Conditions and Performance Chapter Listing

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Introduction

Highway Sensitivity Analysis

Transit Sensitivity Analysis

Other Alternative Assumptions

As in the case with travel growth projections, changing other key variables can have a significant impact on the investment requirement results. Exhibit 10-2 shows the impact that changing certain variables would have on the Cost to Maintain Highways and Bridges and the Cost to Improve Highways and Bridges. The individual changes are discussed in more detail below.

Exhibit 10-2. Impact of Other Alternate Assumptions on Investment Requirements

High Cost Lanes

For each highway section in HPMS, States code a Widening Feasibility rating. In this report, it has been assumed that highway sections cannot be widened beyond the width specified as feasible by the States. However, the investment requirement analysis in previous C&P reports treated the widening feasibility rating as a measure of the number of lanes that could be added at "normal" cost. In previous reports, it was assumed that if adding additional lanes was justified, they could be added at "high" cost, representing the cost required to double-deck a freeway, build a parallel route, or acquire expensive right-of-way. The decision to turn off the high-cost lane feature in HERS for this report is explained in Appendix G.

Turning on the high-cost lane feature would increase the Cost to Improve Highways and Bridges by 38.0 percent. This feature allows HERS to add additional lanes in congested areas. While these lanes are expensive, the model would consider them to be cost-beneficial in many situations.

Turning on high-cost lanes would increase the Cost to Maintain Highways and Bridges by 28.7 percent. This occurs because the model would shift a greater percentage of investment towards capacity improvements, since there would be more attractive widening projects to choose from. As explained in Chapter 7, the Highway Maintain Conditions scenario represents a cost-beneficial mix of investments that is expected to maintain average IRI, but also includes capacity projects that meet the same minimum BCR cutoff point.

Elasticity Values

The travel demand elasticity values were increased in this report to -1.0 for short term elasticity with an additional -0.6 (total -1.6) for long term elasticity. [See the discussion of elasticity in Chapter 7]. In the 1997 C&P report, values of -0.8 and -0.2 (total -1.0) were used. The rationale behind this change is explained in Appendix G.

Setting the elasticity values back to the levels used to develop the 1997 C&P report would increase the Cost to Maintain Highways and Bridges by 4.9 percent. As indicated in Chapter 7, highway-user costs are projected to increase overall under the Highway Maintain Conditions scenario. Therefore, the elasticity procedures in HERS tend to suppress travel growth at this level of investment. Reducing the elasticity values back to the levels used in the 1997 C&P report would allow additional travel to occur, thus boosting the investment requirements.

The opposite effect can be observed in the Cost to Improve Highways and Bridges. Under the Highway Maximum Economic Investment scenario, highway users are projected to decline. At this level of investment, the elasticity procedures in HERS tend to induce travel growth. Therefore, reducing the elasticity values back to the levels used in the 1997 C&P report would reduce the amount of induced travel, and reduce the investment requirements.

Emissions Module

The HERS model now factors in the societal costs of emissions into its benefit-cost analysis of highway improvements. As discussed in Appendix G, the emissions module in HERS is based on older research. The impact of emissions costs on the investment requirements may change in the future, as the HERS emissions equations are enhanced.

Turning off the emissions module in HERS would increase the Cost to Maintain Highways and Bridges by 0.1 percent and increase the Cost to Improve Highways and Bridges by 1.1 percent. When the model doesn't consider the societal costs of emissions, it finds more potential improvements to be cost beneficial.

Value of Time

The value of time in HERS was developed using a standard methodology adopted by the Department of Transportation. This methodology provides consistency between different analyses performed within the Department. However, there is a great deal of debate about the appropriate way to value time, and no single methodology has been uniformly accepted by the academic community, or within the Federal government.

Doubling the value of time in HERS would increase the Cost to Maintain Highways and Bridges by 6.6 percent and increase the Cost to Improve Highways and Bridges by 4.9 percent. Increasing the value of time causes HERS to consider more widening projects that reduce travel time costs cost beneficial. The proportion of capacity projects implemented as a percentage of total projects would increase, causing the Cost to Maintain Highways to rise also.

Reducing the value of time by 50 percent would cause a slight 0.3 percent increase in the Cost to Maintain Highways and Bridges, and a 3.8 percent reduction in the Cost to Improve Highways and Bridges. The slight increase in the Cost to Maintain Highways and Bridges is caused by the change in the mix of projects that are implemented.

Value of Life

HERS uses $2.7 million for the value of life, which is the Department of Transportation's standard value for use in benefit-cost analyses. As in the case with the value of time, there is a great deal of debate about the appropriate value, and no single dollar figure has been uniformly accepted by the academic community, or within the Federal government.

Doubling the value of life in HERS would increase the Cost to Maintain Highways and Bridges by 2.1 percent and increase the Cost to Improve Highways and Bridges by 0.5 percent. HERS would find a few more projects to implement on the basis of their increased safety benefits, if the value of life were increased. HERS would also change the mix of recommended improvements, favoring those that reduce crash costs over those that primarily gain their benefits by improving pavement quality. This effect tends to cause the Cost to Maintain Highways and Bridges to increase.

Reducing the value of life by 50 percent would reduce the Cost to Maintain Highways and Bridges by 0.2 percent and reduce the Cost to Improve Highways and Bridges by 0.2 percent. Some marginal projects that were justified based on potential reductions in crash rates they would cause would not be implemented if the value of life was reduced.