Access-based cost-benefit analysis

Abstract

Current methods of cost-benefit analysis (CBA) for transport investments rely on travel-time savings for potential users. This approach presents a consistent and significant historical trend of forecast inaccuracy, and thus has been questioned and criticized. Access, or the ease of reaching valued destinations, can be used as an alternative. Access features a strong correlation with land value which can be measured through hedonic analysis, and subsequently, access gains offered by a transport initiative can be monetised via property uplift. We test this hypothesis and evaluate Sydney's South West Metro Link (SWML).We first develop linear and semi-log ordinary least square hedonic pricing models for house sales in the Sydney region. The models are set up with structural and neighbourhood attributes in addition to access measures, and result in a statistically significant fit.Next, we model changes to job access induced by the SWML. Benefits are then quantified by land value uplift and are estimated at $1.87 Billion in 2031 and between $1.53–$3.08 Billion in 2061, which reflect base and transit-oriented development (TOD) scenarios. The project is thus feasible should certain land use and economic conditions be met, including TOD to occur about station localities by 2061 and if project costs are minimal. Although limitations are noted, access-based CBA exhibits significant promise as an alternative approach to appraisal and has direct application in value capture strategy.