use route x to travel between zones i and j (euro). The utility function of transit trips has been defined as follows39: (Eq. 5-6) VPTx i, j 2,0ta 2,5tw tv BPm VOT TPm VOT 2,0te VOT Fij n n1 Where: VOT is the value of time (euro/min); n is the transit line used in each leg of a particular transit trip; ta is the access time to the first stop or transfer stops (on foot) (min); tw is the waiting time at the transit stop (which is assumed to be half the time headway) (min); tv is the in-vehicle time (min); BPm is a boarding penalty, the value of which varies for 40 different transit sub-modes (min); TPm is a transfer penalty , the value of which varies for different transit sub-modes (min); te is the egress time (on foot) (min); Fij is the average transit fare (euro); and the weights for access/egress time (2,0), waiting time (2,5) and in-vehicle time (1,0) are those recommended by Wardman (2004). The transit assignment model assumes that the boarding and transfer penalties are different for different transit sub-modes. The boarding penalty to bus is higher than to rail, since transit users have a stronger preference to use rail sub-modes rather than bus (because of its comfort, image and network understandability). The transfer penalty to bus is higher than to rail, which indicates that transit users prefer to transfer to rail sub-modes rather than to bus because of the ease of transfer (no need to cross traffic, presence of special transfer facilities, etc). The values of the boarding and transfer penalties to the BRT system are assumed to be between those to bus and rail modes. The reason is that the RetBus system is expected to be more attractive to passengers than the regular bus system (because of better image, network understandability and ease of transfer) but still less attractive than rail modes. The values of the dispersion factor (), boarding penalties per mode (BPm) and transfer penalties per mode (TPm) have been chosen based on theoretical assumptions so as to ensure the face validity of the transit assignment model. Due to lack of adequate data, the parameters have not been calibrated, although tests have been made in order to select the set of parameters that yields the smallest difference between predicted and observed total number of bus and metro trips in 2007 (see Annex I). The selected set of model parameters is presented in Table 5-10. 39 Note that the definition of transit trip utility does not take into account the influence of vehicle occupancy on travel cost. 40 The transfer penalty is added to the boarding penalty in case of transfer. 59 Cost-Benefit Analysis of RetBus Table 5-10: Transit assignment model parameters. BPbus BPBRT BPrail TPbus TPBRT TPrail (euro-1) (min) (min) (min) (min) (min) (min) 3,0 7,0 6,0 5,0 3,0 1,5 0,0 5.1.5.2. Car assignment Private vehicle trips have been loaded to the roadway network using a deterministic user equilibrium (DUE) assignment approach (Cascetta, 2001; Ortuzar and Willumsen, 2001; Vuchic, 2005). The main reasons to use this approach are the following. On the one hand, it takes network capacity constraints and congestion effects into account; therefore it is potentially more accurate than simpler approaches such as all-or-nothing or pure stochastic assignment, especially at the network level (which is the scale of the present study). On the other hand, the stochastic-user equilibrium (SUE) approach has been discarded because the level of detail of the input data (OD matrix and network description) is not sufficiently high as to justify the higher level of complexity of SUE models41. The DUE assignment model used in this study assumes that travelers choose routes based on generalized travel cost, and a situation of equilibrium is eventually reached at network level in which no traveler can improve his/her travel time by unilaterally changing routes (Wardrop, 1952). The method of successive averages (Ortuzar and Willumsen, 2001) has been used to find a solution to the user equilibrium at the network level. The effects of network capacity constraints and congestion on travel costs have been taken into account by incorporating a function (BPR function) that relates link travel costs to actual traffic flows (Vuchic, 2005): 0 qa ta( q a ) t a 1 (Eq. 5-7) c a 0 Where: ta is the average travel time for a vehicle on link a (h); t a is the free flow travel time on link a (h); qa is the traffic flow attempting to use link a (veh/h); ca is the capacity of link a (veh/h); and are the parameters of the BPR function. The following remarks need to be made with regard to the link performance function used in this study (see also Table 5-11): A different parameter has been set for highways (=0,5) and urban roads/streets (=2,0). The objective is to take into account that congestion has a higher impact on travel time in urban roads/streets than in highways, due to the presence of controlled intersections. Parameter has been assumed to be equal for all road types (=4,0). 41 SUE assignment models take into account congestion effects as well as the variability in perceptions of travel costs by trip-makers. Hence, they are potentially more accurate than DUE approaches, but they are also more complex and data-demanding. 60 Cost-Benefit Analysis of RetBus 0 Free flow travel times (t a) have been calculated on the basis of maximum speeds per road type. Traffic flows (qa) and link capacities (ca) per road type have been defined for a period of 14 hours (veh/14h). The main reason is the following. The OD matrices available include all trips made by private vehicle during a whole workday. Since there is no specific OD data for the peak hours (which is when the most severe congestion occurs), this study has assumed that all trips made by private vehicle during an average workday are evenly distributed between 8:00 and 22:00h42. The BPR function parameters have been chosen based on theoretical assumptions so as to ensure the face validity of the car assignment model. However, the parameters have not been calibrated, due to insufficient quality of the input data (network characteristics and OD demand). Table 5-11: BPR function parameters per road type. Road type Maximum speed (km/h) Capacity (veh/14h) 3-lane highway 0,5 4,0 120 210.000 2-lane highway 0,5 4,0 120 140.000 Avenue 2,0 4,0 80 70.000 3-lane urban road 2,0 4,0 50 63.000 2-lane urban road 2,0 4,0 50 42.000 1-lane urban road 2,0 4,0 50 21.000 Local street 2,0 4,0 30 14.000 5.2. Travel demand forecasts This section presents and analyzes the travel demand forecasts made by means of the model described in Section 5.1. As explained in Section 5.1.1, the outputs of the travel demand forecasting model have been used to estimate some of the benefits and disbenefits of the RetBus project. Section 5.2.1 presents the results of the growth factor model. Section 5.2.2 presents and analyzes the results of the modal split model at the regional, district and zone level. Section 5.2.3 discusses the transit and car route choice forecasts as well as the resulting flows and travel costs in the roadway and public transport networks. Note that the forecasts presented in sections 5.2.2 and 5.2.3 correspond only to year 2016. The travel demand predictions for 2021 are not discussed in this report since the general forecast trends are similar. 42 According to Ajuntament de Barcelona (2008), in Barcelona 90% of private vehicle trips are made between 8:00 and 22:00h. Demand variations over time within that period are very small (maximum 1%). 61 Cost-Benefit Analysis of RetBus 5.2.1. Production of total trip OD matrices Total trip OD matrices for years 2016 and 2021 have been obtained by updating an observed base year matrix by means of the growth factor model defined in Section 5.1.3. This model predicts that the total number of trips/workday made by mechanical modes within the entire RMB will increase by +1,19% in the period 2007-2011, +1,93% in the period 2007-2016 and +2,46% in the period 2007-2021 (Table 5-12 and Table 5-13). Table 5-12: Total number of trips/workday in years 2007, 2016 and 2021. Total number of trips/workday Year Within Barcelona to Rest of RMB to Within the rest Within RMB Barcelona rest of RMB Barcelona of the RMB 2007 3.556.910 1.671.481 608.729 639.537 637.162 2011 3.599.177 1.670.362 619.077 650.434 659.304 2016 3.625.490 1.652.206 627.913 659.776 685.595 2021 3.644.265 1.636.097 634.525 666.767 706.876 Table 5-13: Relative variation in the total number of trips/workday in periods 2007-2016 and 2007-2021. Variation in the total number of trips/workday (%) Period Within Barcelona to Rest of RMB to Within the rest Within RMB Barcelona rest of RMB Barcelona of the RMB 2007-2011 +1,19 -0,07 +1,70 +1,70 +3,48 2007-2016 +1,93 -1,15 +3,15 +3,16 +7,60 2007-2021 +2,46 -2,12 +4,24 +4,26 +10,94 2007-2021 +4,26% +4,24% +10,94% -2,12% Figure 5-2: Variation in the total number of trips/workday in period 2007-2021. 62 Cost-Benefit Analysis of RetBus The model shows that travel demand will grow at a different pace depending on whether the trip origins and destinations are located in Barcelona or the rest of the RMB. For example, in the period 2007-2021, the number of trips between zones located within Barcelona is expected to decrease by -2,12%, while the number of trips between Barcelona and the rest of the RMB would increase by around +4,25% and the number of trips within the RMB (excluding Barcelona) would grow by +10,94% (Table 5-12, Table 5-13 and Figure 5-2). A similar geographical pattern is observed in periods 2007-2011 and 2007-2016: demand for trips within Barcelona decreases slightly; demand for trips between Barcelona and the rest of the RMB increases; and demand for trips within the RMB (excluding Barcelona) also increases (but more than the number of trips between Barcelona and the rest of the RMB) (Table 5-12 and Table 5- 13). This geographical pattern is a direct cause of the differences in population growth rates between Barcelona and RMB, which have implications on the growth factors used to predict OD trip ends. 5.2.2. Modal split This section analyzes the modal split forecasts at the regionl level (Section 5.2.2.1), district level (Section 5.2.2.2) and zone level (Section 5.2.2.3). Those forecasts correspond to year 2016. 5.2.2.1. Modal split at the region level The modal split model predicts that the RetBus project will have an impact on modal split in the RMB as a whole, causing a net increase of transit trips and a net decrease of private vehicle trips in the region (Table 5-14). The main reason is that the BRT network will provide new transit route options that will reduce the minimum transit travel cost for particular OD pairs; therefore, the implementation of the RetBus project will make public transport more competitive a mode in comparison to private vehicle for some OD pairs. Table 5-14: Impact of the RetBus project (alternatives 1 and 2) on modal split in the RMB (2016). Private % Private Total Transit % Transit vehicle vehicle Number of trips/workday 3.625.490 2.074.824 1.550.666 57,2 42,8 in 2016 (Base case) Number of trips/workday 3.625.490 2.093.204 1.532.286 57,7 42,3 in 2016 (Alternative 1) Absolute variation 0 +18.380 -18.380 (Alt.1 – Base case) Relative variation (%) 0,00 +0,89 -1,19 (Alt.1 – Base case) Number of trips/workday 3.625.490 2.090.408 1.535.082 57,7 42,3 in 2016 (Alternative 2) Absolute variation 0 +0,75 -1,00 (Alt.2 – Base case) Relative variation (%) 0,00 +15.584 -15.584 (Alt.2 – Base case) 63 Cost-Benefit Analysis of RetBus However, the influence of the RetBus project on modal split at the regional level will be small. The modal split model predicts that if Alternative 1 is implemented, 18.400 additional travelers/workday will use transit instead of private vehicle as transport mode in 2016, which will cause an increase of +0,89% in total transit demand. As a consequence, the share of transit over total travel demand in the entire RMB will also increase, but only to a very limited extent (from 57,3% to 57,7%) (Table 5-14). Instead, if Alternative 2 is implemented, 15.600 additional travelers/workday will use transit instead of private vehicle, which will cause an increase of +0,75% in total transit demand (Table 5-14). At this point, the following questions arise: i) for how many OD pairs will the RetBus system provide a faster transit connection than the existing one?; and ii) to what extent will this decrease of the minimum transit travel costs affect modal split for each OD pair? These issues have been examined both at the district and the zone level. 5.2.2.2. Modal split at the district level The modal split model predicts that the RetBus project will cause a net increase in transit demand, but this increase will not be homogeneous for all district pairs. In both project alternatives, the number of transit trips/workday will grow especially for those district pairs that have districts 3 (Sants-Montjuic), 4 (Les Corts), 7 (Horta-Guinardo) and 10 (Sant Marti) as origin and/or destination. If Alternative 1 (TMB plan) is implemented, the average number of transit trips/workday produced and attracted43 in 2016 by districts 3, 4, 7 and 10 will increase by more than +1,50% (Table 5-15), which is more than the relative increase at the regional level (+0,89%) (Table 5-14). In total, districts 3, 4, 7 and 10 will generate around 58% of the total additional transit trips resulting from the implementation of Alternative 1. If Alternative 2 (Cost- reduction plan) is implemented, the average number of transit trips/workday produced in 2016 by districts 3, 4, 7 and 10 will increase by more than +1,50% and the average number of transit trips/workday attracted by districts 3, 4 and 10 will increase by more than +1,50%, while the increase in District 7 will be 1,35% (Table 5-16). Those increases are considerably higher than the relative increase at the regional level (+0,75%) (Table 5-14). In total, districts 3, 4, 7 and 10 will generate around 64% of the total additional transit trips resulting from the implementation of Alternative 2. Districts 3, 4, 7 and 10 are not part of the city centre; hence it can be concluded that the RetBus system will improve the transit connection (and therefore will cause a shift in modal split) for some OD pairs with origins and/or destinations not located in the city centre. This makes sense, since the existing metro network has a radial structure. When there is a direct connection via metro, adding a parallel BRT route (with similar frequency but lower operational speed) does not reduce the minimum transit travel costs and does not have any significant influence on modal split (according to the model defined in Section 5.1.4). Indeed, due to its grid structure, the new BRT system improves transit travel costs (and thus causes a shift in modal split) mostly only for trips made between or within peripheral districts (figures 5-3, 5-4, 5-5 and 5-6), for example trips within District 7 (+471 trips/workday in Alternative 1 and +411 trips/workday in Alternative 2, in 2016) or trips from District 7 to District 10 (+624 trips/workday in Alternative 1 and +624 trips/workday in Alternative 2, in 2016) (tables 5-15 and 5-16). 43 Since the OD matrices used in this research contain data on the number of trips over a whole workday, they are almost symmetrical in terms of total trips produced and attracted per zone. Therefore, the variations in number of attracted and produced transit trips/workday are similar. 64 Cost-Benefit Analysis of RetBus Table 5-15: Difference in generated transit trips/workday (Alternative 1 - base case) per district in 2016 (cells highlighted in blue show OD pairs with differences higher than +250). D1 D2 D3 D4 D5 D6 D7 D8 D9 D10 EC Total D1 Ciutat Vella -54 -237 240 76 138 143 -10 -26 -22 -30 242 460 0,36% D2 Eixample -416 28 823 105 220 383 252 20 3 413 375 2206 0,59% D3 Sants - Montjuic 81 722 60 320 330 73 67 75 28 471 415 2642 1,89% D4 Les Corts -12 131 528 -167 209 142 45 62 102 274 806 2120 1,96% D5 Sarria - Sant Gervasi -88 -135 140 257 -116 18 -42 -47 19 74 104 184 0,17% D6 Gracia 4 190 70 191 72 24 87 65 32 213 155 1103 1,27% D7 Horta - Guinardo -27 12 63 170 33 86 471 119 76 624 27 1654 1,55% D8 Nou Barris -35 0 105 125 60 13 127 -58 69 210 64 680 0,95% D9 Sant Andreu -74 11 30 241 88 47 105 67 47 163 199 924 1,02% D10 Sant Marti 95 272 788 440 151 256 641 328 303 333 642 4249 2,79% External centroids -330 211 254 594 165 146 336 66 208 508 0 2158 0,31% -856 1205 3101 2352 1350 1331 2079 671 865 3253 3029 18380 0,89% Total -0,67% 0,31% 2,24% 2,24% 1,26% 1,44% 1,89% 0,95% 0,97% 2,08% 0,44% 0,89% Table 5-16: Difference in generated transit trips/workday (Alternative 2 - base case) per district in 2016 (cells highlighted in blue show OD pairs with differences higher than +250). D1 D2 D3 D4 D5 D6 D7 D8 D9 D10 EC Total D1 Ciutat Vella -119 -276 250 76 139 162 -6 -30 -39 -65 233 325 0,25% D2 Eixample -516 -393 819 107 156 374 198 4 0 420 329 1499 0,40% D3 Sants - Montjuic 81 714 59 302 324 74 65 71 24 470 408 2593 1,85% D4 Les Corts -12 150 532 -193 194 140 48 55 97 268 784 2062 1,91% D5 Sarria - Sant Gervasi -87 -170 133 250 -263 3 -44 -68 16 59 25 -144 -0,13% D6 Gracia 5 113 62 189 69 22 84 66 32 210 154 1006 1,16% D7 Horta - Guinardo -28 -41 64 171 29 87 411 86 82 615 -31 1446 1,35% D8 Nou Barris -41 -37 102 123 48 18 50 -119 49 145 72 411 0,58% D9 Sant Andreu -83 9 35 227 77 37 90 57 0 103 180 732 0,81% D10 Sant Marti 63 229 783 436 139 250 631 255 250 245 571 3850 2,53% External centroids -366 195 258 593 94 146 333 59 96 433 -37 1804 0,26% -1101 494 3096 2282 1004 1312 1862 436 607 2903 2688 15584 0,75% Total -0,86% 0,13% 2,24% 2,17% 0,94% 1,42% 1,69% 0,61% 0,68% 1,85% 0,39% 0,75% It is important to mention that the absolute number of transit trips to/from District 2 (which is located in the city centre) is also expected to increase considerably, although the increase will not be as high as that of districts 3, 4, 7 and 10 in relative terms (+0,59% produced transit trips and +0,31% attracted transit trips in Alternative 1 and +0,40% produced transit trips and +0,13% attracted transit trips in Alternative 2, in 2016). District 2 is the centre of the metro network and it generates more transit trips than any other Barcelona district44. Because of this, even small relative variations mean high numbers of additional transit trips. Indeed, if Alternative 1 is implemented, District 2 is expected to produce +2.206 additional transit trips and attract +1.205 additional transit trips than in the base case in 2016 (Table 5-15). If Alternative 2 is implemented, District 2 is expected to produce +1.499 additional transit trips and attract +494 44 District 2 generates about 27,5% of all transit trips having their origin and destination within Barcelona (excluding external zones). 65 Cost-Benefit Analysis of RetBus additional transit trips than in the base case in 2016 (Table 5-16). Most of these additional transit trips will be made between District 2 and the districts experiencing the highest growth of generated transit trips (districts 3, 4, 7 and 10). For instance, the new BRT system will cause the number of transit trips/workday from District 3 to District 2 to increase by +722 (Alternative 1) or +714 (Alternative 2) in 2016 (see tables 5-15 and 5-16). D8 D8 D9 D9 D7 D7 D10 D10 D5 D5 D6 D6 D2 D2 D4 D1 D4 D1 D3 D3 Figure 5-3: Districts that produce more than Figure 5-4: Districts that attract more than +1,50% transit trips in Alternative 1 (TMB +1,50% transit trips in Alternative 1 (TMB plan) plan) compared with the base case in 2016 (in compared with the base case in 2016 (in orange). yellow). D8 D9 D7 D10 D5 D6 D2 D4 D1 D3 Figure 5-5: Districts that produce more than Figure 5-6: Districts that attract more than +1,50% transit trips in Alternative 2 (Cost- +1,50% transit trips in Alternative 2 (Cost- reduction plan) compared with the base case reduction plan) compared with the base case in 2016 (in orange). in 2016 (in yellow). 66 Cost-Benefit Analysis of RetBus Note that the average number of transit trips/workday attracted by District 1 decreases if Alternative 1 or Alternative 2 are implemented. Similarly, the average number of transit trips/workday produced by District 5 decreases if Alternative 2 is implemented. These results may look a bit odd but they have a logical explanation. As shown in tables 5-15 and 5-16, they are mainly due to a decrease in number of transit trips between districts 1 and 2, and within District 5. These negative impacts are not caused by the BRT system itself but by the changes in the bus network which are made in parallel to the deployment of the RetBus system in both project alternatives. These changes include removing/shortening some existing bus lines and reducing the frequency of others (see Section 4.3.1). Many of the bus lines that will be modified connect District 1 to District 2 or OD pairs within District 5, which will cause an increase of the minimum transit travel time for specific OD pairs that have their origin and/or destination in districts 1 and 2, or have their origin and destination within District 5. 5.2.2.3. Modal split at the zone level Modal split variations caused by the RetBus project (alternatives 1 and 2) are not homogeneous for all zones within each district. As shown in figures 5-7, 5-8, 5-9 and 5-10, different zones show different relative variations in the number of generated transit trips. For instance, although District 10 as a whole produces more than +1,50% additional transit trips/workday in 2016 if both project alternatives are implemented (see tables 5-15 and 5-16), only six of its ten zones actually experience a growth of more than +1,50% transit trips/workday (zones 59, 60, 61, 64, 66 and 68, in both project alternatives) (see figures 5-7 and 5-9). In general, the main reason why some zones will experience a higher growth of transit trips than others is the following: if the RetBus project (alternative 1 or 2) is implemented those zones will be connected to some other zones by new transit routes providing lower minimum travel costs than the existing transit routes. In fact, the BRT system provides a new transit route with lower minimum travel costs for 32% of all OD pairs (in Alternative 1). The causes for lower travel costs can be lower access/egress time (due to stop location), lower in-vehicle time (due to higher operational speed and/or lower travel distance), lower waiting time (due to higher frequency), lower number of transfers, or a combination of them. Figures 5-7, 5-8, 5-9 and 5-10 identify the zones that produce/attract more than +1,50% extra transit trips in 2016 if alternatives 1 or 2 are implemented. In both alternatives, the majority of those zones are located in peripheral districts, mostly (although not exclusively) in districts 3, 4, 7 and 10. As previously mentioned, the BRT system provides transit routes with lower minimum travel costs than the existing ones (and therefore causes a shift in modal split) mostly for OD pairs with origins and destinations not located in the city centre, since the city centre is rather well connected to the rest of the city via a radial metro network (with similar frequency but higher operational speed than the RetBus system). Therefore, it can be concluded that rather than improving the competitiveness of public transport within the whole city, in both project alternatives what the new BRT system does is basically reducing the travel costs of transit trips between certain OD pairs that are not directly connected via metro and/or are only connected by regular bus lines (which are slower and generally have a lower frequency than the RetBus lines). It is important to remark that those new routes do not always make use only of the BRT network. Some of them are multimodal routes combining metro/bus and BRT route legs. 67 Cost-Benefit Analysis of RetBus Figure 5-7: Zones that produce more than +1,50% additional transit trips in Alternative 1 (TMB plan) compared with the base case in 2016 (in orange). The metro and BRT networks are shown in red and blue, respectively. Figure 5-8: Zones that attract more than +1,50% additional transit trips in Alternative 1 (TMB plan) compared with the base case in 2016 (in yellow). The metro and BRT networks are shown in red and blue, respectively. 68 Cost-Benefit Analysis of RetBus Figure 5-9: Zones that produce more than +1,50% additional transit trips in Alternative 2 (Cost- reduction plan) compared with the base case in 2016 (in orange). The metro and BRT networks are shown in red and blue, respectively. Figure 5-10: Zones that attract more than +1,50% additional transit trips in Alternative 2 (Cost- reduction plan) compared with the base case in 2016 (in yellow). The metro and BRT networks are shown in red and blue, respectively. 69 Cost-Benefit Analysis of RetBus 5.2.3. Assignment This section discusses the transit and car route choice forecasts and the resulting flows and travel costs in the public transport network (Section 5.2.3.1) and the roadway network (Section 5.2.3.2). Note that the forecasts presented in this section correspond to year 2016. 5.2.3.1. Transit assignment It is expected that the RetBus project will have an impact on transit route choice, because for some OD pairs the BRT network will provide new route options with competitive travel costs. Therefore, some passengers will decide to take routes that (partially or totally) make use of the RetBus system instead of the other transit sub-modes, which are expected to lose ridership. At this stage, the following questions arise: i) how many passengers will use the RetBus system in each project alternative?; and b) what transit sub-modes will lose more passengers as a result of the implementation of each alternative? Section 5.2.3.1.1 addresses those two questions by discussing the results of the transit assignment model described in Section 5.1.5.1 in the case of alternatives 1 and 2. Section 5.2.3.1.2 presents the results of a sensitivity analysis carried out to evaluate the robustness of the transit assignment results to changes in the values of the transfer and boarding penalties to the BRT system. That sensitivity analysis has been carried out only for Alternative 1. 5.2.3.1.1. Reference transit assignment model The results of the transit assignment model are presented in Table 5-17 (Alternative 1) and Table 5-18 (Alternative 2) and Figure 5-11. The penalties are set in the following manner: BPrail < BPBRT < BPbus and TPrail < TPBRT < TPbus (see Section 5.1.5.1). The most relevant findings are: Alternative 1 (Table 5-17): o About 495.000 passengers will use the RetBus system per workday in 2016. o The RetBus system will mostly take its passengers from the metro and the bus systems, i.e. most of the RetBus passengers would use the bus and metro systems if the BRT system was not in place (in 2016, 45% would use bus and 52% would use metro, while the remaining 3% of BRT passengers would use other transit sub-modes). o The implementation of the RetBus project will cause bus ridership to decrease by - 42%, while metro ridership will decrease to a considerably lower extent (-13%) in 2016. As seen in Figure 5-12, the bus system loses ridership for the most part in links located in the city centre, where the RetBus network is denser and provides a more competitive alternative to bus. The metro system also loses passengers mostly in links located in the city centre (Figure 5-13). o The average distance per passenger is lower for bus (2,1 km)45 and BRT (2,2 km) than for metro (4,6 km)46. 45 The average distance per passenger by bus is lower than the average distance of bus trips reported by CENIT (2010) (see Section 2.3). This is probably due to the fact that a considerable amount of bus passengers make transfers, so the definition of average distance of bus trips (i.e. length of trips made mostly by bus) and distance per passenger (i.e. distance per trip leg made by bus) is not equivalent. The latter is usually lower than the former. 70 Cost-Benefit Analysis of RetBus o The average travel cost of transit trips in the RMB is 14,97 euro/trip (-0,18 euro/trip in comparison to the base case). Table 5-17: Ridership of each transit sub-mode in the base case and Alternative 1 (TMB plan) in 2016 (reference transit assignment model). Transit Number of passengers per workday47 Absolute Relative difference sub-mode Base case Alternative 1 difference (%) RetBus 0 493.249 +493.249 - Bus 528.657 306.400 -222.257 -42,0 Metro 1.995.834 1.738.332 -257.502 -12,9 FGC 174.396 158.601 -15.794 -9,1 Tram 107.724 101.228 -6.497 -6,0 RENFE 763.683 766.970 +3.287 +0,4 Total 3.570.294 3.564.781 -5.513 -0,2 Alternative 2 (Table 5-18): o About 510.000 passengers will use the RetBus system per workday in 2016, a slightly higher number than in Alternative 1. o The BRT system will mostly take its passengers from the metro and the bus systems, i.e. most of the RetBus passengers would use the bus and metro systems if the BRT system was not in place (in 2016, 51% would use bus and 47% would use metro, while the remaining 2% of BRT passengers would use other transit sub-modes). In comparison to Alternative 1, the BRT system would take a somewhat higher percentage of its passengers from the bus system and a lower percentage of them from the metro system, mostly due to the additional number of bus lines eliminated in Alternative 2. o The implementation of the RetBus project will cause bus ridership to decrease by - 49%, while metro ridership will decrease to a considerably lower extent (-12%) in 2016. In comparison with Alternative 1, the project would cause bus ridership to decrease by a higher percentage and metro ridership by a slightly lower percentage, mostly as a result of the additional number of bus lines eliminated in Alternative 2. o The average distance per passenger is lower for bus (2,2 km) and BRT (2,2 km) than for metro (4,6 km). Those values are similar to those of Alternative 1. o The average travel cost of transit trips in the RMB is 14,99 euro/trip (-0,16 euro/trip compared with the base case), a slightly higher average cost than in Alternative 1. 46 The average distance per passenger by metro is higher than the average distance of metro trips reported by CENIT (2010) (see Section 2.3). This is probably due to the definition of distance of metro trips used in CENIT (2010), which is the distance between the two origin and destination centroids, averaging the Euclidean distance and the distance moving only on the horizontal and vertical axis. Metro lines generally make detours that make distances per passenger by metro longer. 47 Note that the total number of transit passengers is not the same as the total number of transit trips. The number of passengers per mode is the number of trip legs per mode. Therefore, if a traveler makes a trip of the type “origin->walk- >metro line 1->metro line 2->destination”, he is added twice to the total number of passengers who use metro. 71 Cost-Benefit Analysis of RetBus Table 5-18: Ridership of each transit sub-mode in the base case and Alternative 2 (Cost- reduction plan) in 2016 (reference transit assignment model). Transit Number of passengers per workday Absolute Relative difference sub-mode Base case Alternative 2 difference (%) RetBus 0 507.707 +507.707 - Bus 528.657 269.903 -258.754 -48,9 Metro 1.995.834 1.756.767 -239.067 -12,0 FGC 174.396 158.980 -15.416 -8,8 Tram 107.724 102.554 -5.170 -4,8 RENFE 763.683 766.492 +2.809 +0,4 Total 3.570.294 3.562.402 -7.892 -0,2 Number of passengers/workday (2016) -1.000.000 -500.000 0 500.000 1.000.000 1.500.000 2.000.000 2.500.000 3.000.000 3.500.000 4.000.000 Base case (BC) Alternative 1 (A1) Variation A1 - BC Alternative 2 (A2) Variation A2 - BC Bus FGC (Light Rail) Metro RENFE (Heavy Rail) Retbus (BRT) Tram Figure 5-11: Ridership of each transit sub-mode in the base case and Alternative 1 in 2016 (reference transit assignment model). 72 Cost-Benefit Analysis of RetBus Figure 5-12: Comparison of bus ridership in Alternative 1 and the base case (2016). Bandwidth: ridership. Colors: Base case (red), Alternative 1 (blue) and shared in both variants (yellow). Figure 5-13: Comparison of metro ridership in Alternative 1 and the base case (2016). Bandwidth: ridership. Colors: Base case (red), Alternative 1 (blue) and shared in both variants (yellow). 73 Cost-Benefit Analysis of RetBus 5.2.3.1.1. Sensitivity to the value of the boarding and transfer penalties This sensitivity test has only been carried out in the case of Alternative 1, since no major differences between project alternatives are expected. If the values of the boarding and transfer penalties to BRT are set equal to those of bus (i.e. BPrail < BPBRT = BPbus and TPrail < TPBRT = TPbus), the transit assignment model yields the results presented in Table 5-19. The most relevant findings are the following: About 385.000 passengers will use the new BRT system per workday in 2016. This level of ridership is -110.000 passengers/workday lower than the one obtained by applying the reference transit assignment model (see Table 5-17). The RetBus system takes its passengers mostly from the bus system. In 2016, the share of BRT passengers that would use bus if the BRT system was not in place is much higher (63%) than with the reference model (45%); and the share of BRT passengers who would use metro (36%) is in turn much lower than with the reference model (52%) (see Table 5- 17). The BRT system causes bus ridership to decrease by -47%, while metro ridership diminishes to a considerably lower extent (-7%). These relative variations are different than those obtained by means of the reference model: with the reference model, the RetBus system competes to a lower extent with the bus system (it causes bus ridership to decrease by -42%) and competes to a higher extent with the metro system (it causes metro ridership to decrease by -13%) (see Table 5-17). The average distances per passenger do not change: 2,1 km for bus trip legs, 2,2 km for RetBus trip legs, and 4,6 km for metro trip legs. Table 5-19: Ridership of each transit sub-mode in the base case and Alternative 1 in 2016 (BRT boarding and transfer penalties equal to those of bus). Transit Number of passengers per workday Absolute Relative difference sub-mode Base case Alternative 1 difference (%) RetBus 0 383.323 +383.323 - Bus 528.657 281.958 -246.698 -46,7 Metro 1.995.834 1.853.243 -142.591 -7,1 FGC 174.396 166.636 -7.760 -4,4 Tram 107.724 103.850 -3.875 -3,6 RENFE 763.683 766.385 +2.702 +0,4 Total 3.570.294 3.555.395 -14.899 -0,4 If the values of the boarding and transfer penalties to BRT are set equal to those of rail (i.e. BPrail = BPBRT < BPbus and TPrail = TPBRT < TPbus), the transit assignment model yields the results presented in Table 5-20. The most relevant findings are the following: About 630.000 passengers will use the RetBus system per workday in 2016. This level of ridership is +135.000 passengers/workday higher than the one obtained by applying the reference transit assignment model (see Table 5-17). The RetBus system takes its passengers mostly from the metro system. In 2016, the share of BRT passengers that would use metro if the BRT system was not in place (61%) 74 Cost-Benefit Analysis of RetBus is much higher than with the reference model (52%); the share of BRT passengers that would use bus is much lower (30%) than with the reference model (45%) (see Table 5- 17). The RetBus system causes bus ridership to decrease by -36%, while metro ridership diminishes to a considerably lower extent (-19%). These relative variations are different than those obtained by means of the reference model: with the reference model, the RetBus system competes to a higher extent with the bus system (it causes bus ridership to decrease by -42%) and competes to a lower extent with the metro system (it causes metro ridership to decrease by -13%) (see Table 5-17). The average distances per passenger do not change significantly: 2,1 km for bus trip legs, 2,2 km for RetBus trip legs, and 4,8 km for metro trip legs. Table 5-20: Ridership of each transit sub-mode in the base case and Alternative 1 in 2016 (BRT boarding and transfer penalties equal to those of rail). Transit Number of passengers per workday Absolute Relative difference sub-mode Base case Alternative 1 difference (%) RetBus 0 631.874 +631.874 - Bus 528.657 339.422 -189.235 -35,8 Metro 1.995.834 1.607.789 -388.045 -19,4 FGC 174.396 149.773 -24.622 -14,1 Tram 107.724 95.393 -12.332 -11,4 RENFE 763.683 767.630 +3.947 +0,5 Total 3.570.294 3.591.881 -21.587 -0,6 The following conclusions can be drawn from this sensitivity test: a) The lower the BRT boarding and transfer penalties (the more similar to those of rail), the higher the level of ridership achieved by the RetBus system. This makes sense because reducing the value of the penalties causes a decrease in the generalized travel cost of RetBus trips, which increases the attractiveness of BRT routes. b) The lower the BRT penalties (the more similar to those of rail), the more strongly the RetBus competes for demand with the metro system. The main reason is that reducing the value of the BRT penalties causes a relative decrease in the generalized travel cost of RetBus trips in comparison to the travel cost of metro trips. In general, metro and RetBus seem to be mutually exclusive sub-modes in terms of route choice. c) The lower the BRT penalties (the more similar to those of rail), the less strongly the RetBus system competes for demand with the bus system. The RetBus system causes bus ridership to decrease to a lesser degree if the values of the penalties to BRT are set equal to those of rail than if they are set equal to those of bus. This counterintuitive finding may indicate that once the project will be implemented the bus network will function partially as a feeder to the RetBus network. On the one hand the RetBus and bus systems will be mutually exclusive transit sub-modes for certain routes, but on the other hand they will be complementary for some other routes (multimodal transit trips). d) The average distances per passenger of each transit sub-mode are not influenced by the value of the BRT penalties. 75 Cost-Benefit Analysis of RetBus 5.2.3.2. Private vehicle assignment The implementation of the RetBus project (alternatives 1 and 2) will have very little influence on car route choice. As shown in tables 5-21 and 5-22, the total number of vehicle-km/workday by private vehicle decreases in both project alternatives compared to the base case, but this is mostly a consequence of the decrease in private vehicle trips (due to a slight shift of modal split) rather than a consequence of changes in route choice. In fact, the average trip distance is almost equal in both project alternatives and the base case (12,6 km). The main reason is that the predicted shifts in modal split caused by both alternatives (-18.400 car trips/workday in Alternative 1 and -15.600 car trips/workday in Alternative 2 in 2016, network-wide) are too small to produce noticeable changes in congestion and thus car travel costs at the macro-scale. Table 5-21: Number of car trips and vehicle-km per workday and average car trip distance in the base case and Alternative 1 (TMB plan) in 2016. Absolute Relative Private vehicle, 2016 Base case Alternative 1 difference difference (%) Trips/workday 1.550.666 1.532.286 -18.380 -1,19 Vehicle-km/workday48 19.586.720 19.406.660 -180.060 -0,92 Average trip distance (km) 12,63 12,66 +0,03 +0,24 Table 5-22: Number of car trips and vehicle-km per workday and average car trip distance in the base case and Alternative 2 (Cost-reduction plan) in 2016. Absolute Relative Private vehicle, 2016 Base case Alternative 2 difference difference (%) Trips/workday 1.550.666 1.535.082 -15.584 -1,00 Vehicle-km/workday 19.586.720 19.426.270 -160.450 -0,82 Average trip distance (km) 12,63 12,65 +0,02 +0,19 As already mentioned in Section 5.1.2.3, this research does not take into account that some new bus lanes need to be built in order to operate the BRT system. Providing space for those bus lanes will reduce the capacity of some specific links of the roadway network, which may have a significant impact on car traffic congestion. However, that effect has not been included in the analysis. 5.3. Notes on forecast reliability The outputs of the travel demand forecast model must be interpreted with care. Their reliability is limited, since accurate prediction of travel demand is highly dependent on both the accuracy of input data and the model‟s predictive validity49. These two elements influencing reliability are discussed below with regard to the growth factor model (Section 5.3.1), the modal split model (Section 5.3.2) and the assignment models (Section 5.3.3) used to forecast travel demand. 48 All private vehicle trips have been assumed to be made by car (one passenger per vehicle). 49 According to Mackie and Preston (1998), the most common causes of unreliable travel demand predictions are: a) inaccurate forecast of external factors having an impact on travel demand (population, income, car ownership, fuel prices, etc); b) inaccurate forecast of transport network attributes (e.g. travel speeds, service frequencies or fares); and c) model errors (e.g. specification errors, lack of transferability in space and/or time, and aggregation errors). 76 Cost-Benefit Analysis of RetBus 5.3.1. Production of total trip OD matrices The reliability of the future total trip OD matrices depends on the accuracy of the base year OD matrix as well as the growth factor model specification and the estimated growth factors: The reliability of the base year OD matrix (TMB, 2007) is limited because it contains aggregate data on trips made by all user classes for all trip purposes; therefore, only average growth factors can be applied, which reduces the reliability of the predicted OD matrices. Trip growth rates have been assumed to be equivalent to predicted rates of population growth. Population is assumed to be the only variable influencing trip generation. This is obviously a limitation of the model, which does not account for other factors that may influence travel demand (e.g. average income, car ownership and fuel prices). The growth factor model does not take into account that OD patterns may mutate over time as a result of changes in the location of population and jobs, and changes in the transport network. Different growth factors have been defined for Barcelona and the rest of the RMB to account for differences in population growth rates; however, no trip distribution model has been applied. Hence possible changes in destination choice are not taken into account. For those reasons, the total trip OD matrices predicted by the growth factor model cannot be regarded as being highly accurate. However, the level of accuracy is deemed sufficient for the purpose of this research because of the following reasons: a) the impact of the RetBus project on trip generation is not expected to be high; and b) the appraisal period is not very long (2012- 2021) and no major changes in the population/job location patterns and the transport network are expected to occur in Barcelona during that period. 5.3.2. Modal split The reliability of the future transit and private vehicle OD matrices depends on the accuracy of the future total trip OD matrices and network characteristics as well as the modal split model specification and the estimated parameters: As already mentioned, the total trip OD matrices predicted by the growth factor model are not highly reliable. The predicted total trip OD matrices contain the number of trips between each OD pair made during one whole day (not specifically in the peak or off-peak hours). As a result, the effects of congestion on private vehicle travel time cannot be accurately forecasted. To solve this, current average travel speeds per road class have been used to predict future travel costs; because of that, the modal split model does not account for changes in travel costs resulting from changes in congestion. Moreover, this research does not take into account that some new bus lanes need to be built in order to operate the BRT system, which will reduce the capacity of some specific links of the roadway network and affect car traffic congestion. The zoning system is probably too coarse to accurately capture transit stop and line choice (particularly with regard to the bus network), and average values for operational 77 Cost-Benefit Analysis of RetBus speeds and service frequencies had to be used for many transit lines, due to lack of line- specific data. Both issues have an impact on the calculation of transit travel costs. The model specification is quite complete. The MNL modal split model includes a mode- specific constant accounting for unobserved attributes of generalized travel cost. It assumes that the sensitivity to travel cost is different for private vehicle and public transport trips. Also, it takes into account geographic differences in mode choice behavior. Finally, the parameters have been calibrated by means of observed modal split data. However, the model specification also has limitations: a) the transit and car trip modal sequences have been simplified; b) the results of assignment are not fed back to the modal split model, which may lead to an underestimation of the impacts of congestion on future car travel costs; c) the definition of transit trip utility has been simplified (e.g. the transfer penalty is the same for all transit sub-modes) and is not consistent with the definition used to model transit route choice; and d) the effect of modal shift on private vehicle demand has not been considered, which may lead to an underestimation of private vehicle trips and an overestimation of transit trips. The model predicts modal split with a 27,4% average error, which is an acceptable level of accuracy. This is of crucial importance, since the impact of the project on mode choice has a strong influence on its social and financial value. However, it should be noted that the total trip OD matrices used as input to the modal split model are not very reliable, which reduces the accuracy of the transit and car trip OD matrices forecasted by means of the modal split model. 5.3.3. Assignment This section discusses the reliability of the transit assignment model (Section 5.3.3.1) and the private assignment model (Section 5.3.3.2). 5.3.3.1. Transit assignment The reliability of the future transit flows and travel costs depends on the accuracy of the future transit trip OD matrices and network characteristics as well as the transit assignment model specification and the estimated parameters: As already mentioned, the modal split model is fairly reliable. However, the transit trip OD matrices predicted by means of that model cannot be considered very accurate, because of the limited reliability of the growth factor model. The zoning system is probably too coarse to accurately capture transit stop and line choice (particularly with regard to the bus network), and average values for operational speeds and service frequencies had to be used for many transit lines. Both issues have an influence on the calculation of transit travel costs. The parameters of the MNL model have been validated but they have not been properly calibrated due to the lack of data on observed transit route choice behavior. Some parameters specific to the BRT network have been estimated based on theoretical assumptions. In conclusion, the future transit flows and travel costs predicted by means of the transit assignment model cannot be considered highly reliable, particularly because the model parameters have not been properly calibrated. However, the model specification is based on 78 Cost-Benefit Analysis of RetBus sound theoretical assumptions and the results make sense. Therefore, the level of accuracy of the transit assignment outputs is deemed sufficient so as to use them to estimate the RetBus project effects. 5.3.3.2. Private vehicle assignment The reliability of the future car flows and travel costs depends on the accuracy of the future private vehicle trip OD matrices and roadway network characteristics as well as the car assignment model specification and the estimated parameters: As already mentioned, the modal split model is fairly accurate, although the car trip OD matrices predicted by means of that model cannot be considered very accurate, because of the limited reliability of the growth factor model.. The predicted total trip OD matrices contain the number of trips between each origin and destination made during one whole day. Estimations of travel demand in peak hour have been made based on data on traffic intensities over time, but those are coarse estimations. Data on intersection layout and control schemes is missing; therefore, the effects of intersections on network capacities have not been taken into account. As a result, the effects of congestion on private vehicle travel time cannot be accurately forecasted. Moreover, this research does not take into account that some new bus lanes need to be built in order to operate the BRT system, which will reduce the capacity of some specific links of the roadway network, and in turn affect car traffic congestion. The parameters of the BPR function have been validated based on theoretical assumptions; they have not been properly calibrated due to the lack of data on observed car route choice behavior. To sum up, the future car traffic flows and travel costs predicted by means of the car assignment model must be considered only rough estimations. However, the model specification is based on sound theoretical assumptions and the results make sense. Therefore, the level of reliability of the transit assignment outputs is considered sufficient so as to use them to estimate the RetBus project effects. It is important to note that the differences between project alternatives and base case are more relevant inputs to the cost-benefit analysis of the RetBus project than the absolute values of the transport forecasts for each project variant. 5.4. Conclusions This chapter (Chapter 5) has described the methodology used to predict travel demand in the future target years and has presented and analyzed the forecasts produced by means of that methodology. Those forecasts (particularly OD demand, traveler flows and travel costs per mode) are critical inputs to the estimation of some of the benefits and disbenefits caused by the RetBus project, mainly: change in operating revenues, transit user benefits, safety effects and environmental effects. The travel demand forecasting methodology used in this study is based on the traditional four- stage model, which has been adapted to fit the research objectives and the input data available. The travel demand forecasting model comprises three basic steps. First, total trip OD matrices are produced by means of a growth factor model. Second, a MNL modal split model has been used to disaggregate each future total trip OD matrix in a transit trip OD matrix and a private 79 Cost-Benefit Analysis of RetBus vehicle OD matrix. Finally, two different models have been used to assign transit trips and private vehicle trips to the transit and roadway networks, respectively. This has been done by means of a MNL transit assignment model and a DUE private vehicle assignment model. The travel demand forecasting model needs the following inputs: a) OD travel demand; b) zoning system; and c) characteristics of the roadway and public transport networks. This chapter has described the input data used in the present study. The travel demand forecasting model has been run by means of the software package OmniTRANS. This chapter has also presented the results of the demand forecasting exercise. The main findings are the following: The RetBus project (both alternatives 1 and 2) will have an impact on modal split in the RMB as a whole, causing a net increase of transit trips and a net decrease of private vehicle trips in the region. However, the changes in modal split at the regional level will be small (+0,89% if Alternative 1 is implemented, +0,75% if Alternative 2 is implemented). At the local level, the changes in modal split increase will not be homogeneous for all district OD pairs: the number of transit trips/workday will grow especially for those district pairs that have districts 3 (Sants-Montjuic), 4 (Les Corts), 7 (Horta-Guinardo) and 10 (Sant Marti) as origin and/or destination. Those districts are not located in the city centre. Hence it can be concluded that the RetBus system (both project alternatives) will improve transit travel costs (and thus will cause a shift in modal split towards public transport) mostly for trips made between or within peripheral districts. In fact, rather than improving the competitiveness of public transport within the whole city, what the new BRT system does is basically reducing the travel costs of transit trips between certain OD pairs that are not directly connected via metro and/or are only connected by regular bus lines. It is important to note that there are not big differences between alternatives 1 and 2 with respect to the impact of the project on modal split at the regional, district and zone level. It is expected that both project alternatives will have an impact on transit route choice. Some passengers will decide to take routes that (partially or totally) make use of the RetBus system instead of the other transit sub-modes, which are expected to lose ridership. In 2016, about 495.000 passengers per workday will use the BRT system if Alternative 1 is implemented (510.000 if Alternative 2 is implemented). Most of the RetBus passengers would use the bus and metro systems if the BRT system was not in place (45% would use bus and 52% would use metro if Alternative 1 is implemented, and 51% would use bus and 47% would use metro if Alternative 2 is implemented, in 2016). The implementation of the RetBus project will cause bus ridership to decrease by -42% if Alternative 1 is implemented (-49% in Alternative 2), while metro ridership will decrease to a considerably lower extent (-13% in Alternative 1, -12% in Alternative 2) in 2016. The differences between alternatives are mostly a result of the fact that a higher number of bus lines are eliminated in Alternative 2. A sensitivity test has been carried out to evaluate the robustness of the transit assignment results to changes in the values of the BRT transfer and boarding penalties. The main conclusions are the following: a) the lower the BRT boarding and transfer penalties (the more similar to those of rail), the higher the level of ridership achieved by the RetBus system; b) the metro and BRT systems are mutually exclusive in terms of route choice; and c) the bus and BRT systems are mutually exclusive for certain routes, but they are complementary for some other routes (i.e. the bus network functions partially as a feeder to the RetBus network). 80 Cost-Benefit Analysis of RetBus The implementation of the RetBus project will have very little influence on car route choice, since the predicted shift in modal split is too small to produce noticeable changes in congestion at the regional level. Finally, this chapter has also discussed the reliability of the travel demand forecasts. The forecasting model is imperfect and prone to predictive errors. The main reason is the limited accuracy of the input data (OD data, network characteristics, etc) and the limited predictive validity of the model (explanatory variables included, parameter calibration, etc). However, the forecasts produced by the model make sense and the level of accuracy is deemed sufficient for the purpose of this research, i.e. to make a preliminary evaluation of the most relevant effects of the RetBus project. The modal split model has a high level of reliability, while the growth factor model and the transit assignment models cannot be regarded as producing very highly accurate outputs, although they are sufficiently accurate to be used to estimate the RetBus project effects. Finally, the outputs produced by the car assignment model must be considered only rough estimations. Next Chapter (Chapter 6) presents and discusses the results of the cost-benefit analysis and compares the performance the two project alternatives. Also, the results of several sensitivity tests are discussed. Those tests have been carried out in order to analyze possible changes to the RetBus project that may improve its social and/or financial value, and to evaluate the robustness of the CBA results to changes in critical model parameters and the environment of the project. 81 Cost-Benefit Analysis of RetBus 6. Monetary evaluation This chapter presents the results of the cost-benefit analysis of the two project alternatives. Section 6.1 discusses the results of the SCBA and FCBA of alternatives 1 and 2, including a comparison of the performance of both project alternatives. Section 6.2 analyzes the results of several sensitivity tests that have been carried out in order to explore possible ways to improve the social and/or financial value of the RetBus project, and to evaluate the robustness of the CBA results. Section 6.3 presents the main findings and conclusions of this chapter. 6.1. The social and financial value of the RetBus project This section summarizes the results of the cost-benefit analysis of the two project alternatives. Sections 6.1.1 and 6.1.2 discuss the results of Alternative 1 and Alternative 2, respectively. Section 6.1.3 compares the performance of both project alternatives. 6.1.1. Alternative 1: TMB plan As observed in Table 6-1 and Figure 6-1, the social net present value (NPVSCBA) of Alternative 1 is positive (629,0 million euro). Consequently, from a socio-economic viewpoint, it is recommended to implement the project, since it is expected to contribute to social welfare. The chief reason why the project has a high NPVSCBA is that it will bring substantial benefits to transit users, namely a 707,5 million euro increase in total consumer surplus. Those transit user benefits mainly result from a decrease of the average transit travel cost in the RMB. Even though this decrease will be small (-0,18 euro/transit trip in 2016), it will have a considerable impact on total consumer surplus because the number of transit trips in the RMB is very high (more than 2 million transit trips per workday). In addition to transit user benefits, Alternative 1 will also generate other types of benefits, such as additional operating revenues (43,8 million euro), positive safety effects (22,3 million euro) and positive environmental effects (7,6 million euro). However, the present value of those benefits is much lower than that of transit user benefits. Additional operating revenues will be generated as a consequence of a slight increase in the total number of transit trips produced in the RMB (+0,89% in 2016). The positive safety and environmental effects will be mainly caused by a decrease in private vehicle trips. The project will produce a modal shift from private vehicle to public transport which will result in a decrease in the total mileage of private vehicles (-0,92% in 2016). Therefore, Alternative 1 will generate savings in external accident and environmental costs caused by private transport (31,0 and 14,1 million euro, respectively). It is important to point out that the project will generate an increase in the combined mileage of the bus and RetBus systems, and thus an increase in external accident and environmental costs caused by the public transport system (-8,7 and -6,6 million euro). However, the balance between the external cost savings resulting from a decrease in the total car mileage and the increase in external costs caused by the increase in transit mileage will be positive (22,3 and 7,6 million euro)50. 50 The unit safety and environmental costs (in euro/vehicle-km per traveler) of private vehicle trips are higher than those of transit trips (see Section 4.3.3). 82 Cost-Benefit Analysis of RetBus The present value of the total costs of Alternative 1 is -152,1 million euro. Those include the BRT investment costs (-35,2 million euro) as well as an increase in fleet replacement costs (-5,1 million euro) and operating costs (-111,9 million euro). The BRT investment costs include infrastructure costs (-8,7 million euro) and vehicle costs (-26,4 million euro). The project generates a net increase in fleet replacement costs. Although many of the vehicles used to run the RetBus system will be reallocated from the regular bus system, some new vehicles will also be required. As a result, the size of the combined bus and RetBus fleets in Alternative 1 (649 vehicles for the bus system and 256 vehicles for the BRT system, so 905 vehicles in total) will be a little bigger than the size of the bus fleet in the base case (891 vehicles), therefore the fleet replacement costs of Alternative 1 will be somewhat higher. In fact, the replacement costs of the bus fleet will decrease by 148,2 million euro, which is less than the replacement costs of the RetBus fleet (-153,3 million euro), resulting in a negative balance (-5,1 million euro). The increase in operating costs constitutes the main part of the project‟s costs. Although the changes in the existing bus network will result in savings in bus operating costs equal to 379,4 million euro, the operating costs of the new BRT system will be higher than those savings (-491,3 million euro). The difference between them is negative, therefore Alternative 1 will produce a net increase in operating costs (-111,9 million euro). The social benefit/cost ratio (BCRSCBA) of Alternative 1 is 18,87. This is a high BCRSCBA value, which indicates that the project delivers a high social value for money (18,87 euro of net social benefit in return for each euro invested). Alternative 1 (TMB plan) is expected to be socially beneficial for: a) transit users, who will benefit from the increase in consumer surplus (707,5 million euro); and b) society as a whole, which will benefit from the decrease in external accident and environmental costs (29,9 million euro). It should be noted that even though those benefits are expressed in monetary units, they do not imply monetary transactions to the beneficiaries. All the disbenefits of Alternative 1 (BRT investment costs and increase in fleet replacement costs and operational costs) are borne by TMB and the Government. The project is not beneficial to those parties, since the present value of the additional operating revenues is lower than the present value of the project‟s costs. As a result, the present value of the project‟s net benefits to TMB and the Government is negative (-108,4 million euro). That is also the financial net present value (NPVFCBA) of Alternative 1. The fact that the financial net present value is lower than zero means that the financial benefits generated by Alternative 1 are expected to be lower than its costs. The main reason why Alternative 1 has a negative NPVFCBA is that it generates a large increase in total operating costs (-111,9 million euro). The financial benefit/cost ratio (BCRFCBA) of Alternative 1 is negative (-2,08), which indicates that the project does not generate a net financial benefit in return for the money invested; actually it generates a net financial loss. Since Alternative 1 has a negative NPVFCBA and a negative BCRFCBA, the project should be rejected from a strictly financial point of view. 83 Cost-Benefit Analysis of RetBus Table 6-1: Cost-benefit analysis of Alternative 1: overview of costs and benefits, NPV and BCR for 2011. Note: numbers indicate the difference compared with the base case (positive numbers indicate more benefits or lower costs, negative numbers indicate more costs or fewer benefits). Alternative 1: TMB plan Average RetBus operational speed = 15 km/h RetBus fully operational at full demand in: 2016 Bus network: TMB plan changes fully operational in 2016 Extension of metro lines L9/L10 fully operational in: 2016 VOT: Value of working time Discount rate = 5% Annual increase of transit fares: 4% NPV Project effects BCR (million euro) 1. BRT investment costs -35,2 1.1. Infrastructure investment costs -8,7 1.2. Vehicle investment costs -26,4 2. Change in fleet replacement costs -5,1 2.1. Change in fleet replacement costs (BRT) -153,3 2.2. Change in fleet replacement costs (bus) 148,2 3. Change in operating costs -111,9 3.1. Change in operating costs (BRT) -491,3 3.2. Change in operating costs (bus) 379,4 4. Change in operating revenues 43,8 5. Transit user benefits 707,5 6. Safety effects 22,3 6.1. Change in external accident costs (private vehicles) 31,0 6.2. Change in external accident costs (transit) -8,7 7. Environmental effects 7,6 7.1. Change in noise costs (private vehicles) 5,9 7.2. Change in noise costs (transit) -3,3 7.3. Change in air pollution costs (private vehicles) 5,9 7.4. Change in air pollution costs (transit) -2,5 7.5. Change in climate change costs (private vehicles) 2,3 7.6. Change in climate change costs (transit) -0,8 SCBA Total 629,0 18,87 FCBA Total -108,4 -2,08 NPV Parties affected by the project (million euro) TMB / Government -108,4 Transit users 707,5 Society 29,9 84 Cost-Benefit Analysis of RetBus 6.1.2. Alternative 2: Cost-reduction plan As shown in Table 6-2 and Figure 6-1, the social net present value (NPVSCBA) of Alternative 2 is positive (817,4 million euro). Hence, it is recommended to implement the project from a socio- economic viewpoint, since it is expected to generate an increase in social welfare. The main reason why Alternative 2 has a high NPVSCBA is that it will bring substantial benefits to transit users (665,1 million euro increase in total consumer surplus). Transit user benefits mostly result from a decrease in the average transit travel cost in the RMB. Even though this decrease is small (-0,16 euro/transit trip in 2016), it will have a significant impact on total consumer surplus because the number of transit trips in the RMB is very high (more than 2 million transit trips per workday). Along with transit user benefits, Alternative 2 will also generate other kinds of benefits, including savings in fleet replacement costs and operating costs (28,5 and 85,0 million euro, respectively), additional operating revenues (37,6 million euro), positive safety effects (25,4 million euro) and positive environmental effects (11,0 million euro). However, the present value of those benefits is notably lower than that of transit user benefits. The savings in fleet replacement costs are caused by a reduction in the number of vehicles required to operate the bus system. The size of the combined bus and RetBus fleets in Alternative 2 (593 vehicles for the bus system and 256 vehicles for the BRT system, so 849 vehicles in total) will be smaller than the size of the bus fleet in the base case (891 vehicles); therefore, the fleet replacement costs of Alternative 2 are lower. In fact, the replacement costs of the bus fleet will decrease by 181,8 million euro, which is more than the replacement costs of the RetBus fleet (-153,3 million euro), and which results in a positive balance (28,5 million euro). As a result of the changes made in the bus network, Alternative 2 produces a decrease in the operating costs of the bus system (576,3 million euro). Those savings are higher than the operating costs of the new BRT system (-491,3 million euro). The difference between them is positive, hence Alternative 2 produces net savings in operating costs (85,0 million euro). Additional operating revenues are generated as a consequence of a minor increase in the total number of transit trips produced in the RMB (e.g. +0,75% in 2016). The positive safety and environmental effects are mainly caused by a decrease in private vehicle trips. The project will produce a modal shift from private vehicle to public transport which will result in a decrease in the total mileage of private vehicles (e.g. - 0,82% in 2016). Therefore, Alternative 2 will generate savings in external accident and environmental costs caused by private transport (27,5 and 12,6 million euro, respectively). On the other hand, the implementation of the project will generate an increase in the combined mileage of the bus and RetBus systems, and thus an increase in external accident and environmental costs caused by the public transport system (-2,1 and -1,6 million euro). However, the balance between the external cost savings resulting from a decrease in the total car mileage and the increase in external costs caused by the increase in transit mileage is positive (25,4 and 11,0 million euro, respectively). 85 Cost-Benefit Analysis of RetBus BRT investment costs (-35,2 million euro) constitute the only disbenefits of Alternative 2. The social benefit/cost ratio (BCRSCBA) of the project is 24,22, which indicates that the project delivers a high social value for money (24,22 euro of net social benefit per euro invested). Alternative 2 is expected to be beneficial for all parties affected by the benefits and disbenefits of the project. Firstly, transit users will benefit from the increase in consumer surplus (665,1 million euro). Secondly, society will benefit from a decrease in external accident and environmental costs (36,4 million euro). Finally, the project will also be beneficial to TMB and the Government, who will benefit from the savings in fleet replacement costs and operating costs, as well as from the generation of additional revenues. Although those two parties will pay for the BRT investment costs, the present value of those costs is lower than the sum of the savings in fleet replacement costs, the savings in operating costs and the additional revenues. Alternative 2 will bring 115,9 million euro of net present benefits to TMB and the Government. That is also the financial net present value (NPVFCBA) of the project. The financial net present value of Alternative 2 is greater than zero, which indicates that the financial benefits generated by the project will be higher than its costs. The most important reason why the project has a positive NPVFCBA is that it will produce considerable savings in operating costs (85,0 million euro). The financial benefit/cost ratio (BCRFCBA) of Alternative 2 is 4,29. This is a high BCRFCBA, which indicates that the project will generate 4,29 euro of net financial benefit in return for each euro invested. Since Alternative 2 has a NPVFCBA greater than zero and a BCRFCBA greater than 1, it is recommended to carry out the project from a financial point of view. Note that this is a very different result than the one obtained in the analysis of Alternative 1 (unlike Alternative 2, Alternative 1 is not financially profitable). 86 Cost-Benefit Analysis of RetBus Table 6-2: Cost-benefit analysis of Alternative 2: overview of costs and benefits, NPV and BCR for 2011. Note: numbers indicate the difference compared with the base case (positive numbers indicate more benefits or lower costs, negative numbers indicate more costs or fewer benefits). Alternative 2: Cost-reduction plan Average RetBus operational speed = 15 km/h RetBus fully operational at full demand in: 2016 Bus network: Cost-reduction plan changes fully operational in 2016 Extension of metro lines L9/L10 fully operational in: 2016 VOT: Value of working time Discount rate = 5% Annual increase of transit fares: 4% NPV Project effects BCR (million euro) 1. BRT investment costs -35,2 1.1. Infrastructure investment costs -8,7 1.2. Vehicle investment costs -26,4 2. Change in fleet replacement costs 28,5 2.1. Change in fleet replacement costs (BRT) -153,3 2.2. Change in fleet replacement costs (bus) 181,8 3. Change in operating costs 85,0 3.1. Change in operating costs (BRT) -491,3 3.2. Change in operating costs (bus) 576,3 4. Change in operating revenues 37,6 5. Transit user benefits 665,1 6. Safety effects 25,4 6.1. Change in external accident costs (private vehicles) 27,5 6.2. Change in external accident costs (transit) -2,1 7. Environmental effects 11,0 7.1. Change in noise costs (private vehicles) 5,3 7.2. Change in noise costs (transit) -0,8 7.3. Change in air pollution costs (private vehicles) 5,2 7.4. Change in air pollution costs (transit) -0,6 7.5. Change in climate change costs (private vehicles) 2,1 7.6. Change in climate change costs (transit) -0,2 SCBA Total 817,4 24,22 FCBA Total 115,9 4,29 NPV Parties affected by the project (million euro) TMB / Government 115,9 Transit users 665,1 Society 36,4 87 Cost-Benefit Analysis of RetBus 6.1.3. Comparison between alternatives 1 and 2 The only difference between project alternatives 1 and 2 lies in the configuration of the bus network: Alternative 1 contains 21 bus lines which are not present in Alternative 2 (see Section 4.3.1.2). As a result, the mileage of the bus system in Alternative 2 is nearly 5 million vehicle-km per year lower than in Alternative 1 (-19%), and the size of the vehicle fleet needed to operate the bus system in Alternative 2 is 56 vehicles lower than in Alternative 1 (-11%). This has important implications for the estimation of some project effects, such as the change in operating costs and fleet replacement costs, which have both a negative value in Alternative 1 but a positive value in Alternative 2 (see tables 6-1 and 6-2, and Figure 6-1): Because of changes in the bus network, Alternative 1 produces a decrease in bus operating costs of 379,4 million euro; however, Alternative 2 generates a much higher decrease (576,3 million euro). The operating costs of the RetBus system are the same in both project alternatives (-491,3 million euro). As a result, Alternative 1 generates a net increase in operating costs (-111,9 million euro), whereas Alternative 2 produces net cost savings (85,0 million euro). Alternative 1 produces a 148,2 million euro decrease in the fleet replacement costs of the bus system, but Alternative 2 reduces costs further (181,8 million euro). The fleet replacement costs of the BRT system are equal in both project alternatives (-153,3 million euro). Therefore, Alternative 1 generates a small net increase in fleet replacement costs (-5,1 million euro), while Alternative 2 generates net cost savings (28,5 million euro). The differences in the configuration of the bus network yields differences between both project alternatives in terms of transit travel costs. For some OD pairs, transit travel costs are a little higher in Alternative 2 than in Alternative 1. Those differences have an influence on mode choice and transit route choice. For that reason, the value of some project effects (namely, change in operating revenues and transit user benefits) is different in the two alternatives (see tables 6-1 and 6-2, and Figure 6-1): Operating revenues increase in both alternatives. However, this increase is slightly higher in Alternative 1 (43,8 million euro) than in Alternative 2 (37,6 million euro), the main reason being that the project causes a higher modal shift from private vehicle to public transport in Alternative 1 (e.g. +0,89% increase in the number of transit trips in the RMB in 2016) than in Alternative 2 (+0,75%). Transit user benefits are somewhat greater in Alternative 1 (707,5 million euro) than in Alternative 2 (665,1 million euro). The chief reason is that the project causes a higher decrease in transit travel costs. For example, compared with the base case, Alternative 1 reduces the average transit travel cost in the RMB by -0,18 euro/trip in 2016, while Alternative 2 reduces it by -0,16 euro/trip. Furthermore, the differences between project alternatives in terms of mileage of the bus system as well as transit travel costs and modal split between certain OD pairs result in different safety and environmental effects (tables 6-1 and 6-2, and Figure 6-1). On the one hand, Alternative 1 generates a greater increase in external accident and environmental costs caused by the transit system (-8,7 and -6,6 million euro, respectively) than Alternative 2 (-2,1 and -1,6 million euro), since the aggregated mileage of the bus and RetBus systems is higher in Alternative 1. But on 88 Cost-Benefit Analysis of RetBus the other hand, Alternative 1 produces a greater decrease in external accident and environmental costs caused by private vehicles (31,0 and 14,1 million euro) than Alternative 2 (27,5 and 12,6 million euro), the main reason being that Alternative 1 produces a greater modal shift from private vehicle to public transport. If those two effects are aggregated, the result is that Alternative 1 generates slightly lower savings in external accident and environmental costs (22,3 and 7,6 million euro, respectively) than Alternative 2 (25,4 and 11,0 million euro). Figure 6-1: Cost-benefit analysis of alternatives 1 and 2: overview of costs and benefits, and NPV for 2011 (numbers indicate the difference compared with the base case). Present value of costs and benefits (2011): Alternatives 1 and 2 Million euro -200 0 200 400 600 800 1000 BRT investment costs -35,2 Change in fleet replacement costs -5,1 Change in operating costs -111,9 Change in operating revenues 43,8 NPV(FCBA) -108,4 Alt. 1 Transit user benefits 707,5 Safety effects 22,3 Environmental effects 7,6 Benefits to society as a whole 29,9 NPV(SCBA) 629,0 BRT investment costs -35,2 Change in fleet replacement costs 28,5 Change in operating costs 85,0 Change in operating revenues 37,6 NPV(FCBA) 115,9 Alt. 2 Transit user benefits 665,1 Safety effects 25,4 Environmental effects 11,0 Benefits to society as a whole 36,4 NPV(SCBA) 817,4 If the present values of all project effects are added up, it can be seen that the differences in the bus network between alternatives 1 and 2 have a significant influence on the social net present value (NPVSCBA) of the project. The NPVSCBA is positive in both project alternatives, but it is considerably higher in Alternative 2 (817,4 million euro) than in Alternative 1 (629,0 million euro). Therefore, it can be concluded that Alternative 2 produces a higher increase in social welfare (188,4 million euro extra). The social benefit/cost ratio (BCRSCBA) is also higher in Alternative 2 (24,22) than in Alternative 1 (18,87), which means that Alternative 2 delivers better social value for money than Alternative 1 (5,35 euro of additional net present benefit in return for each euro of investment cost). 89 Cost-Benefit Analysis of RetBus The differences in the bus network between alternatives 1 and 2 also have a considerable influence on the financial net present value (NPVFCBA) of the project. The NPVFCBA turns out to be negative in Alternative 1 (-108,4 million euro) but positive in Alternative 2 (115,9 million euro). Therefore, only Alternative 2 is beneficial from a financial point of view. Alternative 1 ought to be rejected based on financial criteria, since the financial benefits generated by the project are expected to be lower than its costs. This conclusion is also supported by the comparison between the financial benefit/cost ratios of the two alternatives. The BCRFCBA of Alternative 1 is -2,08, which shows that the project generates net financial losses, while the BCRFCBA of Alternative 2 is 4,29, indicating that the project brings 4,29 euro of net financial benefit in return for each euro invested. The comparison of the SCBA results of the two alternatives clearly indicates that the two alternatives of the RetBus project under study are socially beneficial, i.e. they contribute positively to social welfare, although Alternative 2 is more beneficial than Alternative 1. In contrast, the results show that Alternative 1 is not profitable from a strictly financial point of view, while Alternative 2 is. Alternative 2 is financially profitable because it allows for considerable savings in operating costs and fleet replacement costs. Interestingly, the differences in the configuration of the bus network have a small impact on transit user benefits and operating revenues, which are similar in both project alternatives. In conclusion, if Alternative 2 instead of Alternative 1 were implemented, the RetBus project could become more socially beneficial and at the same time become financially profitable. The latter is of particular interest to TMB and the local government. For those particular parties, Alternative 1 is not beneficial, since the present value of the net benefits that directly affects them is negative. On the contrary, Alternative 2 is expected to be beneficial for all parties affected by the project, including TMB and the local government. 6.2. Sensitivity analysis Several sensitivity analyses have been carried out in order to explore possible ways to improve the social and/or financial value of the RetBus project (both alternatives), and to evaluate the robustness of the CBA results to changes in critical model parameters and the environment of the project. The impact of the following changes has been investigated: a) increase of the average BRT operational speed (from 15 to 20 km/h); b) completion of the project in two years (2012-2013) instead of four (2012-2015); c) assuming that the extension of metro lines L9-L10 will not start operations within the appraisal period (i.e. before 2021); d) raise of the annual fare increase rate (from 4 to 5%); e) use of a lower value of time (75% of the value of working time instead of 100% of the value of working time); and f) increase of the discount rate from 5 to 7% to include a risk-premium. The results of those sensitivity tests are discussed in sections 6.2.1- 6.2.6. The cost-benefit overview tables can be found in Annex J. 6.2.1. Average BRT operational speed As observed when comparing tables 6-1 and 6-2 with tables J-1 and J-2 (Annex J), increasing the average operational speed of the RetBus system from 15 km/h to 20 km/h (+33%) has a very significant impact on the CBA results of both alternatives: a) The social net present value (NPVSCBA) of Alternative 1 rises from 629,0 to 1.424,9 million euro, while the NPVSCBA of Alternative 2 increases from 817,4 to 1.616,3 million euro. Furthermore, the social benefit/cost ratio (BCRSCBA) of Alternative 1 changes from 90 Cost-Benefit Analysis of RetBus 18,87 to 64,05, and the BCRSCBA of Alternative 2 increases from 24,22 to 72,52. Therefore, if the average BRT operational speed is increased to 20 km/h both project alternatives produce a greater increase in social welfare and deliver much more social value in return for the money invested. From a socio-economic viewpoint, Alternative 2 continues to be more beneficial and to deliver better value for money than Alternative 1. b) The financial net present value (NPVFCBA) of Alternative 1 changes from -108,4 to 114,0 million euro, and the NPVFCBA of Alternative 2 increases from 115,9 to 338,7 million euro. Additionally, the financial benefit/cost ratio (BCRFCBA) of Alternative 1 changes from - 2,08 to 6,04, and the BCRFCBA of Alternative 2 increases from 4,29 to 15,99. Clearly, an increase in the operational speed of the RetBus system makes both project alternatives produce a greater net financial benefit and deliver a better financial value in return for the money invested. In fact, Alternative 1 produces net financial losses if the operational speed is 15 km/h but it becomes financially profitable if the speed is increased to 20 km/h. Even so, from a financial perspective, Alternative 2 continues to be more beneficial and to deliver better value for money than Alternative 1. The main reasons why increasing the BRT operational speed from 15 to 20 km/h makes the two project alternatives more socially and financially beneficial are the following. First and most importantly, transit travel costs decrease further for many OD pairs. As a result, both alternatives generate higher transit user benefits. Second, this higher increase in transit travel costs also has an influence on mode choice and transit route choice. In comparison with the base case, the total number of transit trips within the RMB in 2016 increases by +1,99% in Alternative 1 and +1,86% in Alternative 2, while those growth rates are much lower if the BRT operational speed is 15 km/h (+0,89% and +0,75%, respectively). As a result of that higher modal shift from private vehicle to transit, the value of additional operating revenues, safety effects and environmental effects is much larger. Third, the size of the vehicle fleet needed to operate the RetBus system is -65 vehicles lower (-25%), which reduces vehicle investment costs and fleet replacement costs. Finally, as a result of the increase in operational speed, the unit operating costs of the RetBus system decrease from 4,01 to 3,01 euro/vehicle-km, which causes a decrease in total operating costs. In conclusion, increasing the average operational speed of the BRT system (e.g. through infrastructural and traffic management measures) would make both project alternatives considerably more beneficial from both the social and financial points of view. However, it should be noted that an increase in RetBus ridership would lead to higher vehicle occupancy levels. This sensitivity test has not taken into account that it may be necessary to increase the BRT capacity (e.g. by means of higher service frequencies, larger vehicles, etc.), which in turn would have an impact on vehicle investment costs, fleet replacement costs and BRT operating costs. 6.2.2. Project completion date If tables 6-1 and 6-2 are compared with tables J-3 and J-4 (Annex J), it can be seen that speeding up the implementation of the project has relevant impacts on the CBA results of both alternatives: a) The social net present value (NPVSCBA) of Alternative 1 rises from 629,0 to 712,0 million euro, while the NPVSCBA of Alternative 2 increases from 817,4 to 893,7 million euro. Also, 91 Cost-Benefit Analysis of RetBus the social benefit/cost ratio (BCRSCBA) of Alternative 1 changes from 18,87 to 20,78, and the BCRSCBA of Alternative 2 increases from 24,22 to 25,83. Clearly, if the project is realized in two years instead of four, both project alternatives generate a greater increase in social welfare and deliver better social value in return for the money invested. Yet from a social viewpoint Alternative 2 is more beneficial and delivers better value for money than Alternative 1. b) The financial net present value (NPVFCBA) of Alternative 1 decreases from -108,4 to - 124,7 million euro, and the NPVFCBA of Alternative 2 increases from 115,9 to 133,4 million euro. The financial benefit/cost ratio (BCRFCBA) of Alternative 1 changes from -2,08 to - 2,46, and the BCRFCBA of Alternative 2 increases from 4,29 to 4,71. These results show that completing the project two years earlier has a different influence on the financial performance of both alternatives. Alternative 1 produces a greater net financial loss; conversely, Alternative 2 generates a bigger net financial benefit and delivers better financial value in return for the money invested. The chief reason why speeding up the realization of the project makes Alternative 1 more socially beneficial but less financially beneficial and Alternative 2 both more socially and financially beneficial is herewith explained. No matter whether the project is completed in 2013 or 2015, Alternative 1 produces net social benefits and net financial losses every year, while Alternative 2 generates both net social benefits and net financial benefits every year. If the project is realized in two years instead of four, the project yields higher net benefits (costs) in the earlier years of the appraisal period, mainly because the ramp-up period includes only three years (2012-2014) instead of five (2012-2016). Therefore, if the project is completed in 2013 instead of 2015, the aggregation of cost and benefit streams yields a more positive NPVSCBA in both alternatives, a more negative NPVFCBA in Alternative 1 and a more positive NPVFCBA in Alternative 2. To sum up, completing the project in two years instead of four would make both alternatives slightly more beneficial from a social point of view. Additionally, Alternative 2 would become more financially profitable; however, Alternative 1 would produce a greater net financial loss. 6.2.3. Development of metro lines L9/L10 As seen when comparing tables 6-1 and 6-2 with tables J-5 and J-6 (Annex J), a delay in the completion of the metro lines L9/L10 extension has the following impacts on the CBA results of both alternatives: a) The social net present value (NPVSCBA) of Alternative 1 rises from 629,0 to 875,1 million euro, while the NPVSCBA of Alternative 2 increases from 817,4 to 1.043,8 million euro. In addition, the social benefit/cost ratio (BCRSCBA) of Alternative 1 changes from 18,87 to 25,86, and the BCRSCBA of Alternative 2 increases from 24,22 to 30,65. Therefore, if the extended metro lines were not operational before 2021, both project alternatives would produce a higher increase in social welfare and deliver more social value in return for the money invested. However, from a social viewpoint Alternative 2 continues to be more beneficial and to deliver better value for money than Alternative 1. b) The financial net present value (NPVFCBA) of Alternative 1 changes from -108,4 to -95,7 million euro, and the NPVFCBA of Alternative 2 increases from 115,9 to 126,8 million euro. Also, the financial benefit/cost ratio (BCRFCBA) of Alternative 1 changes from -2,08 to - 92 Cost-Benefit Analysis of RetBus 1,72, and the BCRFCBA of Alternative 2 increases from 4,29 to 4,60. These results clearly demonstrate that a delay in the completion of metro lines L9/L10 would cause both alternatives to perform better from a financial perspective: Alternative 1 produces lower net financial losses, while Alternative 2 generates a greater net financial benefit and delivers better financial value in return for the money invested. The main reason why a delay in the extension of metro lines L9/L10 makes the two project alternatives more socially and financially beneficial is the following. The implementation of the project causes transit travel costs to decrease further for some OD pairs. As a consequence, both alternatives generate higher transit user benefits. Additionally, this greater decrease in transit travel costs influences modal split: the project produces a higher increase in transit trips if the metro network does not include the extension of metro lines L9/L10. In comparison with the base case, the total number of transit trips within the RMB in 2016 increases by +1,14% in Alternative 1 and +0,96% in Alternative 2 if lines L9/L10 are not operational, while those variations are lower if the extension of metro lines L9/L10 is completed on time (+0,89% and +0,75%, respectively)51. As a result of that higher modal shift from private vehicle to transit, the value of additional operating revenues, safety effects and environmental effects is higher. To conclude, the results of this sensitivity test show that if the completion of metro lines L9/L10 happened to be delayed, the two project alternatives would become more beneficial from both the social and financial perspectives, since then the BRT system would improve the transit service in the RMB to a higher extent in comparison with the base case. 6.2.4. Annual fare increase rate As seen when comparing tables 6-1 and 6-2 with tables J-7 and J-8 (Annex J), increasing the annual STI fare increase rate from 4% to 5% influences the CBA results of both alternatives in the following ways: a) The social net present value (NPVSCBA) of Alternative 1 decreases from 629,0 to 538,1 million euro, while the NPVSCBA of Alternative 2 is reduced from 817,4 to 724,3 million euro. Furthermore, the social benefit/cost ratio (BCRSCBA) of Alternative 1 changes from 18,87 to 16,29 and the BCRSCBA of Alternative 2 decreases from 24,22 to 21,58. Clearly, if the annual fare increase rate is raised to 5%, both project alternatives are still socially beneficial but they produce a lower increase in social welfare and deliver less social value in return for the money invested. From a socio-economic viewpoint, Alternative 2 continues to be more beneficial and to deliver better value for money than Alternative 1. b) The financial net present value (NPVFCBA) of Alternative 1 increases from -108,4 to 191,1 million euro, and the NPVFCBA of Alternative 2 increases from 115,9 to 414,9 million euro. In addition, the financial benefit/cost ratio (BCRFCBA) of Alternative 1 changes from -2,08 to 6,43, and the BCRFCBA of Alternative 2 increases from 4,29 to 12,79. This means that raising the annual fare increase rate to 5% causes both project alternatives to 51 The reason for this difference is that the BRT system provides transit routes with lower travel costs than the existing ones for 32% of all OD pairs if the extended metro lines L9/L10 are operational, but this percentage is higher (35%) if those lines are not operational. Therefore, the BRT system improves the competitiveness of transit routes compared to car routes for a higher number of OD pairs if metro lines L9/L10 are not operational, which influences modal split. This makes sense, since metro lines L9/L10 and BRT line H4 run almost parallel with similar average frequency and stop spacing, but metro lines operate with a higher speed. 93 Cost-Benefit Analysis of RetBus produce greater net financial benefits and deliver a better financial value for money. Interestingly, Alternative 1 is not financially profitable if the annual increase rate is 4% but it becomes profitable if the rate is increased to 5%. However, from a financial perspective, Alternative 2 continues to be more beneficial and deliver better value for money than Alternative 1. The main reasons why raising the annual fare increase rate makes the two project alternatives less socially beneficial but more financially profitable are the following. First, in comparison with the base case, transit travel costs decrease to a lesser extent for all OD pairs. As a result, both alternatives generate lower transit user benefits. Second, this smaller decrease in transit travel costs also has an influence on mode choice. In comparison with the base case, the total number of transit trips within the RMB in 2016 increases by +0,47% in Alternative 1 and +0,34% in Alternative 2, while those growth rates are higher if the annual fare increase rate is 4% (+0,89% and +0,75%, respectively). However, in 2021 the total number of transit trips within the RMB decreases by -0,10% in Alternative 1 and -0,26% in Alternative 2 (those growth rates are positive if the rate is 4%: +1,02% and +0,86%, respectively). As a result of the combination of a lower modal shift from private vehicle to transit in 2016 and a modal shift from transit to private vehicle in 2021, the safety and environmental effects are negative for both alternatives. Therefore, increasing the annual fare increase rate to 5% generates an increase in external accident and environmental costs. Third, raising transit fares produces a considerable increase in the additional operating revenues generated by the implementation of the project, even though the project does not cause transit ridership to increase as much as if the annual fare increase rate is kept constant. The main conclusion is that raising STI transit fares may allow the investors to receive higher financial returns (thus recovering their investment) by obtaining a fraction of the transit user benefits generated by the project, while the project would continue to be socially beneficial (even though it will become less beneficial due to a lower increase of transit ridership). However, care must be taken when determining the new fares so that this is not done at the expense of producing smaller or negative safety and environmental effects. 6.2.5. Value of time As seen when comparing tables 6-1 and 6-2 with tables J-9 and J-10 (Annex J), assuming a lower value of travel time (75% of the value of working time) significantly influences the CBA results of both alternatives: a) The social net present value (NPVSCBA) of Alternative 1 decreases from 629,0 to 456,1 million euro, while the NPVSCBA of Alternative 2 is reduced from 817,4 to 662,5 million euro. Also, the social benefit/cost ratio (BCRSCBA) of Alternative 1 changes from 18,87 to 13,96 and the BCRSCBA of Alternative 2 decreases from 24,22 to 19,82. These results show that if a VOT equal to 75% of the value of working time is assumed, both project alternatives are still socially beneficial but they produce a lower increase in social welfare and deliver less social value in return for the money invested. Note that from a socio- economic viewpoint, Alternative 2 continues to be more beneficial and to deliver better value for money than Alternative 1. b) The financial net present value (NPVFCBA) of Alternative 1 decreases from -108,4 to - 118,9 million euro, and the NPVFCBA of Alternative 2 is reduced from 115,9 to 106,9 million 94 Cost-Benefit Analysis of RetBus euro. The financial benefit/cost ratio (BCRFCBA) of Alternative 1 changes from -2,08 to - 2,38, and the BCRFCBA of Alternative 2 decreases from 4,29 to 4,04. Therefore, if a lower VOT is assumed, both project alternatives have a lower financial performance: Alternative 1 produces a greater net financial loss, while Alternative 2 generates a lower net financial benefit and delivers less financial value in return for the money invested. The main reasons why using a lower VOT causes the two project alternatives to become less beneficial (from both the social and financial points of view) are the following. First, in comparison to the base case, transit travel costs decrease to a lesser extent for all OD pairs. As a result, both alternatives generate lower transit user benefits. Second, if a VOT equal to 75% of the value of working time is assumed, the project causes a slightly lower modal shift from private vehicle to public transport. For instance, in comparison with the base case, the total number of transit trips within the RMB in 2016 increases by +0,65% in Alternative 1 and +0,55% in Alternative 2, while those growth rates are higher if a VOT equal to the value of working time is assumed (+0,89% and +0,75%, respectively). The reason for this difference is the effect of a lower VOT on the difference between the competitiveness of transit routes with car routes. As a result of that lower modal shift from private vehicle to transit, the value of additional operating revenues, safety effects and environmental effects is lower. In conclusion, the two project alternatives are somewhat less beneficial (from both the social and financial viewpoints) if a lower value of travel time (VOT) is assumed. However, the main findings of the cost-benefit analysis still hold: a) both project alternatives are socially beneficial, although Alternative 2 contributes to social welfare to a greater extent than Alternative 1; and b) Alternative 1 is not profitable from a financial perspective, while Alternative 2 is profitable. 6.2.6. Discount rate If tables 6-1 and 6-2 are compared with tables J-11 and J-12 (Annex J), it can be seen that using a higher rate to discount the costs and benefits in the future (7% instead of 5%) has the following impact on the CBA results of both alternatives: a) The social net present value (NPVSCBA) of Alternative 1 decreases from 629,0 to 558,9 million euro, while the NPVSCBA of Alternative 2 is reduced from 817,4 to 726,6 million euro. Also, the social benefit/cost ratio (BCRSCBA) of Alternative 1 changes from 18,87 to 17,63 and the BCRSCBA of Alternative 2 decreases from 24,22 to 22,63. Clearly, if the discount rate is set to 7%, both project alternatives continue to be socially beneficial but they produce a lower increase in social welfare and deliver less social value in return for the money invested. From a socio-economic perspective, Alternative 2 continues to be more beneficial and to deliver better value for money than Alternative 1. b) The financial net present value (NPVFCBA) of Alternative 1 changes from -108,4 to -98,6 million euro, and the NPVFCBA of Alternative 2 decreases from 115,9 to 101,1 million euro. In addition, the financial benefit/cost ratio (BCRFCBA) of Alternative 1 changes from - 2,08 to -1,93, and the BCRFCBA of Alternative 2 decreases from 4,29 to 4,01. These results indicate that if a risk premium is added to the discount rate, Alternative 1 produces lower net financial losses, while Alternative 2 generates lower net financial benefits and delivers a lower financial value in return for the money invested. Therefore, if a higher discount rate is used, Alternative 1 turns out to be less socially beneficial but at the same time it becomes less financially unprofitable, while Alternative 2 becomes both 95 Cost-Benefit Analysis of RetBus less socially beneficial and less financially beneficial. The main reason is that a higher discount rate reduces the weight of benefits and costs caused by the project in the future. As a consequence, the present value of the aggregated cost and benefit streams is lower. This sensitivity test confirms the main findings of the cost-benefit analysis. 6.3. Conclusions This chapter has presented the results of the cost-benefit analysis of Alternative 1 (TMB plan) and Alternative 2 (Cost-reduction plan). The main findings are the following (see Table 6-3): a) Both project alternatives are socially beneficial, i.e. they contribute to social welfare, the chief reason being that they bring substantial benefits to transit users (i.e. increase in consumer surplus). The NPVSCBA is 629,0 million euro in Alternative 1 and 817,4 million euro in Alternative 2. Therefore, Alternative 2 is more beneficial than Alternative 1 from a social viewpoint. This is due to the fact that Alternative 2 has considerably lower operating costs than Alternative 1, while transit user benefits and additional operating revenues are similar in both alternatives. b) There is a fundamental difference between the two alternatives in terms of financial performance: Alternative 1 is not financially profitable, while Alternative 2 is (the NPVFCBA is -108,4 million euro in Alternative 1 and 115,9 million euro in Alternative 2). The main reason is that Alternative 2 has considerably lower operating costs, since the bus network includes a smaller number of lines, while additional operating revenues are similar in both alternatives. Table 6-3: Results of the cost-benefit analysis: social and financial NPV and BCR for 2011 (numbers indicate the difference compared with the base case). SCBA FCBA Project alternative NPV NPV SCBA BCR FCBA BCR (million euro) SCBA (million euro) FCBA Alternative 1 (TMB plan) 629,0 18,87 -108,4 -2,08 Alt. 1 / BRT speed 20 km/h 1.424,9 64,05 114,0 6,04 Alt. 1 / completion in 2013 712,0 20,78 -124,7 -2,46 Alt. 1 / Lines L9-L10 not operational 875,1 25,86 -95,7 -1,72 Alt.1 / fare increase 5% 538,1 16,29 191,1 6,43 Alt.1 / lower VOT 456,1 13,96 -118,9 -2,38 Alt.1 / discount rate 7% 558,9 17,63 -98,6 -1,93 Alternative 2 (Cost-reduction plan) 817,4 24,22 115,9 4,29 Alt. 2 / BRT speed 20 km/h 1.616,3 72,52 338,7 15,99 Alt. 2 / completion in 2013 893,7 25,83 133,4 4,71 Alt. 2 / Lines L9-L10 not operational 1.043,8 30,65 126,8 4,60 Alt. 2 / fare increase 5% 724,3 21,58 414,9 12,79 Alt. 2 / lower VOT 662,5 19,82 106,9 4,04 Alt. 2 / discount rate 7% 726,6 22,63 101,1 4,01 96 Cost-Benefit Analysis of RetBus In conclusion, if Alternative 2 instead of Alternative 1 were implemented, the RetBus project would become more socially beneficial and at the same time it would become financially profitable. The latter is of particular interest to the project investors (TMB and the local government). However, it should be noted that total transit ridership in the RMB is somewhat lower in Alternative 2. This chapter has also discussed the results of several tests examining the sensitivity of the CBA results to changes in critical model parameters, the project characteristics and the environment of the project. The main conclusions of the sensitivity analysis are the following (see Table 6-3): a) By increasing the average BRT operational speed (by means of infrastructural, traffic management and/or other types of measures), both project alternatives would become considerably more beneficial from both the social and financial points of view. b) By completing the project in two years instead of four, both project alternatives would become more beneficial from a socio-economic perspective. In addition, Alternative 2 would become more profitable from a financial viewpoint, but Alternative 1 would become more unprofitable. c) If metro lines L9/L10 were finally completed later than planned, both project alternatives would become more beneficial from both the social and financial viewpoints. d) By raising STI transit fares, the financial performance of both project alternatives could be increased: Alternative 1 would become profitable and Alternative 2 would become more profitable. At the same time, raising transit fares decreases the social value of both project alternatives, although the project could still be beneficial from a social viewpoint. It should be noted that if STI fares were increased too much, the project may produce negative safety and environmental effects. e) If a lower VOT is assumed, both alternatives become less beneficial (both in social and financial terms). Even so, the main findings of the CBA of the RetBus project still hold. f) If a 7% discount rate is used, Alternative 1 turns out to be less socially beneficial but at the same time it becomes less financially unprofitable, while Alternative 2 becomes both less socially beneficial and less financially beneficial. Even so, the main findings of the cost-benefit analysis of the RetBus project still hold. The next chapter presents the conclusions of this research study. 97 Cost-Benefit Analysis of RetBus 7. Conclusions This thesis investigates whether and to what extent the RetBus project will be socially beneficial to the region of Barcelona and financially profitable to the investors/operators. The study also explores what changes could be made to the project in order to make it more beneficial from the social and/or financial points of view. This final chapter presents the main findings and conclusions of the thesis. Section 7.1 briefly describes the problem under study and the methodological approach used to evaluate the RetBus project. Section 7.2 summarizes the main findings of this thesis. Section 7.3 presents the conclusions of the evaluation and answers the two primary research questions. Section 7.4 contains some recommendations concerning the configuration of the RetBus project, as well as suggestions for further research. Section 7.5 contains a personal reflection on the research process and final results. 7.1. Research objectives and methodological approach In 2008, the City Council of Barcelona approved the Urban Mobility Plan 2006-2012, which defines a mobility strategy based on the principles of equity, safety, sustainability and efficiency. One of the main objectives of that plan is to increase the modal share of public transport and reduce the modal share of private vehicles, so as to reduce energy consumption per inhabitant related to mobility, emissions of air pollutants and greenhouse gases, and fatalities due to traffic accidents (Ajuntament de Barcelona, 2008). In order to improve the public transport service in Barcelona the City Council is planning to realize several projects. One of them is the RetBus project, which involves building a new Bus Rapid Transit (BRT) system called RetBus. In line with the Urban Mobility Plan, the main objective of the RetBus system is to provide a higher quality bus service to transit users at a lower cost for the operator (Daganzo, 2010). In parallel to the implementation of the BRT system, some existing bus lines will be eliminated, shortened or their frequency will be reduced, in order to avoid bus route overlaps and free the vehicles needed to operate the RetBus system (CENIT, 2010). The BRT network has a hybrid grid-radial structure (11 lines) with an average stop spacing of 650 m (similar to that of the metro system), which will be reduced to 433 in the city centre. The service frequency is 20 services per hour in the grid (similar to that of metro) and 10 in peripheral line segments. The operational speed is 15 km/h (between that of metro and bus). Essentially, the RetBus network provides lower spatial accessibility than the existing bus network, but that is compensated by higher time accessibility. The new BRT system has been designed to provide a service of intermediate quality between metro and bus; therefore it is expected to attract current users of both systems. In addition, the RetBus system is expected to improve the competitiveness of the public transport network as a whole, thus attracting current private vehicle users (CENIT, 2010). The City Council of Barcelona and the transit operator Transports Metropolitans de Barcelona (TMB) need to make a decision on whether to implement the RetBus project. They would like to make that decision based on an assessment of both the social and financial value of the project. This thesis has performed a preliminary evaluation of the most relevant effects of the RetBus project, which should be of assistance to the City Council and TMB in the process of decision- making. The main research questions this thesis aims to answer are: To what extent will the implementation of the RetBus project be socially and financially beneficial? What modifications could be made in the RetBus project so as to improve its social and/or financial value? 98 Cost-Benefit Analysis of RetBus The methodological approach used to evaluate the RetBus project is herewith explained. Based on the results of a literature review, cost-benefit analysis (CBA) has been selected as the most suitable evaluation approach. CBA indicates the extent to which the benefits generated by a specific project will exceed its costs, all benefits and costs being expressed in monetary terms (Pearce and Nash, 1981). Multi-criteria analysis (MCA), an alternative evaluation approach, has been discarded because of its subjective nature and the fact that it does not indicate whether a project is attractive per se. Both a financial cost-benefit analysis (FCBA) and a social cost- benefit analysis (SCBA) have been carried out, since they provide complementary information with which to evaluate the project. The FCBA answers the question of whether the RetBus project will result in adequate financial returns to justify the costs incurred by the investors/operators (TMB and the Government). In contrast, the social cost-benefit analysis (SCBA) indicates whether the RetBus project will generate an increase in social welfare in the region of Barcelona. In this study, the SCBA focuses mainly on direct project effects (partial SCBA). The project impacts included in the FCBA are: BRT investment costs; change in fleet replacement costs; change in operating costs; and change in operating revenues. The SCBA includes all the effects mentioned above plus transit user benefits, safety effects and environmental effects. A methodology based on the CBA step-by-step plans proposed by Eijgenraam et al (2000) and UNECE (2003) has been used to perform the cost-benefit analysis. The appraisal period comprises ten years (2012-2021). The base case has been defined as a scenario in which the RetBus project is not implemented. Two project alternatives have been analyzed: a) Alternative 1 (TMB plan), which defines the RetBus project as it would be implemented according to the plans of TMB; and b) Alternative 2 (Cost-reduction plan), which contains all the elements of Alternative 1 plus additional changes in the bus network (21 extra bus lines are removed). By including Alternative 2 in the evaluation, the study attempts to determine whether making further adjustments to the bus network could make the RetBus project more socially beneficial and/or financially profitable. The underlying rationale is that, by eliminating bus lines that are expected to considerably lose patronage after the implementation of the RetBus project, it may be possible to reduce the total operating costs of the bus system without losing too many transit users. This view implicitly assumes that the BRT system would compete more strongly for demand with the bus system than with the metro system. Travel demand forecasts (particularly future OD demand, traveler flows and travel costs per mode) are necessary to estimate some effects of the RetBus project, namely change in operating revenues, transit user benefits, safety effects and environmental effects. In this thesis, an adapted version of the traditional four-stage model (Ortuzar and Willumsen, 2001) has been used to forecast travel demand. The forecasting methodology used in this research is the following. First, a growth factor model has been used to forecast total trip demand per OD pair by updating an observed OD matrix (year 2007). Trip growth rates have been assumed to be equivalent to predicted rates of population growth. Second, a multinomial logit mode choice model has been used to perform modal split. The mode choice model has been calibrated based on observed data. Finally, two different models have been used to assign transit trips and private vehicle trips to the transit and roadway networks, respectively. The assignment of transit trips has been performed by using a multinomial logit model, while private vehicle trips have been assigned by means of a deterministic user equilibrium (DUE) model. The two assignment models have been validated based on theoretical assumptions, but they have not been calibrated (due to lack of data). The main inputs to the travel demand forecasting model are: a) 99 Cost-Benefit Analysis of RetBus OD travel demand (obtained from TMB, 2007); zoning system (TMB, 2007); and characteristics of the roadway and transit networks (Ajuntament de Barcelona, 2008; and other sources). The reliability of the travel demand forecasting model is limited because of inaccuracies of the input data and the model‟s predictive validity, but it is considered sufficient for the purpose of this research. BRT investment costs have been calculated based on unit costs (euro/km and euro/vehicle) (CENIT, 2010). The change in fleet replacement costs and the change in operating costs have been estimated based on unit costs (euro/vehicle and euro/vehicle-km, respectively) (CENIT, 2010). The change in operating revenues has been estimated on the basis of transit fares. Transit user benefits (i.e. change in total consumer surplus) have been calculated by applying the rule of half based on generalized travel cost (Pearce and Nash, 1981; Eijgenraam et al, 2000; and UNECE, 2003). Finally, safety effects and environmental effects have been estimated based on unit costs per transport mode (euro/vehicle-km) (CE Delft, 2008). The project effects have been estimated and valuated only for years 2016 and 2021; the annual costs and benefits in the remaining years of the appraisal period have been obtained by linear interpolation. The first five years of the appraisal period have been assumed to be a linear ramp-up period. A discount rate of 5% has been applied to discount the future. Such a discount rate is considered adequate for the evaluation of free-risk investments and is frequently used in the appraisal of transport projects in Western Europe (UNECE, 2003). Two measures of social/financial value have been used to evaluate the RetBus project: a) net present value (NPV); and b) benefit/cost ratio (BCR). These two measures are complementary: the NPV indicates the total net benefit of the project, while the BCR indicates how much net benefit would be obtained in return for each unit of investment cost (UNECE, 2003). These indicators have been calculated twice in order to evaluate the project from the social (SCBA) and financial (FCBA) points of view. Several sensitivity tests have been carried out in order to explore possible ways to improve the social and/or financial value of the RetBus project and to evaluate the robustness of the CBA results. The impact of the following changes has been investigated: a) increase of the average BRT operational speed (from 15 to 20 km/h); b) completion of the project in two years (2012- 2013) instead of four (2012-2015); c) assuming that metro lines L9-L10 will not be completed within the appraisal period; d) rise of the annual STI52 fare increase rate (from 4% to 5%); e) use of a lower value of time (75% instead of 100% of the value of working time); and f) increase of the discount rate from 5% to 7% (to include a risk-premium). 7.2. Main research findings The most important findings of this thesis are the following: a) The RetBus project (both alternatives) will have a small but relevant impact on modal split at the regional level. Both project alternatives will cause a net increase in transit trips and a net decrease in private vehicle trips, but in both cases the influence of the project on modal split at the regional level will be rather small. If Alternative 1 (TMB plan) is implemented, 18.400 additional travelers/workday will use transit instead of private vehicle as transport mode in the RMB in 2016, which will cause 52 Integrated Fare System (STI). 100 Cost-Benefit Analysis of RetBus an increase of +0,89% in total transit trip demand. Instead, if Alternative 2 is implemented, that increase will be slightly lower (+0,75%, 15.600 additional travelers/workday). Even though the modal shift caused by both project alternatives is relatively small, that shift is the cause of many of the RetBus project‟s benefits (e.g. additional operating revenues, safety effects and environmental effects). b) Within the municipality of Barcelona, the RetBus project (both alternatives) will generate a significant increase in public transport trips from/to some peripheral districts. In both project alternatives, public transport demand for trips within the municipality of Barcelona will increase particularly for those district pairs that have districts 3 (Sants-Montjuic), 4 (Les Corts), 7 (Horta-Guinardo) and 10 (Sant Marti) as origin and/or destination. If Alternative 1 (TMB plan) is implemented, the districts experiencing the highest increase in the average number of transit trips/workday produced and attracted in 2016 (more than +1,50%) will be districts 3, 4, 7 and 10. Similarly, if Alternative 2 (Cost-reduction plan) is implemented, the districts showing the greatest increase in the number of transit trips/workday produced in 2016 (more than +1,50%) will be districts 3, 4, 7 and 10; while the districts experiencing the highest increase in the number of transit trips/workday attracted (more than +1,50%) will be districts 3, 4 and 10 (the increase in District 7 will be 1,35%). Districts 3 (Sants-Montjuic), 4 (Les Corts), 7 (Horta-Guinardo) and 10 (Sant Marti) are not part of the city centre. Therefore, it can be concluded that in both project alternatives the BRT system provides transit routes with lower travel costs53 than the existing ones (and therefore causes a shift in modal split) mostly for OD pairs with origins and destinations located in peripheral districts rather than the city centre. The main reason is that the city centre is well connected to the rest of the city via a radial metro network (with similar frequency but higher operational speed than the RetBus system). In both alternatives, the BRT system does not improve the competitiveness of public transport for all OD pairs within the municipality of Barcelona. Rather, the BRT system reduces the travel costs of transit trips between certain OD pairs that are currently not directly connected via metro and/or are only connected by regular bus lines (which generally have lower operational speeds and frequencies than BRT lines). c) In both project alternatives, the RetBus system will be used by around 500.000 passengers per workday. In both project alternatives, around 500.000 passengers will use the BRT system every workday in 2016 (495.000 passengers per workday in Alternative 1, and 510.000 in Alternative 2). A sensitivity analysis has been carried out in order to investigate the impact of changing the preference of transit users to travel by RetBus on BRT ridership in Alternative 1 (by setting the BRT boarding and transfer penalties equal to those of metro or bus). The results show that BRT ridership would be higher if transit users showed a preference to travel by RetBus similar to that of metro, but it would be lower if users had a preference to travel by BRT similar to that of bus. 53 The causes for lower travel costs are lower access/egress time (due to stop location), lower in-vehicle time (due to higher operational speed and/or lower travel distance), lower waiting time (due to higher frequency), lower number of transfers, or a combination of the above. It is important to remark that those new routes with lower travel costs do not always make use only of the BRT network; some of them are multimodal routes that also use other transit sub-modes, e.g. bus. 101 Cost-Benefit Analysis of RetBus d) In both alternatives, RetBus passengers would most likely use the bus or metro systems if the BRT system was not operational. The BRT system will mostly take its passengers from the bus and metro systems, i.e. most of the RetBus passengers would use the bus and metro systems if the BRT system was not in place (base case). In Alternative 1, 45% would use bus and 52% would use metro in 2016, while the remaining 3% would use other transit sub-modes. In Alternative 2 those percentages would be 51%, 47% and 2%, respectively). The main reason why in Alternative 2 (Cost- reduction plan) the BRT system would take a somewhat higher percentage of its passengers from the bus system and a lower percentage of them from the metro system than in Alternative 1 (TMB plan) is that a higher number of bus lines are eliminated in Alternative 2 compared with Alternative 1. e) In both project alternatives, the BRT system will compete more strongly for demand with the bus system than with the metro system. The implementation of the RetBus project will cause bus ridership to decrease by -42% in Alternative 1 (TMB plan) and -49% in Alternative 2 (Cost-reduction plan) in 2016, compared to the base case. Metro ridership will decrease to a considerably lower extent (-13% in Alternative 1 and -12% in Alternative 2). Therefore, it can be concluded that in both project alternatives the BRT system will compete more strongly for demand with the bus system than with the metro system. The main reason why Alternative 2 (Cost-reduction plan) would cause bus ridership to decrease to a higher extent than Alternative 1 (TMB plan) is that a higher number of bus lines are eliminated in Alternative 2 compared with Alternative 1. f) The metro and BRT networks are mutually exclusive in terms of route choice, while the bus network is partially complementary to the BRT network. A sensitivity analysis has been carried out in order to investigate the impact of changing the preference of transit users to travel by RetBus on transit ridership per sub-mode in Alternative 1 (by setting the BRT boarding and transfer penalties equal to that of metro or bus). The results indicate that if the BRT penalties are reduced and set equal to those of metro (hence increasing the RetBus service quality), the RetBus competes more strongly for demand with the metro system but it competes less strongly with the bus system. From that finding it can be concluded that in general metro and RetBus are mutually exclusive transit sub-modes in terms of route choice, i.e. travelers choose to travel either by metro or by RetBus. Conversely, the RetBus and bus systems are mutually exclusive for certain routes, but complementary for some other routes. In the latter case, the bus network functions partially as a feeder to the BRT network, i.e. travelers choose to make multimodal transit trips making use of both the bus and the BRT network. This finding demonstrates that it is important to take into account the relationships between the BRT network and the bus network when designing plans to improve the public transport service in Barcelona. g) The RetBus project as defined in Alternative 1 (TMB plan) is socially beneficial but it is not profitable from a financial perspective. As observed in Figure 7-1, the social net present value (NPVSCBA) of Alternative 1 is positive (629,0 million euro) . Consequently, the project is expected to generate a net increase in social welfare. The main reason is that the project will bring substantial benefits to transit users (707,5 million euro). Transit user benefits mainly result from a decrease of the average transit travel 102 Cost-Benefit Analysis of RetBus cost in the RMB. In addition to transit user benefits, Alternative 1 will also generate other benefits, such as additional operating revenues (43,8 million euro), positive safety effects (22,3 million euro) and positive environmental effects (7,6 million euro). However, the present value of those benefits is much lower than that of transit user benefits. The present value of the total costs of Alternative 1 is -152,1 million euro. Those include the BRT investment costs (-35,2 million euro) as well as an increase in fleet replacement costs (-5,1 million euro) and operating costs (-111,9 million euro). The increase in operating costs constitutes the main part of the project‟s costs. Alternative 1 is expected to be beneficial to transit users and society as a whole, but not to TMB and the Government (operators/investors). Indeed, the financial net present value (NPVFCBA) of Alternative 1 is negative (-108,4 million euro), the main reason for this being a large increase in total operating costs (-111,9 million euro) (see Figure 7-1). Therefore, Alternative 1 is not profitable from a financial perspective. Figure 7-1: Cost-benefit analysis of alternatives 1 and 2: overview of costs and benefits, and NPV for 2011 (numbers indicate the difference compared with the base case). Present value of costs and benefits (2011): Alternatives 1 and 2 Million euro -200 0 200 400 600 800 1000 BRT investment costs -35,2 Change in fleet replacement costs -5,1 Change in operating costs -111,9 Change in operating revenues 43,8 NPV(FCBA) -108,4 Alt. 1 Transit user benefits 707,5 Safety effects 22,3 Environmental effects 7,6 Benefits to society as a whole 29,9 NPV(SCBA) 629,0 BRT investment costs -35,2 Change in fleet replacement costs 28,5 Change in operating costs 85,0 Change in operating revenues 37,6 NPV(FCBA) 115,9 Alt. 2 Transit user benefits 665,1 Safety effects 25,4 Environmental effects 11,0 Benefits to society as a whole 36,4 NPV(SCBA) 817,4 103 Cost-Benefit Analysis of RetBus h) The project as defined in Alternative 2 (Cost-reduction plan) is more socially beneficial than Alternative 1 (TMB plan) and it is profitable from a financial viewpoint. As seen in Figure 7-1, the social net present value (NPVSCBA) of Alternative 2 (817,4 million euro) is considerably higher than that of Alternative 1 (629,0 million euro); therefore, it can be concluded that Alternative 2 produces a higher increase in social welfare. Moreover, the financial net present value (NPVFCBA) of Alternative 2 (115,9 million euro) is greater than zero, which indicates that the financial benefits generated by the project will be higher than its costs. Note that this is a very different result than the one obtained in the analysis of Alternative 1 (Alternative 1 is not financially profitable). The most important reason why Alternative 2 is more beneficial than Alternative 1 from both the social and financial viewpoints is that the changes in the bus network generate considerable savings in operating costs, but they have a smaller impact on transit user benefits and operating revenues. The only difference between project alternatives 1 and 2 lies in the configuration of the bus network: Alternative 1 (TMB plan) contains 21 bus lines which are not present in Alternative 2 (Cost-reduction plan). As a result, the mileage of the bus system and the size of the vehicle fleet needed to operate the bus system in Alternative 2 are lower than in Alternative 1. This has important implications for the estimation of the change in operating costs and fleet replacement costs, both of which have a negative value in Alternative 1 (-111,9 and -5,1 million euro, respectively) but a positive value in Alternative 2 (28,5 and 85,0 million euro), indicating cost savings in Alternative 2 (see Figure 7-1). The differences in the configuration of the bus network also yield differences between both project alternatives in terms of transit travel costs. Those differences have an influence on mode choice and transit route choice. For that reason, the value of the transit user benefits and the additional operating revenues are lower in Alternative 2 (665,1 and 37,6 million euro, respectively) than in Alternative 1 (707,5 and 43,8 million euro), but only slightly lower (Figure 7-1). This finding demonstrates that the RetBus project could generate a greater increase in social welfare and at the same time become financially profitable if additional changes were made to the bus network along with the implementation of the BRT system. This is of particular interest to TMB and the Government, for whom Alternative 1 (TMB plan) is not beneficial (because it is not financially profitable). Instead, Alternative 2 (Cost-reduction plan) is expected to be beneficial for all parties affected by the project, including TMB and the Government. i) If a higher discount rate (7%) is used, the CBA results are not significantly altered. If a higher discount rate is used (7% instead of 5%), the social net present value (NPVSCBA) of Alternative 1 and Alternative 2 decrease to 558,9 and 726,6 million euro, respectively. In addition, the financial net present value (NPVFCBA) of Alternative 1 increases to -98,6 million euro, and the NPVFCBA of Alternative 2 decreases to 101,1 million euro, respectively (see figures 7-2 and 7-3). Therefore, it can be concluded that Alternative 1 (TMB plan) becomes less socially beneficial but at the same time it becomes less financially unprofitable, while Alternative 2 (Cost-reduction plan) becomes both less socially beneficial and less financially beneficial. The main reason is that a higher discount rate reduces the weight of benefits and costs caused by the project in the future. As a consequence, the present value of the aggregated cost and benefit streams is lower. However, this sensitivity test corroborates the results of the cost- benefit analysis: a) both project alternatives are socially beneficial, although Alternative 2 104 Cost-Benefit Analysis of RetBus contributes to social welfare to a greater extent than Alternative 1; and b) Alternative 1 is not profitable from a financial perspective, while Alternative 2 is profitable. j) If a lower VOT is assumed (75% of the value of working time), both alternatives become less beneficial (both in social and financial terms), but the CBA results are not significantly altered. As seen in figures 7-2 and 7-3, if a lower VOT is assumed (75% instead of 100% of the value of working time), the social net present value (NPVSCBA) of Alternative 1 and Alternative 2 decrease to 456,1 and 662,5 million euro, respectively. Also, the financial net present value (NPVFCBA) of Alternative 1 and Alternative 2 decrease to -118,9 and 106,9 million euro, respectively. Therefore, it can be concluded that the two project alternatives are somewhat less beneficial (from both the social and financial viewpoints) if a lower value of travel time (VOT) is assumed. The main reasons are the following. First, the RetBus project makes transit travel costs decrease to a lesser extent for all OD pairs; as a result, both alternatives generate lower transit user benefits. Second, the RetBus project generates a slightly lower modal shift from private vehicle to public transport, which results in lower additional operating revenues, safety effects and environmental effects. Nevertheless, this sensitivity test corroborates the results of the cost-benefit analysis: a) both project alternatives are socially beneficial, although Alternative 2 contributes to social welfare to a greater extent than Alternative 1; and b) Alternative 1 is not profitable from a financial perspective, while Alternative 2 is profitable. k) If metro lines L9/L10 were finally completed later than planned, both project alternatives would become more socially and financially beneficial. If metro lines L9/L10 were completed after 2021, the social net present value (NPVSCBA) of alternatives 1 and 2 would increase to 875,1 and 1.043,8 million euro, respectively. In addition, the financial net present value (NPVFCBA) of alternatives 1 and 2 would increase to -95,7 and 126,8 million euro, respectively (see figures 7-2 and 7-3). Therefore, if the completion of metro lines L9/L10 was finally delayed (which is likely to happen), the two project alternatives would become more beneficial from both the social and financial viewpoints. The main reasons are the following. First, the implementation of the project would cause transit travel costs to decrease further for some OD pairs; as a consequence, both alternatives would generate higher transit user benefits. Additionally, the project would produce a higher modal shift from private vehicle to transit, which yields greater additional operating revenues, safety effects and environmental effects. l) Increasing the average BRT operational speed to 20 km/h would make both project alternatives considerably more socially and financially beneficial. Increasing the average operational speed of the RetBus system from 15 km/h to 20 km/h (+33%) has a very positive impact on the CBA results of both alternatives. As seen in figures 7- 2 and 7-3, the social net present value (NPVSCBA) of alternatives 1 and 2 would increase to 1.424,9 and 1.616,3 million euro, respectively. Also, the financial net present value (NPVFCBA) of alternatives 1 and 2 would increase to 114,0 and 338,7 million euro, respectively. The main reasons why increasing the BRT operational speed makes the two project alternatives more socially and financially beneficial are the following. First, transit travel costs decrease further for many OD pairs; as a result, both alternatives generate higher transit user benefits. Second, the project produces a higher modal shift from private vehicle to transit, which yields greater 105 Cost-Benefit Analysis of RetBus additional operating revenues, safety effects and environmental effects. Third, the size of the vehicle fleet needed to operate the RetBus system is much lower, which reduces vehicle investment costs and fleet replacement costs. Finally, unit operating costs of the BRT system decrease as a result of the increase in operational speed, which reduces total operating costs. m) Completing the project in two years would make both project alternatives more socially beneficial. Also, Alternative 2 would become more financially profitable, but Alternative 1 would become more unprofitable. As seen in figures 7-2 and 7-3, if the project was realized in two years (2012-2013) instead of four (2012-2015), the social net present value (NPVSCBA) of alternatives 1 and 2 would increase to 712,0 and 893,7 million euro, respectively. The financial net present value (NPVFCBA) of Alternative 1 would decrease to -124,7 million euro, while the NPVFCBA of Alternative 2 would increase to 133,4 million euro. Therefore, it can be concluded that completing the project in two years instead of four would make both alternatives slightly more beneficial from a social point of view. Also, Alternative 2 would become more financially profitable, but Alternative 1 would produce greater net financial losses. The chief reason is herewith explained. No matter whether the project is completed in 2013 or 2015, Alternative 1 (TMB plan) produces net social benefits and net financial losses every year, while Alternative 2 (Cost-reduction plan) generates both net social benefits and net financial benefits every year. If the project is realized in two years instead of four, the project yields higher net benefits (costs) in the earlier years of the appraisal period, mainly because the ramp-up period takes only three years (2012-2014) instead of five (2012-2016). n) Raising transit fares to some extent could make both project alternatives more financially profitable. The social value of both project alternatives would then decrease, although the project could still be beneficial from a social viewpoint. If the annual STI fare increase rate was changed from 4% to 5%, the social net present value (NPVSCBA) of alternatives 1 and 2 would decrease to 538,1 and 724,3 million euro, respectively. In addition, the financial net present value (NPVFCBA) of alternatives 1 and 2 would increase to 191,1 and 414,9 million euro, respectively (see figures 7-2 and 7-3). The main reasons are the following. First, transit travel costs decrease to a lesser extent for all OD pairs; as a result, both alternatives generate considerably lower transit user benefits. Second, the project generates a lower modal shift from private vehicle to public transport; as a consequence, safety and environmental effects decrease and even become negative, which indicates an increase in external accident and environmental costs (figures 7-2 and 7-3). Third, raising transit fares produces a considerable increase in the additional operating revenues generated by the implementation of the project, even though the project does not cause transit ridership to increase as much as if the annual fare increase rate is kept constant. Therefore, raising transit fares to some extent could make both alternatives more financially profitable, since then the investors would receive a fraction of the social value (mainly transit user benefits) generated by the project. At the same time, if the fare increase is not too high, the project could continue to be socially beneficial (even though it will become less beneficial due to a lower increase of transit ridership). Care must be taken when determining the new fares so that this is not done at the expense of producing smaller or negative safety and environmental effects. 106 Cost-Benefit Analysis of RetBus Figure 7-2: Cost-benefit analysis of Alternative 1 (TMB plan) and sensitivity analysis: overview of costs and benefits for each relevant social-economic party, and NPV for 2011 (numbers indicate the difference compared with the base case). Present value of costs and benefits (2011): Alternative 1 (sensitivity analysis) Million euro -400 0 400 800 1200 1600 2000 NPV(FCBA) -108,4 Alt.1 Transit user benefits 707,5 Benefits to society as a whole 29,9 NPV(SCBA) 629,0 NPV(FCBA) 114,0 20km/h Transit user benefits 1224,9 Benefits to society as a whole 86,0 NPV(SCBA) 1424,9 NPV(FCBA) -124,7 Transit user benefits 801,6 2013 Benefits to society as a whole 35,1 NPV(SCBA) 712,0 NPV(FCBA) -95,7 Transit user benefits 911,1 L9/L10 Benefits to society as a whole 59,7 NPV(SCBA) 875,1 NPV(FCBA) 191,1 Transit user benefits 366,8 Fare 5% Benefits to society as a whole -19,8 NPV(SCBA) 538,1 NPV(FCBA) -118,9 Transit user benefits VOT 75% 555,8 Benefits to society as a whole 19,2 NPV(SCBA) 456,1 NPV(FCBA) -98,6 Transit user benefits r=7% 630,9 Benefits to society as a whole 26,6 NPV(SCBA) 558,9 107 Cost-Benefit Analysis of RetBus Figure 7-3: Cost-benefit analysis of Alternative 2 (Cost-reduction plan) and sensitivity analysis: overview of costs and benefits for each relevant social-economic party, and NPV for 2011 (numbers indicate the difference compared with the base case). Present value of costs and benefits (2011): Alternative 2 (sensitivity analysis) Million euro -400 0 400 800 1200 1600 2000 NPV(FCBA) 115,9 Alt.2 Transit user benefits 665,1 Benefits to society as a whole 36,4 NPV(SCBA) 817,4 NPV(FCBA) 338,7 20km/h Transit user benefits 1185,9 Benefits to society as a whole 91,7 NPV(SCBA) 1616,3 NPV(FCBA) 133,4 Transit user benefits 716,7 2013 Benefits to society as a whole 43,6 NPV(SCBA) 893,7 NPV(FCBA) 126,8 Transit user benefits 851,1 L9/L10 Benefits to society as a whole 65,9 NPV(SCBA) 1043,8 NPV(FCBA) 414,9 Transit user benefits 324,8 Fare 5% Benefits to society as a whole -15,4 NPV(SCBA) 724,3 NPV(FCBA) 106,9 Transit user benefits 528,5 VOT 75% Benefits to society as a whole 27,1 NPV(SCBA) 662,5 NPV(FCBA) 101,1 Transit user benefits 593,1 r=7% Benefits to society as a whole 32,4 NPV(SCBA) 726,6 108 Cost-Benefit Analysis of RetBus 7.3. Conclusions The aim of this research was to perform a preliminary evaluation of the most relevant effects of the RetBus project in order to determine whether it is desirable to proceed with the project from the socio-economic and financial viewpoints. In addition, based on the results of that evaluation, the research aimed to explore what changes could be made to the project in order to make it more socially beneficial and/or financially profitable. The main research questions addressed in this thesis are the following: To what extent will the implementation of the RetBus project be socially and financially beneficial? What modifications could be made in the RetBus project so as to improve its social and/or financial value? This section presents the conclusions of the evaluation and answers the two primary research questions mentioned above. The conclusions are the following: Both project alternatives are socially beneficial, although Alternative 2 (Cost-reduction plan) contributes to social welfare to a greater extent than Alternative 1 (TMB plan). Alternative 2 is profitable from a financial perspective, while Alternative 1 is not. From the results of the cost -benefit analysis (Figure 7-1), it can be concluded that both RetBus project alternatives are socially beneficial, i.e. they contribute to social welfare. The project‟s social net present value (NPVSCBA) is 629,0 million euro in Alternative 1 and 817,4 million euro in Alternative 2. The chief reason why both alternatives are socially beneficial is that they bring substantial benefits to transit users, i.e. they produce an increase in the consumer surplus of transit users (707,5 million euro in Alternative 1 and 665,1 million euro in Alternative 2). The project will also generate other benefits, such as additional operating revenues, positive safety effects and positive environmental effects, but in both project alternatives the present value of those benefits is much lower than that of transit user benefits. It is important to remark that Alternative 2 is more beneficial than Alternative 1 from a social viewpoint. This results from the fact that operating costs are considerably lower in Alternative 2 (because the mileage of the bus system is lower), while transit user benefits and additional operating revenues are not that different in both alternatives (because the BRT system provides new transit routes that are competitive with the ones provided by the extra bus lines eliminated in Alternative 2). However, it should be noted that total transit ridership in the RMB is somewhat lower in Alternative 2. The results of the cost -benefit analysis (Figure 7-1) also indicate that there is a fundamental difference between the two project alternatives in terms of financial performance: Alternative 1 (TMB plan) is not financially profitable, while Alternative 2 (Cost-reduction plan) is profitable. This difference is of particular interest to the project investors (TMB and the local government). The financial net present value (NPVFCBA) of the project is -108,4 million euro in Alternative 1 and 115,9 million euro in Alternative 2. The main reason is that operating costs are considerably lower in Alternative 2, while levels of transit ridership and operating revenues are similar in both alternatives. Several sensitivity tests have been carried out to evaluate the robustness of the CBA results to changes in model parameters and the environment of the project (figures 7-2 and 7-3). The results indicate that if a lower VOT is assumed (75% of the value of working time) or a higher discount rate (7%) is used, the social value of the project decreases but the main conclusions of 109 Cost-Benefit Analysis of RetBus the cost-benefit analysis still hold: a) both project alternatives are socially beneficial, although Alternative 2 contributes to social welfare to a greater extent than Alternative 1; and b) Alternative 1 is not profitable from a financial perspective, while Alternative 2 is profitable. In addition, the sensitivity analysis shows that if metro lines L9/L10 were finally completed later than planned (which is likely to happen, due to the current economic crisis), both RetBus project alternatives would become more socially and financially beneficial. The social value of both project alternatives could be improved by increasing the operational speed of the RetBus system and/or by speeding up the implementation of the project. Assuming a higher average operational speed of the BRT system (20 km/h) makes both project alternatives considerably more beneficial from the social point of view. The social net present value (NPVSCBA) of Alternative 1 rises from 629,0 to 1.424,9 million euro (Figure 7-2), while the NPVSCBA of Alternative 2 increases from 817,4 to 1.616,3 million euro (Figure 7-3). Therefore, if the average BRT operational speed could be increased to 20 km/h both project alternatives would produce a larger increase in social welfare, although Alternative 2 would continue to be more beneficial than Alternative 1. The main reason why increasing the BRT operational speed makes the two project alternatives more socially beneficial is that transit travel costs decrease further; as a result, both alternatives generate considerably higher transit user benefits (see figures 7-2 and 7-3). If the project is implemented in two years instead of four, both project alternatives become more beneficial from the social perspective. The social net present value (NPVSCBA) of Alternative 1 rises from 629,0 to 712,0 million euro (Figure 7-2), while the NPVSCBA of Alternative 2 increases from 817,4 to 893,7 million euro (Figure 7-3). Both project alternatives generate a greater increase in social welfare, although Alternative 2 continues to be more beneficial than Alternative 1. The chief reason why speeding up the realization of the project makes both project alternatives more socially beneficial is that the project yields higher net benefits in the earlier years of the appraisal period. However, it is important to remark that speeding up the implementation of the project makes Alternative 1 more financially unprofitable. In conclusion, speeding up the project implementation and particularly increasing the operational speed of the RetBus system (e.g. through infrastructural and traffic management measures) could be two effective ways to improve the social value of both project alternatives. The combined effect of both measures has not been analyzed. However, the option of completing the project earlier must be studied carefully if TMB and the Government intend to implement Alternative 1 (TMB plan), since that option poses an important dilemma. As seen in figures 7-2 and 7-3, on the one hand, speeding up the completion of Alternative 1 makes the project contribute more to social welfare. Both transit users and society as a whole would receive greater benefits. But on the other hand, the project would generate somewhat higher financial losses, which means that the project would become more unprofitable to TMB and the Government. This is not an issue if Alternative 2 (Cost-reduction plan) was implemented, since completing the project earlier makes Alternative 2 more beneficial from both the social and the financial viewpoints. 110 Cost-Benefit Analysis of RetBus The financial profitability of both project alternatives could be improved by increasing the operational speed of the RetBus system and/or by raising transit fares. Increasing the average operational speed of the BRT system to 20 km/h makes both project alternatives considerably more profitable from a financial viewpoint. The financial net present value (NPVFCBA) of Alternative 1 changes from -108,4 to 114,0 million euro (Figure 7-2), and the NPVFCBA of Alternative 2 increases from 115,9 to 338,7 million euro (Figure 7-3). Therefore, an increase in the operational speed of the RetBus system makes both project alternatives produce a greater net financial benefit. In fact, Alternative 1 produces net financial losses if the operational speed is 15 km/h but it becomes financially profitable if the speed is increased to 20 km/h (Figure 7-2). From a financial perspective, Alternative 2 continues to be more profitable than Alternative 1. The main reasons why increasing the BRT operational speed makes the two project alternatives more financially profitable are the following. First, as a result of the increase in operational speed, the BRT operating costs decrease considerably. Second, transit travel costs decrease further. This has an impact on mode choice: both alternatives produce a higher modal shift from private vehicle to transit at the regional level. As a result, a higher amount of additional operating revenues is generated. Increasing the annual STI fare increase rate from 4% to 5% makes both alternatives significantly more profitable. The financial net present value (NPVFCBA) of Alternative 1 increases from -108,4 to 191,1 million euro (Figure 7-2), and the NPVFCBA of Alternative 2 increases from 115,9 to 414,9 million euro (Figure 7-3). Clearly, raising transit fares causes both project alternatives to produce greater net financial benefits. Interestingly, Alternative 1 is not financially profitable if the annual fare increase rate is 4% but it becomes profitable if that rate is set to 5% (Figure 7-2). From a financial perspective, Alternative 2 continues to be more profitable than Alternative 1. The main reason why raising the annual fare increase rate makes the two project alternatives more profitable is that a higher amount of additional operating revenues is generated, even though the project does not cause transit ridership to increase as much as if the rate is kept constant. In conclusion, increasing the operational speed of the RetBus system (e.g. through infrastructural and traffic management measures) and increasing transit fares (by increasing the annual fare increase rate or by other means) could be two ways to improve the financial performance of both project alternatives. Alternative 1 could even become financially profitable. The combined effect of both measures has not been analyzed. However, the option of raising fares must be studied carefully, since it poses an important dilemma. On the one hand, by raising transit fares the project‟s financial performance would improve: TMB and the Government would receive higher financial returns because they would obtain a fraction of the social value of the project. But on the other hand, the RetBus project would become less socially beneficial, although if fares were not increased too much, it would continue to produce an increase in social welfare. Increasing transit fares would make transit users receive considerably lower benefits, and society as a whole would get smaller or negative benefits in terms of safety and environmental effects (see figures 7-2 and 7-3). 111 Cost-Benefit Analysis of RetBus 7.4. Recommendations The findings and conclusions of this research lead to the following recommendations to TMB and the City Council concerning the RetBus project: Redesign the bus network in conjunction with the implementation of the BRT system. The only difference between project alternatives 1 and 2 lies in the configuration of the bus network: Alternative 1 (TMB plan) contains 21 bus lines which are not present in Alternative 2 (Cost-reduction plan). Those bus lines have been eliminated in Alternative 2 because they are expected to lose a lot of ridership once the BRT system becomes operational. The results of the cost-benefit analysis show that Alternative 2 (Cost-reduction plan) is more beneficial than Alternative 1 (TMB plan) from both the social and financial viewpoints. Therefore, the RetBus project could generate a greater increase in social welfare and simultaneously become financially profitable if the bus network was appropriately redesigned along with the implementation of the BRT system. In that way, the RetBus project could become beneficial to all the parties involved, including the investors and operators (TMB and the Government), for which Alternative 1 (TMB plan) is not profitable. It is important to remark that the optimization of the net benefits of the transport system (i.e. efficiency) is a key principle of the Barcelona Urban Mobility Plan 2006-2012. Therefore, it is recommended to implement the BRT system and modify the bus network as suggested in Alternative 2 (Cost-reduction plan), instead of implementing Alternative 1 (TMB plan). However, it should be noted that Alternative 2 is a conceptual design rather than a formal proposal to eliminate specific bus lines. A more thorough analysis should be carried out before coming up with a new design for the bus network that would reduce the total mileage of the bus system and make it fit better to the public transport network of Barcelona. The new design should take into account the role of the bus network as feeder to the RetBus network. Implement measures to increase the operational speed of the BRT system. The results of the cost-benefit analysis show that a higher average BRT operational speed would make both project alternatives significantly more beneficial from the social and financial points of view. Increasing the operational speed of the BRT system would align the RetBus project more with the principles of the Barcelona Urban Mobility Plan 2006-2012, which are: efficiency (optimizing the net benefits of the transport system); safety (reducing the number/severity of accidents); and sustainability (reducing the environmental costs caused by the transport system). For those reasons, it is recommended to implement infrastructure measures (e.g. intermittent bus lanes), traffic management measures (e.g. traffic light prioritization) or other types of measures aimed at increasing the operational speed of the BRT system. However, further research is needed to determine what measures may be more cost-effective as well as how and where they should be implemented. It should be noted that the present study has not taken into account that increasing the BRT operational speed may make it necessary to increase the capacity of the BRT system in order to accommodate the resulting demand (e.g. higher service frequencies, larger vehicles, etc.). That would have an impact on operating costs and fleet replacement costs, thus decreasing the 112 Cost-Benefit Analysis of RetBus financial profitability of the project. In addition, this thesis has not taken into account that measures aimed at increasing the BRT operational speed may have negative effects on other transport modes (e.g. private vehicle). Indirect effects on other modes have not been included in the cost-benefit analysis and further research is needed in this respect. Consider the possibility of speeding up the completion of the RetBus project, but study carefully its implications for all parties involved. The results of the cost-benefit analysis indicate that if the project is completed in less than four years, both project alternatives become more socially beneficial, i.e. they would generate a greater increase in social welfare. Also, speeding up deployment would align the RetBus project more with the key principles of the Barcelona Urban Mobility Plan 2006-2012 (i.e. efficiency, safety and sustainability). Therefore, speeding up the completion of the RetBus project (both alternatives) appears to be a recommendable measure from a social perspective. However, it must also be taken into account that the impact of completing the project earlier on its financial profitability is only positive in the case of Alternative 2. Indeed, if the project is completed earlier, Alternative 2 (Cost-reduction plan) becomes more financially profitable (the financial net social value increases from 115,9 to 338,7 million euro); however, Alternative 1 (TMB plan) generates somewhat higher financial losses (the financial net social value decreases from -108,4 to -124,7 million euro). Therefore, speeding up the deployment of the project makes Alternative 2 more beneficial for all the parties involved (TMB/Government, transit users and society as a whole), but it makes Alternative 1 more beneficial only for public transport users and society, not for TMB and the Government (see figures 7-2 and 7-3). To sum up, if TMB and the Government decided to implement Alternative 2 (Cost-reduction plan), it would be highly recommendable to speed up the realization of the project, since that would make the RetBus project more beneficial from both the social and the financial viewpoints. However, if they decided to implement Alternative 1 (TMB plan) the question of whether to complete the project earlier would pose a dilemma between the socio-economic and financial objectives of the RetBus project. Speeding up the completion of Alternative 1 would only be advisable if the resulting benefits to transit users and society as a whole were considered to be more important to TMB and the Government than the resulting financial losses. Note that the present study has not defined a specific plan to deploy the project in less than four years. Further research is needed in this respect. Consider the possibility of increasing transit fares along with the implementation of the RetBus project, but study carefully its implications for all parties involved. The findings of this thesis indicate that increasing STI transit fares makes both project alternatives considerably less socially beneficial but more financially profitable. The main reason is that travel costs increase but a higher amount of additional operating revenues are generated. In fact, raising transit fares allows the project investors to get a fraction of the social value generated by the project, thus receiving higher financial returns. This thesis recommends studying the possibility of increasing transit fares as a means to enhance the financial performance of the RetBus project, particularly if the chosen project configuration was Alternative 1 (TMB plan), which is financially unprofitable. However, it is 113 Cost-Benefit Analysis of RetBus important to remark that raising fares would align the RetBus project to a lesser extent with the main principles of the Urban Mobility Plan 2006-2012 (efficiency, safety and sustainability), because the social value of the project would decrease, as well as its transit user benefits, safety effects and environmental effects (as a result of an increase in transit travel costs and a decrease in public transport trip demand). Indeed, an increase in transit fares would only benefit TMB and the Government; while the project would become clearly less beneficial for transit users and society as a whole (see figures 7-2 and 7-3). If it was decided to increase transit fares in order to increase the financial profitability of the project, it is recommended that the new fare scheme be designed after a thorough analysis of its impact on transit ridership, so as to not reduce the social value of the project too much. In particular, if fares were too high, the RetBus project could end up producing negative safety and environmental effects. It should be noted that this thesis has studied the impact of raising transit fares on the project‟s social/financial value from a conceptual viewpoint; no formal proposal of a new fare scheme has been made. This research has analyzed the impact of an increase in the annual fare increase rate but other ways of raising fares could be effective as well (e.g. increasing fares on the opening year and keep the annual increase rate constant). Further research is needed on the impact of raising transit fares on the social and financial value of the RetBus project. Possible political opposition to an increase in transit fares should also be taken into account. Carry out further research to make a more comprehensive evaluation of the effects of the RetBus project and determine the most suitable strategies to improve its social and financial value. This research aimed to perform a preliminary cost-benefit analysis (CBA) of the most relevant effects of the RetBus project in order to determine whether or not it is recommendable to proceed with the project from the socio-economic and financial points of view. However, this thesis has not analyzed the technological requirements and the political implications of its implementation. Further research is required in those areas. With regard to the political implications of the project, it would be useful to carry out a multi- criteria analysis (MCA) to complement the CBA. MCA is more complete than CBA in terms of project effects included in the evaluation. In addition, it can analyze better the outcomes of a project with regard to the political objectives of the stakeholders involved in the decision-making process. Broadening the scope of the SCBA (comprehensive SCBA) is also recommended. Indeed, from a socio-economic point of view, the cost-benefit analysis performed in this thesis does not include important socio-economic effects such as distributional effects, macro-economic effects and effects on other transport modes (e.g. private vehicle). More research into the social value of those types of effects generated by the RetBus project is needed. In particular, it is considered necessary to investigate how the RetBus project will affect private vehicle users. Changes in the consumer surplus of car users have not been included in the social cost-benefit analysis because some model inputs (e.g. road network and OD data) do not have an adequate level of detail so as to make a sound estimation of congestion effects. However, there are three elements of the RetBus project that will probably have an impact on car traffic congestion: a) the reduction of capacity in some roadway segments due to the provision of new dedicated bus lanes; b) the implementation of infrastructural and traffic 114 Cost-Benefit Analysis of RetBus management measures in order to guarantee a certain operational speed of the BRT system; and c) the provision of transit routes more competitive with private vehicle routes, which is expected to produce a slight shift of modal split from private vehicle to public transport, thus reducing total private vehicle trip demand. The impact of those three elements on traffic congestion is expected to be significant in specific points of the roadway network but small at the macro level. However, it is considered necessary to make an estimation of the effects of the RetBus project on car users and valuate them in monetary terms in order to add them to the cost-benefit analysis. The study also aimed to explore changes in the configuration of the project that could potentially make it more socially beneficial and/or financially profitable. More specifically, this thesis has analyzed the benefits associated with redesigning the regular bus network, increasing the operational speed of the BRT system, completing the project earlier and raising transit fares. However, those changes have been only analyzed at a conceptual level. Further research is needed to determine how those measures should be implemented in order to get optimal results. 7.5. Reflection Performing an evaluation of the RetBus project has posed many challenges to me, since it involved using methods and tools that I had never used. Firstly, it was the first time that I had carried out a cost-benefit analysis and in the beginning I was not really aware of the limitations of that method and the difficulties involved in its application. One of the most difficult things turned out to be the estimation and valuation of project effects. The definition of the travel demand forecasting model and the selection of the methods used to estimate/valuate each project effect have a critical impact on the results of the project evaluation. In this respect, sensitivity analysis becomes crucial to incorporate uncertainty in the analysis and examine the robustness of the results. It is important to remark that uncertainty about future technological, social and economical developments limits the reliability of the cost-benefit analysis. In fact, uncertainty about the future is always a limitation of ex-ante evaluations, which poses a challenge to public and private decision-makers. Secondly, I had to learn how to use the transport modeling software package OmniTRANS. I was lucky to receive a lot of help from the OmniTRANS technical support staff. If I were to start the thesis again, I would do some things differently. Probably, I would spend less time checking and improving the quality of the input data and I would try to look at the RetBus project from a broader perspective in order to incorporate more variables into the cost- benefit analysis, even if the impact of those variables was assessed in a simple manner. In my opinion, I could have made a more thorough analysis of the benefits and disbenefits of the RetBus project as well as better recommendations on how to improve the project performance if I had had more time to examine the project from other angles. Some of the additional variables or sensitivity tests that I would have liked to include in the evaluation are: a) different travel demand scenarios and additional variables affecting trip generation (besides population); b) effects of building new bus lanes on the capacity of the roadway network; c) indirect effects of improving transit service on private vehicle demand; and d) effects of increasing the BRT operational speed on BRT ridership and probably on operating costs. Finally, if I had had more time I would have tried to make a more detailed analysis of how 115 Cost-Benefit Analysis of RetBus to modify the bus network and the fare system in order to increase the social and/or financial value of the RetBus project. 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Urban Transit: Operations, Planning and Economics. Indianapolis, IN: Wiley. Wardman, M. (2004). Public transport values of time. Transport Policy, 11, 363-377. Wardrop, J. G. (1952). Some theoretical aspects of road traffic research. Proceedings of the Institution of Civil Engineers, Pt. II, 1, 325-378. Wright, L. and Hook, W. (2007). Bus Rapid Transit Planning Guide. New York, NY: Institute for Transportation and Development Policy. 120 Cost-Benefit Analysis of RetBus Annex A: Socioeconomic data at district level Table A-1: Socioeconomic data per district of Barcelona (Anuari Estadistic de Barcelona, 2010). Average Pop. Car ownership Population income/inhab. Area Density 2008 2008 Jobs 2004 2008 (km2) 2008 (vehicles/1000 (inhabitants) 2 (Barcelona (inhab./km ) inhabitants) =100,0) D1 Ciutat Vella 111.891 4,4 25.596 75.548 251,4 71,1 D2 Eixample 268.189 7,5 35.847 255.869 440,2 114,9 D3 Sants - Montjuic 182.692 23,0 7.953 112.134 399,5 80,7 D4 Les Corts 83.060 6,0 13.794 60.872 570,1 140,0 D5 Sarria - St Gervasi 143.583 20,1 7.141 100.887 671,4 177,6 D6 Gracia 123.304 4,2 29.440 49.587 456,7 103,2 D7 Horta - Guinardo 170.906 12,0 14.296 42.347 465,5 86,7 D8 Nou Barris 169.461 8,0 21.059 27.156 401,3 70,1 D9 Sant Andreu 146.524 6,6 22.303 42.698 408,5 82,5 D10 Sant Marti 228.480 10,5 21.696 86.267 405,8 87,5 Barcelona 1.628.090 102,3 15.926 853.365 442,4 100,0 121 Cost-Benefit Analysis of RetBus Annex B: Description of the RetBus project Table B-1: Vehicle fleet required to operate each RetBus line (sub-line) (CENIT, 2010). Number of standard Number of articulated Line Sub-line buses buses H0 - 24 - H1A - 14 H1 H1B - 14 H2 - - 29 H3A - 17 H3 H3B - 19 H4A - 13 H4 H4B - 14 V2A 8 - V2 V2B 8 - V3 - 19 - V4 - - 26 V5 - 17 - V6 - 26 - V7A 9 - V7 V7B 8 - Total 119 146 122 Cost-Benefit Analysis of RetBus 1st phase: H4A + H4B (east) + V2B 2nd phase: H1A + V4 3rd phase: H3B + V5 4th phase: H2 + V7A 5th phase: H0 + V3 6th phase: H1B + H3A + H4B (west) + V6 th 7 phase: V2A + V7B Figure B-1: BRT network deployment phases (CENIT, 2010). 123 Cost-Benefit Analysis of RetBus Annex C: General criticisms of CBA Although CBA is an attractive evaluation approach, it also has its limitations, which cannot all be completely resolved. Some general criticisms are the following: A first difficulty relates to the unequal distribution of income amongst citizens and the variation in tastes and preferences, which is partly but not fully dependent on income. As a result, the marginal utility of income is not equal for all citizens. This implies that even though market monetary units can be used for measuring a particular consumer‟s utility, the values obtained for different individuals cannot be easily compared. Therefore, if collective welfare is defined as the sum of individual utilities (which is a debatable assumption), we cannot simply add the corresponding monetary values to measure this collective welfare. A weighted addition taking into account the relative worth of income for different categories of consumers would be more appropriate, but such an addition method is very complex to perform and requires specific data which is not always available (Beuthe, 2002). Second, most prices in the real economy are not set in markets meeting the conditions of perfect competition. This is especially true for the transport sector, in which subsidies and taxes distort tariffs and operating costs, and externalities are of high importance (Turro, 2001). As a result of imperfect competition, market prices do not accurately express the marginal willingness-to-pay of individuals for a particular good, nor the marginal cost for society to produce that good; as a result, market prices cannot be directly used to estimate variations in consumer surplus (Saitua, 2007). In those cases shadow prices need to be used. The shadow price of a commodity can be defined as its social opportunity costs, that is, the net loss/gain for society associated with having one unit less/more of it (Drèze and Stern, 1994). However, there is little consensus on how to calculate shadow prices. Third, markets do not exist for external effects, i.e. unintentional, non-priced effects on the welfare of others (for instance, environmental effects such as pollution or noise). Therefore, to value external effects (which tend to be of critical importance in transport-related projects) other relevant markets need to be used or virtual markets need to be created. These methods are based on: a) the behavior of economic agents in markets that are in some way related to the external good (revealed preference methods); or b) information about the behavior of agents collected indirectly by means of questionnaires (stated preferences methods). However, despite the progress achieved, the application of these methods does not always lead to unambiguous results. Furthermore, some external effects cannot possibly be expressed in monetary terms, e.g. value of changing a unique landscape (Saitua, 2007). A fourth critique is that CBA can easily provide incomplete or incorrect information to the decision-makers. Mackie and Preston (1998) emphasize that impacts which are difficult to value in monetary terms tend to be excluded from the analysis. Some of these effects can be included in a qualitative form or expressed in physical units. However, they do not usually attract the same level of attention as monetized effects, a situation which may result in a presentation bias in the final conclusions (De Jong and Van Wee, 2007; Bakker et al, 2009). Fifth, it is of critical importance in evaluation studies to give an overview of distributional effects of a project for different social groups and regions (winners and losers), but conventional CBA yields no objective criterion to evaluate this type of effects (Saitua, 2007). Redistribution effects 124 Cost-Benefit Analysis of RetBus may be of importance not only for the feasibility of the project, as they may generate political opposition, but also in terms of some broader social objectives, such as regional development or recovery of declining urban areas (Turro, 2001). Several authors highlight the importance of disaggregating the benefits and costs of a project for different groups (e.g. operators, users and residents) and regions in the presentation of CBA results (Eijgenraam et al, 2000; De Jong and Van Wee, 2007; Bakker et al 2009). Finally, CBA can be difficult to understand for the public and the decision-makers as a result of its highly complex, resource-intensive and expert-driven nature. Because of this complexity and lack of transparency, citizens and politicians may find it hard to interpret the results or they may doubt the results of the analysis (De Jong and Van Wee, 2007; Bakker et al 2009). 125 Cost-Benefit Analysis of RetBus Annex D: Comparison between CBA and MCA The two methods most often used for ex-ante evaluation of transport projects and policies are cost-benefit analysis (CBA), and multi-criteria analysis (MCA) (Nijkamp et al, 2003). Table D-1 summarizes the theoretical foundations of both CBA and MCA. Table D-2 compares the advantages and disadvantages of both methods in terms of support to the decision-making process, the quality of weights, evaluation completeness, and connection with the political process, based on Bakker et al (2009). Table D-1: Theoretical foundations of CBA and MCA. Theoretical Approach Evaluation criteria Measurement through background Willingness-to-pay for Microeconomics and Cost-benefit analysis Social welfare effects and willingness- Welfare Theory to-accept effects Political or consumer Multi-criteria analysis Operations Research Weighted sum of effects weights for project effects Table D-2: Advantages and disadvantages of CBA and MCA. Aspect Cost-benefit analysis (CBA) Multi-criteria analysis (MCA) + +/- Decision support (It discerns attractive from (It ranks policies in terms of unattractive policies) attractiveness) + - General quality of weights (Weights based in utility (Subjective weights open to functions) ambiguity and manipulation) +/- + Completeness (Some effects are hard to (All effects can be included in the valuate in monetary terms) analysis) +/- + (Conclusions are clear to (Stakeholders can apply their Connection with political process politicians, but distributional own weights related to their issues are not taken into political interests) account) From the comparison of CBA and MCA, the following conclusions can be drawn: CBA is firmly based in economic science and yields clear policy conclusions, which are related to the social and/or financial value of a project. On the other hand, CBA is complex, often incomplete in terms of project effects (e.g. it is difficult to monetize some external effects), and does not connect well to the political process of decision making. 126 Cost-Benefit Analysis of RetBus MCA is transparent, complete in terms of effects, and it combines research results with political input. However, this also opens the door for ambiguity and manipulation. Also, MCA can only rank projects and does not show whether or not a specific project is attractive per se. As a general rule, CBA becomes more suitable if (almost) all impacts of a project can be monetized. If, on the other hand, important impacts cannot be expressed in monetary terms, MCA or a combination of MCA and CBA is usually preferable. Saitua (2007) stresses that CBA and MCA may be complementary, as they can be most useful for different phases of the decision-making process. In the decision-making process two stages can be distinguished: analysis stage and decision stage. In the analysis stage, the analyst intends to make an objective valuation of all the relevant aspects of the project. This calls for the use of a quick-scan CBA evaluation approach. In the decision stage, however, the decision- makers will most likely not consider only the balance sheet of the CBA, but also other elements such as distributional issues, political support and ethical considerations. To make this process well-ordered, they could use MCA techniques, which can analyze better the outcomes of a project with regard to the political objectives of the stakeholders involved in the decision-making process. In the decision stage, a comprehensive CBA including distributional effects can also be useful. 127 Cost-Benefit Analysis of RetBus Annex E: Changes in bus line frequencies (Alt. 1) Table E-1: Changes in bus line frequencies between the base case and Alternative 1. Frequency (services/h) Bus line Base case Alternative 1 6 6,00 3,33 9 8,57 15,00 10 6,00 3,53 14 6,00 4,00 20 7,50 3,33 22 7,50 6,67 30 5,00 3,00 32 6,67 5,00 34 7,50 5,00 36 4,62 3,16 40 4,00 3,00 41 7,50 3,16 44 4,29 4,00 47 7,50 3,33 50 5,45 3,33 54 6,67 3,16 55 6,00 3,16 59 7,50 3,53 64 6,67 3,00 66 3,53 3,16 72 7,50 6,00 75 3,33 3,00 92 5,45 3,16 128 Cost-Benefit Analysis of RetBus Annex F: Valuation of costs and benefits Table F-1: BRT infrastructure investment costs, including taxes (base 2011) in both alternatives. RetBus Line Line length (m) Infrastructure cost (€) H0 16.923 722.104 H1 23.218 990.712 H2 21.548 919.453 H3 34.717 1.481.374 H4 28.387 1.211.273 V2 13.874 592.004 V3 12.629 538.879 V4 19.017 811.455 V5 11.100 473.637 V6 19.833 846.274 V7 15.475 660.318 Total 216.721 9.247.485 Table F-2: BRT vehicle investment costs, including taxes (base 2011) in both alternatives. Number of vehicles Total vehicle cost Vehicle type Total New Reallocated (€) Articulated bus 146 3 143 4.564.476 Standard bus 119 20 99 23.514.214 Total 265 23 242 28.078.690 129 Cost-Benefit Analysis of RetBus Table F-3: Fleet size and annual fleet replacement costs (including taxes) of the bus and BRT systems in the base case and the two alternatives (base 2011). Fleet size 20% fleet size Annual fleet replacement Standard Articulated Standard Articulated costs (euro vehicles vehicles vehicles vehicles 2011) RetBus 0 0 0 0 0 Base case Bus 624 267 125 54 78.301.024 Total 624 267 125 54 78.301.024 54 23.702.424 RetBus 119 (99) 146 (143) 24 (20) 30 (29) (21.518.244) Alternative 1 Bus 525 124 105 25 56.782.780 80.485.204 Total 644 270 129 (125) 55 (54) (78.301.024) 23.702.424 RetBus 119 (99) 146 (143) 24 (20) 30 (29) (21.518.244) Alternative 2 Bus 469 124 94 25 51.990.564 75.692.988 Total 588 270 118 (114) 55 (54) (73.508.808) Table F-4: Change in fleet replacement costs, including taxes (euro/yr, base 2011) in the two project alternatives. Alternative 1 Alternative 2 Change in fleet replacement costs +2.184.180 -2.608.036 (euro/yr, base 2011) (0) (-4.792.216) 54 The number outside the brackets is the total fleet size; the number between brackets is the number of reallocated buses. For the first five years of the appraisal period, BRT fleet maintenance costs have been calculated on the basis of the number of reallocated vehicles (since the rest of the BRT fleet is formed by new vehicles); for the last five years of the appraisal period, they have been calculated on the basis of the total BRT fleet size. 130 Cost-Benefit Analysis of RetBus Table F-5: Unit operating costs, total mileage and total annual operating costs of the RetBus and bus systems in the base case and the two alternatives (base 2009). Average Operating costs Unit cost Total mileage operational (euro /yr) (base (euro/veh-km) (veh-km/yr) speed (km/h) 2009) RetBus 15,0 4,01 0 Base case Bus 11,5 5,22 34.818.352 181.751.797 Total - - 34.818.352 181.751.797 RetBus 15,0 4,01 16.018.002 64.232.188 Alternative Bus 11,5 5,22 25.314.952 132.144.049 1 Total - - 41.332.954 196.376.237 RetBus 15,0 4,01 16.018.002 64.232.188 Alternative Bus 11,5 5,22 20.384.125 106.405.133 2 Total - - 36.402.127 170.637.321 Table F-6: Change in operating costs (euro/yr, base 2009) in the two project alternatives. Alternative 1 Alternative 2 Change in operating costs (euro/yr, +14.624.440 -11.114.476 base 2009) 131 Cost-Benefit Analysis of RetBus Annex G: Inputs to the travel demand forecasting model Figure G-1: Map of internal zones and centroids. 132 Cost-Benefit Analysis of RetBus Figure G-2: Map of external centroids. 133 Cost-Benefit Analysis of RetBus Table G-1: Relationship between zone/centroid number and zone name. Centroid nr Zone name 1 Barcelona 01 01 Raval-Alt 2 Barcelona 01 02 Raval-Baix 3 Barcelona 01 03 Gòtic 4 Barcelona 01 04 Sant Pere-Santa Caterina-El Born 5 Barcelona 01 05 Barceloneta 6 Barcelona 02 06 Esquerra Alta-Oest 7 Barcelona 02 07 Esquerra Alta-Est 8 Barcelona 02 08 Esquerra Baixa de L'Eixample 9 Barcelona 02 09 Sant Antoni 10 Barcelona 02 10 Dreta de L'Eixample-Alt 11 Barcelona 02 11 Dreta de L'Eixample-Baix 12 Barcelona 02 12 Sagrada Família 13 Barcelona 02 13 Fort Pienc 14 Barcelona 03 14 Badal 15 Barcelona 03 15 Sants 16 Barcelona 03 16 La Bordeta 17 Barcelona 03 17 Hostafrancs 18 Barcelona 03 18 Font de la Guatlla 19 Barcelona 03 19 Poble Sec 20 Barcelona 03 20 La Marina (Montjuïc i Port) 21 Barcelona 04 21 Pedralbes 22 Barcelona 04 22 Sant Ramon-Maternitat 23 Barcelona 04 23 Les Corts 24 Barcelona 05 24 25 31 Sarrià Vallvidrera-Tibidabo-Les Planes 25 Barcelona 05 26 Tres Torres 26 Barcelona 05 27 Sant Gervasi-Bonanova 27 Barcelona 05 28 29 Sant Gervasi-Galvany 28 Barcelona 05 30 Putget-Farró 29 Barcelona 06 32 Vallcarca-Penitents i El Coll 30 Barcelona 06 33 La Salut 31 Barcelona 06 34 Vila de Gràcia-Esquerra 32 Barcelona 06 35 Vila de Gràcia-Dreta 33 Barcelona 06 36 Camp d'en Grassot-Gràcia Nova 34 Barcelona 07 37 Sant Genís dels Aguadells, Montbau i Vall d'Hebron 35 Barcelona 07 38 Taxonera 36 Barcelona 07 39 Carmel 37 Barcelona 07 40 Can Baró 38 Barcelona 07 41 Baix Guinardó 39 Barcelona 07 42 Horta 40 Barcelona 07 43 Font d'en Fargas 41 Barcelona 07 44 Guinardó 42 Barcelona 08 45 Canyelles 43 Barcelona 08 46 La Guineueta 44 Barcelona 08 47 Turó de la Peira-Can Peguera 45 Barcelona 08 48 Vilapicina-Torre Llobeta 46 Barcelona 08 49 Porta 47 Barcelona 08 50 Roquetes 48 Barcelona 08 51 Verdun 49 Barcelona 08 52 Prosperitat 50 Barcelona 08 53 Trinitat Nova 51 Barcelona 08 54 Torre Baró, Ciutat Meridiana i Vallbona 52 Barcelona 09 55 Congrés-Indians 53 Barcelona 09 56 Navas 54 Barcelona 09 57 La Sagrera 55 Barcelona 09 58 Sant Andreu-Alt 56 Barcelona 09 59 Sant Andreu-Baix 57 Barcelona 09 60 Bon Pastor 58 Barcelona 09 61 Trinitat Vella 59 Barcelona 10 62 Camp de l'Arpa 60 Barcelona 10 63 El Clot 61 Barcelona 10 64 Glòries-El Parc 62 Barcelona 10 65 Vila Olímpica 63 Barcelona 10 66 Sant Martí 64 Barcelona 10 67 Provençals de Poblenou 65 Barcelona 10 68 Poblenou 66 Barcelona 10 69 La Verneda-La Pau 67 Barcelona 10 70 Besòs-Maresme 68 Barcelona 10 71 Diagonal Mar-La Mar Bella 69 Badalona 70 Cornella de Llobregat 71 Hospitalet de Llobregat 72 Santa Coloma de Gramenet 73 Esplugues de Llobregat 74 Montcada i Reixac 75 Prat de Llobregat 76 Sant Adria de Besos 77 Sant Joan Despi 78 Sant Just Desvern 79 Litoral Sud 80 Litoral Nord 81 Interior Sud 82 Interior Nord 134 Cost-Benefit Analysis of RetBus Figure G-3: Map of the road network specified by road class (in purple, ring roads and main access roads; in blue, basic road network; in orange, secondary road network; in green, local road network). 135 Cost-Benefit Analysis of RetBus Figure G-4: Map of the rail sub-networks: metro (in blue), tram (in yellow), RENFE (in red, only partially shown) and FGC (in green). Figure G-5: Map of the bus network. 136 Cost-Benefit Analysis of RetBus Table G-2: Average frequency and average operational speed of each public transport line. Bus (Base case) Bus (Base case) Metro Average Average Average Average Average Average Line frequency commercial Line frequency commercial Line frequency commercial (services/h) speed (km/h) (services/h) speed (km/h) (services/h) speed (km/h) 6 6,00 11,5 64 6,67 11,5 L1 20,00 26,8 7 7,50 11,5 65 5,00 11,5 L2 20,00 27,7 9 8,57 11,5 66 3,53 11,5 L3 20,00 26,6 10 6,00 11,5 67 5,00 11,5 L4 20,00 28,4 11 4,29 11,5 68 3,16 11,5 L5 20,00 25,9 13 2,31 11,5 70 6,00 11,5 L9 20,00 27,7 14 6,00 11,5 71 4,29 11,5 L10 20,00 27,7 15 7,50 11,5 72 7,50 11,5 16 6,67 11,5 73 7,50 11,5 RENFE 17 6,67 11,5 74 10,00 11,5 Average Average 19 6,67 11,5 75 3,33 11,5 Line frequency commercial 20 7,50 11,5 76 4,62 11,5 (services/h) speed (km/h) 21 3,33 11,5 78 4,00 11,5 R1 2,00 41,4 22 7,50 11,5 79 4,29 11,5 R2 2,00 44,3 23 2,86 11,5 91 3,53 11,5 R2S 2,00 43,5 24 7,50 11,5 92 5,45 11,5 R2N 2,00 42,4 26 3,00 11,5 95 2,86 11,5 R3 2,00 38,8 27 8,57 11,5 96 2,50 11,5 R4 4,00 46,4 28 7,50 11,5 97 2,14 11,5 R7 1,00 44,3 30 5,00 11,5 102 1,05 11,5 31 3,16 11,5 105 1,67 11,5 FGC 32 6,67 11,5 109 6,67 11,5 Average Average 33 8,57 11,5 110 2,50 11,5 Line frequency commercial 34 7,50 11,5 112 4,62 11,5 (services/h) speed (km/h) 35 1,76 11,5 113 2,00 11,5 L6 8,00 23,3 36 4,62 11,5 114 3,00 11,5 L7 8,00 29,6 37 5,45 11,5 115 2,73 11,5 L8 14,00 35,9 39 6,67 11,5 116 5,45 11,5 40 4,00 11,5 117 3,16 11,5 TRAM 41 7,50 11,5 119 2,31 11,5 Average Average 42 3,16 11,5 120 1,88 11,5 Line frequency commercial 43 6,00 11,5 121 3,16 11,5 (services/h) speed (km/h) 44 4,29 11,5 122 2,22 11,5 T1 4,00 21,3 45 5,45 11,5 123 2,61 11,5 T2 4,00 21,6 47 7,50 11,5 125 1,58 11,5 T3 4,00 23,6 50 5,45 11,5 126 2,50 11,5 T4 6,70 19,7 51 2,40 11,5 127 2,61 11,5 T5 6,70 20,0 54 6,67 11,5 129 2,31 11,5 T6 3,00 18,8 55 6,00 11,5 130 2,22 11,5 56 6,00 11,5 131 2,22 11,5 BRT 57 3,75 11,5 132 4,00 11,5 Average Average 58 5,45 11,5 141 2,73 11,5 Line frequency commercial 59 7,50 11,5 157 3,75 11,5 (services/h) speed (km/h) 60 4,62 11,5 158 1,33 11,5 H0 20,00 15,0 61 1,88 11,5 165 4,62 11,5 H1A 10,00 15,0 62 4,29 11,5 185 3,16 11,5 H1B 10,00 15,0 63 4,62 11,5 192 1,88 11,5 H2 20,00 15,0 H3A 10,00 15,0 H3B 10,00 15,0 H4A 10,00 15,0 H4B 10,00 15,0 V2A 10,00 15,0 V2B 10,00 15,0 V3 20,00 15,0 V4 20,00 15,0 V5 20,00 15,0 V6 20,00 15,0 V7A 10,00 15,0 V7B 10,00 15,0 137 Cost-Benefit Analysis of RetBus Figure G-6: Map of the STI zones. 138 Cost-Benefit Analysis of RetBus Annex H: Calibration of the modal split model The methodology used to calibrate the modal split model is herewith explained. The observed values of TPT(i,j) and Ttotal(i,j) in year 2007 are known (TMB, 2007). The travel costs by transit and private vehicle between each OD pair in 2007 are also known (they have been derived using a shortest path algorithm in OmniTRANS). The parameters that need to be estimated are: az, bz, cz and . The dispersion factor () has been set to 1,00. Then, parameters az, bz and cz have been estimated by minimizing the square error: 2 (Eq. H-1) SE TPT (i, j),obs TPT (i, j), pred (i, j) Four different sets of parameters have been estimated (Table H-1). Each set of parameters is associated to a different degree of geographic segmentation. Table H-1: Modal split model performance with different sets of parameters Model 1 Model 2 Model 3 Model 4 Parameter 1,00 1,00 1,00 1,00 Parameter a1 1,06 1,51 1,38 1,66 Parameter a2 1,06 0,40 0,00 0,00 Parameter a3 1,06 0,92 0,75 0,39 Parameter b1 0,60 0,60 0,48 0,51 Parameter b2 0,60 0,60 0,24 0,24 Parameter b3 0,60 0,60 0,48 0,42 Parameter c1 0,24 0,24 0,19 0,24 Parameter c2 0,24 0,24 0,09 0,09 Parameter c3 0,24 0,24 0,19 0,14 Square Error (SE) 6,97E+07 4,96E+07 4,74E+07 4,69E+07 Average error per 78,6 71,9 70,9 70,5 observation % Error per 30,3% 27,7% 27,4% 27,2% observation Modal split model 3 has been used in this study. The main reasons are the following: Model 1 does not take into account geographical differences in modal choice behavior. In addition, it yields the highest average error per observation. For those reasons, it has been rejected as suitable modal split model. Model 4 shows the best predicting capabilities: it yields the lowest average error per observation of the four models. However, it is a complex model. In particular, the 139 Cost-Benefit Analysis of RetBus existence of different travel cost sensitivities for OD pair groups z=1 and z=3 is difficult to interpret. At the same time, the performance of Model 4 is not much higher than that of models 2 and 3. Because Model 4 has a higher degree of complexity than the other models but it does not perform significantly better, it has been discarded. Model 2 is relatively simpler and easier to interpret than Model 4. However, it does not take into account the influence of income over travel cost sensitivity (travelers with higher income are expected to be less sensitive to travel cost when making mode- choice decisions). For that reason, Model 2 has been rejected. Model 3 is preferred over the other models because of its high performance (which is almost as good as that of Model 4) and ease of interpretation. Model 3 constitutes a hybrid approach between models 2 and 4. Geographical differences in mode choice behavior are taken into account by: a) specifying different mode-specific constants for the three different OD pair groups; b) setting travel cost sensitivities equal for groups z=1 and z=3 (which are supposed to not be significantly different in terms of average income), but different for group z=2 (since District 5 is the one with the highest average income within Barcelona). 140 Cost-Benefit Analysis of RetBus Annex I: Validation of the transit assignment model The methodology used to validate the modal split model is herewith explained. The observed values of TPT(i,j), Tbus(i,j) and Tmetro(i,j) in year 2007 are known (TMB, 2007). The transit travel costs (VPTx(i,j)) between each OD pair in 2007 are also known (they have been derived using a shortest path algorithm). The parameters that need to be estimated are: BPm, TPm and . The values of the dispersion factor (), the boarding penalties (BPm) and the transfer penalties (TPm) have been manually changed. Then, the following rule has been used to choose the most suitable set of parameters: minimization of the difference between predicted and observed number of bus and metro trips (for the whole network in 2007), particularly focusing on bus trips55. Four different sets of parameters have been estimated (Table I-1). Table I-1: Transit assignment model performance with different sets of parameters Model 1 Model 2 Model 3 Model 4 Parameter 3,0 2,0 3,0 2,0 Parameter BPbus 10,0 10,0 7,0 7,0 Parameter BPmetro 5,0 5,0 5,0 5,0 Parameter TPbus 5,0 5,0 3,0 3,0 Parameter TPmetro 0,0 0,0 0,0 0,0 Difference in bus trip legs 2007 -20,2 -15,0 +16,5 +23,0 (predicted-observed) (%) Difference in metro trip legs 2007 +50,0 +48,0 +26,9 +25,2 (predicted-observed) (%) Transit assignment model 3 has been used in this study to assign transit passengers to the network. The main reasons are the following: The boarding and transfer penalties to-bus are too high in models 1 and 2, which results in too low levels of predicted bus ridership: with such penalty values, the predicted 55 Only data on predicted number of trip legs per mode can be computed using OmniTRANS. Therefore, if a passenger makes a trip of the type “origin->walk->metro line 1->metro line 2->destination”, this passenger is added twice to the total number of passengers who use metro as transport mode. This has important implications for the validation process, since the observed data consists of number of trips (not trip legs). It is expected that observed number of trips will be lower than predicted number of trip legs, since the latter does not take into account that some passengers make transfers between transit lines of the same mode to complete their trips (which leads to multiple-counting). In addition, it is expected that there will be more transfers between metro lines than between bus lines because transferring between metro lines has been assumed to have a lower penalty than transferring between bus lines. As a result, the difference between observed number of trips and predicted number of trip legs by metro is expected to be higher than the difference between observed number of trips and predicted number of trip legs by bus. 141 Cost-Benefit Analysis of RetBus number of bus trip legs is lower than the observed number of bus trips, which does not make sense. Therefore, models 1 and 2 have been rejected. Choosing between models 3 and 4 means selecting the most suitable value for the dispersion parameter (). A dispersion factor of 3,0 (Model 3) yields a much better match between predicted number of bus trip legs and observed number of bus trips than a dispersion factor equal to 2,0 (Model 4). Model 4 results in similar differences between predicted number of trip legs and observed number of trips for metro and bus, which is contrary to the hypothesis that there are more transfers between metro lines than between bus lines, because transferring between metro lines has a lower penalty than transferring between bus lines56. Therefore, the chosen value for is 3,0 (Model 3). 56 Higher transfer penalties for transfers to bus account for the fact that transit users have a stronger preference to transfer to rail modes than to bus. 142 Cost-Benefit Analysis of RetBus Annex J: Cost-benefit tables resulting from the sensitivity tests Table J-1: Cost-benefit analysis of Alternative 1: overview of costs and benefits, NPV and BCR for 2011 (average BRT operational speed equal to 20 km/h). Alternative 1: TMB plan Average RetBus operational speed = 20 km/h RetBus fully operational at full demand in: 2016 Bus network: TMB plan changes fully operational in 2016 Extension of metro lines L9/L10 fully operational in: 2016 VOT: Value of working time Discount rate = 5% Annual increase of transit fares: 4% NPV Project effects BCR (million euro) 1. BRT investment costs -22,6 1.1. Infrastructure investment costs -8,7 1.2. Vehicle investment costs -13,9 2. Change in fleet replacement costs 31,3 2.1. Change in fleet replacement costs (BRT) -117,0 2.2. Change in fleet replacement costs (bus) 148,2 3. Change in operating costs 10,7 3.1. Change in operating costs (BRT) -368,8 3.2. Change in operating costs (bus) 379,4 4. Change in operating revenues 94,6 5. Transit user benefits 1.224,9 6. Safety effects 60,9 6.1. Change in external accident costs (private vehicles) 69,6 6.2. Change in external accident costs (transit) -8,7 7. Environmental effects 25,1 7.1. Change in noise costs (private vehicles) 13,3 7.2. Change in noise costs (transit) -3,3 7.3. Change in air pollution costs (private vehicles) 13,1 7.4. Change in air pollution costs (transit) -2,5 7.5. Change in climate change costs (private vehicles) 5,2 7.6. Change in climate change costs (transit) -0,8 SCBA Total 1.424,9 64,05 FCBA Total 114,0 6,04 NPV Parties affected by the project (million euro) TMB / Government 114,0 Transit users 1.224,9 Society 86,0 143 Cost-Benefit Analysis of RetBus Table J-2: Cost-benefit analysis of Alternative 2: overview of costs and benefits, NPV and BCR for 2011 (average BRT operational speed equal to 20 km/h). Alternative 2: Cost-reduction plan Average RetBus operational speed = 20 km/h RetBus fully operational at full demand in: 2016 Bus network: Cost-reduction plan changes fully operational in 2016 Extension of metro lines L9/L10 fully operational in: 2016 VOT: Value of working time Discount rate = 5% Annual increase of transit fares: 4% NPV Project effects BCR (million euro) 1. BRT investment costs -22,6 1.1. Infrastructure investment costs -8,7 1.2. Vehicle investment costs -13,9 2. Change in fleet replacement costs 64,9 2.1. Change in fleet replacement costs (BRT) -117,0 2.2. Change in fleet replacement costs (bus) 181,8 3. Change in operating costs 207,5 3.1. Change in operating costs (BRT) -368,8 3.2. Change in operating costs (bus) 576,3 4. Change in operating revenues 88,9 5. Transit user benefits 1.185,9 6. Safety effects 64,0 6.1. Change in external accident costs (private vehicles) 66,1 6.2. Change in external accident costs (transit) -2,1 7. Environmental effects 27,7 7.1. Change in noise costs (private vehicles) 11,9 7.2. Change in noise costs (transit) -0,8 7.3. Change in air pollution costs (private vehicles) 12,5 7.4. Change in air pollution costs (transit) -0,6 7.5. Change in climate change costs (private vehicles) 5,0 7.6. Change in climate change costs (transit) -0,2 SCBA Total 1.616,3 72,52 FCBA Total 338,7 15,99 NPV Parties affected by the project (million euro) TMB / Government 338,7 Transit users 1.185,9 Society 91,7 144 Cost-Benefit Analysis of RetBus Table J-3: Cost-benefit analysis of Alternative 1: overview of costs and benefits, NPV and BCR for 2011 (completion of the project in 2013, BRT system operating at full demand in 2014). Alternative 1: TMB plan Average RetBus operational speed = 15 km/h RetBus fully operational at full demand in: 2014 Bus network: TMB plan changes fully operational in 2014 Extension of metro lines L9/L10 fully operational in: 2014 VOT: Value of working time Discount rate = 5% Annual increase of transit fares: 4% NPV Project effects BCR (million euro) 1. BRT investment costs -36,0 1.1. Infrastructure investment costs -8,9 1.2. Vehicle investment costs -27,1 2. Change in fleet replacement costs -7,0 2.1. Change in fleet replacement costs (BRT) -174,0 2.2. Change in fleet replacement costs (bus) 167,0 3. Change in operating costs -129,8 3.1. Change in operating costs (BRT) -570,1 3.2. Change in operating costs (bus) 440,3 4. Change in operating revenues 48,1 5. Transit user benefits 801,6 6. Safety effects 25,4 6.1. Change in external accident costs (private vehicles) 35,5 6.2. Change in external accident costs (transit) -10,1 7. Environmental effects 9,7 7.1. Change in noise costs (private vehicles) 6,8 7.2. Change in noise costs (transit) -3,8 7.3. Change in air pollution costs (private vehicles) 7,7 7.4. Change in air pollution costs (transit) -2,9 7.5. Change in climate change costs (private vehicles) 2,7 7.6. Change in climate change costs (transit) -0,9 SCBA Total 712,0 20,78 FCBA Total -124,7 -2,46 NPV Parties affected by the project (million euro) TMB / Government -124,7 Transit users 801,6 Society 35,1 145 Cost-Benefit Analysis of RetBus Table J-4: Cost-benefit analysis of Alternative 2: overview of costs and benefits, NPV and BCR for 2011 (completion of the project in 2013, BRT system operating at full demand in 2014). Alternative 2: Cost-reduction plan Average RetBus operational speed = 15 km/h RetBus fully operational at full demand in: 2014 Bus network: Cost-reduction plan changes fully operational in 2014 Extension of metro lines L9/L10 fully operational in: 2014 VOT: Value of working time Discount rate = 5% Annual increase of transit fares: 4% NPV Project effects BCR (million euro) 1. BRT investment costs -36,0 1.1. Infrastructure investment costs -8,9 1.2. Vehicle investment costs -27,1 2. Change in fleet replacement costs 30,9 2.1. Change in fleet replacement costs (BRT) -174,0 2.2. Change in fleet replacement costs (bus) 204,9 3. Change in operating costs 98,7 3.1. Change in operating costs (BRT) -570,1 3.2. Change in operating costs (bus) 668,8 4. Change in operating revenues 39,8 5. Transit user benefits 716,7 6. Safety effects 29,7 6.1. Change in external accident costs (private vehicles) 31,8 6.2. Change in external accident costs (transit) -2,1 7. Environmental effects 13,9 7.1. Change in noise costs (private vehicles) 6,1 7.2. Change in noise costs (transit) -0,8 7.3. Change in air pollution costs (private vehicles) 7,0 7.4. Change in air pollution costs (transit) -0,6 7.5. Change in climate change costs (private vehicles) 2,4 7.6. Change in climate change costs (transit) -0,2 SCBA Total 893,7 25,83 FCBA Total 133,4 4,71 NPV Parties affected by the project (million euro) TMB / Government 133,4 Transit users 716,7 Society 43,6 146 Cost-Benefit Analysis of RetBus Table J-5: Cost-benefit analysis of Alternative 1: overview of costs and benefits, NPV and BCR for 2011 (extension of metro lines L9/L10 fully operational after 2021). Alternative 1: TMB plan Average RetBus operational speed = 15 km/h RetBus fully operational at full demand in: 2016 Bus network: TMB plan changes fully operational in 2016 Extension of metro lines L9/L10 fully operational in: after 2021 VOT: Value of working time Discount rate = 5% Annual increase of transit fares: 4% NPV Project effects BCR (million euro) 1. BRT investment costs -35,2 1.1. Infrastructure investment costs -8,7 1.2. Vehicle investment costs -26,4 2. Change in fleet replacement costs -5,1 2.1. Change in fleet replacement costs (BRT) -153,3 2.2. Change in fleet replacement costs (bus) 148,2 3. Change in operating costs -111,9 3.1. Change in operating costs (BRT) -491,3 3.2. Change in operating costs (bus) 379,4 4. Change in operating revenues 56,5 5. Transit user benefits 911,1 6. Safety effects 43,1 6.1. Change in external accident costs (private vehicles) 51,8 6.2. Change in external accident costs (transit) -8,7 7. Environmental effects 16,6 7.1. Change in noise costs (private vehicles) 9,9 7.2. Change in noise costs (transit) -3,3 7.3. Change in air pollution costs (private vehicles) 9,3 7.4. Change in air pollution costs (transit) -2,5 7.5. Change in climate change costs (private vehicles) 3,9 7.6. Change in climate change costs (transit) -0,8 SCBA Total 875,1 25,86 FCBA Total -95,7 -1,72 NPV Parties affected by the project (million euro) TMB / Government -95,7 Transit users 911,1 Society 59,7 147 Cost-Benefit Analysis of RetBus Table J-6: Cost-benefit analysis of Alternative 2: overview of costs and benefits, NPV and BCR for 2011 (extension of metro lines L9/L10 fully operational after 2021). Alternative 2: Cost-reduction plan Average RetBus operational speed = 15 km/h RetBus fully operational at full demand in: 2016 Bus network: Cost-reduction plan changes fully operational in 2016 Extension of metro lines L9/L10 fully operational in: after 2021 VOT: Value of working time Discount rate = 5% Annual increase of transit fares: 4% NPV Project effects BCR (million euro) 1. BRT investment costs -35,2 1.1. Infrastructure investment costs -8,7 1.2. Vehicle investment costs -26,4 2. Change in fleet replacement costs 28,5 2.1. Change in fleet replacement costs (BRT) -153,3 2.2. Change in fleet replacement costs (bus) 181,8 3. Change in operating costs 85,0 3.1. Change in operating costs (BRT) -491,3 3.2. Change in operating costs (bus) 576,3 4. Change in operating revenues 48,5 5. Transit user benefits 851,1 6. Safety effects 46,0 6.1. Change in external accident costs (private vehicles) 48,1 6.2. Change in external accident costs (transit) -2,1 7. Environmental effects 19,9 7.1. Change in noise costs (private vehicles) 9,2 7.2. Change in noise costs (transit) -0,8 7.3. Change in air pollution costs (private vehicles) 8,7 7.4. Change in air pollution costs (transit) -0,6 7.5. Change in climate change costs (private vehicles) 3,6 7.6. Change in climate change costs (transit) -0,2 SCBA Total 1.043,8 30,65 FCBA Total 126,8 4,60 NPV Parties affected by the project (million euro) TMB / Government 126,8 Transit users 851,1 Society 65,9 148 Cost-Benefit Analysis of RetBus Table J-7: Cost-benefit analysis of Alternative 1: overview of costs and benefits, NPV and BCR for 2011 (5% annual fare increase rate). Alternative 1: TMB plan Average RetBus operational speed = 15 km/h RetBus fully operational at full demand in: 2016 Bus network: TMB plan changes fully operational in 2016 Extension of metro lines L9/L10 fully operational in: 2016 VOT: Value of working time Discount rate = 5% Annual increase of transit fares: 5% NPV Project effects BCR (million euro) 1. BRT investment costs -35,2 1.1. Infrastructure investment costs -8,7 1.2. Vehicle investment costs -26,4 2. Change in fleet replacement costs -5,1 2.1. Change in fleet replacement costs (BRT) -153,3 2.2. Change in fleet replacement costs (bus) 148,2 3. Change in operating costs -111,9 3.1. Change in operating costs (BRT) -491,3 3.2. Change in operating costs (bus) 379,4 4. Change in operating revenues 343,3 5. Transit user benefits 366,8 6. Safety effects -12,6 6.1. Change in external accident costs (private vehicles) -3,9 6.2. Change in external accident costs (transit) -8,7 7. Environmental effects -7,2 7.1. Change in noise costs (private vehicles) -0,8 7.2. Change in noise costs (transit) -3,3 7.3. Change in air pollution costs (private vehicles) 0,3 7.4. Change in air pollution costs (transit) -2,5 7.5. Change in climate change costs (private vehicles) -0,3 7.6. Change in climate change costs (transit) -0,8 SCBA Total 538,1 16,29 FCBA Total 191,1 6,43 NPV Parties affected by the project (million euro) TMB / Government 191,1 Transit users 366,8 Society -19,8 149 Cost-Benefit Analysis of RetBus Table J-8: Cost-benefit analysis of Alternative 2: overview of costs and benefits, NPV and BCR for 2011 (5% annual fare increase rate). Alternative 2: Cost-reduction plan Average RetBus operational speed = 15 km/h RetBus fully operational at full demand in: 2016 Bus network: Cost-reduction plan changes fully operational in 2016 Extension of metro lines L9/L10 fully operational in: 2016 VOT: Value of working time Discount rate = 5% Annual increase of transit fares: 5% NPV Project effects BCR (million euro) 1. BRT investment costs -35,2 1.1. Infrastructure investment costs -8,7 1.2. Vehicle investment costs -26,4 2. Change in fleet replacement costs 28,5 2.1. Change in fleet replacement costs (BRT) -153,3 2.2. Change in fleet replacement costs (bus) 181,8 3. Change in operating costs 85,0 3.1. Change in operating costs (BRT) -491,3 3.2. Change in operating costs (bus) 576,3 4. Change in operating revenues 336,6 5. Transit user benefits 324,8 6. Safety effects -11,0 6.1. Change in external accident costs (private vehicles) -8,9 6.2. Change in external accident costs (transit) -2,1 7. Environmental effects -4,4 7.1. Change in noise costs (private vehicles) -1,7 7.2. Change in noise costs (transit) -0,8 7.3. Change in air pollution costs (private vehicles) -0,5 7.4. Change in air pollution costs (transit) -0,6 7.5. Change in climate change costs (private vehicles) -0,7 7.6. Change in climate change costs (transit) -0,2 SCBA Total 724,3 21,58 FCBA Total 414,9 12,79 NPV Parties affected by the project (million euro) TMB / Government 414,9 Transit users 324,8 Society -15,4 150 Cost-Benefit Analysis of RetBus Table J-9: Cost-benefit analysis of Alternative 1: overview of costs and benefits, NPV and BCR for 2011 (VOT equal to 75% of the value of working time). Alternative 1: TMB plan Average RetBus operational speed = 15 km/h RetBus fully operational at full demand in: 2016 Bus network: TMB plan changes fully operational in 2016 Extension of metro lines L9/L10 fully operational in: 2016 VOT: 75% of the value of working time Discount rate = 5% Annual increase of transit fares: 4% NPV Project effects BCR (million euro) 1. BRT investment costs -35,2 1.1. Infrastructure investment costs -8,7 1.2. Vehicle investment costs -26,4 2. Change in fleet replacement costs -5,1 2.1. Change in fleet replacement costs (BRT) -153,3 2.2. Change in fleet replacement costs (bus) 148,2 3. Change in operating costs -111,9 3.1. Change in operating costs (BRT) -491,3 3.2. Change in operating costs (bus) 379,4 4. Change in operating revenues 33,3 5. Transit user benefits 555,8 6. Safety effects 14,9 6.1. Change in external accident costs (private vehicles) 23,5 6.2. Change in external accident costs (transit) -8,7 7. Environmental effects 4,3 7.1. Change in noise costs (private vehicles) 4,5 7.2. Change in noise costs (transit) -3,3 7.3. Change in air pollution costs (private vehicles) 4,5 7.4. Change in air pollution costs (transit) -2,5 7.5. Change in climate change costs (private vehicles) 1,8 7.6. Change in climate change costs (transit) -0,8 SCBA Total 456,1 13,96 FCBA Total -118,9 -2,38 NPV Parties affected by the project (million euro) TMB / Government -118,9 Transit users 555,8 Society 19,2 151 Cost-Benefit Analysis of RetBus Table J-10: Cost-benefit analysis of Alternative 2: overview of costs and benefits, NPV and BCR for 2011 (VOT equal to 75% of the value of working time). Alternative 2: Cost-reduction plan Average RetBus operational speed = 15 km/h RetBus fully operational at full demand in: 2016 Bus network: Cost-reduction plan changes fully operational in 2016 Extension of metro lines L9/L10 fully operational in: 2016 VOT: 75% of the value of working time Discount rate = 5% Annual increase of transit fares: 4% NPV Project effects BCR (million euro) 1. BRT investment costs -35,2 1.1. Infrastructure investment costs -8,7 1.2. Vehicle investment costs -26,4 2. Change in fleet replacement costs 28,5 2.1. Change in fleet replacement costs (BRT) -153,3 2.2. Change in fleet replacement costs (bus) 181,8 3. Change in operating costs 85,0 3.1. Change in operating costs (BRT) -491,3 3.2. Change in operating costs (bus) 576,3 4. Change in operating revenues 28,6 5. Transit user benefits 528,5 6. Safety effects 19,0 6.1. Change in external accident costs (private vehicles) 21,1 6.2. Change in external accident costs (transit) -2,1 7. Environmental effects 8,1 7.1. Change in noise costs (private vehicles) 4,0 7.2. Change in noise costs (transit) -0,8 7.3. Change in air pollution costs (private vehicles) 4,1 7.4. Change in air pollution costs (transit) -0,6 7.5. Change in climate change costs (private vehicles) 1,6 7.6. Change in climate change costs (transit) -0,2 SCBA Total 662,5 19,82 FCBA Total 106,9 4,04 NPV Parties affected by the project (million euro) TMB / Government 106,9 Transit users 528,5 Society 27,1 152 Cost-Benefit Analysis of RetBus Table J-11: Cost-benefit analysis of Alternative 1: overview of costs and benefits, NPV and BCR for 2011 (discount rate of 7%). Alternative 1: TMB plan Average RetBus operational speed = 15 km/h RetBus fully operational at full demand in: 2016 Bus network: TMB plan changes fully operational in 2016 Extension of metro lines L9/L10 fully operational in: 2016 VOT: Value of working time Discount rate = 7% Annual increase of transit fares: 4% NPV Project effects BCR (million euro) 1. BRT investment costs -33,6 1.1. Infrastructure investment costs -8,3 1.2. Vehicle investment costs -25,2 2. Change in fleet replacement costs -4,3 2.1. Change in fleet replacement costs (BRT) -136,4 2.2. Change in fleet replacement costs (bus) 132,1 3. Change in operating costs -99,6 3.1. Change in operating costs (BRT) -437,6 3.2. Change in operating costs (bus) 338,0 4. Change in operating revenues 38,9 5. Transit user benefits 630,9 6. Safety effects 19,8 6.1. Change in external accident costs (private vehicles) 27,5 6.2. Change in external accident costs (transit) -7,7 7. Environmental effects 6,8 7.1. Change in noise costs (private vehicles) 5,3 7.2. Change in noise costs (transit) -2,9 7.3. Change in air pollution costs (private vehicles) 5,3 7.4. Change in air pollution costs (transit) -2,2 7.5. Change in climate change costs (private vehicles) 2,1 7.6. Change in climate change costs (transit) -0,7 SCBA Total 558,9 17,63 FCBA Total -98,6 -1,93 NPV Parties affected by the project (million euro) TMB / Government -98,6 Transit users 630,9 Society 26,6 153 Cost-Benefit Analysis of RetBus Table J-12: Cost-benefit analysis of Alternative 2: overview of costs and benefits, NPV and BCR for 2011 (discount rate of 7%). Alternative 2: Cost-reduction plan Average RetBus operational speed = 15 km/h RetBus fully operational at full demand in: 2016 Bus network: Cost-reduction plan changes fully operational in 2016 Extension of metro lines L9/L10 fully operational in: 2016 VOT: Value of working time Discount rate = 7% Annual increase of transit fares: 4% NPV Project effects BCR (million euro) 1. BRT investment costs -33,6 1.1. Infrastructure investment costs -8,3 1.2. Vehicle investment costs -25,2 2. Change in fleet replacement costs 25,6 2.1. Change in fleet replacement costs (BRT) -136,4 2.2. Change in fleet replacement costs (bus) 162,0 3. Change in operating costs 75,7 3.1. Change in operating costs (BRT) -437,6 3.2. Change in operating costs (bus) 513,3 4. Change in operating revenues 33,4 5. Transit user benefits 593,1 6. Safety effects 22,6 6.1. Change in external accident costs (private vehicles) 24,4 6.2. Change in external accident costs (transit) -1,9 7. Environmental effects 9,8 7.1. Change in noise costs (private vehicles) 4,7 7.2. Change in noise costs (transit) -0,7 7.3. Change in air pollution costs (private vehicles) 4,7 7.4. Change in air pollution costs (transit) -0,5 7.5. Change in climate change costs (private vehicles) 1,8 7.6. Change in climate change costs (transit) -0,2 SCBA Total 726,6 22,63 FCBA Total 101,1 4,01 NPV Parties affected by the project (million euro) TMB / Government 101,1 Transit users 593,1 Society 32,4 154