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MEASURING IMPROVEMENTS IN THE MOVEMENT OF - page 41 / 60

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Measuring Improvements in the Movement of Highway and Intermodal Freight

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ratio of variance to average minutes per trip in peak periods in major metro areas

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total public and private costs of travel

ASSESSMENT:

This effort identified a number of potentially useful indicators of the impact of the highway system on productivity. The effort is not focused specifically on freight but more broadly on measures that can be used to gauge FHWA’s progress in attaining its productivity-related strategic goal, “Continuously improve the economic efficiency of the Nation’s transportation system to enhance America’s position in the global economy.” Each potential indicator is described and issues such as data availability and applicability are discussed at a basic level.

The authors do not explain why their recommendations of six indicators that merit further investigation do not match with the top six indicators identified by the panel. The authors appear, however, to have selected indicators that broadly address the economic impacts of highway investments. They did not include measures that only address specific aspects of travel, such as hours of delay at border crossings, toll plazas, or weigh stations. Indicators that focus on these aspects of travel have more of a direct connection with freight traffic but presumably were considered too narrow as national indicators.

Some of the measures recommended by the authors do not address freight specifically, but focus on the overall economic costs and benefits of highway investments. For example, net present value (or current year benefit-cost ratio) of highway improvements accounts for benefits such as travel time savings, accident cost savings, and vehicle operating cost savings. While these cost savings clearly have positive implications for productivity, benefits accrue to both freight and personal travel, with a large portion of the benefits of most highway projects coming from personal travel time savings. As a result, net present value (or current year benefit-cost ratio) of highway improvements is not a measure of freight productivity but rather a measure of the total economic efficiency of highway investment.

“Total public and private costs of travel” appears to be a weak measure, even though it was recommended by authors as worth further consideration (in contrast, the panel ranked this measure relatively low). This measure is difficult to understand conceptually, is difficult to use to track progress over time, and has problems of data availability. The concept behind this measure is that the optimal transportation system minimizes total “costs” when one accounts for total public and private costs. In a standard benefit-cost analysis framework, an increase is costs is not necessarily bad if it is more than offset by an increase in benefits (e.g., travel time and vehicle operating cost savings may more than offset the cost of an infrastructure investment). Under this measure, however, beneficial project impacts are viewed as a reduction in cost (e.g., a reduction in travel time costs) rather than as a benefit. In order to use this measure, one must account for all public and private sector transportation costs. This would be fine in a static system. However, in a growing economy, one sees not just changes in travel time costs, operating costs, and infrastructure construction and maintenance, but also changes in the amount of travel. The benefits of new travel are not addressed in this framework since the focus is solely on costs. The measure also has a negative focus.

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