A key element of benefit from transport infrastructure improvements is travel time savings. The value travellers attribute to travel time savings is dependent on a number of variables — but principally income and distance. However it is common practice internationally to use average values of time in appraisal (varying by journey purpose, vehicle type, day of week or time of day) rather than values which vary with the characteristics of the travelle. The UK and Scotland are no exception. In the UK and Scotland appraisal practice distinguishes between work and non-work trips (commuting and other non-work) and for non-work trips to use a standard value of travel time savings (VTTS) for all trips. These standard or equity values of VTTS are used in the Cost Benefit Analysis (CBA) as they are regarded as fair — preventing investment concentrating in high income areas. An alternative to the use of equity values of non-work time is to use local values - varying with income and trip distance - and weighting the results such that the benefits received by ‘poor’ people are weighted higher than those received by ‘rich’ people. This more sophisticated approach is consistent with economic principles and also the Treasury’s Green Book, but does not form either part of STAG or its English counterpart webTAG. This more sophisticated approach is also a more onerous approach both analytically and from a data perspective. This is because it introduces additional calculations into the CBA, and also places a requirement on the analyst to know or estimate what the incomes of non-work travellers are (i.e. whether they are poor or rich). In this paper we examine whether the use of the equity values of travel time savings is really fair — as it is argued they are. We firstly consider whether the use of local VTTS — values reflecting the characteristics of the traveller and their trip — give different results from CBA results calculated using an equity value. We also compare the CBA results with an equity value with results calculated using income weights derived using the Treasury’s Green Book method. Finally as the equity VTTS implies a weighting between low and high income travellers we estimate what this is in different scenarios and examine whether there is any consistency in the weights and whether the weights appear excessive. It is argued for example that weights for poor people that exceed twice the weight for rich people are inappropriate from a policy perspective as there exist better policy instruments for ensuring an equitable distribution of wealth, such as welfare benefit system. To do this we use firstly a synthetic analysis, and secondly data from two Scottish inter-urban road schemes. To derive an income profile for travellers we use Monte Carlo simulation fitted to observed income profiles for different areas. This paper is structured as follows: Chapter 2 briefly summarises the methodology; Chapter 3 presents the synthetic analysis, which shows the economic impact of using local/regional values of time and the method of deriving implied weights; Chapter 4 presents the Scottish inter-urban case studies, which estimate regional user benefits and clarifies the appropriateness of the implied weights; whilst Chapter 5 sets out our conclusions. (Author/publisher)
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