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Cost Benefit: the economic case for cycling

First publishedin ITS International
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Authorities all over the world are looking at cycling infrastructure

Cycling is good for us for any number of reasons. David Crawford finds that it is now possible to access basic, low-cost data which will help make the economic case for improving infrastructure

Cycling is enjoying a favourable press the world over as a ‘good thing’ in the economic, environmental and social spheres. A recent study on the Value of Cycling from the UK’s University of Birmingham, for example, shows that cycle-friendly urban settings can deliver annualised transport infrastructural support costs that are 33% lower than those of car-oriented ones. Cyclists visit local shops more often than drivers do. Per square metre of space occupied, cycle parking can deliver five times higher levels of retail spend than the same area of car parking. In education, encouraging children to cycle is saving €390 million (US$445 million) a year on the cost of school transport in the Netherlands. It is also keeping pupils in better condition and so lowering their healthcare costs.

Physical inactivity is increasingly being recognised as a healthcare problem for people of all ages, and one that is unlikely to be systematically overcome through playing organised sports or exercising in leisure time. Cycling (and walking) can be readily integrated into normal living and working schedules as alternatives to short car trips. People who cycle to work need fewer days off per year to recover from bouts of sickness.

Across all these spheres, however, there are important gaps in the quantity and quality of data needed to support adequate - and sustained - public investment in the mode. One of these relates to the potential role, in increasing cycling’s modal share, of information and communication technologies (ICT)-enabled urban networks. But little is as yet understood about the impacts, costs and benefits of these, according to a recent report from the Dutch Smart Cycling Futures research project.  

Modal context

A second problem stems from the fact that public agencies tend to measure cycling benefits primarily in the context of modal switch. That is, they focus on the environmental, health and other gains to be expected when people decide to leave their cars at home. But they often fail to acknowledge the cost of losing these advantages when making decisions that tend to favour the use of cars.

A third hiatus concerns the nature and effectiveness of the partnerships that need to evolve between the transportation, urban planning and healthcare sectors in order to develop convincing, and widely researched, cases for financial support. Riding to the rescue here is the online Health Economic Assessment Tool (HEAT) for cycling and walking projects that the World Health Organisation (WHO) Europe has introduced to equip local officials to demonstrate the economic effects of low physical activity, as well as of air pollution and road injury levels. It is designed to make the optimum use of the best, readily available evidence.   

Central to the approach, which originated in Europe, is the default standard value of a statistical life (VSL), calculated in the European Union as an average €3.37 million (US$3.84 million) on the basis of work by the Organisation for Economic Co-operation and Development.

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HEAT is providing straightforward, accessible and - not least important - low-cost support to partnerships of transport planners, traffic engineers, health economists (and community and special interest groups) that lack professional expertise in developing convincing cost-benefit analysis (CBA). The valuation of health effects is, in any case, a complex task and transport planners working on their own are not always equipped to appreciate the full scale of the methodology involved.

Clusters of such groups can now – using their own PCs rather than resorting to external consultants - explore ways of making practical provision for increased levels of cycling - to and from, for example, a workplace - starting out with basic and readily available local data.

Critical Question

They are being equipped to answer, convincingly, the critical question: “If x people regularly walk or cycle an amount of y, what is the economic value of the health benefits that occur as a result of the reduction in mortality due to their physical activity?”

The tool is designed to enable a community that is, for example, planning a new piece of cycling infrastructure to attach a value to the estimated level of cycling once the work is complete, and to compare this value with the costs of implementing one or some solutions to generate an acceptable benefit–cost ratio as part of the case for making the proposed investment.

It applies a comparative risk assessment approach, in which the risk of interest (mortality or premature death) is compared between two cases: the reference one and a comparison case. The impact of interest is the difference in mortality between the two cases. For HEAT, this difference is a result of a contrast in physical activity between the two cases. It has proved to be a particularly valuable asset to smaller communities with limited access to professional and financial resources. In Kuopio, Finland, it has enabled the town government to estimate, initially, the economic value of having its own employees cycle rather than drive to work in order to improve their physical wellbeing.

The town has now developed its own model for collecting and analysing the necessary data, and identifying problems, using limited funding from WHO, its own municipal resources, and - with a view to wider application - the local service sector. The annual number of deaths potentially prevented, using the VSL concept, ranges between 0.29 and 5.66; and the current value of the annual benefit across 10 years reaches as high as €7.6m (US$8.7m).

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Cycling in towns has quantifiable benefits

Encouraging a switch

These results have laid the foundation for a follow-up aimed at encouraging switching by other commuters - including those working for large employers close to an existing cycle route perceived as being dangerous. Needs identified for funding include winter maintenance and storage.

In Estonia, the Pärnu city government has used HEAT to quantify the scope for increasing levels of cycling - via improved physical infrastructure – simply by collating data on existing numbers and trip duration and distance.  

It has then used the results to estimate future numbers of riders that would take advantage of a proposed new 4km-long route linking the city centre with residential areas. Assuming that 230 people would use this, and that 50% of them would be converts from car use, generated an average annual VSL-based benefit of €112,000 (US$128,000). This proved to be enough to secure the necessary funding.

The two communities are relatively small, with fewer than 100,000 residents each (though the tool has already been used by Finnish local governments responsible for over a quarter of the country’s population). But the cumulative contribution of these and others following their example in taking advantage of the tool, is potentially huge.

A similar message about the overall importance of apparently low numbers in individual locations emerges in the EU Cyclists’ Federation report (see Health benefits of cycling) on sickness-related absence from work. Employees encouraged to cycle in are, on average, away for 1.3 fewer days a year. But this apparently minor difference grosses up to an annual productivity gain of €4.5 billion (US$5.1 billion).

Health benefits of cycling (billion euros)

Longer lives: e97,00
Healthier lives: e39,00
Improved mental health: e30,00
Improved kids’ health versus sedentary life styles: e20,00
Reduced fatalities: e0,38
Reduced serious injuries: e0,33
Reduced light injuries: e0,06
Reduced absenteeism: e4,50

Total (billion euros): e191.27

Typical data needed to generate HEAT

  • Estimates of the size of the study population, from route user surveys, or roadside counts, tailored to reflect the age range being assessed.
  • Estimates of current levels of cycling garnered from surveys or estimates and recorded as an
  • average per person per day.
  • Average times taken and distances cycled per person.
  • Average numbers of trips/steps made per person.

Source: ECF report on the EU Cycling Economy, updated 2018

Increased cycling benefits traders

Retailers overestimate the share of their customer base that drives to shop, making them resistant to schemes that restrict cars, according to the ECF. It argues that changing cities to accommodate bicycles, rather than cars, will not adversely affect trading: “In fact, additional revenue and business brought in by cyclists will more than offset lost revenue from car drivers.”

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