Table 3.29 Economic and Financial Aspects

from Eco cities (World bank,2010)

Table 3.25 Elements of a Public Transportation Network

Economic and Financial Aspects

Best practice dictates that planning and feasibility studies on transportation projects should thoroughly analyze viable alternatives. Analyses should consider the life-cycle costs and time horizons of investments. Studies of public transportation corridors often assess BRT and urban rail alternatives. BRT systems have a slightly lower capacity and a shorter life cycle because buses and busways are not as durable as rail cars and tracks. However, a BRT system is considerably more rapid and cheaper to build than rail if rights-of-way are available (box 3.17). A BRT system is also more fl exible, may be implemented incrementally, and is more easily altered.

Table 3.29 summarizes key aspects in economic and fi nancial assessments of transportation projects.

Economic analyses of transport alternatives typically rely on cost-benefi t analyses and the calculation of rates of return.4 For World Bank–fi nanced projects, the economic and fi nancial indicators are usually linked to project development objectives and the monitoring and evaluation framework. These indicators include calculations of net present value and an internal economic rate of return, which are typically estimated over the life of the project and encompass the following elements:

• Costs: – Capital (fi xed or up-front investment costs) – Operating (variable or operating costs, maintenance, disposal costs)

• Benefi ts (listed from primary to secondary benefi ts): – Travel time savings: quantifi ed using transportation models, including demand forecasts and mode choices; this value theoretically captures most of the potential gains in land values from improved transportation services and accessibility – Vehicle operating cost savings: quantifi ed on the basis of the wear and tear on vehicles and fuel savings – Road safety benefi ts: sometimes quantifi ed in terms of avoided injuries, fatalities, and property damage using statistical values from local data sources – Air quality benefi ts: sometimes quantifi ed on the basis of estimates of the economic and health impacts of reduced emissions of local pollutants – Greenhouse gas emissions: directly related to fuel consumption and sometimes quantifi ed, particularly to evaluate the possibility of selling carbon credits (see the section on innovative fi nancing below); greenhouse gas emissions are usually normalized by person or unit of economic welfare (such as GDP), and issues related to estimating transportderived greenhouse gases are discussed – Other impacts of infrastructure on employment and poverty: sometimes considered; however, the broader, long-term economic impacts of integrated transport systems and technologies (for example, impacts on the small business market and on technology exports) are rarely quantifi ed

• Sensitivity analyses to assess the viability of investments under diff erent scenarios, based on changes in at least three variables: – Costs (that is, increases in the capital or operating costs)