I blogged some months back about a paper of mine published in a peer-reviewed journal. This was a critique of the orthodox approach to the cost-benefit analysis of transport investments, which focuses on the saving of travel time. My paper has prompted three senior transport economists to publish a response in the same journal. They say: ‘Metz makes some good points, but many of his key arguments are unsound.’ Naturally, I disagree with the latter proposition.
The three economists concede that the conventional approach to appraisal is weak on the spatial distribution of the benefits of investment, which is important to decision-makers. An example here is High Speed 2, the planned new rail route connecting London to the cities of the Midlands and the North. The strategic case for this very large investment is to boost the economies of these cities by improving their connectivity to the dynamic economy of the capital. However, the conventional economic case sees the benefit as largely time saving for business travellers, and is silent on its spatial distribution. What we need is economic analysis that quantifies the strategic case. This is lacking.
More generally, the purpose of the transport system is to move people and goods through space. Investment increases such movement, whether by increasing the speed of travel so that people go further in the time they allow themselves for travel, or by increasing capacity at existing speeds, so that more people are able to travel. In either case, an important consequence is change in land use and land value, reflecting the increased access made possible by the investment. Transport planners well understand how transport investment increases access and changes how land is used, whereas transport economists are fixated on notional time savings – notional because they are the output of models, not observed in practice. What we observe in the findings of the National Travel Survey is that average travel time has hardly changed over 45 years, despite many £ billions of transport investment justified by the value of supposed time savings.