Economic Perspectives on
Transport and Equality

09

Discussion Paper 2011 • 09
David LEWISHDR Corporation

This document was produced as background for the 2011 International Transport Forum, on
25-27 May in Leipzig, Germany, on Transport for Society. The views expressed in this document
do not necessarily reflect those of the member countries of the International Transport Forum.

Further information about the International Transport Forum is available atwww.internationaltransportforum.org

ECONOMIC PERSPECTIVES ON
TRANSPORT AND EQUALITY

Discussion Paper No. 2011-09

David Lewis Ph.D., FCIT
Senior Vice President
HDR Corporation

April 2011

Economic Perspectives on Transport And Equality

INTERNATIONAL TRANSPORT FORUM

The International Transport Forum at the OECD is an intergovernmental organisation with52 member countries. It acts as a strategic think tank with the objective of helping shape thetransport policy agenda on a global level and ensuring that it contributes to economic growth,environmental protection, social inclusion and the preservation of human life and well-being. The
International Transport Forum organizes an annual summit of Ministers along with leading
representatives from industry, civil society and academia.
The International Transport Forum was created under a Declaration issued by the Councilof Ministers of the ECMT (European Conference of Ministers of Transport) at its Ministerial
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Italy, Japan, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Moldova,
Montenegro, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russia, Serbia,
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Economic Perspectives on Transport And Equality

TABLE OF CONTENTSEXECUTIVE SUMMARY............................................................................................................ 5
1. INTRODUCTION................................................................................................................... 6
2. TRANSPORT AND INEQUALITY ......................................................................................... 6
3. TRANSPORT OPTIONS FOR ALLEVIATING ECONOMIC INEQUALITY............................. 8
4. IMPROVING ECONOMIC WELL-BEING THROUGH TRANSPORT POLICY ......................10
4.1 Transport‘s Influence on Well-Being at the Aggregate Expenditure Level ....................10
4.2. Transport‘s Influence on Well-Being at the Disaggregate Project and Plan Level ........12
5. CONCLUSION .....................................................................................................................26

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Economic Perspectives on Transport And Equality

EXECUTIVE SUMMARY

Poverty, inequality and social exclusion are closely tied to personal mobility and theaccessibility of goods and services. Evidence of the economic role of transport in promoting
better living standards and greater wellbeing can be seen in the effects of both overall public
investment in transport infrastructure, and in the impacts of specific transport policies, projects
and multi-project plans.
At the level of overall public expenditure, transport capital investment measurably promotes
growth in worker productivity: This is significant because productivity growth is key to facilitating
growth in personal incomes and living standards, and to closing income disparities between
regions and sub-regions.
At the level of specific policies, investments and plans, transport is seen to create economic
wellbeing for a wide range socially disadvantaged groups, including the poor, elderly people,
people with disabilities, children, young adults, and women. Such benefits include greater
accessibility to work and other life-chances and reduced stigmatic harms associated with social
exclusion.
This paper argues that transport planning, economic evaluation, and governance modalities
need to do a better job of adapting to the perspective on transport as a legitimate policy
instrument for diminishing inequality and creating a just distribution of social value. Analysis
methods to identify and measure such value, and governance mechanisms to ensure that equity
objectives are properly served, are beginning to appear. This is a trend to be encouraged,
particularly through the extension of economic evaluation methods and governance mechanisms
to:Account for a wider range of transport benefits and effects than traditionally recognized;
Address multi-project and multi-policy plans as well as individual projects; andShape transport plans with measures, both transport and non-transport, that mitigate
systematic social biases; andGive transport a direct, proactive role in fostering equality (rather than merely mitigatingsocial biases) by encouraging the development of emerging policy development andplanning methods that are rooted less in welfare economics and more in the operational
ideas of social justice.

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Economic Perspectives on Transport And Equality

1. INTRODUCTION

The recession has attuned the general public to the idea of transport infrastructure as
something to be ramped up quickly when an economic slowdown motivates the need tostimulate employment. But as attention turns to reducing public sector deficits, it is vital torecognize that the fundamental economic purpose of transport policy is not the transitory jobs
that arise during the construction of infrastructure projects. Transport policy is about nothing
less than creating societies in which people can prosper and live a good life. To be sure, travel
itself creates no economic value: Unless we‘re on a cruise, the time, money and effort spent
getting from here to there represent a cost, not a benefit, of daily life. It is the life activities forwhich travel is the means of access that produce economic opportunity and value in peoples‘
lives - activities such as work, accessing food and water, going to the doctor, visiting family
and friends, going to the pub, seeing a film. Recognizing that almost everything people do in
the pursuit of well-being and happiness requires travel, the quality of government transport
policy is ultimately manifest in nothing less than the quality of peoples‘ lives.

2. TRANSPORT AND INEQUALITY

According to transport scholar Martin Wachs, mobility and access to transportation are
two of the most important global economic forces for the alleviation of poverty, inequality andsocial exclusion.1 While the degree of empirical strength in this conclusion may be debated,most investigators agree that poverty, inequality and social exclusion are tied to personal
mobility and to the accessibility of goods and services. In richer and poorer countries alike,
Wachs notes that people with disabilities, women and girls and other disadvantaged people
suffer from measurable deficits in nutrition, health care, employment and education. While
such deficits reflect an array of simultaneously occurring causes (from poor housing to weak
governance), problems traveling and moving goods at affordable cost can rank among them.
Recognizing weak transport and energy infrastructure as key constraints to poverty reductionin Africa, the African Development Bank (ADB) has made infrastructure development a
cornerstone in its development agenda and promotes private and public sector infrastructuredevelopment through the provision of financial and technical resources.‖2
A link between improved transport and diminished regional disparities in income andwell-being is evident in emerging and developed economies alike -- mobility and transport
have a role to play in diminishing economic and social gaps between rich and poor in literally
all the world‘s economies.3 In coordination with other sectoral policies, transport represents
an important policy instrument for reducing poverty and diminishing social exclusion.
Germany, for example, is reported to have witnessed a larger reduction in sub-regional
income disparity since the mid-1990s than most other OECD nations.

1. Martin Wachs, Transportation Policy, Poverty, and Sustainability: History and Future, 2010
Thomas B. Deen Distinguished Lecture, Transportation Research Board, January 2010.
2. Mthuli Ncube, Hee-Sik and Albert Mafusire, Governance and Infrastructure in Africa, (in) 2010
Ibrahim Index of African Governance, Revised Edition, 2010, page 8.
3. Ibid, (and) Social Exclusion Unit, Making the Connections: Final Report on Transport andSocial Exclusion, Office of the [UK] Deputy Prime Minister, February 2003.
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Economic Perspectives on Transport And Equality

Analysis attributes this convergence in part to national and European Union funds forinfrastructure (as well as to research and development, education and the transfer of somemanufacturing jobs from factories in the western states to the east).4 As shown in Section 3
below, large infrastructure investment programs can promote productivity growth, one of the
key factors in reducing income inequalities between regions and raising a real personal
incomes.
A 2003 U.K. study on transport and social exclusion identifies a linkage between theconcept of ―accessibility‖ and economic disadvantage. The term accessibility goes to―whether people can get to key services at reasonable cost, in reasonable time, withreasonable ease.‖5 Accessibility is shown to depend on whether transport exists between
people and the services they require; whether people know about all available transport
service; whether they find it reliable and feel safe using it; and whether people are physicallyand financially able to access it. The U.K. study also reports that accessibility can turn on
whether key services and places of life activity are within reasonable distance one eachother, observing that while solving accessibility problems may be about transport it can also
be about locating and delivering key activities in ways that help people reach them. Basedon surveys, the U.K. study identified six distinct transport-related problems associated with
low income and social exclusion in that country:
Access to work. Two out of five jobseekers say lack of transport is a barrier togetting a job. One in four jobseekers say that the cost of transport is a problem
getting to interviews. One in four young people have not applied for a particular job
in the last 12 months because of transport problems.
Access to learning. 16-18 year old students spend on average £370 a year (in2002) on education-related transport, and nearly half of them experience difficultywith the cost. Six percent of all 16-24 year-olds turn down training or further
education opportunities because of problems with transport.
Access to healthcare. 31% of people without a car have difficulties traveling to theirlocal hospital, compared to 17% of people with a car. Over 1.4 million people say
they have missed, turned down, or chosen not to seek medical help over the last
12 months because of transport problems.
Access to food shops. 16% of people without cars find access to supermarkets
difficult, compared with 6% of the population as a whole.
Access to social, cultural, and sporting activities. 18% of people without a car findseeing friends and family difficult because of transport problems, compared with 8%
for car owners. People without cars are also twice as likely to find it difficult getting
to leisure centres (9%) and libraries (7%).
Impact of traffic on deprived communities. Children from lowest social class are fivetimes more likely to die in road accidents than those in the highest social class.
More than a quarter of child pedestrian casualties were found to occur in the mostdeprived 10% of wards.
A common thread running through many of the inequities and practical mobility
problems outlined above is the disparity between those with and without access to a car.
Even in developed nation‘s a significant minority of people do not have access to a car forreasons of affordability, disability, age (and choice). Low income is of particular significance.
In the U.K., for example, statistics indicate that among the 20% of households with thelowest real incomes, fully 63% do not have access to a car (Figure 1). Women are less likely
to have a driving license; in the U.K. statistics indicate 25% of women live in households
4. The Economist, Regional Inequality, March 12-18, 2011, pages 83-84.
5. Ibid.
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Economic Perspectives on Transport And Equality

without a car compared with 17% of men. The combination of low income and low car
ownership make the poor, women, older people, the young and people with disabilities
disproportionately dependent on public transport. Public transport can itself pose
accessibility and mobility barriers through weaknesses in route coverage, schedule,
frequency, reliability and physical accessibility to people with disabilities. Fares can also be abarrier to public transport, with real bus fares having risen multifold in real terms in manynations over the past two decades.
In the context of emerging economies, moreover, research documents that billions ofpeople walk significant distances every day to find clean water, lack physical access to
medicine, and have no school within walking distance of home. Transport investments ofmany sorts can bring people to the places they need and wish to go and to services theyneed to consume; and transport of many kinds can bring goods and services to people.
Figure 1: Households without a car by income, 1998/2000
70
Percentage of households

60
50
40
30
20
10
0

Lowest reallevel

Second
level

Third
level

Fourthreal income

Highesthouseholds

All Income

Income group
Source: Office of the Deputy Prime Minister, Making the connections: Final Report on Transport and Social Exclusion, Report by
the Social Exclusion Unit, February 2003.

3. TRANSPORT OPTIONS FOR ALLEVIATING ECONOMIC INEQUALITY

Wachs reports that the relative effectiveness of improvements in mobility to reducepoverty depends on the degree to which a society is already developed:―A bicycle or an animal may be extremely important in some contexts and ineffective inothers. Given the enormous disparities in mobility among societies, many areas can benefit
greatly from improvements in the ability to travel from place to place on foot by using animalor human motive power, for example, or on land using bicycles and handcarts or on waterusing canoes or rafts; by using wind power for sailing; and by using mechanical motive
power in the form of petroleum-based engines and electricity-powered motors.‖6

6. Wachs, page 5.
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Economic Perspectives on Transport And Equality

In the highly developed European context, research on social exclusion identifies afurther range of measures that might help tackle the kind of accessibility problems
associated with poverty and social exclusion, including:
Improving physical accessibility and availability
Wider network of mainstream bus routes
Making more public transport physically accessible to people with disabilities
More flexible bus services whose routes adjust according to demand
Shuttle services to specific work and other locations
Car clubs―Wheels to work‖ programs
Making travel more affordable
Concessionary public transport fares for particular groups
Travel vouchers that passengers can use on different modes
Driving lessons for unemployed people if they take up work opportunities
Widening awareness - helping people understand the travel options available tothem throughTravel advice
Travel training and personalized travel plans
Improved travel information
Reducing the need to travel
Focusing shops, leisure facilities and offices in city centres or local centres
Travel training and personalized travel plans
Planning policies that promote development and services in suitable places
Encouraging outreach, home and virtual delivery services
Safer streets and transport facilities and equipment.
Better street lighting
Traffic calming and road safety measures
Improved travel information
Secure station programs
The list of possible transport measures to address poverty, inequality and social
exclusion also includes major capital investments in new capacity. Better roads and railways
can sharply increase the geographic range of employment opportunities available to poorer
individuals. Such improvements can also generate agglomeration economies in cities andurbanized regions, creating productivity-induced improvements in real wages.

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Economic Perspectives on Transport And Equality

4. IMPROVING ECONOMIC WELL-BEING THROUGH TRANSPORT POLICY

Public can create value and improve well-being. But investment costs money. This,
together with the reality that, as shown above, there exist a great many options of relevanceto the goals of transport policy, means that decision makers face difficult decisions andtrade-offs. At the aggregate level, trade-offs are required in the allocation of public funds tothe transport sector relative to other sectors. At the disaggregate level, trade-offs are
required among competing projects and programs. It is helpful therefore to understand howtransport creates economic value and promotes well-being at both levels.

4.1

Transport’s Influence on Well-Being at the Aggregate Expenditure Level

The aggregate level of transport investment creates improved well-being by enabling
economic expansion (growth in Gross Domestic Product – GDP) and thus improved living
standards. To be sure, there is a lot more to creating the conditions for a good life thangrowth in GDP. But without GDP growth, peoples‘ disposable incomes cannot grow andneither, therefore, can their standard of living improve.
GDP may be seen as the product of the number of workers times the amount of
production per worker. Growth in the economy springs from these two sources, more people
making goods and services (more workers) and more output per person (more productivity).
But the two are not of equal significance to the alleviation of poverty and inequality. It‘sproductivity growth that contributes most to most to long-term economic expansion.
Research indicates that up to 85% of GDP growth over the past 50 years is attributable toincreased worker productivity as opposed to increases in the sheer volume of workers.7 And
studies suggest that differences in productivity are far more important than differences injoblessness in explaining regional income disparities (note the example of diminishedregional income disparities in Germany noted in Section 2).
So what drives productivity growth? This is where capital investment in general, andtransport infrastructure in particular enter the picture. The productivity of labour issignificantly affected by the per-worker rate of capital investment – the amount of money
spent in building up the nation‘s capital stock. In short, workers produce more per hour when
they are equipped with better facilities and equipment. Less obvious is the fact that the rateof capital investment also affects the productivity of facilities and equipment, further
improving worker productivity. Because new capital embodies the latest technology, themore rapidly new capital is added to the capital stock, the faster average productivity willgrow. And the rate of technological progress itself is dependent on the rate of capital
investment. The more quickly new capital is added to the capital stock, the better the qualityof that capital will be in terms of embedded technology. This in turn means higher
productivity and higher growth. Figure 2 illustrates how capital investment stimulates
technological advance, productivity growth and economic expansion. Except for a small partdevoted to basic science, research and development are seldom undertaken unless theresults are expected to be applied in new facilities and superior operating modes that canincrease productivity, reduce costs and improve the quality of goods and services. Therefore
a larger rate of investment creates a market for technological improvements, spurring
technological advance. The result is a ―virtuous circle‖ of capital expansion and technologicaladvance that yields economic growth and growth in peoples‘ earning power and standard ofliving.

st

7. David Lewis, Daniel Hara, and Joseph Revis, The Role of Infrastructure in the 21 Century (in)A Look Ahead; Year 2020, Transportation Research Board, Washington D.C., 1988.
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Economic Perspectives on Transport And Equality

Figure 2: Economic Growth through Capital Investment: A Virtuous Circle
Acts as a Catalyst
To Set Off Virtuous Circle

RESEARCH &DEVELOPMENT

CAPITALINVESTMENT

Self-generating“Virtuous
Circle”

NEW TECHNOLOGYAND PRODUCTIVITY
IMPROVEMENT
Available Technology
Spurs Investment

Better Usageof Resources

ECONOMICGROWTH

Source: David Lewis, Daniel Hara, and Joseph Revis, The Role of Infrastructure in the 21st Century (in) A Look
Ahead; Year 2020, Transportation Research Board, Washington D.C., 1988.

All of the above is true for private and public investment alike. Public investment (suchas investment in transportation infrastructure), is a fundamental and necessary part of anation‘s capital stock. So any strategy to boost productivity and achieve higher economic
growth and well-being must include a commitment to the maintenance and enhancement ofa nation‘s public infrastructure.
A number of studies give evidence of significant private sector productivity gains frompublic infrastructure investments. In many cases, returns to public investment are greaterthan returns to private investment.8 The research record indicates that infrastructure
investment can raise economic growth, productivity, and land values, while also providing
significant positive spillovers to areas such as economic development, energy efficiency,
public health, manufacturing and overall living standards. While the direction of causality isdifficult to prove unambiguously, a number of carefully designed studies lend weight to theprobability of a causal link running from infrastructure investment to subsequent private
sector productivity gains. On the premise that, in reasonably well functioning (i.e.
competitive) economies, workers share in the gains to productivity, it can plausibly beinferred that aggregate infrastructure investment lifts well-being and living standards. A study
centered on the Mexican city of Acayucan found that road paving substantially raised
housing values substantially more than the cost of living, thereby substantially improving
living standards.9 Edward Gramlich finds a high rate of return from bringing deteriorated
roads up to a state of repair in line with their original design standards.10
An example of the entire virtuous circle at work was seen in the 1990s. Vigorous
highway investment helped trigger research that, in turn, let loose the just-in-time revolutionthat sparked productivity growth in the manufacturing sector. Betters roads and railways
unleashed a wave of research and development of internet-based ―e-procurement
8. United States Department of the Treasury with the Council of Economic Advisors, an Economic
Analysis of Infrastructure Investment, October 11, 2010.
9. Quintana-Domeque, Climent and Marco Gonzalez-Navarro, Street Pavement: Results from an
Infrastructure Experiment in Mexico,‖ Industrial Relations Section, Princeton University,
Working Paper No. 556, July, 2010 [as cited in ibid. page 6].
10. Gramlich, Edward, Infrastructure Investment: A Review Essay, Journal of Economic Literature,
Vol. 32, No. 3 Sept., 1993 pp. 11761196 [as cited in op.cit. Department of the Treasury page 6].
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Economic Perspectives on Transport And Equality

purchasing systems,‖ digitized assembly lines, advanced robotics, networked stock
replenishment systems and other technologies that enabled manufacturers to shed millions
of square feet in storage and customer service infrastructure.11 In most OECD nations,
national productivity grew in the ‗90s like never before.
Another example of the virtuous circle at work is the dramatic improvement in well-being
in China over the past two decades which, according to Wachs, rests on a foundation ofsignificant investment in ports, airports, roads and public transportation. Wachs notes that
whereas a significant rise in car ownership in China is the result of increased wealth, ―it isalso to a great extent the cause of China‘s rise as a world power. This is in addition to ahuge increase in the number of bicycles, electric bicycles, cars and buses that are becoming
ubiquitous in cities and also in rural areas. Citizens are using all such means to accesseducation, health care, and recreational opportunities and to obtain goods brought to themby the expanding freight transportation system.‖
Today, the economic case for aggregate investment in transport infrastructure turns heavily
the creation of faster and more reliable and predictable journey times that help promote
productivity growth. By investing in new capacity to reduce congestion and in the repair andrehabilitation of wearing pavement and aging facilities and equipment, governments promote
well-being by promoting productivity growth. The reverse is also true: an insufficient level ofaggregate public investment in transportation infrastructure can starve a nation‘s productivity
growth, and that‘s a threat to peoples‘ well-being and standard of living.

4.2.

Transport’s Influence on Well-Being at the Disaggregate Project and PlanLevel

To say that aggregate spending on transport infrastructure investment promotes wellbeing is, however, partly to miss the point. The chief hope for increased productivity growthand higher standards of living comes not solely from the quantity of capital, but from more
efficient and better-suited facilities, equipment and technology – namely, high quality
investment. In the case of private-sector investment market forces help ensure high quality
investment decisions: The virtuous circle of capital expansion, technological advance andeconomic growth is naturally driven by profit-seeking market forces. In the public sector,
where market forces are weak, the achievement of sound infrastructure investment
decisions requires concerted effort.
―Welfare economics,‖ including Cost-Benefit Analysis and a related family of projectappraisal methods provide the principal lens through which a perspective on the quality oftransportation investments is taken. The European Union12 and most, national and sub-national
governments, have formal methods and procedures for the appraisal of transport projects.
Prior to recent developments, applications of Cost-Benefit Analysis and related projectappraisal methods took little or no direct account of equity and social exclusion. Indeed,
equity and related social issues were viewed as lying outside the reach of economic
analysis, something to be addressed in other, ―social policy‖ arenas. A recent critique of
project appraisal practices13 finds that, whereas the technical apparatus of Cost-Benefit
Analysis rests on a foundation of accepted economic principles, the ethical, analytical anddemocratic foundations in which the procedures of Cost-Benefit Analysis are rooted havechanged over the last 50 years. Thus, whereas the technical practices of Cost-Benefit
Analysis generate little controversy among practitioners, citizens and decision makers might
11. David W. Gillen and David M. Levinson (Eds), Assessing the Benefits and Costs of ITS:
Making the Business Case, Klewar Academic Press, 2004.
12. European Commission: Directorate General Regional Policy, Guide to Cost-Benefit Analysis ofInvestment Projects, July, 2008.
13. David Lewis, The New Cost-Benefit Analysis, MacArthur Foundation, June 2006.

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Economic Perspectives on Transport And Equality

regard the product as unhelpful, irrelevant or wrong.14 Whereas Cost-Benefit Analysis
recognizes the existence of obvious liberties and duties (due process of law and naturalrights, for example), it draws no fundamental distinction between ―the good,‖ ―the right,‖ or―the fair‖ in seeking out economically efficient solutions. Such things as the distribution ofincome, social exclusion and human rights are viewed as ―non-economic‖ or ―political‖
factors to be introduced into decision making outside the context of Cost-Benefit Analysis.
With Cost-Benefit Analysis, efficiency maximizing solutions are searched for outside thechoice process itself. The Cost-Benefit Analysis is conducted as a research exercise within alarger context in which decisions about the allocation of resources and the character offairness, rights and duties are taken by elected or appointed officials who receive advice on
the resource dimension from third-party experts (such as economists). Experts treat
resource values (time, life, property, environment, time-preference) as data to be drawn fromthe empirical analysis of consumer behaviour; the decision making process itself tends not tobe regarded as a source of information about resource values.
When decisions veer from the steps recommended in Cost-Benefit Studies, economists
tend to look for the ―political logic‖ that might explain the divergence from the economicallycorrect course of action. Does the maximization of welfare (happiness) really exist only
within the province of economics, not that of politics? Or, has modern society‘s view of what
constitutes the basis for well-being and happiness gone beyond the assumptions of classicalutilitarianism, the basis for traditional Cost-Benefit Analysis. In recent years, attempts havebeen made to adapt the technical apparatus of project appraisal to align with contemporary
policy goals and democratic governance. Four ways in which this is so are:Translating the compensation principle from theory to reality;
Recognizing inequality and social inclusion in the identification and measurement ofcosts and benefits;
Embracing democratic procedures and good governance in the process ofappraising projects and plans;
Movement away from the economic paradigms of appraisal in favour of approaches
rooted more directly in the concepts of social justice and human need.
4.2.1.

Making Compensation and Mitigation a Reality

In theory, satisfying the Cost-Benefit Analysis criterion for a worthwhile policy orinvestment requires that benefits exceed costs and that no one is made worse off by thechange under consideration (this is known as the Pareto criterion). Since projects andpolicies satisfying that rule are rarely observed in the real world, an attempt to improve upon
the Pareto criterion was formulated in the early part of the 20th century. Called thecompensation principle, it states that a policy change or investment can be deemed an
economic improvement if the benefits exceed the costs and if those who stand to gain could,
through lump sum transfer payments, compensate those who stand to lose and still remain
better off. However, this rule requires only that prospective net benefits are sufficient tocreate the potential for such compensation, not that compensation actually occur.
Some of the more recent formulations of project appraisal seek to go beyond looking at
merely the potential for compensation. In European Union guidelines for the Cost-Benefit
Analysis of transport projects, practical methods for the calculation of distributional impacts
are suggested.15 In the United Kingdom, detailed guidance is being formulated for the
14. For a related discussion see, Joint Transport Research Centre, OECD, International Transport
Forum, The Wider Benefits of Transport, Macro-, Meso and Micro Transport Planning andInvestment Tools, Discussion Paper No. 2008-6 J, January 2008.
15. Op.cit., European Union, Appendix E of the EU Guide gives three possible methods of analyzing
distributional issues; (i) a more general formula for shadow prices could be used, plugging in the
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Economic Perspectives on Transport And Equality

appraisal of transport investment options that would require the specific analysis of socialand distributional impacts. Where negative consequences for particular social groups are
identified, actual mitigating steps would need to be formulated and integrated into the
proposal under consideration prior to the possibility of it being deemed economicallyworthwhile16 (see Figure 3).
Figure 3: United Kingdom Standardized Accounting Framework for
Measuring the Benefits of Accessibility
STEP 0
Has the analyst
demonstrated that there
are no positive SDIs andthat all negative SDIs canbe eliminated throughdesign / mitigation?
No – SDI appraisal
is required for certain
indicators

Yes – if robust evidence,no SDI appraisal requiredfor certain indicators

STEP 1 confirm
areas impacted byintervention

STEP 2
Identifysocial groups in area
impacted by intervention

STEP 3 SCREENING
Develop specificationfor SDI appraisal of
required indicators

For each indicator, isthe impact significant
and/or concentrated,or marginal anddispersed

Proposals fordetailed SDI appraisal
for each impact thatis significant orconcentrated

Proposals for qualitative
SDI appraisal for each
impact that is neither
significant nor
concentrated

Discuss and agree
proposals with DIT

Discuss and agree
proposals with DIT

STEP 4
Undertake appraisal

STEP 4
Undertake appraisal

STEP 5
Report appraisal in
SDI matrix

STEP 5
Report appraisal in
SDI matrix

Report in AST

Report in AST

Build social / economic/ demographic profile ofmodelled area and sub
areas
Informed bymainstream appraisal,
identification of impact
areas, current andfuture social / economic/ demographic
characteristics,
potential impacts ofintervention option

Create and update
appraisal audit trails

Note: SDI denotes social and distributional impacts.
Source: Detailed Guidance on Social and Distributional Impacts of Transport Interventions, TAG Unit 3.17, IN
DRAFT, U.K. Department for Transport, Transport Analysis Guidance (TAG), January 2010

welfare weights in the shadow prices, and thus avoiding further distribution calculations; (ii) explicit
welfare weights derived from social inequality aversion estimates to be attached to the project
winners and losers, when shadow prices do not include welfare weights; and (iii) focus on theimpact of the projects on the poor, and particularly on the share of income necessary to pay for theservice.
16. Department for Transport (U.K.), Detailed Guidelines on Social and Distributional Impacts ofTransport Interventions, TAG (Transport Analysis Guidance) Unit 3.17 (Draft) January, 2010.
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Economic Perspectives on Transport And Equality

In North America, Cost-Benefit Analysis appraisals of transport policy proposals are also
beginning to examine ways and means of mitigating negative effects they may have on
disadvantaged groups. A recent Cost-Benefit appraisal of nationwide congestion pricing, forexample, found that whereas the net economic benefits would likely be highly positive($113 billion in net congestion relief benefits over 20 years, as shown in Table 1), the effecton low income drivers would be highly regressive, with low income households expected to
pay significantly more on tolls as a percentage of their household income than higher income
households (see Figure 4). The study, published by the Brookings Institution,17 concluded
that congestion pricing would be unacceptable without steps to mitigate the disadvantages
for low income households and devised a scheme to capture compensate low income
travelers in such a way as to avoid diluting the incentives that congestion prices aredesigned to serve. As shown in Table 2, the cost of the compensation scheme wasestimated at $41 billion – significant, but not enough to erode the net benefits of congestion
pricing, thereby creating a win-win congestion pricing policy framework.
Table 1: Time Savings and Accident Cost Savings from Congestion Pricing Relative
to the Loss of Economic Value (“Consumer Surplus”) for those Priced Off Roads(Interstates and Freeways with Volume-to-Capacity Ratio above 0.7)
Economic benefits and costs

Year 1 ofcongestion
pricing

Year 20 ofcongestion
pricing

Benefits (U.S. billions, 2002 dollars)
1

Travel Time savings to Road Users who stay on the Roads
and Accident Cost savings$13.68$26.84

Loss in Economic Value to Road Users who Reduce the
Number of Trips They Take or Divert to Other Times of Day,
Other Roads or Other Modes

$0.70

$2.33

3

Costs of Toll Collection

$6.20

$7.60

4

Total Costs: (2)+(3)

$6.90

$9.93

5

Net benefit: (1)-(4)$6.78$16.91

Costs (U.S. billions, 2002 dollars)
2

Net benefit (net present value) over 20 years (7% discount rate)$113 billion

Source: David Lewis, America‘s Traffic Congestion Problem: Toward a Framework for Nationwide Reform, The
Brookings Institution, Discussion Paper 2008-06, July 2008.
Notes:
Time savings represent $4.8 billion (35%) of total benefits in Year 1 while the social benefit from
accident reduction accounts for $8.9 billion (65%). By the twentieth year, time savings and accident costsavings account for 44% and 56%, respectively, of total benefits. Time savings are probably understated dueto the simplified version of the underlying speed-flow relation used. Research is ongoing in relation to thisissue.

17. David Lewis, America’s Traffic Congestion Problem: Towards a Framework for Nationwide
Reform, The Brookings Institution, July 2008.
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Economic Perspectives on Transport And Equality

Figure 4: Income Distributional Consequences of Congestion Pricing
on Congested Roads in urbanized Areas

Average Annual Expenditure Per Household on
Congestion Tolls as Percent of Income

9
2,000

8
7

1,500

6
5

1,000

4
3

500

2
1

Average Annual Expenditure Per Household on
Congestion Tolls, dollars

2,500

10

0

0

Household Income
Average Annual Expenditure Per Household on Congestion Tolls as % of Income
Average Annual Expenditure Per Household on Congestion Tolls, dollars

Source: David Lewis, The Brookings Institution, America‘s Traffic Congestion Problem: Toward a Framework for
Nationwide Reform, Discussion Paper 2008-06, July 2008.

4.2.2. Recognizing inequality and social inclusion in the identification and measurement of
economic costs and benefits
Economic appraisal methods are beginning to appear that identify indicators andmetrics against which to ascertain, in addition to conventional transport benefits and costs(time savings, for example), the effect of transport projects and multi-project and policy planson the poor, the socially excluded, people with disabilities and otherwise transportdisadvantaged groups. The framework depicted in Table 3, for example, was developed in2010 by the U.K. Department for Transport. As the Table shows, the effects of investment
plans or projects on eight social groups (the rows in the table) are evaluated in terms of up to
eight dimensions of inequality and social exclusion (the columns). It is noteworthy that theeight dimensions of inequality and social exclusion cover, in addition to accessibility,
connectivity and affordability (see earlier), exposure to environmental problems (air andnoise pollution), injury, crime, neighbourhood severance. These wider factors of deprivation
go to the concept of ―environmental justice.‖

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Table 2: Income Distributional Impact of Congestion Charges on Interstates andFreeways with Volume-to-Capacity Ratio above 0.7

Gross annual
household income

Annual household Annual cost of compensation
Annual householdfor congestion charges to
expenditure on
expenditure on
households
congestion charges ascongestion charges per
a percentage of annual
householdincome(Billions of 2007 dollars)< $5,000$5,000–$9,999$428.55$655.28

8.6%
8.7%

$1.0
$3.4

$10,000–$14,999$15,000–$19,999$622.30$930.49

5.0%
5.3%

$2.9
$5.3

$20,000–$24,999$25,000–$29,999$1,061.29$1,198.90

4.7%
4.4%

$5.1
$7.9

$30,000–$34,999$35,000–$39,999$1,334.43$1,530.65

4.1%
4.1%

$5.8
$10.0

$40,000–$44,999$45,000–$49,999$1,540.55$1,730.82

3.6%
3.6%

$4.94
$9.61

$50,000–$54,999$55,000–$59,999$60,000–$64,999$1,858.29$1,890.05$1,871.12

3.5%
3.3%
3.0%

$4.80
$8.47
$3.57

$65,000–$69,999$70,000–$74,999$1,950.93$2,243.30

2.9%
2.9%

$6.23
$3.58

$75,000–$79,999$80,000–$99,999$2,146.45$2,248.22

2.8%
2.5%

$5.98
$11.33> = $100,000$2,277.41

1.8%$18.92

Total

$41.4

Source: David Lewis, The Brookings Institution, America‘s Traffic Congestion Problem: Toward a
Framework for Nationwide Reform, Discussion Paper 2008-06, July 2008.
Notes:
Assumptions are (1) the percentage of vehicle miles of travel (VMT) in urban areas is equal to 55%
of total VMT (assumption based on 2001 Highway Performance Monitoring system (HPMS) runs obtained
from FHWA); (2) the percentage of VMT in congestion conditions exceeding VC of 0.7 is equal to 41%(assumption based on 2001 HPMs runs obtained from FHWA); and (3) the expenditure on congestion costs
includes a charge of $0.25 per mile for all miles driven in congested conditions. Annual compensation is
calculated as the average expenditures on congestion charges in Column 2, multiplied by the number ofhouseholds in income bracket category. Income groupings shown reflect 2001 conditions, whereas tolls paid
reflect 2007 prices.

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Economic Perspectives on Transport And Equality

Improve affordability

Improve accessibility

Reduce severance

Reduce crime

Reduce the risk of death or
injuryReduce air quality health costs

Reduce exposure to noise

Dataset / social group(Shading indicates analysis required
for each indicator)

Improve connectivity accessto leisure (User Benefits)

Table 3: Scope of Socio-Demographic Analyses forSocial and Distributional Indicators

Income Distribution
Children: proportion of population aged <16
Young adults: proportion of population aged 16-25
Older people: proportion of population aged 70+
Proportion of population with a disability
Proportion of population of Black and Minority Ethnic(BME) origin
Proportion of households without access to a car
Carers: proportion of households with dependent
children
Source: Detailed Guidance on Social and Distributional Impacts of Transport Interventions, TAG Unit 3.17, IN
DRAFT, U.K. Department for Transport, Transport Analysis Guidance (TAG), January 2010.

Another example of widening the Cost-Benefit Analysis framework is seen in Canada
where the Canadian federal Department of Transport (Transport Canada) has developed the―TRANSDEC‖ framework of benefits wherein the (un-double counted) effects of projects andplans are valued in four categories, as shown in the text box below:
TEXT BOX: TAXONOMY OF TRANSPORT EFFECTS FOR USE IN COST-BENEFIT ANALYSIS, TRANSPORTCANADA’S TRANSDEC FRAMEWORKCONGESTION MANAGEMENT
Time savings – car users
Savings in vehicle operating costs
Emission savings
Accident cost savings
MOBILITYTime Savings - car users and public transport users
Value to Low-Income Travelers
Cross Sector Benefits
COMMUNITY DEVELOPMENT
Commercial Development
Residential Development
ECONOMIC OUTPUT NOT ACCOUNTED FOR ABOVE

As shown, effects on disadvantaged groups are identified in two distinct ways. The firstis the benefit or cost to low-income households stemming from the availability of transport at
a less (or more) affordable price than their next-best alternative (such as taxis). These arecalled ―affordable mobility‖ benefits and are in both case and time-denominated value. The
second form of benefit is the resource savings (or costs) arising from reduced social service
agency outlays when people are able to travel to centralized points of service delivery rather
than receiving more costly home-based care. These are called ―cross-sector benefits.‖
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Economic Perspectives on Transport And Equality

An illustration of the TRANSDEC framework in application is given in Tables 4 and 5.
The example draws on the recent economic analysis of the Toronto region‘s 30-year, $31
billion multimodal regional transportation plan. As the Table 4 shows, at $356 million (inpresent-day value) the plan‘s estimated benefits to low income people together with crosssector benefits are significant. Due however to the huge congestion-relieving effects of theplan, benefits to low income travelers per se constitute less than one percent of the $46
billion in total benefits. This apparently low percentage understates the true value todisadvantaged groups, however, since the large delay reductions counted under ―congestion
management‖ will have a disproportionately positive impact on low income groups bybroadening the accessibility of labour markets and increasing worker productivity.
4.2.2.1.

Costs and Benefits in Multi-Project Planning:

The Toronto example cited above illustrates an important new trend in the appraisal oftransport policy – that of evaluating the economic and social costs and benefits of entire
portfolios of transport projects and policies rather than single projects or policies one ata time. This allows planners to identify and highlight systematic biases in the transportsystem that benefit some groups or regions over others, and to nudge the transport system
towards greater equity by introducing specific adjustments to help iron out such biases. Suchadjustments can include both transport and non-transport measures. As shown in Section 3
above, transport measures might include such things as the redesign of rail alignments tofavour lower income areas, the redirection of paratransit and bus services to underserved
groups and locations, and the reallocation of capital spending into operating support(subsidy) to help make fares more affordable. Non-transport steps can include land-use
measures (such as planning for higher density and more physically accessible and walkablecommunities), lump-sum cash transfers and negative income taxes to promote mobility andwider labour market reach; affordable housing and mortgage policies; and so on.
Table 5 indicates how, by comparing benefits on a per-capita basis among distinct subregional districts (districts defined by markedly different socio-economic profiles), theTransport Canada framework is used to test for balance in the geographic equity of a multiproject, multi-policy transportation planning portfolios. The Toronto regional plan continues togo through policy iterations in seeking geographic balance and balance in relation to otherdimensions of equity.
4.2.2.2.

Costs and Benefits Relating to Rights and Freedoms:

A major challenge to the identification and measurement of economic benefits arises innations with broad constitutional and legal mandates requiring the physical accessibility oftransport facilities to people with disabilities.18 In many situations, the mandates are given
operational meaning through the process of government regulation. In so doing,
governments employ in one form or another, a process called Regulatory Impact Analysis, or―RIA‖. The role of RIA is to provide a detailed and systematic appraisal of the potential
impacts of a new regulation in order to assess whether the regulation is likely to achieve thedesired objectives. The philosophy of RIA underlines the need to ensure value for money
and to guard against the risk that regulatory costs will exceed benefits. From thisperspective, the central purpose of RIA is to ensure that regulation will be ―welfareenhancing‖ from the societal viewpoint – that is, that benefits will exceed costs. A problem
arising in the application of RIA to transport rights and freedoms, however, is that costs aremuch easier to identify than benefits, creating the risk of systematic under-provision ofaccessibility

18. This section draws heavily on; David Lewis, Sing Suen, Daphne Federing, Countering theth
Economic Threat to Sustainable Accessibility, 12 International Conference on Mobility andTransport for Elderly and Disabled People, Hong Kong, June 2010.
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Economic Perspectives on Transport And Equality

Table 4: Estimated Benefits of the Toronto-Hamilton Regional Transportation Plan, by
Source and by Sub-Region (2010-2031)
CATEGORYREGIONCITY OF HALTON PEELCITY OFYORK
HAMILTON REGION REGION TORONTO REGION

DURHAMREGIONBENEFITS
CONGESTION MANAGEMENT
Time Savings - Auto Users$21,656$1,245$2,360$4,589$4,315$5,619$3,527

Savings in Vehicle Operating
Costs$4,812

$288

$323

$988

$1,543$1,115$554

Emission Savings

$823

$96

$112

$196

$2

$256

$161

Accident Cost Savings

$669

$58

$56

$132

$164

$148

$111

$27,959$1,688$2,850$5,905$6,024$7,138$4,354

Time Savings - Transit Users$3,249

$3

$59

$599

$2,109$551-$74

Value to Low-Income Travelers

$307

$27

$40

$55

$73

$69

$43

Cross Sector Benefits

$49

$2

$4

$8

$22

$5

$6

Total Mobility Benefits$3,604

$33

$103

$663

$2,205$626-$25

Commercial Development$1,887

$52

$31

$224

$1,483$66$30

Residential Development$3,173

$67

$53

$216

$2,612$184$41

Total Community Development$5,060

$119

$84

$440

$4,095$251$71

Economic Output$10,051$607$1,025$2,123$2,166$2,566$1,565

ALL BENEFITS$46,674$2,446$4,062$9,131$14,489$10,581$5,966

Total Congestion Management
MOBILITYCOMMUNITY DEVELOPMENTECONOMIC OUTPUT

Source: HDR Corporation, Costs of Road Congestion in the Grater Toronto and Hamilton Area: Impact and Cost
Benefit Analysis of the Metrolinx Draft Regional Transportation Plan, Final Report, November 2008.
Note: values are in millions of dollars ($2006), in present value terms.

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Table 5: Estimated Benefits per Capita of the Toronto-Hamilton Regional
Transportation Plan, by Source and by Sub-Region (2010-2031)
CATEGORYREGIONCITY OF HALTON PEELCITY OFYORK DURHAM
HAMILTON REGION REGION TORONTO REGION REGIONBENEFITS
CONGESTION MANAGEMENT
Time Savings - Auto Users$2,950$2,139$3,870$3,279$1,546$4,697$4,637

Savings in Vehicle Operating
Costs

$656

$495

$529

$706

$553

$932

$729

Emission Savings

$112

$165

$184

$140

$1

$214

$212

Accident Cost Savings

$91

$100

$92

$94

$59

$124

$146

$3,809$2,898$4,674$4,219$2,158$5,967$5,725Time Savings - Transit Users

$443

$5

$97

$428

$756

$461

-$97

Value to Low-Income Travelers

$42

$47

$65

$39

$26

$58

$56

Cross Sector Benefits

$7

$4

$7

$6

$8

$5

$8

Total Mobility Benefits

$491

$56

$169

$473

$790

$523

-$33

Commercial Development

$257

$90

$52

$160

$531

$56

$39

Residential Development

$432

$115

$87

$154

$936

$154

$54

Total Community Development

$689

$205

$138

$314

$1,467$210$94

Economic Output$1,369$458$1,948$1,354$4,702$1,204$5,152ALL BENEFITS$6,359$4,201$6,662$6,523$5,190$8,844$7,843

Total Congestion Management
MOBILITYCOMMUNITY DEVELOPMENTECONOMIC OUTPUT

Source: HDR Corporation, Costs of Road Congestion in the Grater Toronto and Hamilton Area: Impact and Cost
Benefit Analysis of the Metrolinx Draft Regional Transportation Plan, Final Report, November 2008.
Note: Values are in dollars ($2006), in present value terms, and divided by the average population between 2006
and 2031 in each region.

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Since regulatory impact analysis is generally conducted in a comparative context, withdifferently scoped alternatives for achieving stated objectives, the breadth of benefits
considered will go far in determining the degree of accessibility to be mandated byregulation. A notable example is Australia‘s 1999 regulatory analysis designed ―to assist
decisions regarding the provision of transportation services to people with disabilities underthe Australian Disability Discrimination Act‖ [Attorney General‘s Department, Government ofAustralia, 1999]. The Australian RIA cites as its objective:―To promote recognition and acceptance within the community of the principle that
persons with disabilities have the same fundamental rights as the rest of the community.‖
The RIA also states, however, that:―The Disability Discrimination Act also recognizes that these rights do not mean accessat any cost; there must be a balance between benefit and cost.‖
Since the RIA compares the costs and benefits of mandating alternative degrees ofaccessibility, the scope and definition of benefits counted in the Cost-Benefit Analysis
matters greatly. Typical of many such analyses, the Australian study quantifies two
categories of benefit, (i) those associated with projected additional transportation tripmaking; and (ii) ―cross-sector‖ benefits. As indicated earlier, cross-sector benefits, resourcesavings that accessible transportation facilitates through the substitution of distributed
services for more fiscally costly home-based services, arise across a broad spectrum,including services like chiropody, meals, and home care.
Notwithstanding the seemingly wide range of benefits it considered, the Australian study
found that the costs of the selected option would exceed the benefits by fully Aus$1.1 billion.
Indeed, higher accessibility standards than those in the selected option were rejected as,―not being consistent with the concept of unjustifiable hardship as set out in the DDA.‖
A more recent Regulatory Impact Analysis, this one in the United States concerning theestablishment of architectural accessibility requirements for commercial and state and local
government buildings, recognizes a wider range of benefits. The RIA [US Department ofJustice, 2004] picks up on Canadian themes outlined above in stating that:―Benefits are primarily represented by the creation of social value, and can bedivided into three categories. ―Use value‖ is the value that people both with andwithout disabilities derive from the use of accessible facilities. ―Option value‖ is thevalue that people both with and without disabilities derives from the opportunity toobtain the benefit of accessible facilities. Finally, ―existence value‖ is the value thatpeople both with and without disabilities derive from the guarantees of equal
protection and non-discrimination that are accorded through the provision ofaccessible facilities.‖
In reviewing the judicial and regulatory record across nations, Lewis et al. find that thekind of benefits considered relevant and measurable in relation to accessibility ranges fromvery narrow to very broad19. What is lacking is a consistent and comprehensive approach,within countries and, needless to say, across nations. Lewis et al are working on developing
such a framework, as depicted in Figure 5. Drawing on the judicial and regulatory record aswell as the state-of-practice in micro-economics, the framework embraces both use and nonuse related benefits of accessibility; it recognizes benefits to people both with and without
disabilities; and it identifies reduced stigmatic harms and humiliation as a distinct, separate
and quantifiable benefit of accessibility.

19. Ibid.
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The framework depicted in Figure 5 helps clarify the broader nature of benefits than is
typically taken into account, but is also indicative of measurement problems still in need offurther research. Thus while valuing the mitigation of discomfort, pain and humiliation could
well make a serious difference in the measured economic worth of major investments inimproved accessibility for people with disabilities, methods for measuring such value remain
elusive and controversial. For example, some researchers (including Lewis, et.al) are using
evidence from studies on the premiums people attach to the value of time spent in different
conditions. Others find this approach unsatisfactory and subject to logical flaws: they, quite
understandably, call for more direct measurement approaches. It is also important to avoid
the risk of double-counting, such as the common error of adding employment benefits thatarise from time savings to the value of employment arising from such time savings.20
Impetus for the framework shown in Figure 5, and impetus for its continued
development, comes from sharper clarity in stated government policy objectives and fromgovernment accountability initiatives that demand more complete evidence of the economic
value proposition for proposed policies and regulations. With oversight authority for
regulatory analysis in the United States, the U.S. Office of Information and Regulatory Affairs(ORIA, an arm of the federal government‘s Office of Management and Budget) is pressing
for greater quantification of the intangible benefits of accessibility. This includes the benefitsof reduced stigmatic harm and humiliation linked to inaccessible facilities). Legal scholar
Cass Sunstein, presently the Director of ORIA, has shown that the absence of such
quantification leads the policy and enforcement process to trivialize key benefits sought
under the Americans with Disabilities Act and, accordingly, to the under-provision ofaccessibility.21 The framework shown in Figure 3 continues to develop as a response to thatchallenge.
4.2.3. Democratic Procedures and Governance in the Development and Appraisal ofTransport Projects and Infrastructure Investment Plans
4.2.3.1.

Democratic Process:As discussed earlier, project and multi-project appraisals tend to be conducted as deskstudies - stakeholder involvement in the analysis process is rare. The rarity of stakeholder
involvement in the appraisal process is ironic in the context of matters dealing directly with
the inequality and social exclusion of individuals. There are however, ways and means, andsome examples, of giving voice to citizens in the conduct of economic appraisals of transport
projects and plans. Citizen voice matters: It has been shown in the research literature
pertaining to democratic governance that citizen engagement can provide a corrective toanalytic assumptions regarding the nature and magnitude of social costs and benefits and inthat way help ensure the accountability of governments22.
Consider as an example the efforts to expand capacity at Vancouver International
Airport, one of North America‘s most congested commercial airports. Despite three major
planning efforts over three decades, each of which projected a new runway to be
20. The category called ―third-party employment benefits‖ in Figure 4 does not refer to the employmentof new workers, which would double count with the value of time savings, but pertains rather tobenefits to existing non-disabled employees associated with the process of redesigningaccommodation for disabled people. Legal scholar Elizabeth Emens gives many examples of ways
in which accommodation for accessibility can benefit non-disabled third parties. [See Elizabeth
Emens, Integrating Accommodation, University of Pennsylvania Law Review, April 2008].
21. Cass R. Cass R, Cost-Benefit Analysis without Analyzing Costs or Benefits: Reasonable
Accommodation, Balancing, and Stigmatic Harms. University of Chicago Law and Economics
Olin Working Paper No. 325. March 2007.
22. Op. cit. David Lewis, The New Cost-Benefit Analysis.

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Economic Perspectives on Transport And Equality

economically worthwhile and environmentally sustainable, debate over the key assumptions
and inequitable impacts on noise-affected people kept opposing forces deadlocked foryears. A stakeholder engagement process that was conducted as an integral part of the
project appraisal study helped bring the community to consensus, leading in turn to adecision to build. The principal success factors were, first, that the process did not seek toprove ―one side right and the other wrong.‖ Instead risk analysis was used to determine theprobability of noise and other social and environmental sacrifices and to indicate thelikelihood that the benefits of a runway would be enough to finance a noise compensation
plan for disrupted householders and still improve the regional economy. Second,
stakeholders both for and against the runway were drawn deeply into the analysis ofpossible outcomes for each technical, social and economic projection. The final probability
forecasts thus constituted a community consensus on a wide range of possible outcomes
and the relative odds of each. The result was a shift in the debate from forecasts—now
purged of a combative element and sufficiently broad to be a meaningful foundation for
discussion.
Instead of arguments about the technical merit of underlying assumptions, thediscussion turned to community goals: whether the greater Vancouver area wanted topromote the likelihood of continued economic growth, whether householders near the airport
ought to be compensated for their possible economic losses and social disruption, whether
peak-period airport users should pay more to cover the probable social costs imposed bytheir peak-period consumption, and so on. In 1992 the runway project won approval, largelyon the basis of a strong probability of positive net benefits for the region as a wholecombined with a negotiated compensation package for householders based on probabilistic
forecasts of social costs.23
4.2.3.2.

Governance

The results of project and multi-project economic appraisal studies represent but one
input into infrastructure decision making – many other factors, including ―political‖ factors,
enter into the decision making mix. While this is as it should be in democratic society, an
important relationship nonetheless exists between the quality of governance and the qualityof infrastructure policy and investment decisions. Research conducted for the Mo Ibrahim
Foundation24 reports that the quality of a nation‘s physical infrastructure is associated with anumber of (interrelated) governance-related performance indicators, including, the degree ofnation‘s judicial independence; property rights; corruption in government and public officials;
prosecution of abuse of office; and corruption and bureaucracy. The implication is thatnations can improve the quality and fairness of transport through improving governance,
especially in the areas of property rights, rule of law, accountability and corruption. Improved
governance means improved market conditions within which to attract capital to help financeinfrastructure investment.

23. See, David Lewis, The Future of Forecasting: Risk Analysis as a Philosophy ofTransportation Planning, TR News, Transportation Research Board, July 1995. It is noteworthy
that a schedule of peak-period surcharges, one of the first in North America, was also
implemented.
24. 2010 Ibrahim Index of African Governance, Revised Edition, 2010.

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Increased
Activity

Time Saving

Improved
SafetyReducedHumiliation

ReducedStigmatic
Harm

Convenience

Comfort

Improved
Quality ofTime Spent

People with
Disabilities

Increased
Activity

Time Saving

Improved
SafetyConvenience

Comfort

Improved
Quality ofTime Spent

People without
Disabilities

USE-RELATED BENEFITS

Cross-Sector
Benefits

Option/Insurance
Value

Existence
Value

Third-Party
Employment
Benefits

NON-USE RELATED BENEFITSACCESSIBILITY IMPROVEMENT

Economic Perspectives on Transport And Equality

Figure 5: Towards an Accounting Framework for Measuring
the Benefits of Accessibility

Source: David Lewis, Sing Suen, Daphne Federing, Countering the Economic Threat to Sustainable Accessibility,th
12 International Conference on Mobility and Transport for Elderly and Disabled People, Hong Kong, June 2010.

25

Economic Perspectives on Transport And Equality

The list of governance factors that drive the quality of transport policy and investment also
includes the quality of information provided to decision makers. Although, as indicated earlier,things are beginning to change, the methods conventionally used to formulate and evaluatemajor transport investment projects and plans tend to focus more on single projects than on
integrated plans, and on impacts on passenger (and freight) time savings, safety, andenvironment more so than specific effects on inequality. Planning and evaluation methods needto adapt to the emerging perspective on transport as a legitimate policy instrument fordiminishing economic inequality, including income inequalities, unequal access to opportunityand life chances, unequal access to democratic institutions, rights and freedoms, and social
exclusion (including exclusion in relation to gender, age, race and location). It is true that such
adaptations are underway, although in different degrees in different parts of the world. The
degree of adaptation ranges from lip service to distributional issues to serious attempts todevelop and evaluate policies and plans with a view to diminishing economic inequality andsocial exclusion. The more serious attempts are limited by available evidence, however, and an
aggressive research program is required.
4.2.4.

Moving Towards Appraisal Rooted in Concepts of Social Justice and Human NeedAn emerging belief however is that most all recent attempts to address inequality throughtransport policy and investment are hidebound by the premises of utilitarianism and welfare
economics in which today‘s appraisal methods are fundamentally rooted. A recent review andanalysis by Eda Beyazit argues that the essential dominance of market considerations inconventional techniques inevitably ―forces transport investments to move away from a sociallyjust picture.‖25 Beyazit points to recent developments in the social justice literature, particularly
the Capability Approach originated by Professor Amartya Sen, that seek to take direct account ofquality of life and individual freedoms. To be sure, conventional appraisal approaches and thevarious adaptations to them (as outlined above) can help identify the risk of unjust outcomes oftransport proposals; and such methods can suggest the ways and means of mitigating unjust
outcomes. But approaches rooted less in the fundamentals of welfare economics and more
directly in the ideas of social justice (such as the Capability Approach) are needed to givetransport a more direct, proactive role in actually promoting equality rather than merely avoiding
inequitable outcomes.

5. CONCLUSION

Poverty, inequality and social exclusion are closely tied to personal mobility and theaccessibility of goods and services. The economic role of transport in promoting living standards
and wellbeing can be seen at both the aggregate level of public capital expenditure on transport
infrastructure and at the disaggregate level of transport policies, projects and plans.
At the aggregate level, transport capital investment can promote growth in worker
productivity, a key to facilitating growth in personal incomes and standards of living, and a key
means of closing income disparities between regions and sub-regions.

25.Eda Beyazit, Evaluating Social Justice in Transport: Lessons to be Learned from Capability
Approach, Transport Reviews, Vol. 31, No. 1, 117–134, January 2011. See also Lewis, op.cit.
MacArthur Foundation.

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Economic Perspectives on Transport And Equality

At the disaggregate level, transport policies, investments and plans can create or diminish
economic wellbeing for a wide range socially disadvantaged groups, including the poor, elderly
people, people with disabilities, children and young adults, and women. Steps to identify andmeasure such value are beginning to appear in project, planning and policy appraisal methods,
a trend that is to be encouraged.
An emerging trend in the development of transport policy is that of evaluating the economic
and social costs and benefits of entire portfolios of transport projects and policies rather
than single projects or policies one at a time. This helps planners to identify biases andinequities in the transport system, and to adjust plans accordingly by introducing specificmitigating initiatives. Such initiatives can include both transport and non-transport measures, andcombinations of the two, such as rerouted rail alignments to lower income areas; enhanced
paratransit and bus service to underserved groups and locations; reallocation of capital spending
to hold down fares; land-use measures such as higher density planning regulations for more
physically accessible and walkable communities; lump-sum cash transfers and negative income
taxes; affordable housing and mortgage programs; and so on. However, the effective
coordination of transport and non-transport measures requires new governance modalities,
including institutional coordination among government agencies. A recent example of such
coordination is a U.S. federal task force on livable and sustainable communities that integrates
the policy and planning activities of the United States‘ Departments of Transportation, Housing
and Urban Development, and Environment. Governance factors that drive the quality oftransport policy and investment also include the quality of information provided to decision
makers. While things are beginning to change, the methods conventionally used to formulate
and evaluate major transport investment projects and plans tend to focus on single projects
more so than on integrated plans, and on impacts on time savings, safety, and environment
more so than on specific impacts on inequality.
In short planning, economic evaluation, and governance modalities need to adapt to theemerging perspective on transport as a legitimate policy instrument for diminishing inequality,
including income inequalities, unequal access to opportunity and life chances, unequal access todemocratic institutions, rights and freedoms, and social exclusion (including exclusion
associated with gender, age, race, disability and geographic location). Some such adaptations
are underway, although in different degrees in different parts of the world. The degree ofadaptation ranges from lip service to distributional issues to serious attempts, as in the U.K., todevelop and evaluate integrated transport and non-transport policies and plans with a view todiminishing economic inequality and social exclusion. The more serious attempts are limited byavailable data, evidence and methodology, however, and aggressive research and development
efforts are needed. An important impetus for such efforts comes from clarity in statedgovernment policy objectives, from government accountability initiatives that demand evidenceof the economic value proposition for proposed policies and regulations and from fundamentallynew lines of thinking, especially in the area of social justice. Impetus for the evolving frameworkof benefits for assessing accessibility standards for people with disabilities, for example (seeSection 4) came from clear public policy pronouncements and from accountability requirements
under the regulatory process. That framework continues to evolve in response to that impetus
and governments should continue to challenge economic research and analysis to find methods
that align proposed public policies and plans with public policy objectives.

Discussion Paper 2011-09: David Lewis – ©OECD/ITF 201127

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