Why Sustainable Transport Initiatives Struggle to Attract Funding

First a quick 2 min video to provide some context to the EVIDENCE project.

I've now been coordinating the EU-funded EVIDENCE project for 2 years. It has been fascinating and we will shortly start to disseminate our findings. I thought I'd take a moment to reflect on some observations about why (despite the rhetoric) sustainable transport continues to struggle to attract sufficient funding. 

1) For most major /traditional infrastructure projects there is implicit ‘belief’ that the scheme benefits identified through ex-ante appraisal (typically BCA) will be delivered. This presumption is very rarely tested by ex-post appraisal which is commonly perceived as an unnecessary luxury for a scheme that is considered to have already ‘proved’ its value. Where studies have sought to validate ex-ante benefits through ex-post appraisal the results are inconclusive at best, with an increasing body of literature identifying substantial optimism bias. Traditional infrastructure schemes often have low benefit-cost ratios that are difficult to prove after implementation.

2) In contrast, most appraisal for sustainable transport initiatives is ex-post. Sustainable transport measures have been subject to intense scrutiny and evaluation during the last two decades, to the extent that the evaluation requirements are often more expensive and onerous that the actual intervention. This means that the evidence for a significant proportion of the sustainable transport initiatives reviewed by the EVIDENCE project is demonstrable, not hypothetical as in the case of ex-ante appraisal undertaken for traditional infrastructure projects.

3) Frequently political decisions to improve infrastructure are taken prior to any work to quantify the potential cost-benefits. The onus is therefore on the appraiser to use data and modelling techniques in the “best way possible” to bolster the BCA ratio. In many ways this pressure to validate the political decision transforms the ‘science’ of appraisal into an ‘art’. It is a grey-area, neither right or strictly wrong, although an increasing number of practitioners question the integrity and indeed the ethics of doing this.

4) Formalised appraisal methodologies applied to traditional infrastructure projects are commonly presented by politicians as scientifically validated fact, whereas there is perception that appraisal for sustainable transport measures are somehow inferior and informed by "pseudo-science". The reality is that if all appraisal appeals to the ‘best case’ then investment in sustainable transport measures regularly outperform traditional infrastructure measures.

5) Ex-ante appraisal techniques used to assess traditional infrastructure schemes are generally considered to be superior, the gold standard, and accepted and endorsed by national government as the most appropriate methodological approach. This means sustainable transport initiatives have to be evaluated using the appraisal techniques designed for, and best suited to, evaluation of traditional infrastructure projects. A key input developed for use in these appraisal techniques is the ‘value of time’. The value of time is a highly contentious issue and has been identified as the main reason why appraisal techniques tend to favour major infrastructure projects. Without the disputed values of time most major transport projects would struggle to demonstrate value. Many sustainable transport initiatives are implemented to address other criteria, not to improve value of time. Cycling projects for example improve health, but are often assessed in relation to their ability to encourage mode-shift, reduce traffic congestion and improve journey times for motorists. Public realm schemes improve the liveability of urban places, increasing walking and cycling but are often considered to offer a negative benefit because of the potential to increase journey times.

6) It is for sound and legitimate reasons that multi-criteria analyses need to be applied to properly assess sustainable transport initiatives. It is not because they “can’t complete” on the same playing field as traditional infrastructure investment, it is because the current playing field is slanted heavily in favour of traditional transport measures. A separate paper on this very issue, podcasts from European practitioners, and a video of a debate between experts on this very issue have been prepared. We encourage you to review these resources to understand the impact of the current ‘value of time’ based appraisal on justifications for major infrastructure investments. The consensus from experts in appraisal was that it is better to encourage more use of multi-criteria analysis on a wide range of projects and to promote it as best practice until it becomes the de-facto approach.

7) Changing the way we do appraisal is only part of the challenge. It is crucial to recognise that current appraisal techniques are mainly used to prioritise projects within a pre-allocated funding pot. It is the politicians who decide how much money to put in which pot, and the rules about what the money can be used for. This means, for example, that highway projects are appraised against other highway projects. Frequently other, more sustainable, alternatives to address the same problem are not considered because the funding rules do not allow them to be appraised as different options. If sustainable transport options were appraised as an alternative, it would require the use of different appraisal techniques in order to fully monetise and capture comparisons of the costs and benefits. We recommend therefore that multi-criteria analysis is most appropriate to use for comparing sustainable transport initiatives, as they will struggle to demonstrate value if appraisal techniques developed for traditional infrastructure is applied.

8) Fundamentally we need greater transparency in why and how money is ring-fenced by politicians for certain types of scheme or initiative. We need in future the ability to compare all the different solutions, and to allocate funding according to the ability to deliver best economic return on investment. On the basis of the evidence we have gathered, this would change substantially the flow of funding towards sustainable transport initiatives.

Dr Colin Black

Business Director for Transport Planning, Arcadis UK