How Much is “Ambience” Worth? The Economics of the East-West Cycle Superhighway

The East-West Cycle Superhighway has a range of benefits and disbenefits. Some people will gain (mainly cyclists) while others will lose out (motorists from traffic delays, and even bus passengers and pedestrians). There is of course a way of combining all these different advantages and disadvantages as with any other major transport scheme which is to calculate the Net Present Value (NPV), or Cost/Benefit ratio. This also gives a good measure of whether it is sensible to invest in a scheme, in comparison with investing in something else instead.

Well what is the NPV of this Superhighway? It was given in the report to the TfL Board before they made a decision to proceed and is present here: http://www.tfl.gov.uk/cdn/static/cms/documents/board-20140205-part-1-item06-cycling-vision-portfolio.pdf

Note that the financial budget for all the Cycle Superhighways that was approved is £162 million which is of course a very substantial sum.

You can see the NPV (or Benefit to Cost Ratio, BCR, as the report calls it) on page 65. This shows that although there are positive overall benefits over 30 years for the other cycle superhighways, the East-West one has a negative value of minus £200 million.  And that’s even after valuing the improved “ambience” for pedestrians at £14 million, improved ambience to cyclists of £8.2 million, improved ambience to “others” of £5 million and reduced absenteeism at £1.2 million. Bus operations have a disbenefit of minus £5 million and although health and safety show positive figures they are swamped by the minus £37 million from traffic delays.

They don’t even include the reduced “ambience” for motorists and goods vehicle drivers stuck in traffic jams.

Stephen Glaister of the RAC Foundation said he was astonished the scheme is going ahead given economic disbenefits of £200m. The other superhighways are also questionable depending on whether you believe the “ambience” improvement (and they don’t say how that is measured or valued) offsets the negative impact of increased journey times.

In the view of this writer, this scheme smacks of irrationality and of course these figures were not provided before the scheme went to public consultation so no informed responses to the consultation were possible. A stitch-up by TfL management and by Boris Johnson in essence. As I already said to him, I won’t be voting for him ever again based on his promotion of this scheme so his ambitions on the national political scene may not be as good as he thinks, if others take the same view.

Roger Lawson

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One thought on “How Much is “Ambience” Worth? The Economics of the East-West Cycle Superhighway

  1. All great stuff, and fully agree with your comments.

    I have not read all your blogs, so apologies if you have already covered this point.

    But one glaring heroic assumption on this process is the assumption that cycle mode share will increase from 2% to 5%. There is no evidence on how they arrived at 5%, it appears to be just a target. We don’t build transport business cases based on targets, but rather on evidence-based analysis of forecast growth.

    Like

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