Individualised Marketing the Perth Success Story

Transcription

1 Individualised Marketing the Perth Success Story Presented by Werner Brog and Gary John at the Conference on Marketing Public Transport challenges, opportunities and success stories, Aotea Centre, Auckland, NZ 3 August 2001

2 Abstract Individualised Marketing is a major travel behaviour change program being applied in Perth. It is one of a number of complementary programs included in the Department of Transport s Travelsmart 10 Year Plan to replace car trips with the travel alternatives (walking, cycling and public transport trips). An Individualised Marketing trial was applied to 380 households in the City of South Perth during It identified people wanting information on the travel alternatives and provided motivation and localised information to promote the use of them for all types of trips. Also current users of the alternative modes were rewarded for their behaviour. Evaluation surveys showed a 10% reduction in car driver trips with public transport trips increasing by 21%. Evaluation surveys 12 months and two years later showed these changes to be sustained. Based on the success of this pilot program, the first stage of a large scale program covering the City of South Perth was delivered between February and June Evaluation surveys show a 17% increase in public transport trips, this increase is supported by patronage counts. The TravelSmart 10 Year Plan includes a staged program to expand Individualised Marketing to cover half of the Perth Metropolitan Region. This paper outlines how the Individualised Marketing program has been successfully applied in Perth focusing on the results to date and its cost effectiveness in achieving substantial increases in public transport patronage. Contact Author Gary John Werner Brog Department of Transport Socialdata Australia 441 Murray Street 45 Quarry Street PERTH WA 6000 Fremantle WA 6160 Ph Ph Fax Fax gjohn@transport.wa.gov.au socialdata@socialdata.com.au

3 Contents Abstract 1. Introduction 1 2. Mobility Characteristics for South Perth 1 3. Potentials for Public Transport 2 4. Application of an Individualised Marketing Pilot Program to South Perth 5 5. Application of a Large Scale Program to South Perth 7 6. How Does Individualised Marketing Work? 8 7. Participation and Information Requests 9 8. What the participants think Financial Evaluation Conclusions 14 References 15 Appendix 1 Evaluation Framework

4 1. Introduction In Perth, the Metropolitan Transport Strategy (MTS) provides the overall policy setting for the need to achieve a better balance in the use of the motor car. The reasons for this better balance are common for most developed cities through out the world. The MTS provides a vision for a livable city, of which transport is a contributor, and is supported by a set of principles and targets to replace car driver-only trips with other modes. (Department of Transport, 1995). The target for public transport is to effectively double trip making from 6% in 1991 to 12% by The traditional mobility management approach to achieve mode change has been through the provision of transport services and infrastructure, including pricing, and in the longer term land use policies. The application of a behavioural approach, especially in a car dominated city like Perth, has not, until recently, been in the transport planner's tool box. This paper outlines how a behavioural approach known as Individualised Marketing (developed and delivered by Socialdata Australia under contract to Transport) has been applied through a pilot test and large scale application in the City of South Perth - an inner city municipality. The paper focuses on the effectiveness of Individualised Marketing for increasing public transport trips in the community. 2. Mobility Characteristics for South Perth Two surveys conducted by Socialdata in South Perth in 1986 and 1997, based on travel diaries, showed the following mode share, expressed as the proportion of trips per person per day (figure 1). Figure 1 Mode Choice Some changes in the modal choice of South Perth residents can be observed between the 1986 and 1997 survey results. It is evident that car as driver trips increased over this 1

5 period from 55% to 60% of all trips. This was at the expense of walking, cycling and public transport trips which as a main mode all declined. Public transport trips declined from 7 % to 6 %. Figure 2 shows that the change in mode share has occurred while other mobility indicators have remained almost constant. Figure 2 Mobility Characteristics Characteristics Figure 3. Car Usage The number of activities (2.0 per person / day) and trips (3.4 per person / day) of an average South Perth resident was the same in 1986 as well as in 1997, while the travel time decreased by three minutes (from 61 to 58 minutes travel time per person / day). Meanwhile the average distance covered by a person per day decreased by 3 kilometres to 27 kilometres per person per day. Similarly some indicators on car usage (figure 3) show a relatively unchanged picture over the decade from 1986 to Out of all private cars 80 % were used on an average day in 1986 and 79 % in Those cars used made 3.2 trips (1986) compared to 3.3 trips (1997) per day. While the average travel time decreased by five minutes (from 50 minutes in 1986 to 45 minutes in1997) the car occupancy remained at 1.3. Hence all usage characteristics are declining or remain (almost) the same. The increasing share of trips with car as driver between 1986 and 1997 therefore is due to an increasing number of cars owned by South Perth residents and not by a more intensive use of the single car (i.e. car sharing, higher occupancy, etc). 3. Potentials for Public Transport Between November 1998 and March 2000 an in-depth survey was carried out in South Perth, Victoria Park, Subiaco, Melville and Joondalup (a selection of suburbs in inner, middle and outer local government areas) to obtain information about the reasons for individual s mode choices as well as to evaluate the potentials for behavioural change. 2

6 The in-depth research methodology requires an intensive dialogue which takes up to an hour with each household, each member having previously completed a travel diary (Brög and Erl, 1980). It is necessary to investigate each individual trip to see if there was an objective reason for using a car (e.g. business use of the car, car trips within a longer trip chain, transport problems, etc.) and whether an alternative mode would actually have been available. The interactive approach of the in-depth technique coupled with each individual s travel diary makes it possible to clearly differentiate between people s subjective as well as objective situation (Brög et al., 1999b). The evaluation of the in-depth research showed that in South Perth (inner city local government area) car trips comprise 80% of all trips. Of these trips 53% have no mode alternative (lack of public transport alternative, no bike available, walking impossible) and/or there are constraints against using the alternatives (eg. heavy parcels, car needed for business reasons, trip chaining, etc). This leaves almost half of all car trips made by South Perth residents without constraints that have at least one environmentally friendly alternative (public transport, bike, walking) available so the car is used solely for subjective reasons. Figure 4 Possible Changes of Behaviour Figure 4 shows that of the total number of car trips made by South Perth residents, 47% are in principle replaceable by alternative modes. On average there are 1.4 alternatives in principle for every replaceable trip. Public transport trips represent a possible alternative for about one quarter (12 %) of the replaceable car trips. It is interesting to note that the proportion of car trips that can be replaced by public transport is higher in the other local government authority areas surveyed, ranging from 19% in Victoria Park to 25% in Joondalup (outer suburbs) and 26% in Melville (middle suburbs). This is contrary to previously held expectations in Perth (with a CBD focused public transport system) that the greatest potential for public transport use would be in an inner local government area like South Perth. 3

7 Analysis of the potential for public transport trips identifies four groups (figure 5). Figure 5 Potentials for Public Transport, South Perth Residents Out of all trips made by South Perth residents there are just 6% that are already by public transport. Constraints (eg. the need to carry large parcels or to use a car because of business reasons) are the reasons for 30% not being potential public transport trips. For 46% of all remaining trips no adequate public transport alternative exists (eg. no connection available or a service is not available at the time needed). All these reasons are objective which cannot be solved without system improvements. Only subjective reasons prevent almost one fifth of all trips (18%) being undertaken by public transport. By providing information, communication, motivation, there is potential to change these trips to public transport. This group is 3 times higher than the current use of public transport. Half of these trips (9%) have the potentia l for public transport if people were well informed about the availability of services and connections. This includes lack of sufficient information about travel time, information on fares and information on route times. Of the remaining 9%, in only 2% of cases time and comfort are the reasons for not using public transport. Costs are often considered too high, but this was not mentioned in the discussion with people. For 1% of all trips, other subjective reasons hinder the use. This leaves about every seventeenth trip (6%) is a free of choice decision not to use public transport. The indepth research shows that there is a large potential to increase public transport use by correcting (incomplete and too negative) subjective perceptions. Therefore, the application of behavoural rather than system measures to increase public transport use is not an issue of potential but rather the effectiveness of behaviour change measures. 4

8 4. Application of an Individualised Marketing Pilot Program to South Perth The traditional approach to changing community behaviour, especially in the health promotion area, is social marketing (Andreasen 1995, p7 in Brog, W. Erl, E. Funke, S. James, B. 1999). However, there is little evidence that traditional social marketing campaigns based on the health promotion model are effective at changing individuals travel behaviour. Brög (1998) argues traditional social marketing focussed on target audiences is not appropriate to change travel behaviour on the basis that: people s travel decisions are based as much on their environment as their attributes; people s misperceptions of cycling and public transport are best improved through direct experience of the modes; and people need help to identify which trips can be used by alternative modes, which is different for each household and each household member. Individualised Marketing, a specialised dialogue marketing technique developed by Socialdata, establishes direct contact with individuals to take them through a process that identifies the real demand for information and motivates them more easily to think about and change their behaviour. It has been successfully applied to more than 75 projects in 13 European cities. To test the validity of individualised marketing in Perth, a rigorous measurement program was applied. The first project was a pilot with a small random sample (380 households) in the City of South Perth. The project had three distinct stages: a benchmark travel survey of existing behaviour (August 1997); implementation of the individualised marketing program (Sept-Oct 1997); and travel surveys to measure travel behaviour after the program immediately after (Nov 1997), one year later (Sept 1998) and two years later (Feb 2000). The first two after surveys also contained two separate control groups. This was undertaken to identify any changes that may have occurred due to effects outside of the marketing intervention. The sample size for the twelve month survey was 206 households for the marketing group and 207 households for the control group. The only maintenance marketing function performed was the circulation of a newsletter to participants outlining the results of the marketing intervention. The third after survey contained only the respondents of the second after survey in the South Perth marketing group. There were no further maintenance marketing activities other than some local advertisements advising the commencement of a large scale marketing program in February 2000 (this did not commence until after the third survey had been completed). The mode share, expressed as the proportion of trips per person per day (figure 6) shows the extent of the behaviour change achieved by the marketing intervention. The share of trips people make by the different modes are shown as walking trips, bicycle, car as driver, car as passenger and public transport. 5

9 Figure 6 Mode Choice - Sustainability Car as driver trips declined from 60 per cent of all trips to 54 per cent and a further 1per cent to 53 per cent 12 months later. Public transport trips rose from 6 per cent of all trips to 7 per cent, cycling trips doubled from 2 per cent to 4 per cent of all trips and car as passenger increased from 20 per cent to 21per cent. All three modes were the same 1 and 2 years later. The sustained behaviour change is important for justifying funding for large-scale marketing interventions, especially in terms of non-built solution (this is discussed further in section 10). If we compare the results back to 1986 we see the trial effectively turned back the clock 11 years (refer to discussion relating to figure 1). The aim of the marketing intervention is to achieve changes in travel modes but not through restraining mobility. The surveys showed that Individualised Marketing made minimal change to individual mobility measured by the number of activities people visited each day and the number of trips they made (see figure 7). The two variations are travel time and overall travel distance. The increase in travel time is due to greater use of alternative modes (shown in Figure 6). The reduction in travel distance is coupled with the greater use of the alternative modes and a greater propensity to access local activities, such as shops. This is consistent with an increase 6

10 in the number of trips made entirely within the City of South Perth from 41 percent to 45 percent of all trips. Figure 7 Mobility Indicators 5. Application of a Large Scale Program to South Perth The successful pilot program provided the justification, including a socio-economic evaluation, to obtain funding for a large scale application of individualised marketing for the entire population of the City of South Perth - 35,000 people (refer to section 9 for further details on the socio-economic evaluation). The large scale program was delivered between February to June 2000 with an evaluation survey conducted in October An evaluation survey of a random sample of residents within the City of South Perth was conducted in October A random sample of South Perth residents, including both participants and those not interested in participating in the marketing program, are included in the evaluation survey. This was compared to a before survey of residents undertaken over to measure changes in travel behaviour. The evaluation survey also included a control group from the adjacent municipality of Victoria Park so that corrections can be made for any outside influences. An indepth survey was also undertaken to measure the effects on people s attitudes, perceptions and level of information. The results of this evaluation survey are shown in figure 8. It shows mode split for car as driver trips prior to Individualised Marketing was 60% and average number of trips/person/year 696. The effect of Individualised Marketing was a 14% reduction in car as driver trips (average 97 less car as driver trips/person/year) resulting in a mode split declining to 52% of all trips, effectively turning the clock back to less than the 1986 mode split of 55%. The 97 car as driver trips were replaced by walking cycling car as passenger and public transport trips. Public transport increased by 17% (an average of 12 trips/person /year) with the mode split increasing from 6% to 7% of all trips, turning the clock back to

11 Figure 8 Large Scale Results The evaluation survey has been supplemented by on-going monitoring of the Transperth Wayfarer electronic ticketing system. This has shown an average 26% increase in bus boardings within the City of South Perth from March 2000 to February 2001 compared to the same period in 1999/2000. This has resulted in an additional 300,000 public transport boardings over this 12 month period. The increased patronage has been spread across the day and has been managed entirely using spare capacity on existing services. Individualised Marketing has increased public transport patronage by both existing users as well as attracted new users to the system. Public transport trips have increased from an average of 1.9 to 2.0 trips/person/day, while the share of daily users has increased from 11% to 12% of the total South Perth population. Like the pilot program the evaluation surveys showed that Individualised Marketing made minimal change to individual mobility with travel time and number of activities visited remaining unchanged at 2.0 and 3.4 respectively. Travel time also remained constant at 58 minutes and distance declined slightly from 27 to 26 km/person/day. 6. How Does Individualised Marketing Work? Unlike traditional social marketing, which is based on a segmentation philosophy, Individualised Marketing does not pre-select. Rather, it assumes everybody to be a potential customer. It is the potential customer, rather than the expert, who determines involvement (including the intensity of information and motivation needs) in the marketing process. The process (shown in figure 9) therefore involves contacting the 8

12 entire population in the first instance. Depending on individual responses to six or so simple questions asked over the telephone households are segmented into three main groups. This then leads to a different implementation program for each household. In the large scale program about 15,300 out of 17,500 City of South Perth households with names, addresses and telephone numbers could be identified (T). Immediately following distribution of an official letter informing each household of the program telephone contact was made - 94 per cent could be reached (S). 15,300 households N 39% Left alone T S I 40% Motivate/system experience R 15% Reward 94% Figure 9 Individualised Marketing Process After answering the questions households are divided into three groups: 1. N = not interested; 39 per cent were in this group and these people were left alone. This is important because it saves scarce resources being spent on these people. This approach varies from normal mass marketing which aims at all households in the hope that those interested will catch the message. 2. R = regular users of walking, cycling and public transport; (15%) these people were given a reward that in turn led to these people using these modes more. 3. I = interested; 40 per cent were in this group and interested in starting to use alternative modes. These people were given information they requested and were offered a home visit if it seemed necessary. People having a home visit were sometimes given the opportunity experience public transport with a test ticket. For all people in the R and I groups, people could select from a range of localised travel information. This is discussed further in section 7. Figure 9 shows that 55 per cent of households (8,465 households) participated in the program. This is a 20 per cent increase compared to the pilot program where 46 percent of households contacted participated. 7. Participation and Information Requests Almost all of the households that participated in the large scale program (7,795 households) requested information by completing and returning a service sheet. Information on public transport was requested by 86% of these households with 73% also requesting information about walking and cycling. This indicates that the vast majority of people interested in public transport are also interested in walking and cycling. 9

13 The public transport information was localised and personalised to make it as user friendly as possible for residents. This involved providing convenient wallet size local bus stop specific timetables, a local access guide with bus routes and bus stops shown, personalised timetables as well as ticket and fare guides and ferry timetables. Households who wanted to use public transport more often (and were not already regular users) were offered a home visit by a specially trained bus driver from the local bus company (Perth Bus). The bus driver was able to provide further advice on the local service, answer questions and deliver a test ticket that entitled the household to test the public transport system for 4 weeks. The ticket was validated from the day of the bus driver s home visit and was non-transferable. Table 1 shows the quantities of public transport related materials that were delivered to households. All material were hand delivered in a travelsmart bag and households only received information that they requested. Table 1 Public Transport Materials TravelSmart Map 6,800 Tickets and Fares Guide 2,470 Bus Stop timetables (175 different types) 3,670 Ferry timetables 4,500 Test tickets 734 Personalised timetables 3,200 In addition to the above public transport information 175 bus stop information stands were installed that have timetable information specific to that stop. 8. What the participants think Responses from the bus drivers who conducted the home visits for the large scale program were very positive. The average visit lasted 25 minutes with over 90% of visits recorded by bus drivers as a positive experience. The bus company (Perth Bus) reported that participation of bus drivers in the program improved morale within the company. All residents that received a home visit by a bus driver also received a short questionnaire asking what they thought about the TravelSmart program. Half of the households contacted about public transport responded with about 300 questionnaires being returned. Almost all (97%) of the responses were positive. The following are a selection of comments received, which illustrate that individuals were motivated by the project, initiating changes in travel behaviour. Excellent after one month of using the ticket the habit of catching the bus to and from work has really set in. As a result it will be more difficult to return to the car. 10

14 I would not normally use public transport.. it gave me the opportunity to use public transport during the school holidays. I might now use public transport more often when possible. It encourages you to leave the car at home and try the public transport and save money at the same time. It has encouraged us to use public transport and now it has expired we are continuing to use the public transport system. Good way for people to learn how to use a bus, something I hadn t done for about 15 years. A further indepth survey was undertaken of a random sample of participants in the Individualised Marketing program to measure their perceptions of the public transport system and their views of the travelsmart Individualised Marketing program. Figure 10 shows that considerable image improvements of public transport is a positive side effect of Individualised Marketing. Participants were asked whether they were satisfied or dissatisfied with their public transport service, whether it had improved or got worse over the past 4 years and whether they expected it to improve or get worse over the next 4 years. The satisfaction and expectations of public transport improved considerably after participation in the Individualised Marketing program. Figure 10 Perception of Public Transport 11

15 The popularity of Individualised Marketing with the community is demonstrated in Figure 11. Participants were asked whether they thought the program was a good idea, whether they were happy with its conduct and whether they thought it was effective. The positive results show that the community is very receptive to the customer focused approach used in the Individualised Marketing program. Figure 11 Community Support for Individualised Marketing 9. Financial Evaluation The delivery and evaluation of the Individualised Marketing pilot program involving 400 households in 1997 provided the opportunity to undertake a thorough socioeconomic and financial evaluation. The results of this assessment of the pilot program demonstrated a 13:1 benefit-cost ratio. Traditionally, transport projects require significant building of roads and infrastructure. They usually have a benefit-cost ratio in the range of 5:1 up to 7:1. The favourable assessment of the pilot program provided a strong case to secure capital works funding from the Western Australian State Treasury to deliver the first stage of a large scale program for the entire population of the City of South Perth (35,000) in

16 The delivery and evaluation of the large scale program together with further evaluation of the pilot program (to demonstrate sustainability) and indepth research to determine the potential for delivering Individualised Marketing to other local government authority areas has allowed further development and refinement of the financial evaluation. Figure 12 opposite shows the magnitude of the costs and benefits expressed as net present value (discounted at 8% over 10 years) from the proposed delivery of the Individualised Marketing Program to half of the Perth Metropolitan Region (650,000 people). The total net present value of the program is $1.015 billion. This gives a benefitcost ratio of between 30:1 and 37:1 depending upon sensitivity tests for a range of factors including congestion, health benefit, road trauma and additional public transport capacity. Figure 12 Benefits and Costs of Individualis Marketing Benefits/Savings Additional public transport capacity Operating additional public transport services Individualised Marketing program Road Trauma (increased cycle use) User's walking/cycling costs Road congestion Water pollution Costs The costs and benefits include those incurred by the: overall community socioeconomic value from effects such as air and noise pollution calculated by applying an internationally recognised dollar value that represents the cost that would be incurred in cleaning up or avoiding these pollutions using methods other than Individualised Marketing, government such as the cost to the government of delivering Individualised Marketing, and the costs and revenues of public transport and health care, and Greenhouse gas emissions Health and fitness Road Trauma (reduced car use) Private vehicle operating costs Traffic noise Air pollution individual actual dollar savings to people (users) such as savings from lower car running costs. The evaluation framework for the benefit-cost assessment is attached in Appendix 1. $m 13

17 The socio-economic evaluation for public transport in figure 12 does not include public transport fare box revenue. This is because fare box revenue is a financial transaction only and does not represent a net use of resources (ie. it is a cost to the user and a benefit to the government and private bus companies). In financial terms, if we consider additional fare box revenue returns to the public transport system as a whole (government and private bus companies), the first year rate of return from additional patronage by South Perth residents is 48%. This results in cost recovery from delivering the Individualised Marketing program to South Perth ($1.3 million) in a little over 2 years. Over a 10-year period, the present value of net costs and revenues would be 3 times the initial investment. However, the additional fare box revenue from the Individualised Marketing program does not fully recover additional public transport costs for the government. In Perth, this is primarily because of the contractural arrangements with the private bus operators that requires approximately 62% of additional fare box revenue and $1.50 per additional km payment to operators from additional services required during peak periods. Hence the first year rate of return to the government is only 14% and the return over 10 years in only 67%. 10. Conclusions This paper demonstrates that individualised marketing is an effective means of marketing public transport to achieve significant and sustained increases in patronage. In Perth, the individualised marketing program has increased the mode share of public transport trips, in line with the MTS targets, without constraining mobility. This includes a 17 per cent increase in public transport trips (from 6% to 7% of all trips). This paper also demonstrates that the Individualised Marketing program is cost effective and that a comprehensive financial evaluation of the program has been integral in gaining funding from the public sector. Another important factor contributing the success of the program in Perth is its popularity with the community and support by bus companies. 14

18 References Brög, W. and Erl, E. (1980) Interactive Measurement Methods Theoretical Bases and Practical Applications Paper presented to the 59 th Annual Meeting of the Transportation Research Board (TRB), Transportation Research Record No. 765, Washington, D.C. Brög, W.; Erl, E.; Funke, S. and James, B. (1999b) Potential for Increasing Public Transport, Cycling and Walking Trips Paper presented at the 23 rd ATRF Conference, Perth. Brog, W. Erl, E. Funke, S. James, B. (1999) BehaviourChange Sustainability from Individualised Marketing 24 th ATRF Conference, Perth September. Department of Transport, Main Roads Western Australia, Ministry for Planning, Fremantle Port Authority, Westrail and Metrobus (1995) Metropolitan Transport Strategy Perth, Western Australia. Health and Family Services Department, (1998, Developing an Active Australia: A Framework for Action for Physical Health and Activity. Government Publishing Service Canberra, Australia. James, B. and John, G. (1997) Behavioural Approach to Travel Demand Management 21st ATRF Conference, Adelaide September. James, B. (1998) Changing Travel Behaviour through Individualised Marketing: Application and Lessons from South Perth 23rd ATRF Conference, Sydney September. James, B. and Ker, I. (1999) Evaluating Behavioural Change in Transport a case study of individualised marketing in South Perth, Western Australia 23rd ATRF Conference, Sydney September. 15

19 Appendix 1 - Evaluation Frameworks The principal evaluation frameworks, each of which is useful in different contexts, are: Socio-economic - to guide the overall allocation of resources to achieve the most beneficial outcomes for society. Public sector finance - to assist in the assessment of the impacts of the program on public sector expenditure requirements. Private (User) to demonstrate the value to the individual. Each framework treats some impacts differently. For example: Transfer payments are not estimated in socio-economic evaluation since they are a cost to one group of those impacted and an equal benefit to others. Transfer payments are financial transactions only and do not represent a net use of resources. Public sector financial evaluation does include one part of a transfer payment (eg increased fare revenue) where it accrues to government. Private (user) evaluation also includes one part of a transfer payment (eg. increased cost of public transport fares) where it accrues to the user. The evaluation framework is outlined in Table A1 (Benefits), Table A2 (Costs) and Table A3 (Transfer Payments). Table A1 Evaluation Framework for Individualised Marketing: Benefits S o c i a l G o v t U s e r $ v Comment a l u e Private vehicle operating costs Valued as resource cost (11.3 cents/km - net of taxation) for social, but at market prices (17.2 cents/km) for user financial (Bray & Tisato, 1997) Public transport services: operating Increased walking/cycling costs to user Only applies where additional services have to be run. In conventional economic analysis, operating costs are treated as 'benefits' (may be positive or negative).. Costs are small except where new equipment is purchased. Cycling cost estimated at 2.75cents/km (authors' estimate). Walking cost not estimated. Travel time Induced mode changes result in small initial increases in travel time, even after substitution of closer destinations. Road investment project evaluation in WA excludes the value of private/commuting. Improved health and fitness due to exercise (reduced mortality) User exposure to air pollutants Air pollution Greenhouse gas emissions ( ) Increased life expectancy (socio-economic - based on Hillman (1997)). Reduced health system costs (government - not quantified). Improved quality of life (user - not quantified) ( ) Cyclists, pedestrians & bus passengers less exposed to exhaust pollutants than car users (ETA, 1997, p2). Not quantified. ( ) Motor vehicle exhaust emissions reduced pro-rata with traffic volumes. Likely to be more than proportionate impact if traffic conditions improved. ( ) Motor vehicle greenhouse gas emissions reduced pro-rata with traffic volumes. Likely to be more than proportionate impact if traffic conditions improved. Values from Bray & Tisato (1997) Road congestion Lower time and vehicle operating cost for remaining road users, both private and commercial. Values based on Luk et al (1994). 1

20 Road trauma (community) related to car use Road trauma (users who change modes) related to use of other (vulnerable) modes Pro rata with change in motor vehicle traffic volumes. No estimates for nonhospitalised injuries or property-damage-only accidents. Increased exposure (amount of walk/cycle travel - calculated for cycle only). Reduced accident rates for walking and cycling with fewer motor vehicles. Historical trends in Perth show cyclist hospitalisations increase at one-third the rate of cycle usage in the presence of other cycle programs. Traffic noise Pro rata with motor traffic volumes. Values from Bray & Tisato (1997). Water Pollution Pro rata with motor traffic volumes. Values from Bray & Tisato (1997). Conflicts on Walk/Cycle facilities Improved security and safety in the community Viability of local shops and businesses Synergy with other marketing initiatives. Perceived threat on busy shared paths, but not a significant real cost. not quantified.. A demonstrable benefit through 'eyes on the street' and enhanced social interaction, but virtually impossible to quantify. Benefits to existing customers, especially those who walk or cycle. Difficult to quantify, but nevertheless real. Spin-off benefits for cycling, walking and public transport, through 'wordof-mouth'. Real, but not quantifiable. Note: ( ) Benefits to government accrue outside the transport sector and have not been estimated. Table A2 Evaluation Framework for Individualised Marketing: Costs S o c i a l G o v t U s e r s $ Comment v a l u e d Individualised marketing Upfront 'Capital' cost to undertake individualised marketing Individualised marketing maintenance Public transport capacity: cap ital Table A3 Not undertaken. Potentially reduces decay of all cost and benefits over longer term. Additional demand might require additional buses for peak period.. Evaluation Framework: Transfer Payments S o c i a l G o v t U s e r s $ v a l u e Comment Car parking costs Unless car parking is congested, the savings to the user are offset by reduced income for the car park operator. Except where there is an impact on the parking supply likely to be long term and hence low present value Car parking revenue See car parking costs, above. Public transp fare cost to user Cost to user. Also a financial benefit to public transport provider. Public transport fare revenue Benefit to public transport operator (part accrues to Transperth and part to private operators of bus services). Also a cost to user Government tax revenue Assumed to be net zero. Alternative commodities are also taxed. Money returned to roads assumed to be offset by reduced road expenditure needs. Issues in Valuing Costs and Benefits 2

21 The range of costs and benefits resulting from individualised marketing in relation to travel behaviour raise some fundamental questions about how these can best be incorporated into a single evaluation framework. These questions centre on the applicability of monetary values, especially for social and environmental impacts, and the derivation and application of implicit or explicit weighting schemes for various components. The issues, themselves, are of greatest importance when the impacts of projects being compared vary significantly in both magnitude and direction. However, in this study, all the main indicators - social, economic and environmental - move in the same direction. The Philosophy of Evaluation The costs of undertaking individualised marketing are known from the pilot project, and may be reduced: set-up costs would be spread over a larger number of households/people; and project staff would become more practiced in applying the individualised marketing technique and more familiar with the area and its access/transport opportunities. In respect of the benefits, the evaluation has adopted conservative values where clear values cannot be determined accurately (for example, by using average rather than marginal values for the cost of congestion). Where there is uncertainty about the appropriate values to be used, sensitivity analysis has been applied, either in the form of a binary sensitivity (does the effect have a value or not? - eg the value of time) or as a range (eg range of estimates for air pollution costs). Costs Maintenance of Individualised Marketing The behaviour change brought about through individualised marketing is a social, economic and environmental asset. Most assets require ongoing maintenance if they are to continue to deliver the benefits for which they were created. There is no experience with maintenance of individualised marketing, nor have techniques been developed specifically to address it. The evaluation demonstrates durability of impacts over a three year period rather than attempting to make an assessment of 'asset maintenance' requirements or the extent to which maintenance might increase the level of future benefits. There is a cost ($100,000 pa) associated with maintenance of the stop specific information modules provided. This cost has been factored into the amortisation of future bus replacements. Public Transport Capacity South Perth was chosen for the pilot and large-scale project because, amongst other things, there was sufficient capacity in public transport services to carry additional public transport trips generated by individualised marketing. There was no additional cost (capital or operating) for provision of public transport services. In estimating public transport capacity requirements the evaluation adopts the following: 3

22 The distribution through the day of additional public transport trips is the same as the pilot project, viz: one-third broad morning peak, one-third broad evening peak, one-third offpeak Only high peak period trips would require additional vehicles Half of all peak period trips would require additional vehicles Additional vehicles would be able to make two trips in the peak direction during each peak period. This is a function of max loadings of current services being reached only in proximity to the major public transport destination (the Perth CBD) and would not necessarily apply for the outer suburb sections of bus routes. The actual current bus loadings for services to the CBD in the high peak (7.00 am to 9.00 am) suggest that there is 25 to 40% spare capacity on all but a few services. The split between additional rail patronage and additional bus patronage is assumed to follow current patterns for each area. Revenue flows are identified to Transperth and to the Private Bus Operators. No revenue flow is identified for Westrail because the contract is on a cost basis rather than a patronage basis. Benefits Travel Time Travel time-related items have been separately treated because of uncertainty about the real value of small increments of time. In the specific context of this project, travel time costs are demonstrated to be low by virtue of the mode change achieved. The direct first-year impacts on the individual, other than travel time, are set out in Table A4. The conventionally-derived value of time savings for road project evaluation is $7.33/hour. Using this value, the loss to individuals due to increased travel time of 4 minutes per person per day would be A$4.73 million in the first year. However, if this were the true value, users would not have changed their behaviour. For the observed behaviour change to have occurred either: the behavioural value of time is much less in this case than has conventionally been assumed; or there are benefits to the individual over and above those that have been quantified here. Table A4 Private (User) Benefits ($/year) Stages 2 to 6 Impact Value Private vehicle operating costs Public transport fares Cycling costs Walking costs Health & fitness (mortality) Perceived cycle/walk injury risk -A$104 m +A$ 11 m +AS 2 m not estimated -A$ 5 m +A$ 7 m 4

23 TOTAL (saving) -$ 89 m Congestion The major component of congestion cost is travel time, both private and commercial. Commercial travel time is generally accepted as having a definable value, at least in aggregate, because of the competitive nature of commercial enterprise A value for sensitivity testing is derived below. Average versus Marginal Values Congestion has a number of defining characteristics: marginal cost always exceeds average cost; the cost imposed by one more car exceeds the cost experienced by each car already on the road; marginal cost increases with traffic volume - each extra car imposes successively higher costs; and most congestion costs (66% in Melbourne, across the whole road network (BTCE, 1995, p31)) imposed by the marginal vehicle are imposed on other road users. Method of estimation Luk et al (1994) estimated the cost of congestion in Perth to be $368 million in 1992 prices (equivalent to $410 million in 1997 prices). This is not a useful value in its own right, as a state of zero congestion cannot be achieved in practice, either through expanding capacity or economically-efficient pricing, neither of which is costless. However, this global estimate can provide a basis for deriving a unit cost of congestion for use in this evaluation. If we assume that: all congestion cost is incurred during the morning and evening peak periods (ie that there is effectively no congestion off-peak); and motor vehicle traffic during the day (38.8 million vehicle kilometres/day; 36.5 passenger car kilometres/day) is distributed: 15% morning peak 15% evening peak 35% inter-peak 35% off-peak (BTCE, 1996, Table III.1) then the average congestion cost per peak period passenger car kilometre is cents. A congestion cost of cents per car-km in the peaks is a conservative estimate, because: the marginal cost of congestion (ie the cost saved when traffic is removed from the roads at congested times) must be higher than the average cost; the marginal cost of congestion will increase over time, as traffic increases faster than road capacity; and traffic volume relative to road capacity is higher in inner areas, such as South Perth. Health and Fitness Substituting more active modes of transport (cycling and even public transport which involves walking to and from bus stops) for car driving improves the health and fitness of people who make that change. This has been well-documented (eg Roberts, et al (1996)) and estimates 5

24 made of the magnitude of some of the impacts, but not generally within a framework suitable for adoption in socio-economic evaluation. There has, however, been useful quantification of increased life expectancy due to cycling activity. Hillman (1997) has estimated that, in the United Kingdom, for every life year lost as a result of increased cycling (bearing in mind that cycling has a higher accident rate than motorised modes), 20 life years are gained through improved health and fitness. Assuming that the same relativity is appropriate in Australia, the 20:1 ratio can be applied to the fatality component (4%) of the road trauma resulting from increased cycle use. Because this effect might be less significant in Western Australia than in the United Kingdom (for example, because of the greater range of outdoor recreation opportunities feasible for most of the year), sensitivity testing incorporates a zero value. Given that some such effect is almost certain to occur (ie people who get more moderate exercise are likely to live longer and have fewer ailments), this sensitivity assumption is highly conservative. User Exposure to Air Pollutants Despite the natural, and sometimes visibly-expressed, aversion of cyclists and pedestrians to travelling in heavy traffic, research has established that car-occupants absorb much higher levels of exhaust pollution than cyclists, walkers or bus passengers. (ETA, 1997) In any given road environment, non-car users are exposed to several times less air pollution than car drivers or passengers. In this exercise, this effect is likely to have been reinforced by the substitution of local for more distant destinations for some trips, which are hence more likely to be on local streets rather than arterial roads. Changes in user exposure to air pollution have not been quantified or valued in this evaluation, but it is important to acknowledge that such changes are a positive benefit not a negative impact on those who now choose to walk, cycle or catch public transport. Road Trauma Road trauma impacts of changes in travel behaviour have two principal components: a reduction in road trauma involving motor vehicles; and an increase in road trauma involving cyclists. For the reduction in road trauma involving motor vehicles, the central evaluation uses average fatality/hospitalisation rates over the five years Minor injury and propertydamage-only accidents have not been included in the evaluation as data on these is inadequate, particularly for cycle accidents. In the case of cycling, there is evidence that increases in cycling activity are not matched by increases in cyclist injuries (Bike Ahead, 1996, p2). The long term evidence for Western Australia indicates that cycle trauma, as measured by hospital admissions, increases at around one-third of the increase in cycle usage. This proportion has been used as the central case for evaluation. For sensitivity testing, the low benefit case assumes that cycle trauma will increase in direct proportion to the increase in cycle use. The accident rate for non-motorised modes would also reduce because of the lower volume of car traffic and, hence, fewer conflicts with motor vehicles to the benefit of all users. The WA Office of Road Safety reports estimates of road trauma costs as follows: Fatality: $ Hospitalisation: $

25 These values are based on what are usually (misleadingly) called economic costs, which derive from an accounting approach and substantially underestimate the amount that individuals collectively are 'willing to pay' to reduce the risk of fatality, in particular. Values based upon (the more correct economic concept of) willingness to pay have not been included in the sensitivity analysis. There is no consensus on the extent to which 'willingness to pay' exceeds 'economic cost' on the application of 'willingness to pay to injury (as distinct from fatality) risk. Durability of Impacts The effectiveness of learning declines over time unless the message is continually reinforced. With individualised marketing to change travel behaviour, the experience of changed travel behaviour is itself an effective reinforcing mechanism, provided the quality of the experience does not deteriorate There is limited evidence on the durability of behaviour change. However, a two and a halfyear follow-up survey in South Perth, using both experimental and control groups has shown that the extent and form of travel behaviour change has been maintained. 7