Transport Notes

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The goal of Transport Notes series is dissemination of recent experiences and innovations in the World Bank Group’s transport sector operations.

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Now showing 1 - 10 of 18
  • Publication
    Treatment of Induced Traffic
    (World Bank, Washington, DC, 2005-01) Mackie, Peter; Nellthorp, John; Laird, James
    Induced traffic can be an important part of the economic appraisal particularly when the objective of the investment is to stimulate economic development; it's importance, however, is not restricted to such situations. The omission of induced traffic from the economic appraisal, or its incorrect treatment, may lead to either over or underestimations in the user benefits (consumer surplus) of an investment. In addressing this issues, this note, considers: the importance of induced traffic for the economic appraisal (Section 1); what constitutes induced traffic (Section 2); the situations in which induced traffic is likely to be relevant (Section 3) and the manner in which it can be modeled (Section 4) and user benefits calculated when it is present (Section 5). The annexes show the relative importance of including the benefits of induced traffic in the evaluation of an urban transport project; where the standard "rule of one half" breaks down in some situations that are often present in Bank projects, while another shows a numeric integration technique that can be used as a valid alternative to the rule of one half in many of these situations (and coincidently, provides a more precise evaluation even where the "rule of one half" gives an acceptable estimation).
  • Publication
    Evaluation of Public Sector Contributions to Public-Private Partnership Projects
    (World Bank, Washington, DC, 2005-01) Mackie, Peter; Nellthorp, John; Laird, James
    The Bank requires that any public sector contribution to a collaborative effort between the public sector and private enterprises in the transport sector be analyzed and justified in economic terms. This Note will set out the basis for making such an analysis. The general principles underlying this analysis are that: 1) public contributions to public-private partnership (PPP) projects should be justified on the basis of external benefits from the project, compared with the scenario where no public contribution is made. 2) these external benefits are benefits for the wider economy or society which will arise from the project, but which will not be appropriated by the private partner in the contract; 3) by implication, the social welfare gain must be greater than the amount of public money invested multiplied by the cost of public funds. In practice, a range of different reasons can be - and have been - put forward to explain public contributions to PPP projects, including the following: 1) to pay for positive externalities, such as decongestion or improvements in environmental quality; 2) to contribute to the cost of mitigating negative externalities, which private providers often have little incentive to take into account when designing the project; 3) to secure network improvements necessary for economic development or other planning benefits, for which users are in the short term unable to pay. These are considered one by one in Sections 2, 3, and 4.
  • Publication
    Valuation of Accident Reduction
    (World Bank, Washington, DC, 2005-01) Mackie, Peter; Nellthorp, John; Laird, James
    The objective of this note is to advise on a desired and workable method that can be used to place values on accident reduction. The first section of this note identifies the need to categorize accidents if accidents are to be valued, and suggests a method of categorization. Following, it identifies the components of cost that make up total accident costs, while further sections suggest methods that can be used to value casualty related costs, and incident related costs. Other Sections discuss how accident valuation may vary between modes, and suggest that accident valuations are consistent with those utilized in other Bank projects (e.g. health projects). Final Sections discuss the manner that accident costs vary with time, and the relationship between the valuation and the accident prediction m model. The final Section summarizes the principal recommendations of the note.
  • Publication
    Risk and Uncertainty Analysis
    (World Bank, Washington, DC, 2005-01) Mackie, Peter; Nellthorp, John; Laird, James
    One statement that can confidently be made about any transport project is that the costs and benefits are uncertain. An important question is 'how uncertain'? By analyzing the risk and uncertainty which surrounds the project the probability of a poor outcome can be assessed. In addition, it is often possible to identify ways in which the project can be made more robust, and to ensure that the risks that remain are well managed. Risk and uncertainty analysis is therefore a standard component in the project reporting requirements for Bank projects. Risk and uncertainty analysis also features other in Bank tools, such as the RED model (see Note Low Volume Rural Roads). This note reviews the general principles of risk and uncertainty analysis in transport (Section 1); and outlines the three principal methods which may be used- sensitivity analysis (Sectio
  • Publication
    Notes on the Economic Evaluation of Transport Projects
    (World Bank, Washington, DC, 2005-01) Mackie, Peter; Nellthorp, John; Laird, James
    Experience has shown that money compensation payments to individual citizens are ineffective when used alone as a means to achieve the Bank's aims and World Bank for evidence on the Bank's experience]. Instead, the Bank's advice is that compensation payments should be a part of a wider, coordinated package of development assistance. It is not the purpose of this Note to describe how such a package should be developed, or indeed how the package as a whole should be evaluated. Rather, the question addressed in this Note is the narrower one: How should money compensation payments be evaluated? Section 2 begins by asking what costs the payments are intended to compensate for, and on what basis the value of compensation should be estimated. Section 3 continues to consider how institutional arrangements affect the way compensation payments are designed and channeled in practice. Section 4 turns to the benefits of resettlement compensation and Section 5 brings these strands together to consider how compensation payments should be evaluated within the economic evaluation of World Bank transport projects.
  • Publication
    Notes on the Economic Evaluation of Transport Projects : Fiscal Impacts
    (World Bank, Washington, DC, 2005-01) Mackie, Peter; Nellthorp, John; Laird, James
    The Economic Evaluation Notes are arranged in three groups. The first group (TRN-6 to TRN-10) provides criteria for selection a particular evaluation technique or approach; the second (TRN-11 to TRN-17) addresses the selection of values of various inputs to the evaluation, and the third (TRN-18 to TRN-26) deals with specific problematic issues in economic evaluation. The Notes are preceded by a Framework (TRN-5), that provides the context within which we use economic evaluation in the transport sector. Transport projects have an impact not only on citizens and businesses, but on governments - central, regional and local. Financing and managing the project will place demands on the government's capital and current accounts. Whether these demands are greater or smaller, and how they are phased over time, will depend on the financing mechanisms used and the extent to which the public sector is involved. Alternative approaches for private finance and management are described in the World Bank's 'Public-Private Options' toolkit. In this note, we consider how the appraisal should take the financial effects into account, and how they fit within the appraisal results, as described in the Framework.
  • Publication
    When and How to Use NPV, IRR, and Modified IRR
    (World Bank, Washington, DC, 2005-01) Mackie, Peter; Nellthorp, John; Laird, James
    The Economic Evaluation Notes are arranged in three groups. The first group (TRN-6 to TRN-10) provides criteria for selection a particular evaluation technique or approach; the second (TRN-11 to TRN-17) addresses the selection of values of various inputs to the evaluation, and the third (TRN-18 to TRN-26) deals with specific problematic issues in economic evaluation. The Notes are preceded by a Framework (TRN-5), that provides the context within which we use economic evaluation in the transport sector. All three NPV, IRR, and modified IRR are summary measures of project performance. Each one provides a single figure summarizing the impact of the project on economic welfare. Each of the three measures does, however, give subtly different information: 1) NPV focuses on the total welfare gain over the whole life of the project; and, 2) IRR and Modified IRR focus on the rate at which benefits are realized following an initial transport investment.
  • Publication
    Valuation of Time Savings
    (World Bank, Washington, DC, 2005-01) Mackie, Peter; Nellthorp, John; Laird, James
    This note has been drawn from a number of texts including "The Value of Time In Economic Evaluation of Transport Projects" (Gwilliam, 1997), "Values of Travel Time Savings in the UK - Summary and Conclusions" (Mackie et al, 2003), and "The Value of Time in least Developed Countries" (IT Transport, 2002). The conceptual basis for valuing time is discussed in Section 1. Sections 2 and 3 discuss the theoretical basis for valuing work time savings and non-work time savings respectively, while Sections 4 and 5 discuss the value of time savings to buses, and to freight. The treatment of small time savings are presented in Sections 6 and 7. Section 8 sets out the manner that disparities between regions for values of time should be treated within the cost benefit analysis, and the use of standard values of time. Section 9 summarizes the practical methodologies that should be used for the estimation of travel time savings, while Section 10 summarizes the key recommendations of this note.
  • Publication
    Distribution of Benefits and Impacts on Poor People
    (World Bank, Washington, DC, 2005-01) Mackie, Peter; Nellthorp, John; Laird, James
    This note deals with the extent to which, and the means by which, project level distributional analysis of benefits can be undertaken and how poverty impact indicators can be developed. Section 1 sets out the issues associated with using traditional cost benefit analysis for the appraisal of pro-poor projects. Section 2 discusses the techniques and analysis available to consider the distributional consequences of a transport change, whilst Section 3 sets out a number of indicators that can be used for measuring poverty impacts. A summary of the key recommendations is made in Section 4.
  • Publication
    Projects with Significant Expected Restructuring Effects
    (World Bank, Washington, DC, 2005-01) Mackie, Peter; Nellthorp, John; Laird, James
    This note focuses on the economic evaluation of more conventional infrastructure investments, and specifically on two types of projects which may result in significant economic restructuring - relocation of economic activities, generation of new activities, or changes in the way that current activities are undertaken. The two examples used: new urban rail lines and major new barrier crossings serve simply as examples of a much wider issue. The issue is that whenever projects bring about a large step change in transport costs, there is a stimulus for a reorganization of economic activity outside the transport sector.