Valuation of Time Savings
Travel time savings are a major benefit arising from investments in transport infrastructure. However, the lack of data regarding the economic value of time savings within a developing country mean that traffic assignments are done on a much cruder basis and the value of time savings omitted from appraisals. In such instances benefit estimates may be based on vehicle operating cost savings only. Such omissions will bias appraisals to favour schemes that reduce vehicle operating costs, rather than those which may reduce traffic congestion or induce a mode shift from slow modes, such as walking and headloading, to faster, motorised forms of transport.
The conceptual basis for valuing time is discussed in Section 1. Sections 2 and 3 discuss the theoretical basis for valuing work time savings and non-work time savings respectively, whilst Sections 4 and 5 discuss the value of time savings to buses and to freight. The manner that the value of time varies with time, the treatment of small time savings are presented in Sections 6 and 7. Section 8 sets out the manner that disparities between regions for values of time should be treated within the cost benefit analysis and the use of standard values of time. Section 9 summarises the practical methodologies that should be used for the estimation of travel time savings, whilst Section 10 summarises the key recommendations of this note.
World Bank, Washington D.C., USA. Transport Note No. TRN-15, 13 pp.