Comprehensive Sensitivity Analysis of Cost-Benefit Analysis Variables for Transport Interventions

Abstract

Cost-benefit analysis (CBA) is the universally applied tool to assess economic viability in assisting decisions on transport investments. Its framework is heavily influenced by the numerous variables it considers through estimating and valuing the intervention’s effects. This paper – utilising the authors’ previously implemented CBA test environment – comprehensively analyses the sensitivity of significant variables of three typical CBA models for transport interventions (road, rail and urban) to understand the prevailing appraisal approach better and to help focus on further methodological improvements. Morris and Sobol methods were selected to study the global sensitivity of and the relations between the input parameters of the models. The sensitivity test of the three analysed models provided similar results regarding which variables are most influential in CBAs. Input variables such as the investment cost, the economic discount rate, forecasted GDP changes and specific elasticities to these GDP changes often have a firm but mostly linear effect. Value of time, vehicle operating cost and mode choice-related parameters such as car availability, car occupancy rate, level of service indicators (e.g. frequency of service) and potential to induce travel demand (proxied by a ‘no travel’ parameter) are inputs with considerable linear effects and greater interactive effects.