Extending Monetary Values to Broader Performance and Impact Measures: Applications for Transportation and Lessons from Other Fields

This paper examines recent progress at assigning monetary values to what are normally considered “hard to quantify” benefits of transportation projects, so that they can be considered in benefit-cost analysis. It focusing on three very different types of impacts -environmental, health, safety and economic development – to examine how transportation project evaluation methods have evolved in recent years and how they compare to methods used for evaluation of non-transportation programs. The paper first uses examples of recent practice to show how transport agencies are continuing to refine their definitions of program performance measures to include broader impacts in project evaluation. It develops a classification system to distinguish fundamental direct effects from broader measures of indirect effects, a step that is important to minimize the double-counting of impacts in benefit-cost analysis. For each type of impact, the paper discusses the range of variation or apparent differences in impact valuation among agencies, and then shows that they are due less to imprecision in measurement than to fundamental issues about whether to use damage compensation, impact avoidance costs, stated preferences or behavioral valuation perspectives to define the impact values. Case studies as diverse as Australian roads, Wisconsin energy programs and Appalachian economic development programs are used to show how information and technology transfer are working between transport and non-transport agencies to improve impact measurement and its use in project benefit-cost evaluation for investment decision-making. Extending Monetary Values to Broader Performance and Impact Measures Page 3