This paper is prepared for staff
use and is not for publication.
The views expressed are those of
the author and not necessarily
those of the Bank or the Association.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
INTERNATIONAL DEVELOPMENT ASSOCIATION
Economics Department Working Paper No. 73
A Framework for Urban Transport Studies
March 27, 1970
This paper is a product of the continuing investigation of the
Economics of Urbanization Division into methods for approaching urban
development and, in particular, for appraising urban projects.
After previous works on the interrelationship between land use
and transportation are examined, an urban transport study method is
proposed. On the project analysis level, the quantification of benefits
is discussed.
Economics of Urbanization Division
Prepared by: Koichi Mera



TABLE OF CONTENTS
Page No.
I.    INTRODUCTION  . . . . . . . . . . . . . . . . .    1
II.    A REVIEW OF URBAN TRANSPORT STUDIES......          5
A. Complexity of Analytic Techniques......         5
B. Transportation and Iand-Use Models     .        7
C. The Cost of Urban Infrastructure  ......12
D. Modes of Urban Transportation . . . . . . .    18
III.    STUDY METHOD  . . . . . . . . . . . . . .......21
IV.    BENEFIT MEASUR-EMENT . . . . . . . . .   . . ...  26
A. Approaches to Benefit Measurement ......26
B. Economic Efficiency Benefit . . . .   . . . .  31
C. Other Benefits   . . . . . . . . . . . . . .   36
V.    SUMMARY AND CONCLUSIONS . . . . . . . . . . . .   39



A FRAMEWORK TO URBAN TRANSPORT STUDIES
I. Introduction
1.        This paper presents a framework to urban transportation studies
which could be adopted as part of a general urban development study for
operational purposes as opposed to educational purposes. Such an urban
transportation study is designed to produce a long-range transportation
investment program for an urban area and to identify and evaluate high
priority transport projects to be undertaken in the immediate future. A
general urban development study covers a number of other sectors as well.
However, it is maintained here that decisions on transportation are coor-
dinated with those in other sectors in the general urban development study.
2.        We shall assume that the objective of an urban development study
is not the development of a particular urban area, but the general economic
development of the country in which the urban area is located. There are
at least three implications to this distinction. First, in most countries
a large portion of income and wealth is created in urban centers and,
therefore, urban centers are expected to play a significant role in the
development of the country in the future. If an overriding objective of a
country is e:conomic development, it has to be achieved, to a significant
degree, within the urban area in question. The urban development program
derived from the study must be consistent with the objective of increasing
national income. Second, since urban areas are open to any citizen of the
country, in contrast to countries which are generally closed, the develop-
ment program has to take full account of its impact on national resource



-2-
allocation through market forces. It is just not possible to build and
maintain a pleasant, highly capital intensive city when the rest of the
population is substantially below the level of affording such luxury. A
usual reaction, for example, is squattering next to glass and concrete
palaces. Third, an urban development program cannot be made without regard
to the resource availability. In most countries resource availability is
significantly controlled by the central government. The central government
allocates resources on the basis of national priorities. No development
program for an urban area can be made useful without reference to resource
allocation at the national level.
3.        Two extreme viewqs are often expressed in regard to the method of
urban planning and decision making. One states that an urban system is a
complex organism in which all elements depend on each other and, therefore,
a comprehensive analysis is required to derive a correct solution to any
problem. According to this view, the decision to build a traffic signal
at a specific intersection cannot be made until the child-rearing practice
of migrants has been sufficiently studied. The other extreme view is that
only one specific project needs to be studied; for comparison purposes all
other projects can be represented by the opportunity cost of the resources.
A project is analyzed in isolation by making appropriate assumptions, often
of certeris paribus, in regard to all necessary information required for
evaluation.
4.        Consider the comprehensive approach.  Two things must be considered:
first, the amount of data required for a comprehensive analysis and, second,
the accuracy of the analytic process used. Data on the developing countries



is almost always insufficient to carry out an ideally comprehensive analysis.
Therefore, the economic cost of such a comprehensive analysis could be
enormous, merely in terms of the time required for collecting data and
for completing the analysis. The extra cost of comprehensive analysis
must be compared with the extra benefit it can generate. In terms of
accuracy of analysis, there are equally profound questions. Although
it is easy to state that every element depends on every other element,
it is difficult to quantify the exact relationship for most of the vari-
ables, particularly for those not related in any directly measurable way.
As will be discussed later, the accuracy of the analytic processes itself
must receive due consideration when any quantitative analysis is under-
taken.
5.        Any social science model is constructed according to our under-
standing of the system involved. A model is not a mysterioue black box,
but a set of interrelationships between variables in the mind of the model
builder. Interrelationships are conceptualized only in a number of dis-
crete ways. Therefore, even though the urban system is a complex system
in which every element depends on every other elemeriT, we .an reason the
impacts of a policy variable by following the stipulated interrelation-
ships. For this purpose fairly simple analytic techniques are usually
required. We should be cautious against the approach of building a
gigantic model without clarifying the basic interreiationships beforehand
and testing policies with the model at random.



-I4-
6.        An urban transportation study requires information on the pref-
erence of individuals and organizations.with respect to the choice of loca-
tion and the mode of transportation and on the policy tools available to the
government in transportation programs. As will be demonstrated below,
transportation policy decisions are not so powerful in determining the
pattern of urban development as have been believed by many. We should
recognize that individual preferences determine the location of different
types of land use in a large part. However, such an objective is mis-
directed for transportation studies, We should be concerned more with
the efficiency of resource use than guiding land use development. For
this purpose the objectives of such a study should be kept clearly in
mind when the study is designed. The art of transportation studiies is in
the selecting of key variables and key interrelationships which are rel-
evant to the objectives so that the impacts of transportation decisions
can be properly evaluated without spending a great deal of resources on
the study itself.
7.        A proper transportation study rests on the formulation of a
proper methodology. Knowledge for this comes from previous empirical and
theoretical research efforts. In the next section., a review of past efforts
in the area of transportation will be presented, and some basic guidelines
will be established for future urban transportation studies. In Section III,
an approach to urban transportation studies is described on the basis of the
findings in Section II. In Section IV, conceptual problerms in measuring
benefits of transportation investment are discussed. Conclusions are pre-
sented in Section V.



II.  A Review of Urban Transport Studies
A. complexity of Analytic_Techniques
8.        William Alonso casts   serious doubt on the current practice of building
complex models for predictive purposes.- He analyzes the accuracy of prediction
in models of different degrees of complexity. He distinguishes between two types
of' error which lead to error in prediction: error of measurement and error
of specification. "'Error of specification arises from a misunderstanding or
purposeful simplification in the model of the phenGmenon we are trying to re-
present.... Measurement errors are those that arise from inaccuracy in assessing
a magnitude."?/ He proceeds to demonstrate that the relative magnitude of the
measurement error frequently increases as the variables are processed through
mathematical operations and that the reliability of the predicted value declines
as the number of the processes increases in the model. As far as the specification
error is concerned, assuming correct knowledge on characteristics of phenomenon,
the magnitude of error diminishes as the number of variables and equations in the
model increases, i.e., as the complexity of the model increases.    However, after
a certain degree of complexity is reached, the reduction in the prediction error
resulting from the speciiNcation error is more than offset by the increase in the
prediction error resulting from the compounding effect of the measurement errors.
Therefore, he argues that an increase in the complexity of a model does not
necessarily improve prediction. According to his view, the optimal complexity of
a model or of an analytic process depends upon the types of mathematical operations
and the accuracy of data used. In general when data is less accurate, simpler
analytic processes are recommended. Also, he discourages a long chain of analytic
nrocesses as errors cumulate in the orocess.
1/ William Alonso, "The Quality of Data and the Choice and Design of Predictive
Models," Urban_Development Models,   Highway Research Board Special Report
97, Washington, D.C., 1968, pp. 178-192.
2/ Ibid., p. 178.



-6-
9.        Alonsots argument is made without reference to any specific
subject. He does not discuss the bias in prediction associated with par-
ticular processes, nor does he discuss the error of a predicted variable
with respect to another predicted variable, which is often more important
than the absolute error of a predicted variable. However, his analysis is
particularly relevant to the study of urban transportation in cities of
developing countries. Tn a number of respects, urban transportation in
cities in developing countries is more complex than that in cities in
developed countries. Take for example, the transportation modes seen in
different cities. On the streets of U.S. cities, there are only a few
typ.es of vehicles, whereas on the streets of Calcutta, there are auto-
mobiles, buses, animal-drawn hand carts, rickshaws, bicycles, scooters,
pedestrians, streetcars and sacred cows. In terms of the distribution of
land uses, cities in developing countries present more complex patterns
than developed country cities. In American or European cities, land uses
are distributed in fairly discrete groups. However, in developing countries
urban land ases are heavily mixed. Mixed uses are the rule rather thans the
exception. Therefore, even when there is a fair amount of data about land
use and transportation, it is more difficult to build a satisfactory pre-
diction model for cities in developing countries than for those in developed
countries. One obvious way to reduce this difficulty is to improve the data,
but experience in the United States indicates that such improvement alone
does not lead to a successful result unless a corresponding improvement is
made in the analytic technique.



-7-
B. Transportation and Land-Use Models
10.       Let us now consider the interrelationship between the transportation
network and land-use pattern as it affects the overa'l efficiency and welfare
of urban areas. In this connection U.S. experience is quite instructive. The
U.S. Bureau of Public Roads and other agencies have been financing large scale
transportation studies. From 1944 to 1961 more than two hundred studies were
conductbed which involved large-scale home-interview surveys.!/ The objective
of the earlier studies was to derive a transportation system which would
satisfy the predicted transportation demand.  The demand was predicted inde-
pendently of the transportation system to be implemented.  The task of the
transportation study was conceived as fulfilling the transportation require-
ment. The concept of choice among alternatives was not incorporated into
the study.2/
11.       Since the advent of the contemporary planning doctrine around 1960,
a number ox' studi-es have tried to evaluate alternative urban development plans
and policies. David Boyce reviewed 13 major transportation planning studies
conducted between 1959 and 1968 which are, to a large extent, based on the
following beliefs:
(1) in order to find a desirable development plan, a comprehensive
analysis of alternative development plans considering both land
use and transportation is necessary;
(2) the cost of transportation can be varied by altering the mix of
transportation modes and the pattern of the transportation network;
1/ Richard M. Zettel and Richard R. Carll Summary Review of Major Metropoliban
Transportation Studies in the United States, University of California, Institute
of Transportation and Traffic Engineering, Berkeley, Calif., 1962.
2/ A typical study of this kind is the Chicago Area Transportation Study, of which
the final report was published in 1959. Such studies are discussed in Zettel
and Carll, M. cit., and N.A. Irwin, "Review of Existing Land-Use Forecasting
Techniques" Highway Research Record No. 88.



-8-
(3) the density of development is strongly related to the trans-
portation facility and services, and therefore transportation
policies cen be used as an effective lever for obtaining a
more desirable physical pattern of development.-/
12.       The thirte-en studies covered the following metropolitart areas:
Baltimore, Boston, Chicago, Detroit, Los Angeles, Milwaukee, Minneapolis-
St. Paul, New York (2), Philadelphia, Pittsburgh, San Francisco and Washington,
D. C. In terms of time, the shortest study took three years, and the longest,
eight years so far, though it is still in process. In terms of cost, a
typical study cost more than one dollar per i&habitant in the metropolitan
area studied.L/ The plan-making process common to these studies is:
(1) generation of alternative concepts, (2) elaboration of each concept
into an alternative plan, (3) evaluation of alternative plans, and (4) the
decision process with respect to the alternatives. Alternatives were con-
ceived in terms of land use patterns such as "radial corridors," "spread
city," "multi-towns," "linear city"; in terms of structural characteristics
such as low density versus high density, concentration versus dispersal; or
in terms of transportation systems such as highway versus transit, arterial
versus freeway, grid versus radial, minimum transport versus maximum trans-
port. In many of the studies, from three to four alternatives were evaluated.
1/ David E. Boyce and Norman D. Day, Metropolitan Plan Evaluation Methodology,
Institute for Environmental Studies, University of Pennsylvania, March,
1969.
2/  Zettel and Carll, op. cit., p. 15. The cost of travel survey constitutes
a large portion of the cost.



In many cases alternatives were evaluated on the basis of performance in
transportation services and cost of facility and service systems.
13.       After reviewing the planning process and the evaluation process,
Boyce concludes:
(1) In those planning programs using urban development models
to elaborate alternative land use patterns in which only
transportation policies were varied, no significant differ-
ences in land use patterns were identified.
(2) In those programs in which land use patterns exhibiting
significant differences were used as the basis for testing
a single transportation system including both highway and
transit, no large difference in network performance and
cost was demonstrated for the land use alternatives.
(3) In those programs using urban development models to generate
land use alternatives in which both transportation policies and
land use Dolicies were varied, the resulting land use patterns and
transportation requirements were not sufficiently different
to provide a technical basis for policy decisions. -
The significant difference as, used by Boyce here, is a difference large
enGagh to enable either the professional staff or the committee supervising
the study to choose among the alternatives on the basis of the difference.
The lack of sufficient difference in the outcome of the ubran development
models used led the study groups to choose on the basis of non-economic
criteria, such as the attractiveness of a strong metropolitan core.
1/
Boyce, 2. cit. p. 61



- 10 -
14.       Boyce attributes the above observations to the following factors:
(1) the land use and transportation policies tested were too
conservative and too similar to obtain differences among
the alternatives;
(2) the models and methods available were too blunt to produce
differences in alternatives in response to the policies
assumed;
(3) for the increment of growth and change and for the fore-
cast period commonly used beyoncI the future base year,
no significant variation could have possibly been obtained;
(4) the size of the districts used for forecasting develop-
ment and travel demand was probably too large to detect the
assumed land use and transportation interaction; the ex-
pected differences in spatial arrangements of aotivities
and environmental quality r..<y- not exist at this aggregate
district scale.l/
Next he states:
"Different regional land use and transportation alternatives
will be obtained only if:
(1) significant variations are made in the proposed development
policies, including not only transportation but also sewer
and water, open space, and location and density of employ-
ment and population;
(2) the alternatives are specified over a long time period with
a large increment of growrth or change relative to existing
development;
(3) the size of the analysis districts is sufficiently small
to capture the kinds of differences desired;
(4) properly specified land use and planning models are used.2/
/ Ibid., p. 62.
2/ Ibid. p. 63.



Then he recommends:
"If these conditions cannot be met in the development of alter-
natives, either for technical or policy reasons, then alterna-
tive plans should not be attempted, given the state of existing
methods. Rather a single 20-year regional projection should be
developed as a target or framework for testing of alternative
facility system plans.l/1
15.       Boyce tried to attribute the lack of significant difference among
alternatives to the method of analysis used in the studies and to the con-
servatism of planners, and carefully avoided the implication that either
transportation policies or land use patterns are not significant in affecting
the use of resources in urban areas. As the study of Bone and Wohl indicates,2/
there is evidence to support the proposition that transportation policies
change the pattern of land use. Therefore, if the study methods and data
are sufficiently refined, significant differences in land use may be obtained
for altemative transportation policies.
16.       Such improvement in the methods and data are, however, not likely
to be readily made particularly for de-veloping countries. Mere collection
of sufficient disaggregated and detailed data requires a resource which is
beyond the practical limit of the developing countries in the short run. As
to the methodological improvements the experience in the U.S. tends to indi-
cate that there is an even poorer prospect in developing countries.3/
1/ Ibid., p. 63.
2/ A. J. Bone and M. Wohl, "Massachusetts Route 128 Impact Study," Highway
Research Board Bulletin, 1959, pp. 34-38.
3/ Other evaluative works to the modeling experience are: Urban Development
Models  Highway Research Board Special Report 97, Washington, D. C.,1,
particularly a chapter by Britton Harris, "Conference Summary and Recom-
mendations," pp. 3-17; Ira S. Lowry, "A Short Course in Model Design,"
Joural of The American Institute of Planers, May 1965.



- 12 -
17.        One point, however, implies that the prospect of the land use
transportation simulation approach is better in developing countries.
According to Boyce, one reason for not producing significantly different
alternatives was, the short time horizon, typically 20 to 25 years, used to
evaluate alternative plans. The appropriate time horizon, however, is re-
lated to the growth rate of the city. Among the 12 metropolitan areas
reviewed, the fastest growing area was Wiashington, D.C. which, according to
the prediction, will take 30 years to double its population. Many of the
cities in developing countries are growing at a much faster rate. TypiLally,
they take 15 years to double their population. Therefore, there is a chance
that the same time horizon would produce more meaningful differences for
cities in developing countries. However, this factor alone is not a
sufficient reason for undertaking this particular type of study.
C. The Cost of Urban Infrastructure
18.        Although not implied by Boyce in the reasons he gave for
the models not producing significant differences, the following interpretation
can be made: even if ideal methods are used for prediction and evaluation,
large differences in the physical layout of transportation networks and land
use may not in fact produce substantial differences in cost savings and other
performance criteria. Many of the alternatives conceived by planners may be
equally good despite their obvious differences in visual and geometrical
differences. A study by Robert Jones is directed to this question and is
extremely helpful in understanding the tradeoff relationships among different
urban infrastructure costs.k/ He has identified three major areas of trade-
offs.2/
1/   Robert Jones, "Transport, Urban Design, and Housing," in Edwin T. Haefele,
editor, Transport and National Goals, The Brookings Institution,
Washington, D.C., 1969.
2/   Ibid.  pp. 54-55.



13 -
(1) As the number of floors in residential buildings increases,
the amount of land required for a fixed number of families
decreases. This leads to an increase in building cost per
unit of housing and decrease in transportation and public
utility costs.
(2) When the residential density is low enough to use soil-
absorption instead of a system of sewer pipes, the sewage
disposal cost decreases but transportation and other
facility costs increase.
(3) As employment locations are decentralized within the city,
the average commuting distance usuially decreases, but the
average intraurban freight transportation distance increases.
Using prices prevailing in Venezuela around 1960, he proceeds to quantify
tradeoff relationships.
19.        The cost analysis is made on two levels:  the neighborhood and
city-wide. At the neighborhood level, the cost per housing unit including
basic improvements such as streets, ditches, water main distribution, sanitary
sewer and transportation depends primarily on the materials used for con-
struction of housing units, the quality of finishings, the size of the unit
and the distance between neighboring units. Four-story walk-ups require
reinforced concrete, while one-story houses only require local materials and
self-help labor. Therefore, the building cost per square foot is about three
times higher for four-story walk-ups than for self-help built one-story houses
when each has low quality finishing. The cost difference per housing unit
varies depending on square footage and the type of labor used, but ranges
from Bs.2,800 to 6,000.1/ The cost of standard site improvements per unit
1/   The exchange rate of Boliu:.;rs (Bs.) 2or US dollars was 3.35 to 1 until
1964 and 4.50 to 1 since then.



- 14 -
declines if the units are clustered together because the average amount of
land per unit and the average distance between units are both reduced. The
cost of standard improvements is about Bs. 1,000 less for four-story apart-
ment buildings with a density of 40 to 70 units per acre than for one-story
houses with a density of 17 to 22 units per acre, and by about Bs. 2,000 less
for the same four-story apartment buildings than for one-story houses with a
density of 4 to 4.6 per acre.  Combining building and standard improvement
costs, the difference between four-story walk-ups and one-story houses
becomes greater as the size of a unit increases and self-help is used for
one-story houses. Cost differences are more systematically presented in
Table I. Typically they are around Bs. 3,000.
Table I:  COMBINED COSTS PER DWELLING UNIT FOR HOUSING AND
STANDARD IMPROVEMENTS AS RELATED TO METHOD
OF CONSTRUCTION
(In bolivars per dwelling unit)
Neighborhood        Neighborhood
4_7la               1-17              Difference
Low quality    Low quality
contract      contract       Self-help
-Floor area pjr dwelling unit construction   construction  construction
Floor area 350 square feet        7,249                       4,360      2,889
Floor area 645 square feet      10,649                        5,760      4,889
Floor area 350 square feet        7,249        5,560                     1,689
Floor area 645 square feet       10,649        7,56o                     3,089
Note: a. Neighborhood 4-71 refers to a neighborhood consisting of four-
story structures with a gross density of 71 housing units per
acre.
b. Neighborhood 1-17 refers to a neighborhood consisting of one-
story structures with a gross density of 17 housing units per
acre.
Source:    Jones, op cit., p. 64.



- 15 -
20.       In addition to building and standard improvemenu costs other costs
were considered at the neighborhood level. The total cost of distance-related
services such as mail delivery, meter reading, police patroling, refuse col-
lection, utility repair, fuel delivery and freight delivery, when they were
capitalized for 20 years at 12 percent, turned out to be Bs. 100 with low
market -wage rates and Bs. 29 with subsistence wage rates for the lowest
density development of 4 units per acre. This is less than 5 percent of the
standard improvement cost for that development and is considered to have
little significance for comparison.
21.       The method of sewage disposal affects the cost of improvement. If
a neighborhood of 4 units per acre has pit privies with natuial soil absorp-
tion and public water taps, while a neighborhood of 17 units per acre has
sanitary sewers and an indoor toilet, the cost saving of the former is about
Bs. 600 per unit (Bs. 340 vs. Bs. 960) for water and sewage alone. However,
the cost advantage of the former diminishes and eventually disappears as other
site improvements are considered such as ditches, paved streets, walkways,
electricity and storm sewers. The cost of water and sewage for a neighbor-
hood of 17 units per acre can be reduced by Bs. 510 per unit by making do
with outdoor public wa.ter taps and pail-and-truck sewage collection. With
truck distribution cf water and collection of sewage, it can be reduced to
Bs. 240. Therefore, it can be concluded that when the income level is low
and substantial improvements are not required the soil-absorption sewage with
low density development is worth considering.  In addition,, technological
alternatives tend to give a wider range of variations in cost for the same
density.



- 16 -
22.       In order to sxamine the tradeoff relationship between the extra
building cost and the savings in distribution systems in high density multi-
story development, a city-wide cost analysis was made for a city of 3369000
families.!/ The sum of the building, site imiprovement, transportation and
utility costs was computed for two density alternatives, each with a single
employment center, one with and the other without four-story walk-up apart-
ment buildings. For each alternative, two different residential land use
patterns were compared: one with the low-income group inside and the high
income outside and vice versa. For each alternative, the land use pattern
of lower total cost was considered as the relevant one, As far as the
cost of transportation and major utility lines is concerned, the high density
alternative gives savings from about Bs.1,250 to 3,100 per low income family.
The exact amount of the savings depends on the modal composition of commuting
transportation, the valuation of commuting time and the frequency of commuting.
The results of the cost analysis on the neighborhood level indicate that the
use of multi-story housing gives a higher cost for the system as a whole except
when one or more of the following rather unrealistic conditions holds: travel
time is valued almost at the wage rate even for unskilled workers, future costs
are discounted at an interest rate well below 12 percent, and the dwelling units
are small and are finished by contract constraction.
23.       In terms of the composition of various costs, it was found that, for
one housing unit, the major water mains cost about Bs 200, the sanitary siewer
mains Bs.50, the basic two-lane roadways Bs, 100 and. the overhead electric trans-
mission and gas lines together even less than Bs, 0. The single most significant
element is the capitalized cost for passenger and. truck transportation which
ranges upwards from Bs. 4,200. Even more important is the fact that the variation
in total utility costs from one pattern to another is much less than the variation
1/  In the context of Latin American countries, this implies a population of
1, to 2.0 million.



- 17 -
in the transport costs. In addition, a counterbalancing tradeoff relation-
ship was found within the transportation costs. Between the two land use
patterns, i.e. one with the low income in the inner ring and the high income
in the outer ring and the other vice versa. The more expensive travel modes
and higher values of travel time for the high-income commuters approximately
offset the higher densities for the low-inoome commuiters , resulting in about
equal overall commuting costs.
214.      Jones proceeds to test the cost implication of having more than one
central workplace. Within the same framework he assumes 5 and 17 major work-
places with one workplace in the center, to which 30 percent of the workers
from every neighborhood commute. By approximating the Venezuelan situation
in terms of modal composition and valuation of time it was concluded that the
capitalized transportation costs would1 average at least Bs. 300 less per
family with 5 or 17 major workplaces than with just one. However, the costs
of utility systems go up as the number of major workplaces increases, largely
because of the 'tand-by capacity in the water mains needed for fire flow for
the workplaces. There are some diseconomies of decentralization in other
utility systems, too. Considering all the utilities together, the additional
cost with several decentralized workplaces would be Bs. 200 or less per
family. Consequently, although land use patterns with the decentralized
workplaces reduce transportation costs, a substantial portion of these savings
are cancelled out ,by an increase in utility costs, the net savings are not
necessarily impressive when unmeasurable costs such as loss of face-to-face
contact are added for the decentralized patterns.1/
1/ The interpretation given in this sentence is the authorts.



25.         In sum, the study by Jones supports the hypothesis that the cost
of urban infrastructure is rather insensitive to the pattern of land use.
More importantly, it makes explicit important tradeoff relationships which
have never been analyzed individually in the simulation analyses. Generally,
it demonstrates that technological alternatives, as opposed to alternatives
in land use layout, such as use of indigenous materials versus reinforced
concrete for housing and natural absorption or truck collection versus piped
sewage disposal, are more significant in affecting the cost of urban infra-
structures
J. Modes of Urban Transportation
26.       It is quite conceivable that there is a significant difference in
the cost of providing different modes of transportation which Jones did not
examine. His commuting costs are solely based on bus service. Unlike bus
service, a mass transit rail system is capital intensive. However, because
of high performance per track which results in savings in road construction,
and possibly in the overall cost of rolling stocks, this system may prove to
be less expensive und.er certain conditions of population size and density.
According to Wilbur Smith and Associates!/ rapid rail transit carries up to
40,009 persons per hour per track, while bus transit carries up to 25,000
using an exclusive reserved land, and automobiles carry about 2,000 persons
per hour per lane on expressways and about 600 persons on surface streets
assuming a ridership of 1.2 persons per automobile,
1/ Wilbur Smith and Associates, Future Highways, and Urban         1961.



- 19 -
27.      'Then the costs of fixed and rolling stocks, of collection in resi-
dential areas and of distribution in downtown areas are added together, the
relative status of different modes changes drastically. The study conducted
by Meyer, Kain and Wohl is quite illuminating on this issue.- They demon-
strate that rapid rail transit was rarely the least cost solution in U.S.
metropolitan areas during the 1960's unless the density of transportation
demand was very high. More specifically, they concluded that automobile
computation is about as inexpensive as any available urban transport mode
when hourly maximum load point volumes per corridor are in the range of 5,000
to 10,000 persons or below.  Once hourly maximum load point volumes per
corridor reach a level of 10,000 passengers per hour or higher, an integrated
bus service appears to be competitive with or cheaper than other urban trans-
port within a wide range of circumstances. The rapid rail transit does not
demonstrate a cost advantage unless the peak passengers per hour exceeds
20,000 or 25,000 and the residential density is high.
28.       Deen and James studied the costs of bus and rail transit systems
in a medium-size metropolitan area in the U.S.Y After analyzing capital and
operating costs under alternative assumptions, they concluded that rail
transit has a cost advantage wihen the peak passengers per hour exceed 125000
for similar levels of service. In their study the cost for bus service is
relatively high since exclusive T"busways" on line hauls are assumed for bus
service.
1/  J. R. Meyer, J. F. Kain and M. Wohl, The Urban Transportation Problem,
Cambridge, Mass., Harvard University Press, 1965.
2/ Thomas B. Deen and Donald H. James, Relative Costs of Bus and Rail Transit
Systems, Alan M. Voorhees & Associates, Inc., McLean, Virginia, undated.



- 20 -
2O.       There are several reasons to believe that the modal preference
would be different in developing countries. In many of the cities in the
developing countries, population density is much higher than that in the
U.S. Consequently, the generation of passengers of up to 5,000 per station
assumed in the Meyer-Kain-Wohl study can easily be exceeded, the maximum
peak of 12,000 passengers per hour in the Deen-James study can also be ex-
ceeded. Second,people are willing to walk greater distances in developing
countries.  Therefore, the feeder bus service considered in both studies is
to a large extent unnecessary. Third, greater utilization of rolling stocks
can be achieved than is assumed in these studies, as a load factor of two or
more is common in cities in developing countries.
30.       Another factor to be considered in choosing modes of transportation
is the impact of a mode on the long-run growth of the city. Althlough the
transportation studies surveyed by Boyce did not reveal, probably due to
the short time horizon used and already widespread use of automobiles, there
are several historical findin-s that tend.to demonstrate that popularization
of transit systems before the spreading of automobile ownership affects the
density of urban development in the long run.  Compare the density of Los
Angeles with that of New York City or Chicago. Since Los Angeles started
developing at a later date than the other two cities when ownership of auto-
mobiles was fairly widespread, it has achieved low density in comparison to
the other two large metropolitan areas. Therefore, it can be argued that the
density of development is related to the technology available at the time of
development. At the same time, the above example tends to demonstrate the
irreversibility of urban development in terms of density.  The Japanese case



21 -
reinforces the argument of irreversibility. In Japan, although income per
capita is highest in Tokyo, automobile ownership in Tokyo is not. Higher
automobile ownership is observed in medium-size cities where rail mass transit
systems are not very well developed.l/
31.       Therefore, an early development of rail mass transit systems can be
thought of as a device for achieving compact development. If rail mass transit
systems can be used to guide development along several corridors so that the
peak passenger demand is sufficiently high for each corridor, such development
would achieve considerable economy. The merit of such a strategy should be
examined.
III. Study Method
32.       Three lessons can be drawn from the above review. First, complexity
in analytical structure does not pay when each individual relationship speci-
fied in the model is not accurate or when the input data are not accurate. In
such cases, a fairly simplified model would produce equally as well as and be
much less costly than a complex analysis. Second,the alleged interdependency
among policies and the economic variables is not ubiquitously significant,
though significant interdependency does exist in limited relationships. More
significantly, there are several counterbalancing forces working in an urban
system. Third, visual or geometrical difference in land-use pattern and in
transportation system is not significant in terms of welfare criteria.
1/ The automobile ownership of Tokyo Prefectures was the 7th highest out of
46 prefectures in 1968, and that of Tokyo City is the 18th highest among
the capital cities of the 46 prefectures in 1965.
Source: Economic Planning Agency of Japan, Keizai-Chiki-Yoran, Tokyo 1968.



- 22 -
33.       In developing a methodology for urban transportation study, the
experience of the U.S. can be interpreted in the following way: an attempt
was made to cover every aspect of transportation and land use and, consequently,
the accuracy of both data and relationships with respect to specific transpor-
tation projects was poorer than it would have been had the studies been more
selective. This inaccuracy made researchers and policy makers distrust, at least
partially, the difference among the alternatives tested. Much of the effort was
misdirected to irrelevant alternatives primarily based on physical patterns.
Study needs to be focussed more on subjects in which differences are signi-
ficant, such as modal choice and individual project evaluation.
34.       The following steps are recommended for a study method of urban
transportation:
(1) establishment of general land use development plan,
(2) analysis of transportation supply and demand,
(3) evaluation of individual projects.
As has been discussed, land use and transportation development alternatives are
more or less equally satisfactory when each is prepared by expert planners
and engineers with due considerations to the relevant factors. Therefore, to
eliminate unnecessary effort, a general land use development plan should be
prepared by a team of experts without a comprehensive quantitative economic
analysis. Since we know that the land use pattern does not significantly
affect transportation demand and transportation flow characteristics, demand
and supply analysis of transportation will be conducted more or less independent-
ly of the land use development plan. Finally, individual projects will be
appraised through rigorous economic techniques.



- 23 -
35.       The general land use development plan, although prepared without
reliance on rigorous quantitative analysis, should be developed after con-
sidering economic and demographic factors which affect the metropolitan area.
However, since the role of the general development plan is to indicate the
direction and overall pattern of development, the precise timing of develop-
ment should not be indicated in the plan. Although this is not the place for
discussing in full the method of determining the general land use development
plan, a brief comment is in order. The composition of population, its growth
rates, the composition of labor force in terms of skill and occupation, the
level and distribution of income, and the industrial structure ought to be
analyzed and predicted in relation to the trends of the national economy in
order to derive an appropriate framework for formulating general land use
development plans. Particularly important is the distribution of employment
locations. These must be located in full recognition of the market forces
determining their location. In choosing industrial areas, the space require-
ment for the industries considered and the costs in transporting goods and
personal contacts ought to be considered. As far as the location of central
business and administrative functions are concerned, the significance of
linkages among them should be fully recognized. It has been demonstrated
in the past that such activities tend to agglomerate in one very small area
called the central business district. This is the destination of a large
portion of commuter traffic.
36.       In establishing the general land use development plan, some decision
must be made with regard to the direction of growth. This should be established



after considering the linkages of the particular metropolitan area with
other metropolitan areas, the topography around the metropolitan area, the
soil conditions and the accessibility to recreational areas. It should be
consistent with the general growth trend of the metropolitan area.
37.       Transportation demand to the major employment center should be
analyzed into the future approximately, for 30 years. Its prediction should
be based on the approximate land use configuration, but more importantly on
the number of commuters to tihe central business district, the income level
of commuters and the residential density distribution of commuters around
the central business district. A particularly important factor is the
prediction of automobile ownership among commuters in the time perspective
both with and without introduction or expansion of rail transit systems.
The predicted time profile of automobile ownership under alternative transport
policies would, in turn, be used to determine the failure or success of rail
mass transit systems.
38.       The cost of each mode of transportation service must be examined.
Not only rail mass transit on elevated, underground or open cut tracks and
bus transit on the regular roadway and reserved expressway, but also bicycle
and other types of vehicles must be considered. The cost depends on the
intensity of demand for the route, the distance of line haul, the comfort
levels demanded and the walking distance allowed. It is important that the
service levels are consistent with the economic situation of the area
considered.



39.       The choice of the mode can be made by comparing the demand and
cost characteristics. A transportation network system consisting of different
modes in different localities can be established on the basis of the above
analysis. The modes for wrhich demand is sufficient to meet the cost require-
ments will be chosen for each route or combination of routes.
40.       High priority projects can be identified on the basis of the demand
forecast in the time perspective. For those projects, economic benefit-cost
analysis should be conducted. This is the only step in the entire study of
urban transportation in which rigorous economic analysis can be introduced.
Since we are assuming that the overall land use development plan will be im-
plemented with some flexibility in exact timing and appropriate modes, the
object of economic analysis is not to accept or reject a proposed project but
to determine its appropriate timing.  This does not necessarily imply that
every project conceived will be implemented. Certain projects may never be
justified within the time span considered in the development program. The
overall decisions about the transportation development programs can be
modified in the face of new information obtained through project feasibility
study or elsewhere.
41.       In this connection, it is important to define the term "project".
A project can be defined in various levels of aggregation. A portion of an
expressway can be a project. The entire expressway network can be a project
or an expressway network plus the development of new, associated industrial
sites can be a project. If we extend the scope further the entire transpor-
tation system becomes a project. However, a project should be defined in such



- 26 -
a way that the efficiency of the investment can be maximized. The efficiency
of investment depends not only on the expected economic rate of return but
also on the time and cost required for analysis, the reliability of pre-
diction, its relative independence and the management capability. If the
efficiency of the investment is increased by including the industrial develop-
ment alongside the expressway system in our previous example, such industrial
development should be included as a part of the expressway project. Before
the analysis, such information cannot be obtained. Selected alternative
delineations must be compared before a full project analysis is conducted.
42.       The role of project feasibility study is quite significant as
nowhere else in the entire system of urban transportation studies is rigorous
quantitative analysis undertaken. Although the project feasibility study is
confined by the overall guidelines established previously, its economic
analysis may lead to modification of these guidelines. In some cases, a new
set of priority projects may have to be identified.
IV. Benefit Measurement
AX A.proaches to Benefit Measurement
43.       Traditionally, economic benefits from investment projects have been
classified into economic efficiency and income redistribution. However, some
factors which affect welfare are usually excluded from this classification.
Some of these are called environmental effects. They include external economies
or diseconomies and non-economic impacts. Others relate to the degree of flexi-
bility in handling uncertain events. The following four groups of benefits
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- 23 -
will be discussed:
(1) Economic efficiency
(2) Distribution of income
(3) Environmental effects
(4) Flexibility to uncertain developments
44.       The economic efficiency benefits are the resource savings resulting
from the project. Properly valued, these resource savings represent an in-
crease in income as they are presumably channelled into the production of
income. If a particular resource is underutilized, its saving would have
no value. Fully utilized scarce resources will necessarily be positively
valued. Therefore, by measuring savings we are estimating an increase of
national income. The same economic efficiency benefit can be measured from
many facets. For example, it might be measured as an increase in land value
affected by a transportation project. However, when the benefit is measured
in this way, all the counterbalancing changes in land value elsewhere must
also be measured. It is highly likely that an increase in land value occurs
in the direct vicinity of the transportation project at the expense of land
values elsewhere in varying degrees. Therefore, if the land value is used
to measure the transportation benefit, it must be measured for the entire
metropolitan area. Everywhere in the world, data on land value are notorious-
ly inaccurate. In addition, there are many conceptual problems in using land
value as a measure of the benefit of transportation investment. For example,
transportation operating firms can recoup some of the benefits without,
passing them on to the land value. On the other hand, when the benefit is



measured by the savings to the user, it is much easier to measure the
aggregate efficiency benefit. In this way, benefits are measured at
their source, before they are spread to different locations and shifted
to a variety of individuals and organizations. It has been demonstrated
in theory that the entire efficiency benefit can be measured as savings
to users and producers of transportation service. (See paragraph 5L)
45.       Three kinds of users receiving benefits are frequently distin-
guished for operational purposes:
(1) Original users
(2) Diverted users
(3) Induced users
The original users are those who would use the facility even in the absence
of the proposed investment. The diverted users are those who would use
other routes without the investment but are diverted to the facility when
it is improved. Induced users are those who would not use the facility
without the investmen,t but become users after the investment either because
of the reduction in the transportation cost or because of land use changes
resulting from the reduction in the transportation cost.
46.       In a sense, the classification of benefits according to the users
described above is misleading. The actual incidence of benefits may be
different. The savings in transportation costs may be passed on to other
individuals or organizations such as landlords, transportation companies



29
and producers of goods and services. The degree of benefit transfer
depends on the elasticities of supply and demand for the goods traded by
users and related agencies. Therefore, these user categories are merely
for the convenience of measuring the aggregate user benefits and do not
imply that the users obtain such a benefit. The real question of distri-
bution will be discussed later.
47.       Another distributional issue involved in benefit measurement is
the intertemporal distribution of benefit in the usual sense, i.e., the
tradeoff between current and future consumption. This is usually explained
by the rate of time preference which is a matter of value adjustment. There
are two typical approaches to this issue; one is the growth maximizing
approach, the other the satisfaction maximizing approach. In the first
approach, consumption at present and within the foreseable future is not
valued at all, only the increase in the productive capability is valued.
In other words, the rate of time preference is zero, consequently, consumption
can be postponed indefinitely into the future. In the second approach, the
consumers time preference is used as the basis of investment decisions.
48.       Development economics is heavily oriented toward the growth   maxi-
mizing approach. The performano5 of an economy is frequently measured solely
by the rate of GNP. According to this approach, investments which encourage
consumptive activities are discouraged. For example, an increase of leisure
time which is a major benefit from urban transportation investment is not
measured as part of GNP. If this is ignored, public commuting facilities will



- 30 -
not be given high priority. Such an action would cause congestion and
long waiting times in queues which might in turn, lead to an increase in
automobile ownership to satisfy consumer's urgent demand, a higher demand
for taxi rides, possibly a demand for higher wages, and a reduction in
employment. This illustrates that even to maximize the growth rate, it
is best to value, to a certain extent, the time saved in commuting trips.
To what extent the traveling time should be valued in order to maximize
the growth rate cannot be answered until a separate quantitative analysis
is made.
49.       The satisfaction or utility maximizing approach employs the
valuation of consumers for weighing future and the present consumption.
According to micro-economic theory, if the working hour is controllable by
the worker, the marginal valuation of time is equal to the wage rate. However,
the working hour is not usually controllable by workers. The actual valuation
of time spent in travel can be estimated from the observed behavior of modal
choice. This has been done frequently. The studies indicate that, by and
large, people value their time substantially below their wage rate.    In a study
of the British,Beesley found that the value of traveling time is one-third the
wage rate 2/ Another study shows that if the time saved in commuting is less
1/ The following are excellent reviews on this subject:
James R. Nelson, "The Value of Travel Time", S.B. Chase, ed., Problems
in Public Expenditure Analysis   Brookings Institution, Washington, D.C.,
1968; Dan G. Haney, The Value of Time for Passenger Cars: A Theoretical
Analysis and Description of Preliminary Experiments, Stanford Research
Institute, Menlo Park, Calif., 1967.
2/ M.E. Beesley, "The Value of Time Spent in Travelling: Some New Evidence",
Economica, May 1965, pp. 174-185.



- 31 -
than about 7 minutes, its value per minute is considerably less than that
when more time is saved)! If we value traveling time this low, the dif-
ference between the two approaches in evaluating economic efficiency benefit
over time may not be so large.2/
B. Economic Efficiency_Benefit
50.       Given the valuation of traveling time, the next question is how to
measure the entire economic efficiency benefit. Van der Tak and Ray have
presented a very simple scheme for measuring the efficiency benefit of
transportation investment.3/ Assuming marginal cost pricing in commodity
markets and in the transportation sector and linear demand and supply curves
for transportation, they demonstrate that the entire economic benefit can be
measured by bhree variables associated with the improved facility:
(1) The downward shift of the supply curve;
(2) The quantity of traffic without the facility improvement and;
(3) The quantity of traffic with the facility improvement.
What is striking in their analysis is that the entire economic efficiency
benefit including that of original, diverted and induced users can be
measured by the above three variables, which subsume all the benefits obtained
elsewhere.
1/  Thomas C. Thomas, The Value of Time for Passenger Cars:  An Experimental Study
of Commuters' Values, Stanford Research Institute, Menlo Park, Calif., 1967,
pp. 88-96.
2/ There is no assurance in other sectors of the urban economy that the economic
efficiency benefits measured by the two alternative approaches are not much
apart with each other.
3/  H.G. van der Tak and A. Ray, "The Economic Benefits of Roqd Transport Projects",
World Bank EC-160, November 13, 1969.



- 32 -
1/
Specifically they present the simple formula:-
(1)    B = s (T + ½-g)
which says that the entire benefit is equal to the vertical downward shift of the
supply curve (s) times the sum of the original traffic (T) and half of the
increased traffic (t). When demand and supply curves are not linear, such
a simple equation does not hold,^but the essential relationship remains valid.
The above equation can be generalized as follows,
T               +t
(2)   B =    (SO - S) dq +     (D - S1) dq
where SO and Si are respectively the supply curves without and with the facility
improvement and D is the demand curve. In this case the demand curve should not
necessarily be interpreted as a fixed one. Whenever the demand curve shifts as a
result of a change in the price of transportation on this route, it should be
interpreted as the locus of equilibrium points. Diagramatically, the benefit is
the sum of the dotted area and the vertically shaded area minus the horizontally
shaded area in Figure 1.
PO
Figure 1                   °            -r         T+t    Transportation
1/ Van der Tak and Ray, Pp. cit. p. 19.
i.  l: ER- - g ' -vW h i@.; ....I  >' ,1 I2 ~.&.k')52I.  - .......... tt !Ph ."II:.  6-   .e- Si . I  s.- a~-   1s I  -  i IIt a: : I -II .. . r'~I~I  .: , -.rar- . ... -  1,--I   ,.,-   :'n.z-a>  .- ---"  ,L .  .. . .. .. . C.: ..



- 33 -
51.       There is one type of benefit which is not explicitly considered
in the Van der Tak - Ray analysis. That is what Morhling and Williamson call
the reorganization benefit.    This benefit results from the locational ad-
justments of producers in response to reductions in transportation costs.
They have demonstrated that such benefit can be measured as a part of the
usual consumers' surplus.
52.       On a close look, the Van der Tak - Ray analysis contains an element
applicable to the organization effect. This appears in the analysis of rail-
road and road transport as imperfect substitutes. The demand for two different
modes is interpreted as two demands existing in two different locations. These
two different locations are regarded as imperfect substitutes. Hence, the
same analysis applies. For practical purposes, the sum of consumers' and
producers' surpluses realized from the improved facility constitutes the
entire economic efficiency benefit.
53.       The Van der Tak - Ray analysis does not provide much clue for measur-
ing benefits when marginal cost pricing is not practised. However, in the
transportation sector, monopoly and non-marginal cost pricing is the rule
rather than the exception. Particularly in the case of urban highway trans-
portation, average social cost is the price perceived by private users.
Marginal cost is not perceived by individual users at all. In the case of
bus and train services, the prices are fixed by government agencies or by the
monopolistic pricing policy of the operating firms. Under such cases the
1/ H. Morhling and H. Williamson, Jr., "Scale and 'Industrial Reorganization'
Economics of Transport Improvements," Journal of Transport Economics and
Policy, September, 1969.



- 314 -
measurement of benefit should be examined too. In the following we shall
merely focus our discussion on the measurement of economic efficiency
benefit under such non-marginal cost pricing in policy without placing
much emphasis on the merit or demerits of such pricing policy.
54.       Let us consider, first, a typical highway in which private automo-
bile users perceive average social cost and not marginal social cost. In
this case, suppliers are the individuals who demand the transportation. The
resulting supply curve is in fact the average cost curve instead of the
marginal cost curve. In general, such an average cost curve increases as the
volume of traffic increases because of congestion effects. Therefore, the
marginal social cost curve rises above the average cost curve. When the
facility is improved, the average cost curve is lowered. The concept of con-
sumer's surplus is still applicable in this case but the producer's surplus
is nil because the total cost is the average social cost times the quantity
of transportation: the users as a group pay the total social cost. See Figure
2, where MCO and MC1 are, respectively, the marginal cost curves without and
with the facility improvement and AC0 and AC1 are, respectively, the average
cost curves without and with the facility improvement.
D             Mo       M
a\/ ,X   CA
/           NC1
0                          T-f4     I'ran.sportati-.n
Figure/



Notice in this case tIhe downward shift of the supply curve (theaverage cost
curve) is irrelevant for measuring the benefit.   The entire benefit consists
only of consumers' surplus.
Let us suppose that monopoly pricing prevails in the supply of
transportation service.   If the price charged does not change when the
facility is improved, then there is no consumers' surplus, only producers'
surplus.    The producer's surplus is the entire economic benefit.   Let us
now suppose that the prices are set by the monopolist so that tŽe marginal rev-
enue is equated with the marginal cost. In this case, the facility improve-
ment will lead to change in the price. The situation is illustrated in
Figure 3, in which there are both consumers' and producers' surpluses.
AM C
T          T+it      Transportation
Figure 3
The facility improvement shifts the mar'g-..nal cost curve from MCO to
MC1. The price is determined by the intersection of the relevant marginal
cost curve with the marginal revenue curve) MR. The price is reduced from
A to E and the traffic is increased from T to (T + t). The resulting con-
sumers' surplus is the area ABFE, and the producers' surplus is EFGH.



- 36 -
However, the original producers' surplus ABCD is lost in this process. The
net increase in the benefit is the dotted area DCBFGH. It is likely that
the consumers' surplus is apt to be proportionally less than in the previous
cases.
56.       Incidentally, this diagram shows the net loss associated with
monopoly pricing. The triangle FIG in Figure 3 is the loss of benefit due
to monopolistic pricing. In this connection, the distinction between the
financial and economic return can be pointed out. The revenue for trans-
portation operator declines when monopolistic pricing is abandoned in favor
of benefit maximizing pricing. Therefore, benefit maximization leads to a
lower financial rate of return. The use of financial returns for economic
justification should be carefully avoided.
S. Other Benefits
57.       As has been mentioned earlier, the economic benefits are distributed
to various classes of people in the area. The distribution can be measured
by income class, neighborhood basis, producers of transportation services
versus consumers, landlord versus tenant, or producers of goods versus con-
sumers. Generally, it is agreed among policy makers and academicians that
more egalitarian distribution is desirable. But to what extent a specific
distribution is desirable is a matter of value judgment. When distributional
impacts are considered important, they must be examined and the factual dis-
tributional effect must be presented as reference to policy makers. If we
proceed to evaluate distributional impacts, subjective elements come into
the analysis, but there are some methods which employ less subjective
criteria. One method derives the implicit value judgment of politically
elected decision makers with regard to the welfare value of a dollar in



- 37 -
1/
different income classes.-/ Similar methods are advanced by Weisbrod,
McGuire and Garn.-/ There are ways of integrating distribut.ional and
economic efficiency benefits. However, at this stage of the art, such a
mechanical technique should be used as a reference,not as the determining
criterion. The basis of making recommendations should be the best judgment
of the researcher.
58.       The environmental effects of transportation investment encompass
traffic safety, air pollutino;, noise and vibration, creation of unsightly
and undesirable areas, and clime induced. The general strategy for evalu-
ating these environmental impacts is quite similar to the one used for
measuring the value of travelling time. In the case of noise frcm a highway,
the depreciation of property value along the traffic route can be observed.
That amount can be counted as a negative economic benefit. It can also be
argued, as for the case of leisure, that most of these impacts are irrelevant
for maximizing the growth rate. What is more difficult to evaluate is the
benefit of increased traffic safety. There have been a number of attempts
to attach a monetary value to lives saved, but the problem of valuing human
lives which have other dimensions than economic benefit cannot be sidestepped.
Therefore, the best the researcher can do in this area is to present objective
estimates of each variable affected by the investment based on the behavior
of the population.
59.       Another type of environmental effect is the comfort associated with
each mode of transport. Such difference in comfort can be reflected in the
demand for each mode. If the demand is correctly estimated, there is no need
1/ Koichi Mera, "Experimental Determination of Relative Marginal Utilities,"
, August 1969, pp. 46h-477.
2/ Burton A. Weisbrod, "Income Redistribution Consequences of Government Expen-
diture Programs," 81.B. Chase, ed., Problems in Public Expenditure Analysis,
Brookings Institution, Washington, D.C., 1968; Martin C. McGuire and Harvey
A. Garn, "An Experiment in the Integration and Efficiency Criteria in Public
Project Selection, "r unpublished, 1968.
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38 -
to consider difference in comfort further. In order to estimate demand
correctly, the comfort difference between the modes of urban transport should
be considered. For example, a train gives a stable ride in which reading is
quite possible whereas a bus ride is not so smooth. However, for commuters,
bus stops are more readily accessible than train stations.
60.       In developing a long range land use development plan and, in parti-
cular, predicting transport demand for specific routes, allowance for uncer-
tainties should be given. Technology, the level of income and also consumers'
taste change day by day. More significantly the art of predicting transpor-
tation supply and demand and that of land use development are in the formative
stage. We should not assume that we can predict the future with any degree of
accuracy. When an unexpected development takes ?lace, the demand for specific
facilities change and subsequent decisions must he changed accordingly.  For
this reason, flexibility of the system itself is highly desired. Such ttlexi-
bility can be obtained in the stage of modal choice as well as in the allocation
of space for specific purposes. Specifically, rail service is less flexible
than road mass transit service since it involves a large fixed investment on
the right of way which can only be used for specific limited purposes. W4e
must recognize this additional benefit inherent to bus service over rail service.
61.       To translate the amount of flexibility into economic benefit requires
information on the probability distribution of future events and the preference
for different events. Such information cannot be obtained for any specific
area without spending substantial amounts for research. At this stage, i-t
can only be said that flexible systems are preferred to less flexible ones.
-                                                      1   os   .r  . .  r u F<.-;t ...: v ::e.1. :, ..... !. :e 1~.zeE - ...:R.sS-..U.Wsa ...... a |t f z A.. . . . .. .-. '. . ."..



- 39 -
62.       The above discussion shows that we have the firmest ground for
economic efficiency benefit and rather weak ones for other benefits. Therefore,
a convincing case can be made if the economic efficiency benefit alone is large
enough to justify the cost of investment and other benefits are not negative.
If a project is conceived primarily on the basis of redistribution benefit or
environmental effect, some of the developing techniques must be used to
justify the cost.
V. Summary and Conclusions
63.       A review of urban transportation studies has led to the following
conclusions: (1) the urban transportation and land use simulation analysis
which has been used frequently during the 1960's in the U.S. has been ineffec-
tive in improving the planning of urban development; (2) the employment of a
complex simulation model for planning urban transportation systems would require
at least substantially improved data and analytic techniques which cannot be
expected even in the developed countries in the near future.
64.       The physical pattern of land use and of transportation network is
not so significant in affecting the efficiency of resource use in transportation.
Greater attention should be given to technological alternatives. For example,
the transportation cost savings due to high density development are not likely
to be large enough to compensate for the increased construction cost necessary
to achieve high density.
65.       Considering the above findings and the particular situation of the
developing countries, the following points are made: (1) the duplication of
the U.S. experience of building complex models should be avoided in developing
countries and (2) in an analysis of a particular issue, significant variables
and relationships should beexplicitly identified and the scope should be limited;



a lengthy chain of reasoning should be avoided as much as possible.
66.      The following three steps are recommended for an urban transportation
study: (1) development of the general urban development program without
particular reliance on any extensive simulation analysis, (2) comparison of
different modes of transportation based on demand and supply conditions which
are consistent with the predicted population and income levels and (2) the
evaluation of priority projects which should be conducted with the full use
of economic techniques.
67.      The benefits of urban transportation investment can be grouped into
(1) economic efficiency, (2) distribution benefit, (3) environmental effects
and (h) flexibility to uncertain developments. Among them, the economic ef-
ficiency benefit is most readily quantifiable. Some techniques are emerging
for quantifying distribution benefit and environmental effects, but they have
not yet reached the stage where they can be used for operational purposes.
68.      There are two approaches for evaluating savings in traveling time:
growth maximization and utility maximization. There may be some difference in
the value of time savings depending on the approach used, but it does not seem
to be significantly large.
69.      The economic efficiency benefit of a particular urban transportation
project can be measured by the variables associated with the project alone. In
estimating the benefit, the pricing policy must be explicitly considered as it
affects the composition of consumers' and producers' surpluses which are to be
included in the benefit. The financial rate of return does not necessarily co-
incide with the economic rate of return and the degree of deviation depends
upon the pricing policy.
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