Overcoming the Inferiority Complex: Demonstrating the Value of Active Transport

Overcoming the inferiority complex: demonstrating the value of active transport
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Overcoming the inferiority complex: demonstrating the
value of active transport
Ian Ker
CATALYST (Consulting in Applied Transport, Access and Land use sYSTems)
92 Vincent Street, Mt Lawley, Western Australia, 6050
catalystian@netscape.net
Abstract:
Most jurisdictions now have policies supporting greater use of active transport (walking and cycling).
Despite this, programs often have difficulty either getting or sustaining the level of funding necessary
for achieving the objectives of those policies.
Despite decades of published research and analytical studies of the value of walking, cycling, active
transport and travel behaviour change, transport planners are often strangely reluctant to accept that
these alternatives to the car perform as well as or better than car-based or public transport
investments. It’s almost as if we don’t believe our own rhetoric. This is, paradoxically, reflected in the
insistence on monitoring and post-evaluation of many travel behaviour change projects, as though
previous evaluations are unreliable. Perhaps ironically, these post-evaluations provide a body of
research and analysis that consistently shows walking and cycling to be effective and valuable
alternatives to driving the private car for sufficient of our daily travel to be at least as worthwhile
investing in as more conventional transport projects.
In recent years, the ability to demonstrate the value of active transport has been enhanced by
research into the value of congestion-reduction and health effects, which can be more than half the
total benefits.
This paper uses recent research to demonstrate that the socio-economic case for investment in active
transport has been sufficiently articulated and quantified that a more streamlined model of public
sector decision-making is warranted and required. Such a model might be based on a program rather
than project approach, with ex-ante appraisal of projects in a program context, and simpler, less costly
monitoring of effectiveness and outcomes.

VeloCity Global Conference, 27th-30th May, 2014: Adelaide, South Australia
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Introduction
…cost-benefit analyses of cycling infrastructure projects, as well as of other cycling
measures, are a useful instrument to assist decision-making. On the other hand,…while a
good basis for decision-making may have been established, the methodology, parameters,
and traffic models are all less evolved than those used for cost-benefit analyses of large
infrastructure projects. …there should be follow-up research in this area.
http://www.fietsberaad.nl//index.cfm?lang=en&section=nieuws&mode=newsArticle&repository=Cost-
benefit+analyses+also+possible+for+cycling+projects#Comments
Most jurisdictions now have policies supporting greater use of active transport (walking and cycling).
Despite this, programs often have difficulty either getting or sustaining the level of funding necessary
for achieving the objectives of those policies. In Western Australia, for example, the recent review of
the 1996 Perth Bicycle Network Plan (which was, itself a review and regeneration of the 1985 Perth
Bikeplan) identified a lack of sustained funding as a primary reason for the non-completion of the
planned network of bicycle routes for the Perth Metropolitan Region (DoT, 2012).
Figure 1 Funding and cost-escalation for bicycle infrastructure: Perth, WA
Source: DoT (2012, p20)
The National Cycling Strategy, 2011-16 (Australian Bicycle Council (ABC), 2010) included in its six
objectives to ‘improve monitoring and evaluation of cycling programs and develop a national decision-
making process for investment in cycling’.
One of the resulting actions from this was that ‘The ABC will develop an agreed decision-making
process, including a robust basis for assessing the costs and benefits of investment in cycling’ (p25).
It is the thesis of this paper that such a basis already exists and includes work previously undertaken
for the ABC itself (Ker and Sidebottom, 2005). Whilst there is still some work to be done to improve
some details (eg the unit value of health benefits), the methodology is sufficiently advanced to be used
in decision-support and, importantly, is entirely consistent with the methodology used to evaluate road
and public transport investment and hence can be used to support funding decisions across the whole
of transport, not simply to prioritise within bicycle programs.
There is no shortage of guidelines for the appraisal of walking and cycling (ATC, 2006; NCHRP, 2006;
NZTA, 2010; DfT, 2010). Even travel behaviour change has started to appear in the guidelines (NZTA,
2010).
The problem lies in the application and acceptance of these and similar guidelines as part of the
decision-making process.

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Walking, cycling, travel behaviour change and transport planning
For many years, transport planning was ruled by a ‘predict and provide’ paradigm, which essentially
meant predicting future transport demand and providing the network to accommodate it. This
approach:
 Typifies the limited, physical-determinist, view of land-use/transport interaction that has
characterised urban planning for the past half-century or so. In this, the spatial distribution of land
uses generates a demand for movement and the role of transport is to facilitate that movement at
minimum (or, at least, acceptable) cost. It ignores the role of perceptions.
 Favours those modes of transport that are most compatible with the scale and resolution of the
land use planning process (motorised modes), to the detriment of the fine-grain and access
through proximity using non-motorised modes.
Evaluation and public policy
Good public policy and associated programs require comprehensive evaluation of all impacts (benefits
and costs) to allow decision-makers to understand the full effects of the alternatives they must choose
from. Comprehensive evaluation helps identify the options that are optimal overall, and helps avoid
solutions to one problem that unintentionally exacerbate other problems facing society or have
unintended consequences.
Wherever choices have to be made, some form of assessment or evaluation must be undertaken,
unless the choice is purely random or based on personal opinion. Sometimes, however, the evaluation
is implicit, rather than explicit, and the real basis known only to the person making the decision.
Often evaluation is incomplete, using one or a small number of criteria rather than the full range of
issues the community would wish to be considered. This may be the case where public commitments
are made without full knowledge of the implications or where a particular objective is, at the time, seen
as paramount. It is also the case where a decision is made on the basis of a single form of
assessment, such as benefit-cost analysis, without consideration of the limitations and exclusions of
such a methodology. This raises questions about the extent to which evaluation should be technically
or professionally driven and the appropriate role for stakeholders and the community.
Evaluation and transport
In assessing “reforms and investments which are vital to ensure Australia’s economic [includes
transport] infrastructure continues to support and drive the nation’s economic, social and
environmental success”, Infrastructure Australia (2010) requires a combination of benefit-cost analysis
and other methods, demonstrating:
 Robust and objective Cost Benefit Analysis which is supported by strong evidence.
 Consideration of as many monetised economic benefits and costs as possible.

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 All benefits and costs are economic impacts and not simply transfers, second round effects, or
financial in nature; all impacts are incremental; and all are directly associated with the initiative.
 Consideration of non-monetised benefits and costs. Where impacts cannot be robustly expressed
in money units (‘non-monetised’), Infrastructure Australia will nevertheless incorporate them into
the appraisal process and requests proponents to provide supporting information on the scale of
these impacts.
 Consideration of both the overall efficiency of an initiative (the combined scale of benefits and
costs), as well as its equity and distributional impacts.
 Consideration of issues of risk and uncertainty. Infrastructure Australia is fully aware that the
future cannot be predicted with certainty, and that economic growth, individuals’ behaviour, oil
prices, carbon prices and so on may vary over time. To ensure that the appraisal process is
robust to potential changes, Infrastructure Australia requests a series of sensitivity tests of the
demand modelling and Cost Benefit Analysis results.
It is a fundamental principle of transport economics that the demand for transport is a derived demand.
In other words, transport and travel are not valued for their own sakes but for what they enable us to
achieve (e.g. travelling to work, visiting friends etc). That being so, there are circumstances in which
we seek to minimise the amount of transport (to achieve given outcomes) as well as occasions when
‘more is better’ (if the range of outcomes is increased).
Evaluation and active transport
In the case of cycling and active transport initiatives, there has been a tendency to emphasise the
environmental and social benefits, some of which are difficult to quantify and can be contentious as to
their existence, when the economic benefits are much larger than either and can be readily quantified.
Generic depiction (DoT, 2012) Real benefits (Ker, 2012)
Components of a Business Case
A business case must ensure that all significant costs and benefits are identified – even if they cannot
all be measured and valued – lest they be otherwise overlooked. A complete and robust framework is
required to quantify the benefits of cycling, to provide a comprehensive evaluation to assist public
policy decisions across government.
Benefit-cost analysis
Benefit-cost analysis (BCA) is the conventional way of evaluating transport and other public sector
investment proposals. BCA compares the upfront cost of a proposal with the stream of benefits it
generates for the community and provides a straightforward means of comparing projects that require
investment of resources. Benefit-cost analysis does, however, have limitations, principally in dealing
with emerging issues that either cannot be quantified or, more particularly, are unable to be given
reasonable monetary values.

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Impacts of cycling that can be covered by benefit-cost analysis
Costs Benefits
Infrastructure improvements Reduced private motor vehicle operating costs
Associated encouragement and
behavioural programs
Maintenance of infrastructure (usually
assessed as a negative benefit to be
offset against the upfront program cost)
Operating cost for additional cycling trips (negative benefit)
Reduced public transport operating costs (to the extent that
cycling trips were previously made by public transport.
Reduced road traffic congestion costs
Reduced car parking costs – where demonstrable impact on
parking requirements and provision is found
Reduced travel time – private and commercial
Road trauma – net effect of reduced car crashes and increased
cycle incidents
Reduced transport contribution to climate change
Reduced air pollution
Reduced traffic noise
Reduced water pollution
Improved health and fitness not already included in air, noise and
water pollution costs.
Financial and distributional analysis
Increases in active transport have financial implications for governments and for those who make the
change from car to active modes. The most substantial benefits accrue to those who change their
travel behaviour, largely through savings in car operating costs, but the financial effects on both
federal and state governments are also strongly beneficial, largely through reduction in health system
costs.
Financial and distributional analysis allows clear identification of those effects that are net zero in BCA
because they represent a cost to one part of the community and a benefit to another (eg public
transport fares or car parking charges).
Financial effects of additional cycling
Government
Federal State/Local Business Individual
Infrastructure (a) X
Associated encouragement/behavioural programs X
Private vehicle operating costs
Operating cost for additional cycling trips X
Public transport costs
Congestion costs
Car parking costs
Travel time – private and commercial Not a direct financial cost beyond those of congestion.
Transport contribution to climate change Not a direct financial cost
Air pollution (b)
Traffic noise Not a financial cost
Water pollution Not a direct or quantifiable financial cost
Health and fitness (b) (c)
Note: Signs indicate either higher (RED) or lower (GREEN) financial costs to the stakeholder.
(a) Assumes no Federal government contribution to infrastructure, but costs could be shared.
(b) Financial cost to the health system, which is funded from Federal and State Governments and private individuals.
(c) Includes road trauma impacts

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Community analysis
Not all outcomes of increased cycling can be expressed in monetary terms or, in some cases, even
quantified. Community analysis acknowledges the extent of impacts for individuals, households,
business or government that cannot be fully captured by benefit-cost analysis. Although these
assessments should be regarded as indicative rather than precise, no negatives have been identified.
Business Case Framework for Cycling
A comprehensive business case requires consideration of four elements:
 The increase in cycling activity that will be generated;
 The cost of achieving that increase cycling activity;
 The full range of outcomes across public and private sectors, community and individuals; and
 Identification and, where possible, quantification of benefits, including estimation of monetary
values.
It is also important to identify when benefits will effectively accrue – for example, traffic congestion
reduction will occur immediately but health and fitness benefits will accrue progressively with
continuing cycling activity.
Framework for estimating the benefits of cycling
Level of cycling activity
The most difficult component of this framework to quantify is the change in cycling activity, largely
because data are so poor in many places and also because cycle networks are often incomplete and
network-completion effects can be substantial. It is also not easy to identify diversion, as distinct from
generation effects, which requires screenline data.
However, it is possible to use time-series data, including counts at specific locations, to estimate the
effects of infrastructure on cycling activity.

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A kilometre of high standard shared path (Principal Shared Path – PSP) can generate up to 425,000
additional cycle-km per year in inner/middle areas. Allowing for a lower level of usage in outer areas,
three kilometres of PSP would deliver an additional 1 million cycle-km per year.
Effect of Principal Shared Path extension on cycling activity.
Source: Ker, (2012). Derived from Perth Bicycle Network Counts. Bikewest, Department of Transport:
Government of Western Australia. http://www.transport.wa.gov.au/cycling/19930.asp
Useful information can also be derived from differential growth of cycling activity on poor cycling
facilities relative to others serving essentially the same market. In the diagram below, the Causeway
path is narrow, close to traffic and poorly maintained. It primarily serves commuters to the Perth CBD,
but has not shared in the growth of cycling to work.
Effect of sub-standard facilities on cycling growth
Cost
The most expensive cycle infrastructure in Perth is the Principal Shared Path (PSP), estimated to cost
around $1.15 million per kilometre on average.
A ten-year, 1 million cycle-km/year program based on PSPs would have a present value of cost of
$25.9 million (7% discount rate) to $30.9 million (2.5% discount rate).

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Other cycle facilities are both less costly than PSPs and generate lower levels of usage. For example:
 Conventional shared paths cost approximately $120,000 (2 metres wide) to $165,000 (2.5 or 3
metres wide) per kilometre (10-14% of a PSP); and
 On-road bicycle lanes cost approximately $75,000 per kilometre (7% of a PSP).
The 1996 Perth Bicycle Network Plan was estimated to cost around $230 million in 2011 prices. With
the growth of Perth, the planned PSP network has been expanded to include extensions to the
suburban passenger rail and freeway systems and also to include Controlled Access Highways (Reid,
Roe and Tonkin). This means that 145km remains to be constructed, with 112km already having been
completed.
Multi-sectoral outcomes
As societies confront the economic, social and environmental effects of climate change, population
growth, traffic congestion and the burden of chronic disease, there is a unique opportunity to view the
benefits of active transportation through a multi-sector lens. …Studying the co-benefits of policy
options however is at the nascent stage. …The language of co-benefits is useful as it helps break
down policy silos and presents additive (rather than discrete) benefits that could be incorporated in
economic analyses to assess cost-effective strategies.
(Giles-Corti et al, 2010)
The Australian National Cycling Strategy (ABC, 2010) identifies a range of societal and individual
benefits from cycling, including:
 Reducing traffic congestion and improving the quality of life in Australia’s cities;
 Environmental benefits including reducing the carbon emissions from transport;
 Improving health outcomes and reducing pressure on health services by increasing people’s
physical activity;
 Saving time and money; and
 Providing new opportunities to meet people and build a community’s social capital.
Cycling is more than a transport or recreational activity. It supports a wide range of community and
individual objectives and delivers outcomes ranging from lower-cost transport to improved individual
and community health and local and global environmental improvements.

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Identifying and valuing the benefits
An investment in cycling (the cost) creates an asset (the infrastructure) that in turn creates a
continuing stream of benefits.
Values for Benefit-Cost Evaluation: Resource costs (a) – 2010 prices
Item Application 2010 2021 2031
Car Operating Costs Per car-km 17.0 cents 21.26 cents 24.96 cents
Public transport
operating costs
Bus: per passenger-km 12.6 cents 12.6 cents 12.6 cents
Train: per passenger-km 8.6 cents 8.6 cents 8.6 cents
Bicycle operating costs Per cycle-km 1.7 cents 1.7 cents 1.7 cents
Congestion Peak/heavy traffic: per car-km 29.7 cents 56.0 cents 104.2 cents
Moderate traffic: per car-km 21.1 cents 39.6 cents 74.1 cents
Off-Peak/light traffic: per car-km 5.6 cents 10.5 cents 19.7 cents
Car Parking (b) Per workday $8.55 $8.55 $8.55
Per cycle-commute-km 54.8 cents 54.8 cents 54.8 cents
Road Trauma Car travel; per car-km 6.5 cents 6.5 cents 6.5 cents
Public transport; per passenger-km 0.85 cents 0.85 cents 0.85 cents
Cycling; per cycle-km 18.2 cents 18.2 cents 18.2 cents
Climate Change Car travel; per car-km 2.00 cents 1.80 cents 1.40 cents
Bus; per passenger-km 0.79 cents 0.71 cents 0.55 cents
Train; per passenger-km 1.05 cents 1.05 cents 1.05 cents
Walking and cycling: per km 0 0 0
Air Pollution Car travel; per car-km 2.81 cents 2.53 cents 1.97 cents
Bus; per bus-km 31.69 cents 28.52 cents 22.18 cents
Train, walking and cycling 0 0 0
Traffic Noise Car travel; per car-km 0.91 cents 0.91 cents 0.91 cents
Water Pollution Car travel; per car-km 0.42 cents 0.42 cents 0.42 cents
Health and Fitness (c) Cycling; per cycle-km (benefit) 49.0 cents 60.9 cents 74.3 cents
Car, bus and train 0 0 0
(a) Distinguished from financial cost by exclusion of indirect tax (Excise on fuel; Goods and Services Tax).
(b) Calculated only for Perth CBD.
(c) Accruing progressively over a five-year period following the intervention.
The Business Case for Cycle Infrastructure in Perth, WA
Why Invest in Cycling?
 Cycling is a low-cost, low-impact means of independent local transport that is available to most
people, including those too young to hold a driver’s licence for a motor vehicle.
 Western Australians own almost as many bicycles as cars, with an average of 1.58 bicycles per
household, higher than the Australian average of 1.46.
 Nearly half (45%) Western Australians ride a bike at least once a year, indicating a willingness to
use the bicycles they own, but only half the annual users actually used their bikes in a typical
week (ABC, 2013).
 Despite their high rate of bicycle ownership, Perth people make only 2% of trips by bicycle
(PARTS, undated).
 The main reasons for non-cyclists not riding a bicycle relate to safety/traffic and the physical
environment (TNS, 2008). This can be addressed by provision of suitable cycle infrastructure.

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 The Perth Bicycle Network, which was identified and planned in 1996, is incomplete and planning
has not kept pace with the growth of the Perth Metropolitan Region. Bicycle routes are often not
continuous and substantial areas of Perth do not have effective regional bicycle networks.
 Regional towns and cities similarly suffer from incomplete cycle networks.
The scenario
The business case is based on the generation of an additional 1,000,000km of cycling per year on
workdays and identifying what it would be worth to the community and to specific stakeholders. To put
this into context, 1,000,000 additional cycle-km represents:
 0.10% of existing motorised travel in Perth; and
 1.21% of existing bicycle travel in Perth.
This scenario for evaluation, therefore, is small relative to the existing transport task by any mode and,
importantly, in comparison to targets for increasing bicycle use.
An effective cycle encouragement program, including both infrastructure and non-infrastructure
components, will be a multi-year program. The principal results are based on a 10-year program, each
year of which would deliver an additional 1 million cycle-km plus a further 5% a year growth induced
by the availability of high standard cycling facilities. With population growth of 1.4% per year, there
would be an additional 5.7 million cycle-km per year after 5 years and 13.4 million after 10 years.
Additional cycle travel is assumed to come from motorised travel in the same proportion as current
usage (PARTS, undated):
 630km from car driving;
 325km from car passenger; and
 45km from public transport.
The second part of the business case involves estimation of the amount of investment in infrastructure
and associated programs to achieve that increase in cycling activity.
For country urban centres, public transport performs a much smaller role and can be discounted as a
previous mode for new bicycle travel.
Benefit-cost analysis
Investment in high-standard bicycle infrastructure, reinforced by behavioural programs to encourage
cycling and improve the safety of cyclists, will deliver benefits for the community 3.4 times the costs
incurred.
With a greater level of concern for sustainability and the longer-term future, the community benefits
are 5.4 times the costs.
These rates of return are higher than those achieved by most urban transport investments.
On an annual basis, the benefits range from 14.5-37.8 cents per cycle-kilometre in the first year to
59.5-96.3 cents per cycle-kilometre in 2021. The range for each year reflects increasing road traffic
congestion and the extent to which car parking provision can be reduced. The increase from the first
year to 2021 reflects the increasing real cost of petrol and traffic congestion as well as the progressive
accumulation of health benefits over time for any individual.
Cycling and other forms of active transport deliver a wide range of individual and community benefits
in terms of:
 Low operating cost;
 Negligible contribution to traffic congestion;
 Compact parking requirements;
 Contribution to health and well-being, which outweighs the road trauma rates for cyclists; and
 Negligible contribution to pollution including air (exhaust & greenhouse gas emissions) and noise.

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An additional one million cycle-kilometres will generate benefits with a value of $420,000 (42 cents per
kilometre) in the first year. A one-off increase of one million kilometres a year, maintained over 25
years, will, with population growth of 1.4% per year, generate benefits with a present value of $11.4
million.
A 10-year program to increase cycling by 1,000,000km on workdays each year (10 million kilometres
per year extra after ten years), spread equally between inner, middle and outer suburbs, will generate
benefits with a present value of from $44 million (over 15 years) to $74 million (over 25 years). This
value has been calculated on the same basis as the evaluation of conventional transport infrastructure
projects, such as roads and public transport, with benefits in future years discounted at the WA
Treasury-specified rate of 7% per year.
Good practice in project evaluation, endorsed by the Australian Transport Council of Ministers (ATC,
2006), suggests that the appropriate discount rate is around 2.5%, which is also more consistent with
the concept of long-term sustainability. Using this 2.5% discount rate, the benefits increase to $67
million (15 years) to $139 million (25 years).
High-standard bicycle infrastructure increases the rate of growth of cycling as well as the level of use
at the time of construction (Ker, 2009). The growth of cycle usage between 1998 and 2010 at key
parts of the Perth Bicycle Network has been:
 15.0% per year (12-hours) and 15.6% (3-hours, 0630-0930) for the Perth CBD Cordon; and
 4.1% per year (12-hours) and 7.6% (3-hours, 0630-0930) for the Fremantle Cordon.
Taking a conservative 5% per year growth induced by good cycling facilities, the present value of
benefits becomes:
 $88 million over 25 years at 7% discount rate; and
 $167 million over 25 years at 2.5% discount rate.
In Western Australia, consistent with the Perth Bike Ahead strategy and the Australian National
Cycling Strategy 2011-2016, cycle infrastructure programs are supported by behavioural initiatives.
Measured increases in cycle usage must be attributed to the mix of infrastructure and behavioural
programs. If behavioural programs were to be funded to the extent of 10% of the infrastructure cost,
the overall benefit-cost ratio (BCR) would be:
 3.4:1 over 25 years, at 7% discount rate; or
 5.4:1 over 25 years, at 2.5% discount rate.
In comparison, the draft 20-year public transport strategy for Perth (DoT, 2011) identified benefits
valued at 1.8 times the costs.
The benefits are widely spread across the range of economic, social and environmental areas, with
two-thirds being in the key economic areas of transport operating costs, road traffic congestion and
car parking (Figure 2). Although the ‘road trauma and health’ benefits include some increase in road
trauma, because of the current high crash and injury rates for cyclists, the injury risk will improve with
better infrastructure and health improvements for those who take up cycling are more than three times
the additional road trauma.
Figure 2 Cycling benefits by sector
29%
32%
14%
20%
5% Transport
operating costs
Congestion
Car parking
Road trauma and
health
Environment

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A conventional shared path would need to generate 10 to 14% the number of additional cycle trips (35
to 50 per day1) as a PSP to achieve the same level of benefits relative to cost.
Similarly, an on-road bicycle lane would need to generate 7% the number of additional cycle trips (25
per day) as a PSP to achieve the same level benefits relative to cost.
These levels of usage are well within the range of outcomes achieved by well-planned and well-
designed cycle facilities of these types in Perth.
In practice, the return from investment in bicycle facilities is best assessed at a network level. The
components of a network will depend upon a range of factors including:
 the likely levels of demand;
 inter-relationships between components of the network; and
 the opportunities that are available.
Financial and distributional analysis
Investment in high-standard bicycle infrastructure, reinforced by behavioural programs to encourage
cycling, will deliver financial returns for the community more than twice the costs incurred.
Two-thirds of these financial benefits accrue to individuals and households, providing the equivalent of
a tax cut to those who change from car-driving to cycling, while also reducing traffic congestion for
those who do not.
1
0.10 * 333,000 cycle-km / 250 workdays per year / 3.7km per trip = 36 trips per day. 0.14 * 333,000 cycle-km / 250 workdays
per year / 3.7km per trip = 50 trips per day
Charles the City Commuter
Charles rides 10km to work in the City every day. Not only does he feel good, his improved health
and fitness means he visits the doctor less often than his colleagues, saving him $200 a year in
medical costs.
Occasionally, he does need to drive to work (sometimes, he admits, just to avoid the rain), but if
he drove to work every day, instead of once a week, he would be paying out:
- an extra $700 a year in car running costs (rising to over $1,000 with higher petrol prices); and
- an additional $2,000 a year or more simply to park his car.
His cycle commute takes 30 minutes, mainly using the path alongside the freeway he would
otherwise be driving along. Often he is travelling faster than the cars stuck in the peak freeway
traffic. When he arrives, he has a quick shower and starts the day energised and refreshed. When
he drives, he spends 15-20 minutes parking his car and getting to the office from the car park
Charles calculates that his cycle journey to work takes little longer than driving – and it saves him
a couple of hours a week going to the gym.
Charles’ employer also notices the difference. Employees who are more physically active are
more alert and productive and take fewer days off work.
Peter Park’n’Rider
Like half of his fellow park’n’riders, Peter lives less than 3km from the station he drives to every
day. When he starts to cycle to the station instead, he is immediately up to $275 a year better off –
rising to $400 or more as the price of petrol continues to increase.
There is another car at home, used by his wife during the day, so he may be able to sell the 5-
year-old car that stands idle all day at the train station, making him up to $3,000 a year better off.
The State Government also benefits, by as much as $25,000, as it only has to provide a secure
bike parking place rather than what will often, in the future, be a decked car parking space at the
train station.

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A change from car driving to cycling will have financial consequences, in addition to the actual cost of
the program, for the WA State Government, the federal government and the individuals and families
who change their travel behaviour. These impacts relate to:
 Lower car operating costs for individuals and households;
 Public transport fares and operating costs (where public transport demand is affected);
 Where car parking is a scarce resource (in the CBD and major activity centres), there will be an
impact on the cost of and revenues from car parking.
 Lower cost of health services through improved health and fitness;
 Lower cost of health services through reduced exposure to air pollution; and
 Changes in net GST revenue for federal and state governments, because of the different
arrangements applying to the GST on motor vehicle fuel.
An additional one million cycle-kilometres will generate net financial benefits with a value of nearly
$240,000 (24 cents per kilometre) in the first year alone. A one-off increase of one million kilometres a
year, maintained over 25 years, will generate financial benefits with a present value of $6.9 million.
A 5-year program to increase cycling by 1,000,000km each year (5 million kilometres a year over five
years), spread equally between inner, middle and outer suburbs, will generate financial benefits with a
present value of from $18.3 million (over 15 years) to $29.7 million (over 25 years). This value has
been calculated on the same basis as the evaluation of conventional transport infrastructure projects,
including discounting benefits in future years at the WA Treasury-specified rate of 7% per year.
Investment of $17.3 million in cycle infrastructure, plus a further $1.7 million in behavioural programs
over five years has a present value of $15.3 million. This would deliver an overall financial return of
nearly 200%, including:
 $19 million to individuals and households (125% of the cost);
 $4 million to the State Government (25% of the cost); and
 $7 million to the Federal Government (45% of the cost) (Figure 3).
The financial return to users is largely through the saving in car operating costs and car parking
charges in the CBD. The return to both Federal and State governments is through the saving in health
system costs that will result from improvements in health and fitness (Figure 4).
Figure 3 Who benefits financially? Figure 4 Areas of financial benefit
-5
0
5
10
15
20
25
30
35
40
Federal
Gov't
State Gov't Parking
Provider
Individual
Presentvalue(25years@
7%):$million
0
5
10
15
20
25
30
Transport
user costs
Car parking Transport
provider
Health costs
Presentvalue(25years@
7%):$million
Mary of the Middle Suburbs
Mary lives 5km from the Stirling Regional Centre and works part-time in a retail store. At present
parking is free and public transport is inconvenient, especially for her journey home in the middle
of the day, so she drives to and from work.
Cycling to work would save Mary $450 a year (nearly $700 with more expensive petrol).
She can’t do without her car, as she needs to take her two children to and from school. If their
school had safe cycle routes, Mary would consider selling her 10-year old car, giving her a couple
of thousand dollars in-hand and saving $1,000 a year in registration and insurance.

14
Community Analysis
Some benefits of cycle infrastructure and behavioural programs cannot be fully-quantified or converted
into the monetary values necessary for benefit-cost or financial analysis.
Benefit-cost analysis and financial/distributional analysis are important indicators of the value of an
activity to individuals and the community, but they do not necessarily tell us all we need to know. A
complete picture of the impacts on the community requires a means of acknowledging the importance
and extent of impacts that cannot be quantified or expressed in monetary terms.
An Appraisal Summary Table summarises information on the full range of economic, environmental
and social impacts of an activity or initiative, allowing decision-makers to decide its worth, without
restriction to those outcomes that can be given monetary values.
An important purpose of the appraisal summary table is to identify where negative or poor outcomes
may arise and provide the opportunity for the project or program to be modified in such a way that
these are wholly or partially avoided.
For cycling the only current negative is the higher crash and injury rates than for car use, but this is
more than outweighed by improvements in health and fitness. With more cyclists, the crash/injury
rates will fall as there is ‘safety in numbers’ and more experienced cyclists are safer cyclists. The
health and fitness benefits are not solely for those who take up cycling instead of driving; those who
continue to drive and the community generally benefit from reduced exposure to air pollution.
The short-term assessment is more robust than the medium-long term assessment. Although some
effects take time to accrue (especially health effects, which can take five years to accrue fully), the
longer-term outcomes depend critically on the extent to which the switch from motorised travel to
cycling is maintained. High quality infrastructure is a proven way of both creating and maintaining
increased cycle usage.
Community analysis for increased cycling
Strategic Objective Contribution of Increased Cycling
Strategic Alignment. Initiatives to increase the role that cycling plays in getting around our towns
and cities support and are supported by all current strategic transport and
land use directions, including Directions 2031.
Economic and Financial. Cycling is a low-cost transport mode for users and government.
Increased cycling reduces the financial cost of transport for those who
change and traffic congestion for all road users.
Environment. Cycling has very low environmental impacts.
Increased cycling reduces air pollution, greenhouse gas emissions and
traffic noise.
Social: Amenity, People and
Communities.
Cycling supports local communities and reduces the impacts of motorised
traffic.
Those who cycle are fitter and healthier and are more productive at work.
Safety. Good cycling infrastructure reduces the complexity of traffic interactions.
The more cyclists, the safer they are, through the ‘safety in numbers’
effect.
There are benefits to existing cyclists as well as new cyclists.
Governance and Feasibility Mechanisms are already in place for state and local governments jointly to
implement a network of bicycle facilities.
There is strong community support for safer cycling facilities.
Risk Assessment
All initiatives carry risks that intended outcomes may not be achieved or that unintended ones (positive
or negative) may arise or that the process designed to achieve the outcomes is more difficult than
anticipated. A business case should:
 Identify risks and assess their likelihood and consequences; and
 Identify and assess management strategies.

15
In the case of investment in cycling infrastructure, any risk of the potential usage increase not being
achieved is substantially reduced by the substantial past investment that is not yet delivering its full
potential because of incomplete implementation.
The more substantial risk is that network development and related programs will be left unfinished,
thus limiting the extent to which cycling can be seen as an everyday mode of transport that is
potentially suitable for many of the short-medium length trips most of us make every day.
The full benefits of investment in cycling infrastructure and related programs will only be achieved with
long-term commitment to fund such programs in both the Perth/Peel regions and in the non-
metropolitan areas of Western Australia.
Table 1 Risks, likelihood and consequences
Risk Likelihood Consequences Management
Non-completion of
cycling
infrastructure
program
Medium  Anticipated levels of
usage will not be
achieved
 Transport systems will
be less robust (eg to oil
price/availability)
 Program projects to maximise
connectivity of network at any
stage
 Maximise support for the program,
including bipartisan political
support
Delays to program Medium-high  Anticipated levels of
usage may not be
achieved
 Establish long-term funding
commitments
 Create strong constituency of
support through users and
potential users
Increases in costs Medium  Program may be
curtailed or delayed
 Minimise delays to program
 Flexible design and materials
standards, including staging within
individual projects where feasible
(eg delaying grade separation)
External factors
that make cycling
less (or more)
attractive
Low (’less’)  Support for program may
decline
 Cyclist level of service is
higher
 Monitoring of potential affecting
factors
 Argue that infrastructure program
is justified even at lower levels of
usage
 Preparation/planning for higher
cycling demand (eg if oil price
increases substantially or health
concerns from inactivity become
more pressing)
Medium-high
(‘more’)
 Support/pressure for
expanding the program
 Cyclist level of service
declines

How Much Investment Is Required
In Western Europe, network-wide segregated facilities supported by traffic calming on the highway
network appears to offer an effective system-wide approach to increased levels of cycling and lower
casualty risk. Piecemeal implementation of such an approach however is unlikely to be satisfactory
and careful consideration needs to be given as to the best sequence in which to introduce measures.
Achieving a functional network for cyclists in urban areas based on these continental principles would
require:
 Sustained investment over decades;
 A willingness to prioritise cycle traffic;
 A multi-faceted approach seeking to increase cycle safety and cycle use together; and
 A focus on achieving high-quality outcomes.
Reid and Adams (2010)

16
Cycle networks in Australian towns and cities are incomplete, often fragmented and have not kept
pace with population growth. $267 million over 10 years is required to create continuous, convenient
and comprehensive cycle networks in WA cities, towns and other urban areas. Up to a further $27
million is needed for related safety and encouragement programs.
Of the total $294 million, $45 million (15%) is for places outside the Perth/Peel Metropolitan Area.
Recently-announced increases in the anticipated future population of both the Perth/Peel Region and
the rest of Western Australia indicated that the total requirement is likely to be $338 million ($290
million for Perth/Peel and $48 million for the remainder of WA.
The following estimates of the cycling infrastructure and related investment need for Perth/Peel and
for non-metropolitan Western Australia are based on previous planning, which in turn is based on the
then-existing projections of population and development. Whilst the anticipated population levels were
often not explicit in bicycle planning documents, it is significant that current projections of population
(WAPC, 2012) are substantially higher than those published in 2005 (WAPC, 2005) and used as a
basis for planning since then.
 The population for the Perth/Peel Region in 2026 is now expected to be 2.44 million, 16.5%
higher than the equivalent projection made in 2005.
 The population for non-metropolitan WA in 2026 is now expected to be 617,000, 6.0% higher than
the equivalent projection made in 2005.
These increases in anticipated future populations will require substantial investment in all modes of
transport. In the Perth and Peel regions, in particular, for which there is a target of 47% of new
dwellings to be in existing developed areas, the higher future population translates into substantial
increases in population and activity densities and, hence, in the levels of access and mobility
demands. Higher densities, especially in conjunction with mixed-use development promoted in
Directions 2031 (WAPC, 2010), also translate into a greater number of shorter journeys for which
cycling is a feasible option provided suitable infrastructure is provided.
To reflect the most recent population projections (WAPC, 2012), the calculated cycling investment
needs derived from previous planning have been increased by 16.5% for Perth/Peel and 6.0% for non-
metropolitan WA.
Perth and Peel
WA state and local governments have already invested substantial amounts in the Perth Bicycle
Network, but the value derived from this investment is limited by:
 remaining gaps in the network (see, eg, Table 2 for status of Principal Shared Paths (PSPs) in
Perth); and
 the lack of similar planning and provision for areas developed since 1996.
The cost of these outstanding PSPs is estimated to be $168 million (in 2010 prices), of which:
 $98 million is for PSPs included in the Perth Bicycle Network Plan; and
 $70 million is for routes subsequently upgraded to PSPs (and not costed in the PBN).
Table 2 Extent of completion of planned principal shared paths
Principal Shared Path Total distance
(km)
Completed
(km)
Outstanding
(km)
Perth Bicycle Network Plan 151.2 66.3 84.9
Perth-Fremantle 18.0 6.6 11.4
Perth-Midland 17.1 7.9 9.2
Perth-Armadale 28.5 7.1 21.4
Mitchell Freeway 28.8 11.3 17.5
Kwinana Freeway 58.8 33.4 25.4
PBN Routes Upgraded to PSPs 106.9 46.3 61.0
Roe Highway 43.6 25.4 18.2
Tonkin Highway 42.4 18.1 24.3
Reid Highway 21.3 2.8 18.5
ALL Principal Shared Paths 162.1 112.6 145.9

17
Stage 3 of the PBN included non-PSP expenditure equivalent to 50% of the PSP expenditure,
implying an outstanding requirement for $49 million of investment. With the growth of Perth since
19962, this amount increases to $58 million
The total cost to state government of this infrastructure would be $226 million.
Over a ten-year period, this represents $22.6 million per year, in 2010 prices.
Within this, priority should be given to completing the network that has already been started, namely
the PSPs and the associated Stage 3 projects as set out in the original Perth Bicycle Network Plan.
Infrastructure investment should be accompanied by ongoing safety and encouragement programs to
ensure that potential cyclists are aware of the improvements and are able to take advantage of them.
These programs should be funded to the extent of up to 10% of the cost of the infrastructure itself,
making a total of $249 million (roughly $25 million per year) for cycling programs in the Perth and Peel
Region.
Allowing for the recently-announced increase in the anticipated future population (WAPC, 2012), the
program for the Perth/Peel regions should be increased to $290 million ($29 million per year for 10
years).
Within this, priority should be given to:
 Completing the network that has already been started, namely the PSPs and the associated
Stage 3 projects as set out in the original Perth Bicycle Network Plan, in order to obtain the full
benefits from investments that have already been made; and
 Ensuring that newly-developing areas have good cycling facilities from the start rather than
relying on costly retrofitting at a later time.
Outside the Perth Metropolitan Area
The unit construction costs of providing cycling infrastructure in urban areas outside the Perth
Metropolitan Area are likely to be similar to the cost in Perth itself. However, there will be much less
need for the highest cost infrastructure, the Principal Shared Path.
If we assume:
 Off-road infrastructure will be in the form of 2.5 or 3 metre wide shared paths where Perth Metro
would need PSPs;
 Costs for other cycling infrastructure are the same as Perth Metro;
 Historical levels of investment in cycling infrastructure have been half those required for
comparability with Perth3, hence twice the remaining ‘unmet need’; and
 Cycling infrastructure needs are proportional to population (20% of the WA population live outside
the Perth and Peel region);
then the infrastructure requirement for non-Metro WA would be $41 million over 10 years, with an
addition $4 million for safety and encouragement programs – a total of $45 million over 10 years, or
$4.5 million per year.
Allowing for the recently-announced increase in the anticipated future population (WAPC, 2012), the
program for the non-metropolitan regions of WA should be increased to $48 million ($4.8 million per
year for 10 years).
2
30% population growth, of which 60% in newly-developed areas.
3
There has been no equivalent of the Perth Bicycle Network funding for regional areas. Local governments have been reliant
on their own funding and contributory funding from the WA Government to provide cycling facilities.

18
What Will This Investment Deliver?
This investment would substantially achieve the objectives of the Perth Bicycle Network Plan for the
Perth and Peel regions in terms of:
 Convenience, safety and accessibility;
 Comprehensiveness, providing access to most destinations for most cyclists;
 Connected, providing continuous routes without barriers; and
 Covering the whole metropolitan region.
The non-metropolitan component would achieve similar outcomes for Western Australian urban
centres outside the Perth and Peel regions.
The non-infrastructure component would improve the confidence of cyclists in their ability to ride safely
and create an environment in which cycling is viewed as a feasible option for everyday travel needs.
The investment would deliver:
 Benefits for the community of between 3.4 and 5.4 times the costs incurred. These rates of return
are higher than those achieved by most urban transport investments.
 Financial returns for the individuals who cycle more and for government that are nearly twice the
costs incurred. Two-thirds of these financial benefits accrue to individuals and households,
providing the equivalent of a tax cut to those who change from car-driving to cycling while also
reducing traffic congestion for those who do not.
Increased cycle usage, which would be delivered by this investment, is entirely consistent with the
strategic objectives and directions of public policy in such diverse areas as transport, land use
planning, economic development and robustness, environment, social and community development.
Increased cycling directly addresses two important and growing issues for the western Australian
community:
 Deteriorating child and adult health, including obesity, heart disease and diabetes, resulting from
low levels of physical activity; and
 Road traffic congestion, especially in the Perth and Peel regions.
In the longer term, a comprehensive cycle infrastructure network will help make the personal transport
systems of Western Australia more robust to changes in the price and supply of oil-based fuels.
Some Issues
Road Capacity
Some sources (eg Litman, 2010) suggest that both congestion reduction and savings in road capacity
costs should be included in the evaluation of non—car modes. However, this runs the risk of double-
counting when marginal rather than average congestion values are used, as in this analysis.
Reducing the amount of motor vehicle traffic will reduce the level of congestion for a given level of
road capacity.
If congestion benefits are estimated using a marginal-cost model, then reducing future road capacity
would remove the benefits of traffic reduction.
If congestion benefits are estimated using an average-cost model, the dynamic relationship between
road capacity and congestion is removed and evaluation effectively assumes a constant relationship
between the volume of traffic and the capacity of the road system. In this case, it may be appropriate
to value both congestion-reduction and savings in road capacity.

19
Valuing the Future
Discount rates
Australia is systematically under-investing in long-term infrastructure, compared to other developed
countries, by requiring the use of high discount rates for evaluation.
Benefit-cost evaluation requires that the future be given a lower value than the present, through the
application of a discount rate that reflects a combination of community time-preference (for having
something now rather than later) and opportunity cost (what else could be done with the resources).
According to the Australian Transport Council:
Discounting is necessary because a dollar of benefit in the future is worth less than a dollar of benefit
today. [The Bureau of Transport and Regional Economics] recommend[s] that the level of the discount
be set at the long-term government bond rate…(ATC, 2006, p. 74).
[T]he most appropriate discount rate to use for BCA is the government bond rate [which] provides a
ready measure of the cost of capital free of any risk premium. The nominal bond rate needs to be
adjusted for inflation to obtain the real rate. … The private sector practice of adding a risk premium to
the discount rate is not appropriate for evaluation of public sector initiatives. (ATC, 2006, Part4, p. 84).
The long-term government bond rate is currently around 4% with a 10-year mean of around 5.5%.
Over most of the same period, inflation, as measured by the Consumer Price Index (CPI), has been
running at around 3.1% per year, implying a real discount rate of less than 2.5% per annum.
In practice, the discount rate is nominated by the funding jurisdiction. Most Australian jurisdictions
currently specify a rate of 7% per annum. In Australia, only the Queensland Government requires a
lower discount rate, set on the following basis:
The interest rate for government borrowings for a term relevant to the expected duration of the project
with an allowance for inflation deducted from this rate, as costs and benefits are to be expressed in
real terms. (Department of Infrastructure & Planning, 2010, p. 37)
This is consistent with the Australian Transport Council advice on the basis of which the appropriate
discount rate is around 2.5% per annum.
Using a lower discount rate is more consistent with long-term sustainability concerns and increases
the value of benefits more than it does costs, because most costs are incurred ‘up-front’ and therefore
receive little or no discounting – benefits occur later and over a longer period of time.
The UK Treasury specifies a real discount rate of 3.5% to be used in benefit-cost evaluation (UK
Treasury, 2011). The United States also requires that a real discount rate be used in benefit-cost
analysis with a currently-specified value of 1.1% per annum for long-term projects and lower rates for
programs below ten years (US Office of Management and Budget, 2013). The US revises the
specified discount rates every year but values have been consistently below 4% for the past decade
(US Office of Management and Budget, 2013).
Real Values
For benefit-cost evaluation, costs and benefits are required to be expressed in constant value terms,
usually interpreted as meaning in terms of prices in the year of analysis. Unit values, therefore, are
constant over the evaluation period. However, there are some instances where the real value of
resources is expected to increase (in practical terms, the price will increase more rapidly than the
general rate of inflation because of increasing scarcity and/or increasing demand for a resource). This
is most clearly the case for:

20
 Transport fuels as global oil production peaks4 and starts to decline while demand continues to
increase, placing upward pressure on fuel prices;
 Road traffic congestion, as road system capacity in towns and cities is unable to be expanded at
the same rate as traffic volume; and
 Health system costs, which have consistently exceeded the general rate of inflation.
Increases in the real cost of motor vehicle fuels directly affects the vehicle operating cost component
of benefits in the evaluation. Fuel is also a component of congestion costs and this component should
be escalated on the same basis as for motor vehicle operating costs.
In the case of traffic congestion, estimates of the total avoidable costs of congestion for Perth and
other capital cities in Australia (BTRE, 2007) indicate a strongly-increasing incremental congestion
cost over time as traffic volumes increase relative to road capacity. In simple terms, the congestion
cost that can be avoided by removing a single car from the traffic stream is higher the further into the
future we look.
In the case of health costs, real outlays on health increased by an average of 4% per year during the
1990s (Australian Institute of Health and Welfare, 2002), implying a substantial rate of increase in real
unit costs that would need to be taken into account in BCA. However, more recent experience shows
that both health and general inflation averaged 3.4% a year between 1997–98 and 2007–08
(Australian Institute of Health and Welfare, 2010), implying no real increase in unit costs. The basic
case, for both benefit-cost and financial analyses assumes 2% per annum increase in health costs,
but this can be varied in the benefits calculator.
The same applies to the costs of a program, where they can be expected to increase more rapidly
than prices generally. There is little specific time-series information on the cost of constructing cycle
infrastructure, but the cost index for road and bridge construction, with the exception of a period from
2005 to 2008, has moved very closely with the consumer price index
Social Benefits
The social benefits of cycling and walking are often regarded as difficult to quantify – and, hence, are
often overlooked. They are, nevertheless, real. For example:
 People who endure more than a 45-minute commute by car are 40% more likely to divorce
(Sandow, 2011).
 People who live in monofunctional, car-dependent neighbourhoods outside urban centres are
much less trusting of other people than people who live in walkable neighbourhoods where
housing is mixed with shops, services and places to work (Sandow, 2011).
 A person with a one-hour commute has to earn 40% more money to be as satisfied with life as
someone who walks to the office. On the other hand, for a single person, exchanging a long
commute for a short walk to work has the same effect on happiness as finding a new love (Stutzer
and Frey, 2004).
 The level of traffic on residential streets inversely correlates with the level of social contact
(Appleyard, 1981). As traffic on a street increases, people retreat from the street and attempt to
shut it out of their lives and have less contact with their near neighbours.
4
Peak oil describes the period of maximum oil production. Australian oil production peaked in 2000 and the International
Energy Agency, as well as other organisations have growing doubts regarding the capacity for existing oil supplies to meet
demand. For more information, see:
http://www.sensibletransport.org.au/sites/sensibletransport.org.au/files/Lake%20Mac_01.12.pdf
http://www.sensibletransport.org.au/sites/sensibletransport.org.au/files/Oil%20Vulnerability%20in%20Melbourne%20Feb%2
02010.pdf

21
Conclusion
To be written
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