Teleworking and begird demand management

Teleworking and
begird demand management
J.Y.K. Luk
ABSTRACT
Teleworking or telecommuting reduces the
amount of car travel related to work trips,
especially during congested periods. One of its
impacts is therefore on travel demand and it is
often regarded as a travel demand management
(TDM) measure.
In Australia, 83 per cent of all vehicle-kilometretravelled (VKT) is by passenger cars, and 25
per cent of car-VKT is for journeys to/from
work. Car commuting therefore constitutes only
about 21 per cent of all road travel demand.
A small reduction in road demand can
substantially reduce congestion delay and other
social costs.
The annual cost of congestion delay in Sydney
is estimated to be $2.1 billion. If the acceptance
rate for teleworking is 10 per cent across all
industries, or if 50 per cent of car commuters
telework one day per week, delays in Sydney
would be reduced by up to $0.8 billion depending
on how the teleworking days are distributed
over a 5-day week. At this level of acceptance,
the total social cost saving including delays,
vehicle operating costs, accident, noise and air
pollution costs is in the range $240 million to
$1 billion.
26
Vol.3 No.1 March 1994 ROAD & TRANSPORT RESEARCH
14.+
AV&X44
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We Y. 444//////MW/AY/eX•V/A01,....////oW////////oW/e7/44/////eW//////////44,////////////////#///e547////////e
ot,
T
ravel demand management (TDM) refers
to the application of a range of measures to
address the traffic congestion issue and
environmental concerns. These measures attempt
to reduce the impact of travel on the road network,
and also the amount and need of car travel. They
include flexi-working hours, ride-sharing, parkand-ride schemes, traffic calming, pricing
measures, parking control, and also long-term
measures such as urban and social changes and
communication substitutions (see, for example,
Luk 1992). Teleworking is a TDM measure that
reduces car commuting, i.e. car travel related to
work trips, by allowing a teleworker to work parttime or full-time from home, a telecentre, or a
vehicle (Chung 1992). It has been facilitated in
recent years by advances in communication
technologies, but the concept of working from
home on an ad hoc basis for whatever reason is
certainly not new.
This paper studies the transport impacts of
teleworking. Going to or from work can be by car,
bus, rail, or other modes of transport. Overloading
of public transport systems may occur at peak
hours in Sydney or Melbourne, but congestion is a
far more important issue for car commuting than
for rail or bus commuting. Teleworking also has
the potential to reduce overloading or to reduce
service frequency in rail or bus. However, the
focus of this paper is on car commuting and on its
impact on road congestion.
The impact of teleworking on travel demand
depends on various factors that include the level of
acceptance, the travel behaviour of teleworkers,
and the prevailing levels of congestion and travel
Teleworking and travel demand management
demand. Surveys on attitudes and behaviour are
the common means to determine travel behavioural
changes. This paper reviews published survey
results and estimates the impact of teleworking
on delay, accidents and pollution from available
data in travel demand and congestion level in
Australian cities.
TELEWORKING SURVEY RESULTS
Various pilot projects were undertaken in recent
years to evaluate the impact of teleworking on
travel demand, productivity, staff morale, cost
savings and other objectives. The results from two
well-publicised studies are used to give some
insights into the impacts. Table I summarises the
survey results from the studies carried out in
California (Pendyala et al. 1991) and The
Netherlands (Hamer et al. 1992). Those results
relevant only to the impacts of teleworking on
travel are shown. Some broad conclusions are as
follows:
(a) teleworking reduces car commuting trips,
especially during peak hours;
(b) non-commuting and off-peak trips do not
increase;
(c) trip-chaining does not increase;
(d) teleworkers tend to shift activities to
destinations closer to home;
(e) there is no significant increase in travel
behaviour by household members (except
the second experiment at Rijswijk).
Vol.3 No.1 March 1994 ROAD & TRANSPORT RESEARCH
27
Teleworking and travel demand management
The survey results are dependent on factors such
as residential locations, car ownership, and
household structure and income. The teleworkers
surveyed in both countries lived further away
from the city centres than the national averages
and had higher levels of car ownership. The results
in Table II therefore may not be representative,
and possibly represent the upper bound of the
expected impact of teleworking in travel demand.
Mokhtarian (1992) also reported some results
from the 1989-1990 Hawaii Demonstration Project.
A target group of 15 in a telecentre at Mililani
(32 km from Honolulu town centre) reported a 76
per cent reduction in the number of downtown
trips and a saving of 7.4 hours per week. The Road
and Traffic Authority of New South Wales has a
teleworking project in progress and should provide
useful information in an Australian context
(Edwards 1993).
IMPACT OF TELEWORKING IN AUSTRALIA
hence to reduce delay and other social costs such
as accidents and pollutant emission. This section
describes the level of congestion in Australian
cities, and ascertains the amount of car commuting
in the total amount of vehicle travel demand. The
impacts of teleworking are estimated at various
levels of acceptance.
Level of congestion
A current project at the Australian Road Research
Board (ARRB) is investigating the cost of car
travel in Australian cities. It estimates the cost of
congestion in terms of delay and other social costs
by means of a spreadsheet model (Hepburn and
Luk 1994). The model makes use oftravel demand
data, or vehicle-kilometre-travelled (VKT), and
average car speeds on different road types under
congested and uncongested conditions. VKT
statistics are routinely collected by the Australian
Bureau of Statistics and car travel speeds are
regularly monitored by State road and transport
authorities.
A primary objective of TDM (and teleworking) is Table II shows the cost of delay for each of the
to reduce car commuting trips at peak hours and capital cities. These results were calibrated with
TABLE I
Impacts of teleworking on travel demand
Study
Design
California
•
•
•
•
•
The Netherlands
• 30 hh
• 7-day travel diary
• 1-3 T-days
• no control group
First experiment at
Amsterdam,
The Hague,
Rotterdam
•
•
Second experiment at
Rijswijk
•
•
219 persons in 142 hh*
3-day travel diary
at least 1 T-day
2 waves (`before/after')
with control group
Impact
•
•
•
•
•
•
2 car trips less on T-days*
—39% on non-work trips
—60% peak period trips
—90% freeway distance on T-days
no sig.* increase in hh travel
—25% in trip chaining
60 persons
5 waves
•
•
•
•
•
—16% in total travel distance
—34% in peak travel distance
no sig. change in off-peak travel
no sig. change in hh car travel
—12% in trip chaining
60 persons
4 waves
•
•
•
•
—14% in total travel distance
—22% in peak travel distance
+73% in weekend distance
+34% in hh car/peak distance
Abbreviations: hh = household, T-day = teleworking day, sig. = significant at 10% level or better.
28
Vol.3 No.1 March 1994 ROAD & TRANSPORT RESEARCH
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Teleworking and travel demand management
TABLE II
Costs of congestion
City
Sydney
Melbourne
Brisbane
Perth
City
Delay cost
($ million)
Adelaide
Canberra
Hobart
Darwin
2080
1820
398
366
estimates prepared for Sydney (Commeignes 1992)
and Melbourne (Miles 1992). The total delay cost
for all capital cities is about $ 5.1 billions in 1992
prices. The values of time savings are $4.3/h for
private travel and $25.9/h for business travel;
vehicle occupancy is assumed to be 1.6 persons per
vehicle (Taylor and Thoresen 1992).
Note that the delay costs of Sydney and Melbourne
are about four times those of Perth, Adelaide and
Perth. As expected, there is relatively little
congestion in Hobart, Darwin and Canberra. The
implication is that teleworking would have more
impact in Sydney and Melbourne than in other
cities.
Delay reduction
The most recent survey of motor vehicle use by the
Australian Bureau of Statistics (1993) found that
83 per cent of all VKT was by passenger cars. It
also reported that 25 per cent of all car VKT was
related to journeys to work. The percentage of car
commuting travel to the total VKT is therefore
about 0.25 x 0.83 = 21 per cent. In other words,
even if the impossible target of eliminating all car
commuting trips is achieved, the road network
still has to cater for the other 79 per cent of vehicle
demand due to education, shopping, business,
social activities, and road freight.
The delay in a road network increases non-linearly
with the level of congestion. The marginal delay
(i.e. the extra delay due to an extra vehicle on the
road) increases rapidly as the road travel demand
reaches the network capacity. Any reduction of
peak demand by teleworking, mode shift to public
transport, or any other TDM measure would have
significant effect.
Delay cost
($ million)
274
105
42
24
It is difficult to predict the adoption rate of
teleworking and the VKT reduction in a city. The
adoption rate depends on factors such as the total
labour force, the number of teleworking days per
week, and the nature of the industries concerned.
Teleworking would probably be quite suitable for
workers in the information service industries
(Olszewski and Lam 1993).
Consider the hypothetical case that all workers
telecommute one day per week. Assuming a 5-day
week and all workers take the same day for
teleworking, the adoption rate is 20 per cent and
the reduction in VKT is 1/5 x 20% = 4.2 per cent.
This case represents the upper bound in VKT
reduction at this level of acceptance. If teleworking
days are evenly distributed from Monday to Friday,
the reduction in VKT would be 1/5 of 4.2 per cent,
or 0.84 per cent, representing the lower bound of
road demand reduction.
Table III shows the relationship between adoption
rates and reduction rates in VKT for the two
scenarios of `telework on the same days' and
`telework with even distribution'. Note again that
a universal adoption rate of 20 per cent should be
interpreted as all workers teleworking one day
per 5-day week. Similarly, a 10 per cent rate
means that half of the work force takes one
teleworking day per week. In reality, not all
industries and not all workers adopt teleworking,
and some telecommute more frequently than one
day per week. Boghani et al. (1991) anticipated an
adoption rate of 10-20 per cent in the United
States.
Fig. 1 shows the reduction in travel time costs in
Sydney for teleworking adoption rates in the range
from 0 to 20 per cent for the two scenarios. For a
10 per cent adoption rate, the travel time cost
Vol.3 No.1 March 1994 ROAD & TRANSPORT RESEARCH
29
Teleworking and travel demand management =======:=========:;=============4::
TABLE III
Hypothetical adoption rate and VKT reduction rate
Adoption rate
of teleworking
VKT reduction rate (%)
(telework on same days)
VKT reduction rate (%)
telework with even distrib.)
0
0
5
10
15
20
1.05
2.10
3.15
4.20
0
0.21
0.42
0.63
0.84
reduces from $9.1 billions to $8.2 billions under
the 'same day' scenario and reduces to $8.8 billions
under the even distribution scenario. The reduction
in congestion delay is from the current estimated
level of $2.1 billions to a level in the range from
$1.3 to 1.9 billions.
Federal Office of Road Safety (1988) found that
the car travel distances for the purpose of education
were about 1.1 per cent of all car-VKT. It is well
known that the absence of these trips during
school holidays results in noticeable reduction in
congestion. This level of reduction is equivalent to
the case when the adoption rate is 5 per cent or
when 25 per cent of all workers telework on the
same day (Table III). Hence, even at a moderate
level of acceptance, teleworking would have a
large impact on congestion.
Other social costs
The Australian Road Research Board travel cost
model also provides estimates of savings in vehicle
operating cost (VOC), road accident cost and
pollution cost. The premise is that a reduction in
road travel would improve traffic flow and hence
reduce fuel consumption, maintenance cost, tyre
cost, etc. Accidents are reduced due to less exposure
to road travel. The VOC and accident cost estimates
are based on ARRB research (Bowyer et al. 1985;
Andreassen 1993). Noise and air pollution costs
are based on Inter-State Commission (1990)
research.
The accident cost makes use of an average value of
5.05 cents/km. Noise pollution costs are based on
0.1 cent/km for cars and 5 cents/km for heavy
Travel cost $million
9500
9000
8500 —
8000 —
7500
7000
6500
15
10
5
Teleworking adoption rate %
With delay
30
Telework with even dist.
20
No delay
Figure 1
Travel time cost
and teleworking
Vol.3 No.1 March 1994 ROAD & TRANSPORT RESEARCH
/el<hV.4.V.L.VA4VRNE.00WAC4V/AtV.NAVAWV//...W/..X.V.W/AOCVKV/o.M.G4V..W•WA49ENV.WMW/e.
Teleworking and travel demand management
With the Sydney road travel demand data for
1991, the estimates are shown in Table IV at a
teleworking adoption rate of 10 per cent.
Teleworking could reduce the social costs by up to
$1 billion for Sydney alone. The lower bound to
this estimate is $0.24 billion when teleworking
days are evenly distributed from Monday to Friday.
suburbs. For example, the CBD jobs in Melbourne
account for 11 per cent of the total metropolitan
jobs (VicRoads 1991). When jobs in all nine inner
suburbs in central Melbourne are considered, this
percentage is about 28 per cent. In other words,
the majority of jobs are in areas not usually well
serviced by public transport systems and
commuting is mainly by car. There are indications
that the average commuting time and distance
may have stabilised due to job dispersals in spite
of urban sprawling at the city fringes (Brotchie
1992). Teleworking is therefore one effective tool
in reducing road demand for those who choose to
live and work in the suburbs, and certainly for
those who commute to work from country resorts!
DISCUSSION
CONCLUSIONS
Many argue that the reduction of travel demand
may not reduce congestion in cities where there is
latent or suppressed demand. Any improvement
in traffic flow conditions, due either to the provision
of extra capacity or to reduction of demand, would
quickly induce the suppressed demand onto the
road network (e.g. by shifting from public transport
to car commuting). Congestion itself is therefore
an effective instrument of demand management.
Car commuting is about 21 per cent of all vehicle
travel in Australian cities. If teleworking achieves
an average acceptance level of 10 per cent across
all industries, or when 50 per cent of workers
telework one day per 5-day week, the maximum
reduction in car travel is about 2.1 per cent. This
level of road demand reduction is not high.
However, if this level is maintained, the delay cost
in Sydney could be reduced from $2.1 billions to
$1.3 billions in 1992 prices. The maximum total
savings in social costs including delay, vehicle
operating cost, accident, and pollution cost is about
$1 billion at this level of acceptance. A lower
bound to this estimate is $240 millions when
teleworking days are evenly distributed from
Monday to Friday. Teleworking is therefore an
important tool in the armoury for congestion and
environmental management.1
vehicles. Air pollution costs are subjects of ongoing research; the values used are 0.5 cent/km for
cars and 1 cent/km for heavy vehicles. Recent
research by the Environment Protection Authority
(Vic) indicates that their air pollution cost
estimates are of the same order of magnitude as
the Inter-State Commission values.
The analysis in this paper does not consider the
effect of releasing suppressed demand as a result
of reduced delay due to teleworking. This effect is
quite plausible in Sydney and Melbourne. The
reduction in delay and other social costs could be
only short-term benefits.
Another issue relates to job dispersals in Australian
cities. In the last two decades, jobs have dispersed
from the Central Business District (CBD) to the
TABLE IV
Social cost reduction at an adoption rate of 10%
Social costs
Travel time or delay cost
Savings ($ million)
(telework on same days)
Savings ($ million)
(telework with even distrib.)
Vehicle operating cost
Accident cost
Noise pollution cost
Air pollution cost
823
161
22
0.5
2.2
197
34
4.4
0.1
0.4
Total
987
236
Vol.3 No.1 March 1994 ROAD & TRANSPORT RESEARCH
31
Teleworking and travel demand management
REFERENCES
ANDREASSEN, D.J. (1993). Road Accident Costs and
Their Use. Australian Road Research Board Special
Briefing No. 4. (ARRB: Vermont South, Vic.)
AUSTRALIAN BUREAU OF STATISTICS. (1993).
Survey of Motor Vehicle Use, Australia. Catalogue No.
9208.0. (AGPS: Canberra.)
BOGHANI, A.B., KIMBLE, E.W. and SPENCER, E.E.
(1991). Can Telecommunications Help Solve America's
Transportation Problems? Arthur D. Little Inc. Report
No. 65740. (Arthur Little: Cambridge, Massachusetts.)
HEPBURN, S. and LUK, J.Y.K. (1994). User Guide to
the ARRB Travel Cost Model (ATCM). Australian Road
Research Board Working Document No. WD TE 94/
001. (ARRB: Vermont South, Vic.)
INTER-STATE COMMISSION. (1990). Road Use
Charges and Vehicle Registration: A National Scheme.
Volume 1. (AGPS: Canberra.)
LUK, J.Y.K. (1992). Models for travel demand
management. Road & Transport Research, 1(3), pp.
58-73.
BOWYER, D.P., AKCELIK, R. and BIGGS, D.C. (1985).
Guide to Fuel Consumption Analyses for Urban Traffic
Management. Australian Road Research Board Special
Report 32. (ARRB: Vermont South, Vic.)
MILES, J. (1992). The Cost of Congestion. Vic Roads
Corporate Development Division Report no. IR 92 - 5.
(Vic Roads: Kew, Vic.)
BROTCHIE, J. (1992). The changing structures of
cities. Urban Futures, Special Issue 5, pp. 13-26.
MOKHTARIAN, P.L. (1992). Telecommuting in the
United States: letting our fingers do the commuting.
TR News, 158, pp. 2-7.
CHUNG, P. (1992). A Practical Guide to Starting a
Telecommuting Program. Telecom Australia Consumer
Business Unit Report. (Telecom Australia: Brisbane)
OLSZEWSKI, P. and LAM, S.H. (1993). Can teleworking
help to reduce traffic congestion in Singapore?CityTrans
Conference, September 2-4, 1993, Singapore.
COMMEIGNES, H. (1992). The Cost of Congestion in
Sydney. Report prepared for the Roads and Traffic
Authority, NSW. (RTA: Sydney.)
PENDYALA, R.M., GOULIAS, K.G. and KITAMURA,
R. (1991). Impact of telecommuting on spatial and
temporal patterns ofhousehold travel. Transportation,
18(4), pp. 383-409.
EDWARDS, M. (1993). Telecommuting case study pilot study of Roads and Traffic Authority, NSW. 3rd
National Telecommuting Conference, December 2, 1993,
Sydney.
FEDERAL OFFICE OF ROAD SAFETY. (1988). Dayto-Day Travel in Australia 1985-86. FORS Report CR
69. (FORS: Canberra.)
TAYLOR, S. and THORESEN, T. (1992). Road User
Costs for Use in Economic Evaluation of Road Works.
Australian Road Research Board Working Document
No. WD TE 92/011. (ARRB: Vermont South, Vic.)
VICROADS (1991). Central Area Transport Strategy,
Revitalising Central Melbourne. Special Report
no. 90-9. (VicRoads: Kew, Vic.)
HAMER, R., KROES, E. and VAN OOSTROOM, H.
(1992). Teleworking in the Netherlands: an evaluation
of changes in travel behaviour - further results. Proc.
20th PTRC Summer Annual Meeting, Manchester,
Seminar C, vol. P355, pp. 211-23. (PTRC Education
and Research Services Ltd: London.)
ACKNOWLEDGEMENT
This paper is adapted from one presented by the
author at the Third National Telecommuting
Conference, 2 December 1993, Sydney. The comments
from reviewers are much appreciated.
32
Vol.3 No.1 March 1994 ROAD & TRANSPORT RESEARCH
X4,,,,,,,V.4}X.X.:144:•XAMW~V.4.4.:~4444.441914,/.../.4%.44.4X......../.....V......,:.:///....41:0:4:44~/.44/.44/////////////////,//////////////////////////////,
Teleworking and travel demand management
James Luk
Dr James Luk is a Principal Research Scientist in congestion and travel
demand management. Before joining ARRB in 1975, he worked for Racal
Electronics Pty Ltd and Amalgamated Wireless Australasia Ltd in Sydney.
He was seconded to the Roads and Traffic Authority NSW (formerly Department
of Main Roads) in 1979-80, and also to the Queensland Department of
Transport (formerly Main Roads Department) in 1989-90, to develop traffic
control systems. His current research interests are in incident and queue
management in urban road networks, and in traffic restraint schemes and the
associated technologies.
Contact:
Dr J.Y.K. Luk
Australian Road Research Board Ltd
PO Box 156
Nunawading Vic 3131
Australia
Vol.3 No.1 March 1994 ROAD & TRANSPORT RESEARCH
33
AAA report
land transport
infrastructure: maximising the
contribution to economic growth
The Australian Automobile Association (AAA)
recently released a report 'Land Transport
Infrastructure: Maximising the Contribution to
Economic Growth'. The report was undertaken by
the Allen Consulting Group under the direction of
Dr Vince Fitzgerald, author of the report to the
Federal Government on national saving.
The AAA is the Federal Secretariat of the State
and Territory motoring organisations and
represents their interests and the interests of
their 5.7 million members, at the national level.
The AAA commissioned the report because of
concerns about the level and variability of funding
for roads. In addition, the AAA believed that
decisions on investment in roads and other land
transport infrastructure were being made on an
ad hoc basis, which had more to do with political
factors and institutional arrangements than
rational economic principles.
The AAA also wanted to contribute to debate
about directions for the development of transport
infrastructure policy and to increase
understanding of the economic role of investment
in land transport infrastructure.
The report was to include an analysis of the widereconomy effects of marginal investments in rail
transport infrastructure, and the modelling
framework does include intermodal substitute
effects. However, because ofdifficulties in obtaining
basic case study data on rail investment in
Australia and its impacts, the study was not able
to be extended to estimating economic effects of
marginal rail investments.
The following extract is taken from the Executive
Summary of the report. If you would like to obtain
a copy of the report, please contact:
John Metcalfe,
Manager Economic & Public Policy,
Australian Automobile Association,
GPO Box 1555,
Canberra ACT 2601.
34
AAA REPORT
The report includes new results in two significant
areas, as well as dealing with many aspects of
land transport infrastructure in Australia. The
first of these new results is an evaluation of the
wider-economic effects of a marginal increase in
investment in the major categories of roads
(Chapter 6).
The second is an analysis at the aggregate,
macroeconomic level of the relationship between
investment in roads and private sector productivity
in Australia for the period 1966-67 to 1991-92
(Chapter 5).
EVALUATING GAINS FROM
ALTERNATIVE ROAD INVESTMENTS
Chapter 6 contains analysis of the economy-wide
effects of marginal investment in the major
categories of roads. This analysis was based on
results from a collection of case studies of
investment in roads, gathered from State road
authorities and other sources.
Based on the case studies, and information from
technical literature, benefits arising from a $1000
million (1990-91 dollars) investment in each
category of road were estimated. These benefits —
such as time saving, vehicle operating cost savings
and accident reduction — were disaggregated and
attributed to different groups of industry and
other transport users. Time savings for private
travel were excluded from the analysis. For the
purposes of modelling, the benefits were taken as
the annual benefit in the 10th year after the
investment had occurred.
An annual financing charge (over 35 years at a 6 per
cent real interest rate) was imposed by an increment
to income tax to pay for the investment. A modified
version of the ORANI model was then used to
simulate the effects of these changes on the
Australian economy.
Vol .3 No.1 March 1994 ROAD & TRANSPORT RESEARCH
TABLE I
Summary of economic modelling results
Road category
Estimated
benefit-cost
ratio for each
$1 billion
investment
Annual
financing cost
over 35 year
life
Long run (year 10)
annual net increase
in GDP
1992-93 $m
Per cent of GDP
1992-93 $m
Rural national
2.1
70
0.07
270
Rural arterial
2.0
70
0.07
270
Rural local
1.0
70
0.03
120
Urban freeway
4.8
70
0.15
620
Urban arterial
6.0
70
0.20
810
Urbabn local
1.0
70
0.03
110
As Table I indicates, the results show very high
net returns from the investments in urban freeways
and urban arterials — an annual benefit of 0.2 per
cent of GDP per year from an initial, one-off
investment in urban arterial roads of $1 billion
(1990-91 dollars, or 0.26 per cent of a year's GDP).
Returns from investments in rural national and
arterial roads are also high by private sector
standards of investment return. Even with
relatively low benefit-cost ratios (BCRs), economy
wide returns from investment in rural and urban
local roads are greater than break-even.
The investments have wide ranging effects on the
economy. These changes arise fundamentally
because of the investments' effects of improving
the productivity of industry. This is shown in the
modelling by significant increases in export
volumes and improvements in the balance of trade.
The modelling results for the effect of the
investments on the public sector borrowing
requirement imply that the investments are self
funding from a whole of government perspective.
In the case of urban arterial investment, additional
taxation and government revenue generated from
flow-on economic activity is estimated to be $180
million (in 1992-93 dollars). This is substantially
higher than the annual financing charge of $70
million (in 1992-93 dollars). It indicates that the
specific taxes imposed to finance the investment
could be forgone and that the servicing cost could
be fully met from additional taxes resulting from
increased economic activity generated by the
investment.
Vol.3
Large potential gains from investment in road
infrastructure are implied by the results. The
results also suggest that the historical pattern of
investment has led to relative over-investment in
local and rural roads and under-investment in
major urban roads. An economically optimal
pattern of investment should result in returns
from investment in each category of road being
similar. Instead the results show higher returns
from investment in urban roads than from
investment in local and rural roads. The imbalance
may reflect governments' concern with equity and
social aspects of road provision rather than with
maximising overall economic returns.
The sensitivity of the findings to some key changes
in assumptions was tested in two cases, or can be
estimated from the results. Modelling was carried
out to simulate the effect of financing additional
road investment through higher fuel excise rather
than through general taxation revenue. Funding
through higher fuel excise reduced GDP by 0.0176
per cent compared to a reduction in GDP of 0.0070
per cent when the investments were financed
through increased income tax.
This result comes about because of the economic
efficiency loss resulting from a tax on a relatively
price-elastic business input (that is, fuel is more
price-elastic than labour). This is not to say that
financing road investment through increased fuel
charges is not desirable if funding from other
sources, such as increased income taxes, is not
feasible.
No.1 March 1994 ROAD & TRANSPORT RESEARCH
35
TABLE II
Long run macroeconomic effects of each road investment
(Per cent change in GDP; or 1992-93 $ million indicated as *)
Rural
National
Rural
Arterial
Rural
Local
Urban
Freeway
Urban
Arterial
Urban
Local
Real GDP
0.07
0.07
0.03
0.15
0.20
0.03
Real consumption
0.02
0.02
0.00
0.07
0.11
0.00
Real investment
0.03
0.03
0.00
0.10
0.14
0.00
Export volumes
0.23
0.21
0.10
0.45
0.54
0.12
Import volumes
-0.00
-0.02
-0.02
0.02
0.02
-0.01
Terms of trade
-0.03
-0.02
-0.01
-0.05
-0.05
-0.01
109
104
59
204
240
64
After tax wages
-0.06
-0.05
-0.04
-0.09
-0.09
-0.06
CPI
-0.07
-0.06
-0.03
-0.15
-0.19
-0.04
Real after tax wages
0.01
0.01
-0.01
0.06
0.10
-0.02
Aggregate employment
0.00
0.00
0.00
0.01
0.01
0.00
Aggegate capital stock
0.03
0.03
0.00
0.10
0.14
0.00
Public sector borrowing
requirement (excluding
annual financing cost)*
-99
-96
-77
-159
-180
-83
Balance of trade*
The sensitivity of the modelling to changes in
labour market conditions was also tested. In
standard, long-run, economic modelling, wages
adjust to clear labour markets with the result that
there is no growth in employment. This assumption
can be criticised as unrealistic in the present
economic environment.
An alternative assumption was tested by fixing
real wage rates (rather than allowing wages to
adjust to clear the market) and simulating the
effects of investment in urban local roads.
Employment increased by 0.03 per cent (around
2400 jobs) with real wages fixed compared to 0.002
per cent (around 160 jobs) with wages free to
adjust. The net benefit to the economy of the
investment, as measured by change in GDP, was
almost doubled to a 0.05 per cent increase as a
result of the changed assumption.
If a similar result occurred in modelling other
investments, an upper bound on the employment
effect of investment in urban arterials might be
expected to be an employment increase of 0.22 per
cent (around 19,000 jobs). The results are upper
bounds as it is unlikely that real wages can be held
fixed for the 10 year period considered in the
model.
36
The sensitivity of the findings to higher real
interest charges or a reduced investment life can
be estimated by increasing the financing charge
for each investment. The effects of changing these
assumptions are unlikely to be significant.
Increasing the required real rate of return to 8 per
cent and reducing the life of the investment to 25
years is estimated to reduce the net benefits from
each investment by a further 0.003 per cent of
GDP from the results indicated in Table I.
The sensitivity of the results to changes in the
initial BCR used in the simulation was not directly
tested. The results indicate however that the final
net benefit to the economy is broadly proportional
to the initial BCR used in the simulation. The
effect of changing the size of initial benefit can
therefore be estimated from the results.
The study does not investigate the number of
investments which are potentially available in
each category of roads. However, road authorities
indicated that they believed they could identify a
stock of presently unfunded, economically justified
projects costing between $14 billion and $19 billion.
This suggests that a significant stock of unfunded
projects exists although no information is available
to assess the likely returns from this stock, or the
Vol.3 No.1 March 1994 ROAD & TRANSPORT RESEARCH
potential size of the stock if changes were
introduced to other aspects of road management
(for example, user charges).
MACROECONOMIC RESEARCH
Chapter 5 contains the second significant, new
analysis arising from the report — a direct analysis
at the broad aggregate level of the relationship
between road investment and economic outcome
in Australia.
This analysis by University of NSW economists
Graham Otto and Glenn Voss identified a
statistically significant relationship between road
investment and private sector output increases.
Their results are similar to those which have been
found in the US and elsewhere.
They find that a one per cent increase in investment
in road infrastructure increases private sector
capital productivity by 0.24 per cent and private
sector total factor productivity by 0.27 per cent
(i.e. elasticities of 0.24 and 0.27).
Both these results imply very high returns. In
1991-92 GDP output for the private industry
sectors considered by Otto and Voss was $164
billion while the end year road stock was $42
billion (both 1989-90 dollars). Based on these
numbers, a $1 billion investment in roads would
produce a benefit of over $900 million, a first year
rate of return of over 90 per cent. This result is
marginally higher than $810 million annual return
identified in the simulation of a $1 billion
investment in urban arterials (in the base case
which assumed labour markets clear).
Otto and Voss suggest in an associated argument
that the level of investment in road infrastructure
has been too low. The trend to lower levels of
investment in roads, as a per cent of total
government outlays, is identified as having been
moving further away from the economic ideal.
The Otto and Voss analysis follows other
macroeconomic studies in the US and other
countries which have documented a relationship
between investment in public infrastructure
(including roads) and increases in private sector
output. Although a wide range of criticism was
made of this analysis, many other studies have
now been carried out in the US. These have tended
to confirm the general proposition that investment
in public infrastructure has important effects on
private sector productivity. This conclusion is not
surprising. Cutting the cost of transport should
reduce business costs.
IMPLICATIONS
The study results indicate that the level and
pattern of investment in land transport
infrastructure is an issue of comparable importance
to other key areas of microeconomic reform, such
as rail reform. However, the findings do not on
their own make a case for devoting substantial
new additional resources, on an ongoing basis, to
this area of public infrastructure. Such an
assessment would require analysis of demands on
limited resources, and benefits from greater
application of such resources in other areas of
government activity.
What is a much clearer implication of the results
is that significantly improved economic returns
would result from a reallocation of the available
investment. For example, shifting investment from
a pattern of even allocation of funds between the
different road categories to one in which the
categories with highest returns were funded
approximately doubles overall returns. (This does
not, however, demonstrate that one group of road
users is cross-subsidising another group. Road
users in those regions in which marginal returns
are lower, such as non-urban areas, may still be
paying road related taxes and charges that fund
the investment in that particular road category.)
The report raises important questions about the
appropriate level and pattern of investment in
land transport infrastructure and provides
evidence of significant economic benefits which
would arise from reform. These issues should be a
matter of concern for all levels of government.
OTHER CHAPTERS OF THE REPORT
Chapters 1 to 4 of the report provide important
background to the major analysis. Chapter 1
discusses our current understanding of the
economic role of land transport infrastructure.
Chapter 2 focuses on patterns of demand from
transport. Chapter 3 considers the provision of
land transport infrastructure. Chapter 4 discusses
aspects of the institutional structure affecting
infrastructure investment. Finally Chapter 7
discusses reform of infrastructure provision,
including the relative importance of other transport
policy issues.
VoI.3 No.1 March 1994 ROAD & TRANSPORT RESEARCH
37
New member of the
editorial panel
Associate Professor Lex Brown has agreed to replace
Mike Mowle as the 'environmental' member of the
Editorial Panel. Mike has resigned to take up an
overseas posting.
Lex is Associate Professor in Environmental
Planning, and currently Head of the Australian
School of Environmental Studies at Griffith
University in Brisbane. That School was first
established in 1975, and is one of the largest
interdisciplinary environmental studies centres
in the world — consisting of over 60 full-time
faculty. He has extensive experience in
environmental planning and management in
Australia and in both developed and developing
countries — and is currently involved in a series of
United Nations Development Program courses on
Environmental Management in the African and
Asian regions. His major research interests are in
community response to environment and pollution,
environmental impact assessment, and working
at the interface between the environmental
scientist and the design professionals in modelling
and implementation.
Lex Brown
He graduated in Civil Engineering and Regional
and Town Planning at the University of
Queensland and completed his doctorate there in
the Departments of Architecture and Psychology
investigating community response to
transportation noise.
His early research career was largely supported
by the Australian Road Research Board and the
Queensland Main Roads Department. Along with
other environmental interests he has maintained
his specialisation in environmental noise, and he
has published extensively in this field. In 1990 he
was co-author ofthe paper which won the Directors'
Prize at the Darwin ARRB conference for the work
which best translates research into practice. The
paper described a methodology for combining
environmental assessment with transport network
modelling.
38
Address:
Australian School of Environmental Studies,
Faculty of Environmental Sciences,
Griffith University,
Brisbane, Queensland 4111
Australia
Vol.3 No.1 March 1994
ROAD & TRANSPORT RESEARCH
BOOK REVIEW
Proceedings of the Workshop on Deep-Lift
Recycling of Granular Pavements
A review by George Kriflik,
Manager Technology Transfer,
Technology Development Branch,
Roads and Traffic Authority of NSW
The use of recycling technology is providing the
RTA with opportunities for cost-effective solutions
to pavement rehabilitation. It is also assisting the
RTA to achieve its environmental vision.
Deep-lift, in-situ recycling of heavily trafficked
rural road pavements using cementitious binders
has become feasible in recent times as a result of
improvements to stabilisation and compaction
equipment as well as improvements to binders.
In 1990/91 a feasibility study for this type of
treatment was carried out as a research and
development project and followed in 1991/92 by
trials of equipment and procedures. These trials
were followed by a workshop in Sydney in
September 1992 to present the results. The
conclusions of this workshop were:
•
pavement and materials design procedures
are available
A workshop was conducted in Sydney on 9
December 1993 to present the results of these
trials, the draft guide-lines for the work and the
QA specification.
These proceedings provide a record of the workshop
by outlining the papers presented and a summary
of the discussions which took place.
Included in the presentations, and so in the
proceedings, is:
•
the background of deep-lift recycling
•
an overview of recycling trials
•
an analysis of the trial results
•
the contractor's perspectives
•
the RTA regional perspectives
•
the guidelines for deep-lift recycling
•
binder selection
•
the development of the specification
•
the future for in-situ recycling
a summary of the discussion.
•
the construction equipment and processes are
available and viable
•
•
quality assurance schemes are available but
require adaptation to this particular purpose.
The Appendices of this publication contain the
workshop program, a list of the workshop attendees,
the draft guide for, and the draft specification for,
in-situ recycling.
As a result, four full scale trials under a Quality
Assurance Specification were carried out in 1993.
These studies and trials were managed by
Statewide Roads Technical Management Pty Ltd
under the supervision of RTA's Engineering
Services Section and, more recently, the Pavements
Branch.
VoI.3 No.1 March 1994
The issues which were identified during the
workshop are:
•
ROAD & TRANSPORT RESEARCH
the need for thorough site investigation prior
to any work (e.g. use of ground penetrating
radar)
39
•
the variability of unconfined compressive
strength tests
•
the advantage of a nuclear density meter
capable of providing for probe insertion up to
400 mm
•
the requirement for long periods of daylight
during this work
•
the difficulties of compacting in a single layer
•
X-Ray fluoroscopy (XRF) techniques for
measuring uniformity of binder mix
•
the need for sufficient setting time for binders
•
the difficulty in achieving the specified
roughness count on the finished pavement
•
the need to measure roughness during the
final trimming (e.g. use of walking
profilometer)
•
the lack of data available on long term
performance of recycled pavements and the
possibility of accelerated pavement testing
•
40
the process of deep-lift recycling of granular
pavements using cementitious binders is
feasible and design criteria are able to be met
using this process.
•
techniques need to be further refined to
improve compaction techniques, particularly
in the lower layers
•
contractors working in a QA environment did
not achieve the ride quality on finished
pavements in the trials but subsequent work
has shown that the specified ride quality can
be consistently achieved
•
further work is required to develop binders
with the necessary working times to enable
adequate compaction and ride quality to be
achieved.
These proceedings will serve as a useful guide for
practising pavement engineers and are essential
reading for all involved in deep-lift recycling of
granular pavements.
the use of 'partnering' techniques to improve
efficiency and effectiveness in communication
relevant to quality and productivity.
A number of substantial conclusions were derived
from the Workshop. These were that:
•
•
Proceedings of the workshop on Deep-Lift Recycling of
Granular Pavement, published by Technology
Development Branch, Roads and Traffic Authority
of NSW.
Copies are available from Therese Bourne, telephone
(02) 662 5783 or fax (02) 662 5133.
deep-lift recycling of granular pavements using
cementitious binders is a cost-effective
pavement rehabilitation technique, and can
be achieved in about half the time and at about
half the cost of conventional rehabilitation
techniques
Vol.3 No.1 March 1994
ROAD & TRANSPORT RESEARCH