VALUING GHG SAVINGS FROM ITS IMPLEMENTATION IN URBAN AREAS

PAPER for 26 th Conference of Australian Institutes of Transport Research CSIRO TRANSPORT FUTURES Bayview Conference Centre Melbourne 8-10 December 2004 VALUING GHG SAVINGS FROM ITS IMPLEMENTATION IN URBAN AREAS Leorey Marquez (CSIRO), Nariida Smith (CSIRO) and Justine Gannon (CSIRO) ABSTRACT CSIRO is undertaking a study to establish the value of Intelligent Transport Systems (ITS) for ameliorating growing environmental, economic and social impacts of increasing traffic in urban areas. This paper, reporting results from early stages of the work, discusses the benefits of estimating the relative impacts of alternative ITS measures at a detailed level across entire urban areas. The benefits of applying these estimates to calculate, over time, monetary savings of early application of ITS and some approaches to estimation are introduced. The approaches are illustrated via a case study which shows how, at a strategic planning level, estimates of the value of ITS as major tools for reducing traffic disbenefits can be obtained in a cost effective manner. CONTACT AUTHOR: Dr Nariida Smith Leader Transport Futures Team CSIRO Manufacturing & Infrastructure Technology PO Box 310 North Ryde 1670 NSW AUSTRALIA Phone +61 2 9490 5466 Fax +61 2 9490 5777 E-mail nariida.smith@csiro.au

1. INTRODUCTION The volume of traffic in urban areas across the world is increasing. Even if growth in passenger traffic finally plateaus because drivers need to time other activities such as work and sleep, freight traffic will continue to grow with freight trips occurring 24/7. Numbers of social, economic and environmental impacts are associated with this growth including injury and death from crashes, economic costs of congestion, and environment impacts from noise, air pollution and green house gas emissions. There is no single solution for the amelioration of all these problems. However we contend that Intelligent Transport Systems (ITS) offer the most promising solutions in the short to medium term for two reasons: ITS can be retro-fitted. Existing roads can be instrumented with traffic management equipment. Telematic devices to improve driving efficiency can be fitted to existing vehicles The Scope of Impacts. A traffic management system that improves traffic flows would improve the efficiencies of all vehicles from heavy trucks, through to large sports utility vehicles (SUV) to old, badly tuned vehicles with low fuel efficiency. The CSIRO has commenced a research program to develop decision support tools for planners and policy makers to use in assessing the benefits for Australia, and urban Australia in particular, of widespread application of ITS technologies. This paper presents the first results of this research which is developing methodologies to: estimate the relative impacts of alternative ITS applications at a detailed network level so that the best type of ITS and the best location for that technology is identified across the urban road network to obtain maximum benefits estimate a range of social, economic and environmental cost and benefits, allowing for the best choices and best placement will differ according to the interests of stakeholders estimate the extra benefits derived from early application of the ITS and the associated value in using ITS as the major tools to reduce traffic disbenefits. As this research is part of a larger energy research initiative aimed at both energy security and reduction of Greenhouse Gas (GHG) emissions (CSIRO, 2004), there is particular interest in valuing early intervention strategies. Global warming is cumulative so options to reduce GHG emissions in the short term are particularly valuable. However global warming is not the only cumulative impact of traffic. Numbers of health impacts are also cumulative. The impacts on the health of vulnerable populations, such as the young and the elderly, are cumulative. So too are the impacts of noise. Moreover, early monetary savings for business and the community from direct reduction in fuel costs due to congestion will translate to significant benefits over CSIRO Transport Futures 26 th CAITR, December 2004 page 1

time. It has recently been suggested congestion accounts for 25% of urban freight costs in one of Australia s cities (Batchelor, 2004). Since the reliability of benefits over time depend on initial impacts analysis, the first priority is to develop reliable estimates of current benefits. The benefits needed to inform strategic planning rather than those developed in impact analysis of particular projects are the focus of this work. Thus the estimation procedures cover larger areas (usually entire urban areas), longer time frames, and multiple options, so cost and time effective methods are needed. In this context, appropriate use of secondary data and choice of measurement and analysis scale is vital. This paper discusses these issues together with our suggested approaches and presents some early results from a case study. The paper is arranged as follows. The following section discusses the relative merits of Top Down and Bottom Up analyses in investigating impacts of ITS. This is followed by the introduction of the concept of Outcome Scenarios which will be used in estimating the impacts of multiple alternative ITS measures. A case study demonstrating the approach is then presented and some comments on the valuation of benefits are provided. Although these results are for an Australian city, we believe the approaches used are generally applicable to cities around the world. 2. TOP DOWN OR BOTTOM UP In Europe, the USA and Japan general global or top down estimates of the potential benefits of ITS have been made. The European Road Transport Telematics Implementation Co-ordination Organisation (ERTICO), the body coordinating ITS activities throughout Europe, predicted and was working toward a set of benefits from ITS applications by the year 2017 (ERTICO, 1998 and European Commission, 2001) including: 25% reduction in travel times 40 hours per traveller saved each year by the use of automatic tolling systems 25% reduction in freight costs by improved efficiency of freight movement and fleet operations and, 50% less pollution in city centres by using advanced traffic management systems. The Federal ITS program in the United States, funded under the Transportation Equity Act for the 21st Century (TEA-21), has similar goals (ITS America, 2002). These include: reducing congestion to save one billion gallons of petrol per annum and the associated emissions CSIRO Transport Futures 26 th CAITR, December 2004 page 2

13% reduction in travel time through better road conditions and 8%-10% reduction in transit travel time and a 13% reduction in fuel consumption through better signal coordination 10% 15% reduction in truck operating costs. In Japan, ITS is expected to be the most effective measure for solving serious road traffic problems. A national project entitled "e-japan Priority Policy Program 2003" (MLIT, 2003) aims to achieve benefits such as: reduction of total loss due to traffic congestion by 6% with VICS (Vehicle Information and Communication System) via a national deployment rate of 30% elimination of about 70% of traffic congestion on Japanese expressways via ETC (Electronic Toll Collection System), AHS (Advanced Cruise-Assist Highway Systems), and other ITS deployments lower fuel consumption and reduced emissions of CO2 by about 10%-15% and nitrous oxide by 30% from improved driving efficiency through ITS. At the same time, estimates of the full local advantage of individual ITS measures via careful bottom up cost-benefit and ITS assessment programs are being published regularly. For example, the US Department of Transport collects the results of studies in an ITS Cost and Benefits Database (www.benefitcost.its.dot.au) which has become a primary repository of information on ITS applications for both practitioners and policy makers. Unfortunately, both the top-down and the bottom-up approaches encounter significant difficulties in providing a full estimation of the benefits of multiple, alternative, integrated ITS measures on an urban-wide scale. While it would be possible, in theory, to mount a vast costbenefit study with multiple ITS applications applied, it would be too costly in practice. At the same time, global estimates of benefits, even if they can be transferred to the local situation cannot be used to estimate the best location of alternative measures. It is particularly important that characteristics and problems associated with individual locations within urban areas be matched to the types of ITS measures that best meet these problems. A number of local studies support the expectation that the location of ITS measures affects their impacts. Thus for transport planners and policy makers seeking some concrete indications of the impacts of ITS measures in their city or region. An approach based on outcome scenarios, as detailed below, may be helpful. 3. OUTCOME SCENARIOS AND MODEL FRAMEWORK Many urban authorities have created strategic travel models based on transport modelling software platforms such as EMME2, Trips, or Transcad to assist planning and managing development. Strategic travel models include multi-modal traffic assignment capability to CSIRO Transport Futures 26 th CAITR, December 2004 page 3

assign trips to various layers of transport network infrastructure. It is possible to manipulate such models to: change origins and destinations of trips, change the numbers of trips, and/or change the attributes such as maximum speed or capacity of portions of the transport network. These are changes in outcome. The models do not need to know the specific measures contributing to each unit of change. By grouping together ITS measures into generic classes that produce similar outcomes, such as increasing speed or decreasing travel time, planners can identify policy outcome scenarios that produce changes in the performance of the transport network as a result of successful implementation alternative ITS measures. In this study we considered ITS measures in generic groups that lead to four outcome scenarios. The scenarios are: Reduced Traffic Volumes: This scenario is produced by a combination of ITS technologies to improve alternative modes of travel or discouraging peak travel. These technologies include efficient operating of public transport (transit management systems); automated control of high occupancy vehicle lanes to improve compliance (road management systems); and automated toll collection allowing more widespread application of road charging and differential charging to shift traffic from peaks. Improved Highway Capacity: This scenario is produced by deploying ITS such as adaptive or integrated traffic signal management on groups of links in the network, such as freeways and arterials; and incident detection and management systems. Trip Route and Time Changes: This scenario is produced by using ITS to provide real time information to drivers with information about specific links of strategic importance in the network to promote alternative trip routes or alternative times when traffic is heavy Reduced Numbers of Freight Trips: This scenario is produced by deploying ITS to freight vehicle operation to increase loading, schedule trips more efficiently and reduce empty running. To test the effectiveness of these scenarios in their local area, the analyst needs to be able to provide estimates of the amount and location of the changes to be modelled. An extensive literature search using both the ITS Benefits and Cost Database and other sources was carried out to find reasonable estimates of the likely impacts based on currently observed results. The modelling procedure was designed to incorporate both sensitivity testing of the initial values and ongoing updates as better estimates become available. The procedure was also designed to allow for spatial variability in the application of changes. CSIRO Transport Futures 26 th CAITR, December 2004 page 4

A prototype of the model, called the ITS-GHG Tool has been developed with the primary role of estimating the GHG impacts from selected outcome scenarios. The ITS-GHG Tool was implemented in Transcad using three components illustrated in Figure 1. Transcad was chosen as the platform for the ITS-GHG Tool as it is both a transport modelling package as required by the Route Assignment Module, as well as a geographic information system (GIS) for the spatial analysis required by the Link Emissions Module and the Long-term Impacts Module. The benefit estimation procedure is currently external to the package because it is still under development. GHG benefits and some first estimates of the values of a range of benefits are described in the case study below. Figure 1: Components of ITS-GHG Tool 4. A CASE STUDY OF SYDNEY Sydney has a good radial rail network and an extensive bus network, but as some 80% of household travel originates and ends in areas of low density, Sydney is very car dependent as evidenced by the car s 70% mode share (HTS, 2001). Freight traffic is increasing even more rapidly than car traffic with a particularly rise in light commercial vehicle traffic. CSIRO Transport Futures 26 th CAITR, December 2004 page 5

ITS outcome scenarios were created based on the policy outcome scenarios described above to consider: Congestion Reduction: The car trip matrices for the AM Peak and the PM Peak were reduced by 15% across the board. No changes were made to the car trip matrices out of peak, or to the commercial vehicle trip matrices at any time. Better Traffic Management : For arterial roads, all relevant volume delay functions, which describe how delay builds up on a link as traffic volume approaches link capacity, were altered so that at saturation point, the road would be operating at 3kph faster than previously, and 10% would be added to the traffic capacity of the road. Improvement was restricted to arterial roads because motorways and freeways generally perform well. Real Time Information: The same volume delay changes proposed for better traffic management were applied just to the roads bearing the brunt of urban traffic flows, principal radial routes and main orbital routes. Logistics Efficiencies: Load factors were increased (i.e. higher loads per vehicle, meaning fewer vehicle trips to move a given quantity of goods around the city) with some consolidation of loads as a result (i.e. a transfer of some freight from light commercials to rigid tucks, and from rigid trucks to articulated) with spatial variation due to differing capacity for higher loads between industries. Passenger and freight trip data for four time of day periods morning and evening peaks, day inter-peak and night were provided by the Transport and Population Data Centre of the New South Wales Department of Infrastructure, Planning and Natural Resources. The latest freight trip data available at the start of the work was for 1996 and thus these demonstration results are for 1996 (CTS, 1996). They are currently being revised with more recent data. However the 1996 figures are useful for demonstration purposes of relative impacts. Figure 2 shows the differences in GHG emissions from freight and passenger between scenarios and the base case over the entire urban area for an entire weekday. CSIRO Transport Futures 26 th CAITR, December 2004 page 6

Real Time Traffic Information Logistics Changes Traffic Management Lower Congestion 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% % Reduction CO2e (Urban 24hrs) Passenger Vehicles Commercial Vehicles Figure 2: Potential ITS Impacts on GHG Emissions Note that this is just an example of impacts based on implementation on sets of roads in the network. The results shown are not for the actual implementation which gives most GHG reduction but for the implementation judged by transport planners to be a likely early implementation. However the average over the day shows the impact of ITS under assumptions of implementation outcomes, which are quite conservative especially for the realtime information and better traffic management scenarios. Moreover, the average hides larger relative impacts in particular time of day periods and particular locations. The decision support tool is able to provide the emissions and changes in emissions on each and every link in the road network. It also provides vehicle kilometres travelled, vehicles hours travelled and fuel consumed (see Table 1). This provides a wealth of information for estimating savings in fuel and environmental cost due to alternative ITS measures at a very detailed level. This could be useful to a wider range of planners and policy makers other than those charged with reducing GHG emissions. The following section describes how monetary estimates of environmental savings might be estimated. CSIRO Transport Futures 26 th CAITR, December 2004 page 7

Table 1: Scenario Impacts on Distance and Time and GHG Emissions (24 Hours) Trips ( 000) VKT ( 000) VHT ( 000) Average Speed (kph) CO2(e) Tonnes Per Day Scenario 1996 Base Lower congestion Net reduction Better traffic management Net reduction Cars 7,113 6,674 439 7,113 0 Logistical changes Net reduction Real-time traffic info. Net reduction 7,113 0 7,113 0 LCVs 443 443 0 443 0 346 97 443 0 Rigids 138 138 0 138 0 107 31 138 0 Artics 25 25 0 25 0 23 2 25 0 All vehicles 7,720 7,280 440 7,720 0 7,589 131 7,720 0 Cars 77,469 72,259 5,210 77,564-95 77,542-73 77,320 149 LCVs 4,989 4,963 26 4,999-10 3,977 1,012 4,979 10 Rigids 2,409 2,394 15 2,413-4 1,749 660 3 Artics 678 674 4 679-1 559 119 678 0 All vehicles 85,546 80,290 5,256 85,653-107 83,737 1,809 85,382 164 Cars 2,371 2,108 263 2,305 66 2,348 23 2,281 90 LCVs 156 150 6 152 4 123 33 148 8 Rigids 67 65 2 65 2 49 18 65 2 Artics 17 17 0 17 0 14 3 17 0 All vehicles 2,612 2,340 272 2,539 73 2,534 78 2,511 101 Cars 32.7 34.3-1.6 33.7-1.0 33.0-0.3 33.9-1.2 LCVs 32.0 33.1-1.1 32.9-0.9 32.3-0.3 33.6-1.6 Rigids 36.0 36.8-0.8 37.1-1.1 35.7 0.3 37.0-1.0 Artics 40.0 39.6 0.4 39.9 0.1 39.9 0.1 39.9 0.1 All vehicles 32.8 34.3-1.5 33.7-0.9 33.0-0.2 34.0-1.2 Cars 16,322 14,835 1,487 15,994 328 16,241 81 15,908 414 LCVs 1,307 1,279 28 1,284 23 1,090 217 1,270 37 Rigids 1,428 1,399 29 1,415 13 1,133 295 1,402 26 Artics 633 623 10 625 8 574 59 623 10 All vehicles 19,690 18,135 1,555 19,318 372 19,039 651 19,203 487 CSIRO Transport Futures 26 th CAITR, December 2004 page 8

VALUING ITS BENEFITS To enable different types of benefits to be compared, a common base is needed and monetary costs and benefits provide this base. Internal costs such as fuel and travel time are borne by road users and can be estimated given each user s travel distance, time and fuel use. The external costs such as noise, air pollution and global warming are borne by other individuals, and by society at large, and are therefore harder to estimate. Since many societal costs are externalities that are not traded in the market, valuation is not simple and no single method is appropriate for all cases. Most authors use an environmental valuation framework (Envalue, 1995): Valuations correspond to the aggregate payments that society (as the sum total of the individuals who make it up) would be prepared to make for these goods. (Envalue, 1995). There are numbers of recent studies estimating the environmental impacts of transport. See for instance External Costs of Transport. Accident, Environmental, and Congestion Costs in Western Europe (Infras/IWW, 2000). Table 2 shows some common methods of evaluation. Table 2: Common Methods for Valuing Transport Externalities Method Market Based Description Damage Costs: that measure the actual costs of damages or of repairing the damage; Avoidance Costs: that reflect the cost of preventing the damage Surrogate Market Based Opinion Based where actual impacts can t be measured, so proxies such as changes in property values (hedonic pricing) in areas of high traffic noise or extreme air pollution, are used Values taken from responses to surveys or expert opinions. These methods include a range of stated preference techniques which test the communities willingness to pay for an environmental gain or willingness to accept an environmental loss In general, tangible costs such as medical treatment costs are assessed using market-based methods whereas, intangible costs such as loss of quality of life or pain and suffering, are better assessed by opinion-based techniques. Average External Costs per traffic unit are estimated to allow comparisons between situations or modes. The usual per unit cost for passenger travel is vehicle passenger kilometres and for freight is tonne-kilometres i.e. the number of kilometres travelled multiplied by the number of tonnes carried. Table 3 suggested by Tsolakis and Houghton (2003) shows a range of environmental benefits estimated in this CSIRO Transport Futures 26 th CAITR, December 2004 page 9

manner for Australian conditions as an example. While some of these figures will be site specific and benefit transfer cannot really be applied to other sites, they do provide some indication of the potential scope and magnitude of the value of benefits. Table 3: Calibrated values of total environmental costs (2001 Australian Dollars). (Source: Tsolakis and Houghton, 2003) Cars (AUD$ per 1000 vehiclekm) Light Duty Trucks (AUD$ per 1000 tonne-km) Heavy Duty Trucks (AUD$ per 1000 tonne-km) Air Pollution 21 100 22 Noise (site specific) 7 23 3 Climate change 17 42 4 Nature and Landscape (site specific) Upstream/Downstream costs 9 50 4 29 140 16 Urban Separation Costs 5 22 2 Average 88 377 51 Note: Climate change costs are based on 8% CO 2 emission target Unfortunately a simple linking of cost per distance travelled for passenger vehicles or load by distance for freight vehicles will not suffice for estimating ITS benefits. As can be seen from Table 1 under the Better Traffic Management scenario, GHG, in CO2 equivalent emissions, fell but the distance travelled VKT actually rose slightly due to smoother traffic flows. Therefore estimating change in GHG cost using $ per 1000 vkt would indicate increased GHG cost when clearly less GHG should mean reduced costs. The first step in solving this problem is to assemble dollar costs for environmental impacts of transport based on effects rather than causes. Thus instead of basing GHG costs on distance travelled, they are based on emissions. Such methods of estimation are less used because they add complexity. It is no longer possible to simply add all the environmental costs per vehicle kilometre and multiply by the vehicles kilometres to get total cost. However simplicity in calculation is not an advantage if it gives a wrong answer. Thus a set of costs based on quantity of GHG emissions is being developed as are new estimates of the other environmental costs of transport, few of which are simply due to distance travelled. Fortunately as can be seen from Table 2 estimations of environmental damage are based on effects, for example willingness to pay to avoid air pollution, so it is possible to develop a set of benefits linked to emission and other effects of traffic. CSIRO Transport Futures 26 th CAITR, December 2004 page 10

The first of the estimates for this study relate to GHG abatement. Using the European Union abatement cost of 38 (A$65) per tonne of CO 2, which is based on a Kyoto protocol emission target of 8%, the monetary savings from reducing GHG and hence limiting climate change by ITS measures were calculated for CO2-equivalent emissions and scenarios for the Sydney of 1996. As can be seen, these benefits alone are significant and the total benefit from all environmental impacts will be greater. The challenge is to make sure that current estimates as well as long-term forecasts, drawn from multiple sources, are comparable with those of other benefits. Table 4: Indicative daily GHG savings due to ITS measures for 1996 Sydney Scenario Lower congestion Better traffic management Logistics changes Real-time traffic information Cars 96,700 21,300 5,300 27,000 Reduction from 1996 Base Case (2004 AUD) LCVs 1,800 1,500 14,100 2,400 Rigids 1,900 900 19,200 1,700 Artics 700 500 3,800 600 All vehicles 101,100 24,200 42,400 31,700 The data from this analysis, when used in conjunction with costing data for the implementation and operation of each of the scenarios will enable detailed economic analysis to assist policy decision makers and investors on whether to implement these technologies and where. This information would also form the basis of a better understanding of who the benefits are attributed to, as the basis for any cost sharing arrangements that may lead to public private partnership funding arrangements. CONCLUSION This paper has argued that since ITS can be retrofitted, existing infrastructure and vehicles can have wide spread impacts on the efficiency of all vehicles, old and new, large and small. ITS measures are particularly valuable for reducing the negative impacts of road traffic. However their value may be under-appreciated. In this context, it is particularly useful for planners and policy makers to have tools that estimate benefits. There are numbers of options available for estimation of local benefits of particular projects at micro level. At the other end of the scale, global estimates of benefits at macro level are available. However there is a need for meta-level estimation methods and tools to assess urban wide benefits of ITS, which can incorporate detailed examinations of network level impacts, since ITS implementations are CSIRO Transport Futures 26 th CAITR, December 2004 page 11

clearly location specific, but can also give the city wide assessment of impacts needed by policy makers. A potentially cost effective method for estimating daily benefits of ITS measures has been developed. While the case study application estimates GHG impacts for global warming, the detailed information on distances, times, fuel and emissions can have wider application in the estimation of other environmental benefits. However in common with other efficiency measures which reduce impacts without reducing travel, the benefits cannot be simply estimated using the typical costs by distance travelled, as impact changes while distance does not. There is value in developing methods which allow for this assessment of ITS for two reasons. First efficiency measures for ITS are particularly attractive when they limit the disadvantages of traffic while retaining the benefits of travel mobility for the community and access to goods and services for business and industry. Secondly, they can be implemented early and therefore have cumulative advantage over time. Ongoing research will provide methods for estimating those advantages. ACKNOWLEDGMENTS: The authors wish to thank Dr. John Wright and the CSIRO Energy Transformed Flagship for their continuing support for research on low energy vehicles and intelligent transport systems. The authors also wish to thank Dr. Rocco Zito and Prof. Michael Taylor of the Transport Systems Center (UNISA) for making the results of their emissions modelling work available for this study. Finally, the authors are grateful for the contributions and guidance on transport modelling for the Sydney GMR provided by the NSW Transport and Population Data Centre (TPDC). REFERENCES CSIRO, 2004, Energy Transformed. http://www.csiro.au/index.asp?type=blank&id=energytransformed, accessed June 2004. Batchelor, P., 2004 Transport Ministers Address at Victorian Supply Chain Summit. Melbourne, August 2004. ERTICO, 1998 Intelligent City Transport: a Guidebook to Intelligent Transport Systems Brussels: ERTICO European Commission, 2001 White Paper- European Transport Policy for 2010: Time to Decide http://europa.eu.int/comm/energy_transport/library/lb_texte_complet_en.pdf, accessed June 2004. ITS America, 2002, Delivering the future of transportation: the national intelligent transport systems program plan: A ten-year vision, January 2002. MLIT, 2003, ITS Handbook 2003-2004, Japanes Ministry of Land, Infrastructure and Transport, http://www.its.go.jp/its/topindex/topindex_c3.html, accessed June 2004. US Dept of Transport website www.benefitcost.its.dot.gov CSIRO Transport Futures 26 th CAITR, December 2004 page 12

EMME/2 Release 9.0 User s Manual, Inro Consultants Trips Website, http://www.citilabs.com/trips/index.html. accessed June 2004. HTS, 2001, Key Transport Indicators. Transport and Population Data Centre, http://www.planning.nsw.gov.au/tdc/indicators.html, accessed June 2004. CTS, 1996, Commercial Transport Study, Transport and Population Data Centre, http://www.planning.nsw.gov.au/tdc/comm-study.html, accessed June 2004. Envalue, 1995, A searchable environmental valuation database, NSW Environmental Protection Authority, http://www.epa.nsw.gov.au/envalue, accessed June 2004. Infras/IWW, 2000, External Costs of Transports - Accidents, Environmental and Congestion Costs in Western Europe, Union Internationale des Chemins de Fer UIR, Brussels. Tsolakis, D. and N. Houghton, 2003, Valuing environmental externalities, Proceedings of the 21 st ARRB and 11 th REAAA Conference, 18-23 May 2003, Cairns, Queensland, Australia. CSIRO Transport Futures 26 th CAITR, December 2004 page 13